#### TOWN OF MORGANTON v. HUTTON & BOURBONNAIS COMPANY and HERMAN BONNINGHAUSEN.

(Filed 14 May, 1924.)

1. Removal of Causes — Diversity of Citizenship — Federal Courts.

Under the Federal Removal Act, in order for a nonresident defendant, joined with a resident defendant, to have the cause removed to the Federal Court for diversity of citizenship, it is required for it to appear from the allegations of the complaint of a resident plaintiff that the defendant movant is a nonresident and that the cause is entirely severable as to him, or that he was fraudulently joined with the resident defendant to *737oust the Federal Court of its jurisdiction, or lie must show that he was not a mere nominal party and that the resident defendant had no substantial interest in the subject-matter of the controversy.

2. Same — Courts—Jurisdiction.

The filing before the clerk of the State court of a petition and bond by defendant for removal of a cause from the State to the Federal court for diversity of citizenship is not alone sufficient to oust the jurisdiction of the State court, and the latter court may proceed to determine as a matter of law the question of the defendants’ right to the Federal jurisdiction, and he may then have an adverse final judgment reviewed in the Supreme Court of the United States, under the provisions of the Federal statute.

3. Same — Complaint—Eminent Domain — Condemnation of Land.

The beneficial interest in lands sought to be condemned for a public use held by a resident defendant, with power to direct the nonresident holder of the naked legal title tb convey to whom he may direct, is not sufficient to confer upon the resident defendant the right to remove the cause to the Federal court.

4. Same — Pleadings—Amendments—Statutes.

Where a nonresident defendant claims an interest in lands, in proceedings by a municipality against a resident owner to take it for a public use, and the nonresident has been made a party -and files his petition and bond for removal to the Federal court for diversity of citizenship, the plaintiff may amend his pleadings on motion granted by the State court, under C. S., 1414, and set up facts sufficient to show that the claim of the nonresident arose by contract that gave him no interest in the lands within the meaning of the Federal Removal Act.

5. Same — Cause of Action.

Proceedings for the condemnation of lands for a public use are within the sole jurisdiction of the State court, and present no cause of action within the contemplation of the Federal Removal Act until a controversy has arisen thereupon with a nonresident defendant upon the question of his compensation for the lands thus taken, but never where the interest of a resident codefendant is involved.

Appeal by Herman Bonninghausen from Webb, J., at January Term, 1924, of Bunios.

This was a condemnation proceeding by the town of Morganton against Hutton & Bourbonnais Company, a domestic corporation, for the condemnation of a large body of timber land for the purpose of providing a watershed and a water supply for the town. The summons was issued 12 August, 1922, and a verified petition was filed 12 August, 1922. The petition was in proper form. On 14 June, 1923, upon affidavit of the town manager that he had notice that Herman Bonning-hausen, a citizen of Michigan, claimed that he was owner of the lands, an order was granted by the clerk, making said nonresident a party defendant and giving the petitioner leave to file a supplementary petition, and order a summons to issue for said nonresident. The summons *738was issued and served by publication. He filed the supplementary amendatory petition. Thereafter, on 21 August, 1923, the said nonresident, Bonninghausen, filed a petition and bond for removal of the cause to the United States District Court, which was allowed by the clerk, but on appeal to the Superior Court the order was reversed, and the nonresident appealed to this Court.

Avery & Ervin, W. A. Self, and L. E. Rudisill for plaintiff.

Ervin & Ervin, W. B. Councill, and Cansler & Cansler for defendant.

Clark, C. J.

In Black’s Dillon on Nemoval of Causes, sec. 84, it is said, with a wealth of citations, that the following is the rule upon motions to remove causes from a State to the Federal court: “When there are several plaintiffs or several defendants in the cause, and a removal is asked on the ground of diverse citizenship,, it is necessary that all of the parties on one side of the controversy (except merely nominal or formal parties, or parties improperly joined, whose citizenship may be disregarded) should be citizens of a different State or States from all of the parties on the'other side. It'is not enough that some of the plaintiffs may be citizens of different States from some of the defendants. This will not make the controversy one 'between citizens of different States/ within the meaning of the statute as interpreted by the courts. If any one of the plaintiffs is a citizen of the same State with any one of the defendants, the case will not be removable. Even if there is serious doubt as to whether all the defendants are citizens of different States from all the plaintiffs, the Federal court should not take jurisdiction. It is not, however, necessary, when the removal is sought on this ground, that all the plaintiffs should be citizens of the State in which the action is brought, provided they are all citizens of States other than that of which the defendant is a citizen.”

In Lawson v. R. R., 112 N. C., 400, Avery, J., quotes Waitt, C. J., in Stone v. S. C., 117 U. S., 430, as follows: “A State court is not bound to surrender its jurisdiction of a suit, on petition for removal, until a case has been made which on its face shows that the petitioner has a right to the transfer.”

And in Pruitt v. Power Co., 165 N. C., 420, it is said: “It is well settled that the State court should not surrender its jurisdiction unless the petition shows upon its face a removable cause and unless such petition and accompanying bond are filed in the State court within the time required by the act of Congress. R. R. v. Daugherty, 138 U. S., 298. . . Whether the petition in its tenor, and time of filing, authorizes the removal, is a matter for decision by the State court in the first instance. That court is not paralyzed by thé simple presentation of a jDetition to remove.”

*739Filing of petition in State court does not ipso facto deprive- it of jurisdiction. Howard v. R. R., 122 N. C., 944. The Federal court acquires no jurisdiction when petition and bond are filed in clerk’s office during vacation. Howard v. R. R., supra; Higson v. Ins. Co., 153 N. C., 40; also, Dick, J., in Fox v. R. R., 80 Fed., 945 (1897).

Whether a case is removable is a question of law, to be decided by the State courts. Patterson v. Lumber Co., 175 N. C., 93; R. R. v. Daugherty, 138 U. S., 298; Springs v. R. R., 130 N. C., 198; 122 U. S., 513. And this must be made from the entire record. “The State court is at liberty to determine for itself on the face of the record whether a removal has been effected. If it decides against removal, its action will, after final judgment, be reviewable in the Supreme Court of the United States.” Stone v. South Carolina, 117 U. S., 431.

There must be a separable controversy, in which the full rights of the nonresident defendant may be determined Avithout the presence of the resident defendant. Paper v. Fordyce, 119 U. S., 468. In Fraser v. Jenison, 106 U. S., 191, it is stated: “To remove a case on the ground that it is a separable controversy, the case must be one capable of separation into parts, so that in one of the parts a controversy will be presented with citizens of one or more States on one side and citizens of other States on the other, which can be fully determined without the presence of any of the other parties to the suit as it Avas begun.” To same effect, Hyde v. Ruble, 104 U. S., 407; Torrence v. Shedd, 144 U. S., 527.

Or if there is a fraudulent or illegal joinder of defendants; but, as was said in Fore v. Tanning Co., 175 N. C., 584, by Holce, J.: “In Hollifield v. Telephone Co., 172 N. C., 714, it was held: ‘Where a nonresident defendant seeks to remove a cause to the Federal court upon the ground of diversity of citizenship, and alleges in his petition that a resident defendant was fraudulently therein joined to prevent removal, before the State court is under any duty or obligation to surrender its jurisdiction, there must be specific allegation of the facts constituting the alleged illegal or fraudulent joinder, and it is not sufficient to charge generally or by indefinite averment that the joinder is or Avas intended to be in fraud of the nonresident’s rights.’ ” Also, see Tobacco Co. v. Tobacco Co., 144 N. C., 352; Hough v. R. R., ibid., at p. 700; 150 Fed., 801.

In R. R. Co. v. Herman, 187 U. S., 63, it is held: “While an action commenced in a State court against tAvo defendants, one of whom is a resident and the other a nonresident, may be remoAred to the Circuit Court of the United States by the nonresident defendant if it can be shown that the cause of action is separable and the resident defendant is joined fraudulently for the purpose of preventing the removal of the *740cause to the Federal court, such removal cannot be had if it does not appear that the resident defendant is fraudulently joined for such purpose.”

The question of the nature of the controversy is governed by the complaint. Whether there is separable • controversy is determined by the complaint. Staton v. R. R., 144 N. C., 135; Hollifield v. Telephone Co., 172 N. C., 714; Patterson v. Lumber Co., 175 N. C., 92. And the plaintiff is entitled to have his cause of action considered as stated in complaint. Hough v. R. R., 144 N. C., 700-702; Smith v. Quarries Co., 164 N. C., 338; Powers v. R. R., 169 U. S., 92; 179 U. S., 135; 200 U. S., 206.

In Powers v. R. R., 169 U. S., 92, it is said: “A separate' defense cannot create a separate controversy or deprive the plaintiff of the right to prosecute his own suit to a final determination in his own way, for the cause of action is the subject-matter of the controversy and is what the plaintiff alleges.” Cited in 194 U. S., 138. Also, in R. R. v. Ide, 114 U. S., 52, it is said: “A defendant cannot make an action several which a plaintiff has elected to make joint.”

In condemnation of land of nonresident defendant alone, Federal court seems to have jurisdiction after appraisers have made their award, but never where a resident defendant is interested in the land.

Compensation (i. e., to nonresident), and not taking, places jurisdiction in the Federal court. McCulloch v. R. R., 149 N. C., 313.

State, and not United States, courts have jurisdiction in condemnation proceedings. Ibid., at p. 317, and cases cited therein.

In Bellaire v. R. R., 146 U. S., 117, it is said: “Where the object of the suit is to condemn and appropriate to the public use a single lot of land, the controversy is not divisible because the two defendants own distinct interests and may be entitled -to separate damages; and, therefore, one of them cannot remove the cause as to himself alone from the State court to the Circuit Court of the United States.”

This case presents these facts of record: In August, 1922, the town of Morganton instituted condemnation proceedings against Hutton & Bourbonnais Company, who duly answered. About nine months passed. On 28 May, 1923, a nonresident, Herman Bonninghausen, subscribed, under oath, a complaint at law — which was later filed in the Federal Court of Western North Carolina — against the petitioner in condemnation proceedings, town of Morganton. Thereafter, the defendant in the condemnation proceedings, Hutton & Bourbonnais, filed an amended answer, and thereupon summons and complaint were served upon town of Morganton in the suit at law instituted in the Federal court. Thereupon, the town of Morganton, under C. S., 1716 and 1728, caused the nonresident, Herman Bonninghausen, to be brought in as party defend*741ant in its condemnation proceeding in tbe State court, baying been put on notice by bis suit at law tbat be claimed an interest in tbe land in controversy. Whereupon, tbe nonresident, baying' forced bimself upon tbe notice of tbe town of Morganton by bis suit at law, and baying made it mandatory upon tbe town of Morganton to make bim party defendant in its proceeding, petitioned for an order of removal, wbicb tbe clerk signed.

Tbe substance of petitioner’s argument is: If tbe town bad alleged tbat tbe two defendants were bona fide owners of distinct interests, of whatever character, in, tbe lands in question, then, from tbat allegation alone, whether ór not it was denied by the one and not answered by tbe other, tbe right of removal as to tbe nonresident would ipso facto be defeated. But, since tbe town alleges, directly or indirectly, tbat tbe resident defendant is tbe real owner and tbe true party in interest, and tbat tbe nonresident is merely a claimant, then such alleged mere claimant, by reason of bis being a nonresident, enjoys larger rights than if be were alleged to have a bona fide interest in tbe subject-matter.

Tbe question is whether, in a condemnation proceeding instituted by a municipal corporation, a nonresident defendant — who is an alleged claimant of a tract of land sought to be condemned, and who is joined with an alleged owner who is a resident — may, before joining issues raised on tbe petition of tbe town, remove tbe cause as to bimself to tbe Federal court.

Tbe defendant relies upon tbe headnote in Railroad Removal Cases, 115 U. S., 1, where it was held tbat, in a proceeding to widen a street, in wbicb certain land owned by a railroad company was sought to be taken; tbe controversy between tbe railroad and tbe city was separable from tbat between other property owners and tbe city and removable alone.” But it appears tbat in tbat controversy tbe city was condemning several tracts of land, each tract belonging to separate individuals, in one proceeding for widening a street, upon wbicb tbe several distinct tracts bordered, and tbe Court held tbat, in respect to tbe tract belonging entirely to tbe railroad company, a nonresident, tbe matter in respect to this separate property constituted a distinct controversy between tbe city and tbe company, and was therefore removable. An examination of tbe case, however, shows tbat tbe appraisal bad been made and tbe question of tbe amount of compensation bad been arrived at, so tbat it was properly a suit, and “not a special proceeding.” In tbat case Mr. Justice Bradley, for tbe Court, said, citing Boom Co. v. Patterson, 98 U. S., 403, tbat in tbe Boom cose “tbe preliminary proceedings were in tbe nature of an inquest to ascertain tbe value of tbe property condemned, or sought to be condemned, by tbe right of eminent domain, and was not ‘a suit at law in tbe ordinary sense of those terms,’ and con*742sequently not a suit witbin tbe meaning of tbe Removal Acts; but tbat when it was transferred to tbe District Court by appeal from tbe award of tbe commissioners;, it took, under tbe statute of tbe State, tbe form of a suit at law, and was thenceforth subject to its ordinary rules and incidents.”

“It may be regarded as settled law tbat tbe power to take private property for public uses belongs to every independent government exercising sovereign power, for it is a necessary incident to its sovereignty and requires to have no constitutional recognition. U. S. v. Jones, 109 U. S., 513. . . . Legislation in tbe exercise of this inherent power, though subject to judicial control, is said to be practically unlimited if tbe purpose be a public one and sufficient provision is made for compensation to tbe owner of tbe property proposed to be taken. R. R. v. Davis, 19 N. C., 451; Lecombe v. R. R., 23 Wall., 108. Tbe mode of exercising tbe power of eminent domain, unless otherwise provided in tbe organic law, rests in tbe sound discretion of tbe Legislature, subject, however, to tbe principle just stated, tbat there must be sure and adequate provision for compensating tbe owner.” Jeffress v. Greenville, 154 N. C., 494, and cases therein cited. To tbe same effect, Kohl v. U. S., 91 U. S., 451.

“Tbe method for taking tbe land for public use is witbin tbe exclusive control of tbe Legislature, limited by organic law. Tbe exercise of this power being a political and not a judicial act, tbe courts cannot help tbe injured landowner in a case like this, where tbe statute has been strictly followed until the question of compensation is reachedDur-ham v. Bigsbee, 141 N. C., 132, and cases there cited.

Tbe proceeding in tbe present case, before commissioners appointed to appraise tbe land, was in the nature of an inquest to ascertain its value, and not á suit at law in tbe ordinary sense of those terms. Tbe counsel for Bonninghausen in this case state in their brief tbat be has instituted an action of ejectment in tbe United States District Court against tbe town of Morganton, alleging that be is tbe owner in fee of said lands and tbat tbe plaintiff has unlawfully trespassed upon tbe same, demanding judgment to be declared sole owner and recover damages for tbe trespass. Tbe plaintiff has moved, under C. S., 1414, to amend, in this Court, by setting up tbe contract between Bonninghausen and Hutton & Bourbonnais and tbe deed executed to said Bonninghau-sen. This tbe Court has power to permit, and tbe counsel for said Bonninghausen has also consented tbat these may be inserted in tbe record.

An examination of these papers shows a conveyance from Arthur G. Olmstead and wife and others to Herman Bonninghausen, with an express stipulation tbat said parties of tbe first part “do not warrant, *743by express or implied warranty, or agree to defend against or convey or intend to convey any other or greater title, interest or possession than was invested in them by a deed from tbe South Mountain Land Company on 22 March, 1901, and the contract, made the same day by said Bonninghausen to Hutton & Bourbonnais, recites that he “holds said lands only in and upon the trust above mentioned, and that upon demand by the parties of the second part (Hutton &■ Bourbonnais) he will convey the lands to the South Mountain Lumber Company or to such other firm, etc., as the parties may designate.” In effect, therefore, it appears that the legal title has been placed in Bonninghausen to convey the property to any person that may be designated hereafter by Hutton & Bourbonnais, a North Carolina corporation.

It would be singular, indeed, if upon these facts the State was deprived of the right to condemn this property for the public use of the town of Morganton.

Whenever the matter of distribution of the compensation arises, then, and not until then, would the matter of jurisdiction be presented as to whom it shall be distributed. At present Hutton & Bourbonnais are the beneficial owners, having power to direct to whom the conveyance by the trustee, Bonninghausen, shall convey the land. Bonninghausen holds only the bare legal title, as trustee, to convey at the instance of Hutton & Bourbonnais, a North Carolina corporation.

The petition to remove the cause to the Federal court was properly denied.

Affirmed.