from the state to the Federal court. Petitioner moved to remand, asserting that the International Trust Company is a necessary party to the suit, and that the case was improperly removed, because the plaintiff and one of the defendants are citizens of the same state. The motion was denied. The case was tried in the district court and dismissed on final decree, which was affirmed by the circuit court of appeals.

There are two questions for decision: Did the district court have jurisdiction? Which of the parties is entitled to the fund?

The district courts have original jurisdiction of controversies between citizens of different states (Const. art. 3, § 2; Judicial Code, § 24); and when, in any suit brought in a state court, there is a controversy which is wholly between citizens of different states, and which can be fully determined as between them, a defendant interested in such controversy may remove the suit to the proper district court of the United States. Judicial Code, § 28.

District courts have jurisdiction if all the parties on the one side are of citizenship diverse to those on

1 Raphael v. Trask, 194 U. S. 272, 277, 48 L. ed. 973, 978, 24 Sup. Ct. Rep. 647; Gage v. Carraher, 154 U. S. 656 and 25 L. ed. 987, 14 Sup. Ct. Rep. 1190; Ayres v. Wiswall, 112 U. S. 187, 192, 28 L. ed. 693, 695, 5 Sup. Ct. Rep. 90; Removal Cases, 100 U. S. 457, 468, 469, 25 L. ed. 593, 597, 598; Strawbridge v. Curtiss, 3 Cranch, 267, 2 L. ed. 435; Chipman v. West United Verde Copper Co. 271 Fed. 91; Danks v. Gordon, 272 Fed. 821, 824. 2 Wormley v. Wormley, 8 Wheat. 421,

diction-effect

unnecessary

is not affected by the fact that one of the defendants is a citizen of the same state as the plaintiff, if that defendant is not an indispensable party to the controversy between Courts-jurisplaintiff and de- of presence of fendant, who are parties. citizens of different states (Barney v. Latham, supra, p. 213). The facts set forth in the present bill are substantially those already stated. This suit involves a controversy between the petitioner, a citizen of Massachusetts, and the respondent, the Finance Company, a citizen of Delaware, which can be determined without affecting any interest of the other respondent, the International Trust Company, a citizen of Massachusetts. The latter is not an indispen- Parties-necessable party. See sary-custodian Niles-Bement Pond

of fund.

Co. v. Iron Moulders Union, 254 U. S. 77, 80, 65 L. ed. 145, 147, 41 Sup. Ct. Rep. 39. It has no interest in the controversy between the petitioner and the other respondent. Its only obligation is to pay over the amount deposited with it when it is ascertained which of the other parties is entitled to it. On the question of jurisdiction, an unnecessary and dispensable party will not be considered. Walden v. Skinner, 101 U. S. 577, 589, 25 L. ed. 963, 967; Bacon v. Rives, 106 U. S. 99, 104, 27 L. ed. 69, 70; Ex parte Nebraska, supra. The cases of Wilson v. Oswego Twp. 151 U. S. 56, 38 L. ed. 70, 14 Sup. Ct. Rep. 259, and Massachusetts & S. Constr. Co. v. Cane Creek, 155 U. S. 283, 39 L. ed. 152, 15 Sup. Ct. Rep. 91, do not support the contention that this case

451, 5 L. ed. 651, 659; Wood v. Davis, 18 How. 467, 469, 15 L. ed. 460, 461; Walden v. Skinner, 101 U. S. 577, 589, 25 L. ed. 963, 967; Wilson v. Oswego Twp. 151 U. S. 56, 64, 38 L. ed. 70, 74, 14 Sup. Ct. Rep. 259; Geer v. Mathieson Alkali Works, 190 U. S. 428, 435, 47 L. ed. 1122, 1126, 23 Sup. Ct. Rep. 807; Wallin v. Regan, 171 Fed. 758, 763; Jackson v. Jackson, 99 C. C. A. 286, 175 Fed. 710, 716; Atchison, T. & S. F. R. Co. v. Phillips, 100 C. C. A. 215, 176 Fed. 663, 666.

As between successive assignees of the same account receivable, does prior notice to the debtor of the later assignment, without more, subordinate the rights of the earlier to those of the later assignee?

There is a conflict of authority on the question. Under decisions of the supreme judicial court of Massachusetts, which are in harmony with the decisions of the highest courts in a number of the states, the earlier assignee would prevail. The court below held that question to be one of general jurisprudence, declined to be bound by the Massachusetts decisions, and

3 Putnam v. Story, 132 Mass. 205, 211; Tingle v. Fisher, 20 W. Va. 497, 506, 510; Meier v. Hess, 23 Or. 599, 603, 32 Pac. 755; Columbia Finance & T. Co. v. First Nat. Bank, 116 Ky. 364, 375, 76 S. W. 156; Fortunato v. Patten, 147 N. Y. 277, 283, 41 N. E. 572; Hawk v. Ament, 23 Ill. App. 390, 394; Harris County v. Campbell, 68 Tex. 22, 29, 2 Am. St. Rep. 467, 3 S. W. 243; White v. Wiley, 14 Ind. 496; Maybin v. Kirby, 25 S. C. Eq. (4 Rich.) 105, 114. See also Thayer v. Daniels, 113 Mass. 129, 131; Herman v. Connecticut Mut. L. Ins. Co. 218 Mass. 181, 186, 105 N. E. 450, Ann. Cas. 1916A, 822; Rabinowitz v. People's Nat. Bank, 235 Mass. 102, 126 N. E. 289; MacDonald v. Kneeland, 5 Minn. 352, 361, 365, Gil. 283; Bellingham Bay Boom Co. v. Brisbois, 14 Wash. 173,,176, 44 Pac. 153; State Banking & T. Co. v. Krause, 22 Ohio C. C. N. S. 216; Houser v. Richardson, 90 Mo. App. 134, 139.

Judson v. Corcoran, 17 How. 612, 15 L. ed. 231; Spain v. Hamilton (Spain v. Brent) 1 Wall. 604, 17 L. ed. 619; Laclede Bank v. Schuler, 120 U. S. 511, 30 L. ed. 704, 7 Sup. Ct. Rep. 644; Farmers & M. Bank v. Farwell, 7 C. C. A. 391, 19 U. S.

Courts-ques

state decision.

The question is one of general law, not based on any legislation of the state, or local law or usage, and the lower court rightly decided that tion of general it was not bound by law-effect of the rule applied in decisions of the highest court of Massachusetts. Swift v. Tyson, 16 Pet. 1, 18, 10 L. ed. 865, 871; Boyce v. Tabb, 18 Wall. 546, 21 L. ed. 757; Brooklyn City & N. R. Co. v. National Bank, 102 U. S. 14, 28, 26 L. ed. 61, 66; Presidio County v. NoelYoung Bond & Stock Co. 212 U. S. 58, 73, 53 L. ed. 402, 407, 29 Sup. Ct. Rep. 237; Methven v. Staten Island Light, Heat, & P. Co. 13 C. C. A. 362, 35 U. S. App. 67, 66 Fed. 113; Re Leterman, B. & Co. 171 C. C. A. 327, 260 Fed. 543, 547.

The precise question now before us was not involved, and therefore was not decided, in any of the deciApp. 256, 58 Fed. 633; Methven v. Staten Island Light, Heat & P. Co. 13 C. C. A. 362, 35 U. S. App. 67, 66 Fed. 113; Re Leterman, B. & Co. 171 C. C. A. 327, 260 Fed. 543.

5 Graham Paper Co. v. Pembroke, 124 Cal. 117, 120, 44 L.R.A. 632, 71 Am. St. Rep. 26, 56 Pac. 627; Lambert v. Morgan, 110 Md. 1, 26, 132 Am. St. Rep. 412, 72 Atl. 407, 17 Ann. Cas. 439; Jenkinson v. New York Finance Co. 79 N. J. Eq. 247, 257, 82 Atl. 36; Jack v. National Bank, 17 Okla. 430, 435, 89 Pac. 219; Phillips's Estate, 205 Pa. 515, 521, 66 L.R.A. 760, 97 Am. St. Rep. 746, 55 Atl. 213; Vanbuskirk v. Hartford F. Ins. Co. 14 Conn. 141, 144, 36 Am. Dec. 473; Dillingham v. Traders Ins. Co. 120 Tenn. 302, 309, 16 L.R.A. (N.S.) 220, 108 S. W. 1148; National Bank v. United Security L. Ins. & T. Co. 17 App. D. C. 112, 124; Ward v. Morrison, 25 Vt. 593, 599. See also Merchants & Mechanics Bank v. Hewitt, 3 Iowa, 93, 102, 66 Am. Dec. 49; Enochs-Havis Lumber Co. v. Newcomb, 79 Miss. 462, 466, 30 So. 608; Perkins v. Butler County, 44 Neb. 110, 116, 62 N. W. 308.

sions of this court cited by the circuit court of appeals.

The

In Judson v. Corcoran, 17 How. 612, 15 L. ed. 231, one Williams had a claim against Mexico for the illegal confiscation of a cargo. Under a treaty with Mexico (Feburary 2, 1848, 9 Stat. at L. 922) such claims were to be adjusted by the United States upon allowance by a board of commissioners created by an act of Congress. March 3, 1849, 9 Stat. at L. 393, chap. 107. Judson obtained from Williams an assignment of an interest in the claim. Later, Corcoran obtained assignments covering the whole claim. board found that Corcoran owned the whole claim, and made an award in his favor. Judson set up no pretensions to the claim until after the award, some six years from the time he obtained the assignment. This court (p. 614) pointed out that, the assignor having parted with his interest by the first assignment, the second assignee could take nothing by the later assignment; that the purchaser is entitled only to the remedies of the seller, and hence has arisen the maxim that "he who is first in time is best in right." The second assignee had drawn to his equity a legal title.to the fund (the award of the board of commissioners); and it was said that-assuming that no negligence could be imputed to the earlier assignee, and that the case was one where an equity in the same chose in action was successively assigned to two innocent persons whose equities are equal-there must be applied the rule that "the equities being equal, the law must prevail." The court said (p. 615): "There may be cases in which a purchaser, by sustaining the character of a bona fide assignee, will be in a better situation. than the person was of whom he bought; as, for instance, where the purchaser who alone had made inquiry and given notice to the debtor, or to a trustee holding the fund (as in this instance), would be preferred over a prior purchaser who neglected to give notice of his as

signment, and warn others not to buy."

Judson took his assignment in 1845, and first produced it in 1851. In the meantime, Corcoran got his assignment, gave notice, and prosecuted it to final award. It was held that he was entitled to the fund. Clearly, that case does not hold that mere priority of notice by a later assignee will subordinate the rights of the first purchaser.

In Spain v. Hamilton (Spain v. Brent) 1 Wall. 604, 17 L. ed. 619, the fund was one tenth of the amount to be received from the United States on account of bonds of the Republic of Texas, after payment of a debt owed by a bank to one Wetmore, which the bonds were pledged to secure. Wetmore was trustee to make collection. The bank gave Hamilton an order on him for the fund. Hamilton made the following assignments: February 12, 1850, to Spain, in general terms, without limit as to amount, and not identifying the fund. August 30, 1850, to Wetmore for $2,500. September 21, 1850, to Corcoran & Riggs for $30,000, which was presented to and accepted by Wetmore. April 30, 1851, to Robb, the whole fund, subject to Wetmore's claim and that of Corcoran & Riggs. Robb gave notice immediately, and later obtained judgment and made seizure of the residuary fund. Hill succeeded to the rights of Robb. The one tenth covered by the order of the bank in favor of Hamilton was left in the Treasury, subject to the assignments. May 10, 1856, Spain brought suit, claiming the fund under the document of February 12, 1850. Up to this time, neither Wetmore nor any of the other assignees had heard of Spain's claim against the fund.

In its decision, this court referred to Spain's negligence and delay. It adverted to the rule that the assignee is entitled to the remedies of the assignor, and is subject to all the equities between him and his debtor, and said (p. 624): “But in order to perfect his title against the debtor

Assignmenteffect of payment to second assignee.

If a debtor pays, or becomes bound to pay, a later assignee, he is not liable to an earlier assignee who failed to give his notice of his assignment. And if, without notice of any assignment, he pays the assignor, he cannot be held by the assignee. To safeguard against such things, it is necessary for an assignee to give the debtor notice of his assignment. But it does not follow that mere priority of notice of the later assignee, who took nothing by his assignment, will subordinate the rights of an earlier assignee. That case does not establish or apply the rule contended for by respondent.

In Laclede Bank v. Schuler, 120 U. S. 511, 30 L. ed. 704, 7 Sup. Ct. Rep. 644, it was held that a bank is not liable to a holder of a check which was not presented for payment until after the drawer had made a general assignment for the benefit of creditors, and directed the bank to hold the fund, subject to the order of the assignee. This case does not support the rule applied by the circuit court of appeals. A check in usual form does not constitute an assignment. It is an order which may be countermanded at any time before it is cashed. Fourth Street Nat. Bank v. Yardley, 165 U. S. 635, 643, 41 L. ed. 856, 861, 17 Sup. Ct. Rep. 439; Florence Min. Co. v. Brown, 124 U. S. 385, 391, 31 L. ed. 424, 427, 8 Sup. Ct. Rep. 531.

The doctrine that mere priority of notice to trustee or debtor gives priority of right to a later assignee over an earlier assignee of a chose in action is generally referred to Dearle v. Hall and Loveridge v. Cooper, 3 Russ. Ch. 1, 38 Eng. Reprint, 475, 10 Eng. Rul. Cas. 478, 27 Revised Rep. 1, decided at the same

Each

time and upon the same principle. The leading case is Dearle v. Hall. In that case, there was much more in favor of the second assignee than mere priority of notice. Brown, cestui que trust under his father's will, made three assignments of income payable to him during his life by the executors. The two earlier assignments were made to Dearle and Sherring, respectively. was for a part of the annual income. By the terms of the assignments the assignor was permitted to continue to collect, and for years he did collect, the income assigned. No notice of the earlier assignments was given to the executors. Before he purchased, Hall, the latest assignee, diligently inquired of the trustees as to Brown's title and the amount of income paid him. The trustees knew of no assignments and without any suspicion of prior encumbrance, Hall, in good faith, purchased the entire claim. He gave immediate notice of his assignment to the trustees, and received assurance that the income would be paid to him. When it became due, an instalment was paid to him. Thereafter, the earlier assignees gave notice and demanded payment under their respective assignments. The trustees withheld all payments. Suit was brought by Dearle and Sherring against Hall to establish priority of their assignments over his. In the lower court, Sir Thomas Plumer, M. R., gave judgment in favor of Hall, and it was affirmed by Lord Lyndhurst, L. C. Two grounds of the decision may be gathered from the opinions: (1) That the negligence of the prior assignees in failing to give notice to the trustees resulted in Hall being induced to purchase without knowledge of the prior assignments. (2) That notice to the trustees was necessary to perfect title,-as, "the act of giving the trustee notice is, in a certain degree, taking possession of the fund." See Ward v. Duncombe [1893] A. C. 369, 387, 62 L. J. Ch. N. S. 881, 1 Reports, 224, 69 L. T. N. S. 121, 42 Week. Rep. 59 -H. L. These cases did not decide

No

that notice by a subsequent assignee after his purchase, without any inquiry in advance of his purchase, will subordinate the title of the prior assignor to that of the later. such questions were involved. But later, in the case of Foster v. Cockerell, in the House of Lords, 3 Clark & F. 456, 6 Eng. Reprint, 1508, that question was decided in favor of the subsequent assignee, and it appears to have become the settled rule in England. However, it has been the subject of much discussion and explanation by the English courts. See Wilmot v. Pike, 5 Hare, 14, 67 Eng. Reprint, 808, 9 Jur. 839; Ward v. Duncombe, supra. It appears that in 1814, in Cooper v. Fynmore, 3 Russ. Ch. 60, 38 Eng. Reprint, 498, Sir Thomas Plumer, V. C., himself, decided that mere neglect of notice was not sufficient to postpone the first assignee, and held (p. 64): "In order to deprive him of his priority, it was necessary that there should be such laches as, in a court of equity, amounted to fraud." In 1827, Dearle v. Hall and Loveridge v. Cooper were decided. In 1833, Lord Lyndhurst, then chief baron, in Smith v. Smith, 2 Cromp. & M. 231, 149 Eng. Reprint, 745, 4 Tyrw. 52, 3 L. J. Exch. N. S. 42, in the court of exchequer, held that the second assignee, in order to obtain priority, must show that he exercised proper caution in taking the assignment, and that he had applied to the trustees to know if any previous assignment had been made, and that, unless he so applied to each of the trustees, he would not have exercised due caution, or done all that he ought to have done. Lord Herschell, in Ward v. Duncombe, supra, said (p. 380): "The language thus used by the chief baron is somewhat remarkable. It would seem, if correctly reported, to indicate the view that a second encumbrancer would only obtain priority over an earlier one if he had used due caution, and had, in fact, made such inquiry as a prudent man would of each of the trustees. This view is in direct conflict with the decision of this House two years

later in Foster v. Cockerell, in which Lord Lyndhurst himself delivered the leading opinion." Undoubtedly the first application of the rule that mere priority of notice gives priority of right was in Foster v. Cockerell, but it is always referred to Dearle v. Hall and Loveridge v. Cooper. In Ward v. Duncombe, the earlier decisions by which the rule. was established were discussed by Lord Herschell and Lord Macnaghten. The opinions leave the impression that the rule itself was not deemed to be wholly satisfactory, and that it is not very clear upon what principle it rests. Ward v. Duncombe, supra, p. 391.

Assignment

effect of priority

of notice.

There is no decision of this court which sustains the contention that, as between successive assignees of the same chose in action, mere priority of notice gives priority of right. It seems to us that the better reasons are against such a rule. By the first assignment, the rights of the assignor pass to the assignee. The creditor has a right to dispose of his own property as he chooses, and to require the debt to be paid as he directs, without the assent of the debtor. See Story, Eq. Jur. 11th ed. § 1057. Notice of the assignment to the debtor adds nothing to the right or title transferred. A subsequent assignee takes nothing by his assignment, because the assignor has nothing to give. See Judson v. Corcoran, supra, p. 614. If, after assignment, the assignor receives payment from the debtor, he is liable to the assignee. Failure of the first assignee to give notice does not devest him of any title or right, or vest any claim in a subsequent purchaser. It cannot injuriously affect an intending purchaser who makes no inquiry of the debtor concerning the assignor's title. The debtor is not bound to answer inquiries concerning the assignor's title, and there can be no assurance that an intending purchaser can ascertain the encumbrance by inquiry of the debtor having notice of the earlier assignment. Low v.