ERROR to the Circuit Court for the District of Vermont; the only question in the case being whether the suit originally brought in a State court (the County Court for the County of Bennington), had been rightly removed to the Circuit Court, in pursuance of the act of Congress of March 2d, 1867; one enactment of which is as follows:
'That where a suit is now pending, or may hereafter be brought in any State court, in which there is a controversy between a citizen of the State in which the suit is brought and a citizen of another State, and the matter in dispute exceeds the sum of $500, exclusive of costs, such citizen of another State, whether he be plaintiff or defendant, if he will make and file, in such State court, an affidavit stating that he has reason to and does believe that, from prejudice or local influence, he will not be able to obtain justice in such State court, may, at any time before the final hearing or trial of the suit, file a petition in such State court for the removal of the suit into the next Circuit Court of the United States, to be held in the district where the suit is pending,' &c.
The case was thus:
The Western Vermont Railroad Company, a corporation of Vermont, having issued a large amount of bonds, made a mortgage of the road to Knapp and Briggs, both citizens of New York, in order to secure the payment. By a foreclosure, in regular equity form, of that mortgage under the laws of Vermont, the title of Knapp and Briggs to the railroad became absolute in fee, in trust for the bondholders under the mortgage. They thereupon leased the railroad for a term of years to the Troy and Boston Railroad, a corporation of New York; and, therefore, according to the decisions of this court, a citizen of the same State with Knapp and Briggs. The lease contained various covenants.
In the meantime, and before the expiration of the lease, a new corporation, called the Bennington and Rutland Railroad Company, had been organized by a majority of the bondholders, in pursuance, as was said, of certain provisions of a railway act of Vermont. That act, as the new corporation conceived, authorized the majority of the bondholders of any railroad company purchasing the road under a foreclosure, to form a new corporation, which would own, maintain, and work the purchased railroad. It vested the company thus formed with all the powers, privileges, and franchises of the original corporation, and empowered it 'to proceed in any manner it may deem expedient, either by purchase or otherwise, to obtain the title and ownership, or the use and benefit of the whole estate, and to satisfy the undivided interest or claims of any other party or parties interested in said railroad; and until the interests of such other parties shall become vested in such new corporation, such corporation shall be the trustees thereof, and shall be accountable therefor as tenants in common.'
By an act passed November 18th, 1864, the corporation formed under the foregoing provisions was declared entitled to receive rents accruing under leases executed by the trustees who foreclosed.
In this state of things, Knapp and Briggs sued the Troy and Boston Railroad Company, on the covenants already mentioned of their lease to them. The defendants-alleging that the new corporation was, by the provision of the statute under which it was formed, substituted as trustee of the other bondholders, in place of Knapp and Briggs, and had thus become the real party in this suit, and filing such affidavit of local prejudice as the act of March 2d, 1867, requires-asked the State court, in a petition addressed to it, to remove the cause into the Circuit Court. They contended that the subject-matter of the controversy was wholly between the Bennington and Rutland Railroad Company, a Vermont corporation, and themselves, and that Knapp and Briggs were now but nominal parties to it, having no interest in it.
The petition, with the affidavit annexed to it, together with the original writ, declaration, and pleas, were transmitted to the Circuit Court. The plaintiffs, upon these papers, the certified copy of the lease, and the affidavits of certain persons that there were outstanding bonds of the Western Vermont Railroad, which had not been converted into or exchanged for the stock of the Bennington and Rutland Railroad Company, nor in any other way paid or discharged, moved the Circuit Court to remand the cause to the State court for want of jurisdiction. This motion the Circuit Court denied, and proceeded to hear ad adjudge the case; and after suit gave judgment for the company. The plaintiff, Knapp, thereupon (Briggs having died) took this writ of error.