Brainerd, Shaler & Hall Quarry Co. v. Brice

Background

A Connecticut corporation called the Quarry Company sued in federal court to collect $20,000 from the estate of Henry Van Schaick and from the American Surety Company. The money claim grew out of a court-ordered bond that Henry gave to secure remainder interests in real estate. A New York resident, Eugene Van Schaick, had assigned $20,000 of his remainder interest to the Quarry Company before he died. The suit claimed the bond should have paid that amount after Henry died and the fund was lost.

Reasoning

The Court considered whether the federal court could hear this case when the plaintiff’s right came from an assignment by a New York citizen. The Court found the suit was really an action on the bond — a chose in action — that Eugene (a New York citizen) could not have brought in federal court. Under the statute quoted in the record, a federal court cannot hear suits by assignees to recover such claims if the original owner could not have sued there. Because the Quarry Company stands in Eugene’s shoes, the federal court lacked power to decide the case.

Real world impact

The ruling means companies or people who buy or receive contract claims from a same-state owner cannot get into federal court simply by stepping into that owner’s place. Claims on bonds or similar contract rights that originated with a local citizen must be pursued where the law allows — often in state courts. The District Court’s dismissal was therefore affirmed.