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State v. Reno Traction Co.

December 31, 1918

STATE OF NEVADA, EX REL. CITY OF RENO, A MUNICIPAL CORPORATION IN WASHOE COUNTY, NEVADA, PLAINTIFF, V. RENO TRACTION COMPANY (A CORPORATION), DEFENDANT.


Geo. B. Thatcher, Attorney-General, and L. D. Summerfield, City Attorney of Reno, for Plaintiff.

Hoyt, Gibbons, French & Springmeyer (Goodfellow, Eels, Moore & Orrick, of Counsel), for Defendant.

By the Court, McCarran, C. J.:

This is an original proceeding in quo warrantor. The defendant has filed the necessary notice, petition, and bond, and has moved this court for an order removing the cause to the United States District Court for the District of Nevada, upon the ground and for the reason that the controversy is between citizens of different states and that more than $3,000 is involved. It is admitted by the plaintiff here that there is involved more than $3,000. Objection is interposed to the removal,

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however, on the ground that the State of Nevada is party plaintiff, and therefore the controversy is not between citizens of different states.

It is the contention of defendant, as movant in this proceeding, that the action is properly one between the city of Reno, as a municipal corporation, and the defendant as a foreign corporation. The complaint in this proceeding is entitled “State of Nevada ex rel. City of Reno, a Municipal Corporation.” The proceedings were instituted in this court by the attorney-general of the State of Nevada, after having made application to this court for leave to bring action upon the relation of the city of Reno, and after having obtained orders granting leave pursuant to said applications. This action is commenced pursuant to the provisions of our civil practice act, sec. 714 (Rev. Laws, 5656, et seq.):

“A civil action may be brought in the name of the state: 1. Against a person who usurps, intrudes into, or unlawfully holds or exercises, a public office, civil or military, or a franchise, within this state, or an officer in a corporation created by the authority of this state.”

Section 5657, Revised Laws, provides:

“A like action may be brought against a corporation: 1. When it has offended against a provision of an act by or under which it was created, altered, or renewed, or any act altering or amending such acts. 2. When it has forfeited its privileges and franchises by a nonuser. 3. When it has committed or omitted an act which amounts to a surrender or a forfeiture of its corporate rights, privileges, and franchises. 4. When it has misused a franchise or privilege conferred upon it by law, or exercised a franchise or privilege not so conferred.”

Section 5658, Revised Laws, provides:

“The attorney-general, when directed by the governor, shall commence any such action,” etc.

Section 5659, Revised Laws, provides:

“Such officer [the attorney-general] may, upon his own relation, bring any such action, or he may, on the

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leave of the court, or a judge thereof, in vacation, bring the action upon the relation of another person; and, if the action be brought under subdivision one of the first section of this chapter, he may require security for costs to be given as in other cases.”

Section 5663, Revised Laws, provides:

“An action under this chapter can be brought in the supreme court of the state, or in the district court of the proper county.”

On the face of the complaint it appears that the action is commenced by the State of Nevada, on the relation of the city of Reno, a municipal corporation. After relating the corporate existence of the city of Reno, as well as the corporate existence of the defendant, the complaint proceeds as to the adoption of a city ordinance by the city of Reno, which said ordinance granted to H. E. Reid, H. J. Gosse, H. J. Darling, and S. H. Wheeler, their successors in interest, and assigns, a franchise to construct, maintain, and operate a street railroad over certain streets and avenues in the city of Reno; that thereafter the franchise thus granted to the parties named was by them sold to the Reno Traction Company, defendant in the proceedings instituted in this court; that the Reno Traction Company constructed in the city of Reno street railway tracks on certain designated streets within the corporate limits of the city of Reno; that for more than three years last past the defendant, Reno Traction Company, has wholly failed, refused, and neglected at its own expense to keep the space within and between its railway tracks and for two feet on each side thereof on certain designated streets in as good repair as the adjoining street, although frequently directed by the city council of said city of Reno so to do during the period aforesaid.

The complaint sets up, by way of exhibit, Ordinance No. 28, under which the defendant, Reno Traction Company, obtained and secured its franchise, and in violation of the provisions of which it is alleged the traction

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company has failed, refused, and neglected to keep its tracks and the space between the rails thereof in as good repair as the adjoining street. The complaint further alleges failure, refusal, and neglect on the part of the traction company to maintain its electrical equipment used in operating said street railway, so that return currents shall be carried according to the most approved method, so as to avoid, so far as possible, injury to the water pipes through property on certain designated streets; further, that for more than three years the defendant, Reno Traction Company, has failed, refused, and neglected to run cars sufficient for the transportation of all desiring passage over said railway tracks constructed under Ordinance No. 28; and that the failure, refusal, and neglect of the defendant in this respect was not due to the elements, riots, strikes, litigation, or other unavoidable causes. The complaint avers failure on the part of the traction company to comply with the city ordinance in the way of carrying lights on the front and rear of its cars during the nighttime, when the same were being operated over the lines of the company on the streets designated.

Chapter 3 of the Judicial Code of the United States, relative to removal of causes, provides, inter alia:

“Any suit of a judicial nature, at law or in equity, arising under the constitution or laws of the United States, or treaties made, or which shall be made under their authority, of which the district courts of the United States are given original jurisdiction by this title, which may now be pending or which may hereafter be brought, in any state court, may be removed by the defendant or defendants therein to the District Court of the United States for the proper district. Any other suit of a civil nature, at law or in equity, of which the district courts of the United States are given jurisdiction by this title, and which are now pending or which may hereafter be brought in any state court, may be removed into the District Court of the United States for the proper district by the defendant or defendants

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therein, being nonresidents of that state. And when in any suit mentioned in this section there shall be a controversy which is wholly between citizens of different states, and which can be fully determined as between them, then either one or more of the defendants actually interested in such controversy may remove such suit into the District Court of the United States for the proper district.” (Judicial Code of the United States, c. 3, p. 22; U. S. Comp. St. 1916, sec. 1010.)

The motion for removal in this case is sought for solely upon the ground that it is a controversy between citizens of different states, the matter in controversy exceeding, exclusive of interest and costs, the sum of $3,000. In furtherance of this motion, the movant here asserts that the city of Reno is the real party in interest as plaintiff, and, it being a citizen of the State of Nevada, defendant may properly demand removal, being a citizen of California.

Mr. Moon, in his work on the Removal of Causes, concisely states the proposition thus:

“When does the duty of the state court ‘to accept said petition and bond' arise? Clearly, if the language of the statute is given any force, it does not arise unless the suit is a removable one and petitioner is entitled to remove it; nor does it arise in any such case until the petition and bond have been made and filed in compliance with the statute. When the case is found to be a removable one, and the conditions precedent to a removal have been performed, then, and not until then, shall the state court ‘accept said petition and bond and proceed no further in such suit.'” (Moon on Removal of Causes, sec. 177.)

Mr. Justice Harlan, in speaking for the Supreme Court of the United States in the case of Crehore v. Ohio & M. R. Co., 131 U. S. 240, 9 Sup. Ct. 692, 33 L. Ed. 144, illuminated the subject by the following assertion:

“It thus appears that a case is not, in law, removed from the state court, upon the ground that it involves a controversy between citizens of different states, unless,

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at the time the application for removal is made, the record, upon its face, shows it to be one that is removable. We say, upon its face, because ‘the state court is only at liberty to inquire whether, on the face of the record, a case has been made which requires it to proceed no further,' and ‘all issues of fact made upon the petition for removal must be tried in the circuit court.' * * * If the case be not removed, the jurisdiction of the state court remains unaffected, and, under the act of Congress, the jurisdiction of the federal court could not attach until it becomes the duty of the state court to proceed no further. No such duty arises unless a case is made by the record that entitles the party to removal.”

It is a well-settled principle that a city as a municipal corporation is a citizen of the state within which it exists, within the meaning of the judicial code. (Foster, A Treatise on Federal Practice, vol. 1, p. 134; Vincent v. Lincoln County, 30 Fed. 749; Lincoln County v. Luning, 133 U. S. 529, 10 Sup. Ct. 363, 33 L. Ed. 766; Loeb v. Columbia Twp., 179 U. S. 472, 21 Sup. Ct. 174, 45 L. Ed. 280.) Another principle which we deem to be established beyond successful controversy is that a suit between an incorporated city and a citizen of another state may be removed for diversity of citizenship. (Ysleta v. Canda, 67 Fed. 6.) The proposition before us may be put thus: If the action is one instituted by the state as the real party in interest against a foreign citizen, the cause is not removable. If the action is one between the city of Reno as plaintiff and a foreign citizen, the cause is removable, and the order prayed for should be entered.

It is the contention of the movant here that inasmuch as the franchise by authority of which they operate their street railroad was granted by the municipal corporation, and inasmuch as the streets over which their street railroad is operated are properly within and under the control of the city of Reno, therefore it is the municipal corporation that is the real party in interest; hence the cause should be removed for diversity of citizenship. It

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is, as a proposition of law, eminently established that a municipal corporation is but the agency by and through which the state exercises its sovereignty in a given locality. The former is the creature of the latter and subject to its dominance and control within constitutional ...


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