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At Law. Action by M. Hohenberg & Co. against Mobile Liners, Incorporated. On motion by plaintiff to remove to state court. Denied.

Stevens, McCorvey & McLeod, of Mobile, Aila., for plaintiff.
Palmer Pillans, of Mobile, Ala., for defendant.

ERVIN, District Judge. This cause comes on to be heard on the motion of plaintiff to remand the cause to the state court. The question depends on the proper construction of the statute as codified in the Judicial Code.

The District Courts are, by section 24 of the Judicial Code (Comp. St. 1916, § 991), given jurisdiction of all suits of a civil nature at common law or in equity where the matter in controversy exceeds $3,000 and is between citizens of different states. Section 51 (Comp. St. 1916, § 1033) provides that no civil suit shall be brought in any District Court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that the action is between citizens of different states, suit shall be brought only in the District of the residence of the plaintiff or defendant. (Italics mine.)

It will be observed that the jurisdiction to determine a controversy between citizens of different states, is conferred by section 24; while section 51 fixes the venue in which the plaintiff is authorized to institute suit by original process or proceeding. Section 51 prohibits only the institution of original suits, and the words characterizing the beginning of such suits “by any original process or proceeding" certainly intimates that suits may be gotten into this court by some other process.

The statement had already been made that no civil suit shall be brought in any District Court against any person in any other district than that whereof he is an inhabitant. Now, the words "by any original process or proceeding" were absolutely unnecessary to add anything to the previous statement that no civil suit shall be brought in any district other than that of the residence of the defendant. The inclusion of these words "by any original process or proceeding" can,

mind, have only the effect of qualifying or limiting the statement as to bringing of the suit in a district other than that whereof the defendant is an inhabitant, by intimating that the suit might be gotten into such court by some process other than that of the original process or proceeding.

The statement that where the jurisdiction of the court is founded on the fact that the action is between citizens of different states that suit may be brought either in the district of the residence of the plaintiff or the defendant carries to my mind the same statement, namely, that the suit shall not be originally instituted in any district other than that of the residence of the plaintiff or defendant. If, however, the court has jurisdiction of the cause of action because it is between citizens of different states, and this cause of action can be removed into the federal court, under any known provision of the law, such removal would not be prohibited by the language of section 51.

Section 28 provides: “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 the state court, may be removed into the District Court of the United States, for the proper district by the defendant or defendants therein, being nonresidents of that state.”

It will be noticed that the provision as to removal is not on its face in any manner limited to removal to a district in which the suit might originally have been brought. It gives the right to remove such suit of which the District Courts of the United States are given jurisdiction, and this is the only limitation placed by the removal statute upon the right to remove. The only condition is that the defendant or defendants shall be nonresidents of the state in which the suit is brought.

Now, it seems to me that where the federal court is given jurisdiction of a suit which is instituted in the state court, and petition for removal is filed by a nonresident of such state, and the fact of nonresidence and jurisdiction being shown by the petition, this is all that is required by the removal statute to transfer such cause from the state to the federal court.

A careful reading of the provisions above quoted leads me to conclude:

First. That the jurisdiction is given to the District Court by section 24 where the controversy is between citizens of different states.

Second. That the plaintiff has the right in the first instance, when he and defendant are citizens of different states, to institute it by any original process or proceeding in the District Court of the United States in the district of the residence of either the plaintiff or the defendant.

Third. When the plaintiff has exercised his election to sue in the court of a state of which defendant is a nonresident, that such defendant is given the right under section 28 to remove such suit to the District Court of the United States for such district.

These provisions have never denied to the plaintiff in the first instance the right to sue in the state court, but they ave given him the right to elect to sue either in the state court or in the federal court, but, while leaving to the plaintiff such election in the first instance to sue in the state court, it then gives to defendant, being a nonresident of such state, the right to remove such suit to the federal court. It then follows that, if such right is given to the defendant, plaintiff cannot complain of its exercise by defendant any more than defendant could have complained of plaintiff instituting such suit in the District Court in the first instance. If this is a proper construction of the act as written, I do not see where the court is concerned with the question as to whether Congress intended to constrict or to enlarge the jurisdiction of the court.

Conceding that the purpose of the act of 1888 was to limit the jurisdiction of the United States courts by increasing the amount necessary to give such courts jurisdiction, and was also to limit the right of removal which existed under the act of 1875 so as to give such right only to the defendant, being a nonresident of the state, still the right

given to such defendant by the act of 1888 must be determined by the language used in the act of 1888, where such language is clear and positive. The purpose of this act cannot be controlled or modified beyond the purpose clearly expressed therein, by the general purpose of the act to limit the jurisdiction. If the act of 1888 therefore gives to the defendant, being a nonresident of the state, the right to remove a suit to the federal court of the district in which the suit is brought in the state court, then no general purpose or limitation should control this expressed right so given to the defendant.

Under the act of 1875 either party had the right to remove, while under the act of 1888 the right of removal is given only to the defendant, with the added condition that he is a nonresident of the state; still, when this condition exists, and the jurisdiction of the court exists, the right of removal so given to the defendant by this act cannot be limited any further than the express terms of the act go.

The fact that the act of 1888 takes away from the plaintiff, who has brought his suit in the state court, the right to remove such suit to the federal court, certainly cannot affect the right given by the act to the defendant. Certainly the language of section 28, giving the right of removal in the following words:

"Any other suit, of a civil nature, at law or in equity, of which the District Court 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 therein, being nonresidents of that state" -is clear and unequivocal. It gives the right of removal absolutely to defendant when the named condition exists, and gives no veto on such right to plaintiff.

Plaintiff having been given by the provisions of section 51, his election to sue in the state or federal court, the defendant by this language is given the absolute right of removal, and there is not one word or intimation anywhere in the act that, where the proper jurisdiction exists in the federal court, and the proper conditions exist for the invocation by defendant of this jurisdiction, such exercise by defendant of his right so given is to be controlled or negatived in any manner by the plaintiff. If plaintiff and defendant are residents of different states, and plaintiff brings his suit in the District Court of a third state, defendant could appear and waive the objection or could object on the ground of venue, and the court would on this ground dismiss the suit, whether plaintiff objected or not. If plaintiff brings suit in a state court in his district, defendant, being a nonresident of such state, can remove such suit because of section 28, whether plaintiff objects or does not object. On what ground can be object? Must he not point to some provision of the original act, or the codification of it, giving him the right to object, and if there be no such provision, on what can he base an objection? If it had been intended by the provisions of this act to allow the plaintiff to negative the effort on the part of defendant to remove the suit, certainly some word or some intimation would have been put in the act to show this right on the part of the plaintiff. The fact that we find no word or intimation anywhere in the act giv

ing the plaintiff the right to veto any effort on the part of defendant to remove the suit is conclusive, to my mind, that Congress did not intend to give plaintiff any such right. To deny to defendant the right so given to remove the suit is to deny to him a right clearly and expressly given in unequivocal language, and if the courts can deny him this right, then they can deny him any other right which may be given him by Congress.

Construing the provisions of the act as a whole, and giving them what seems to me to be the clear intent of Congress, I find that jurisdiction is given to the federal courts, where there is diversity of citizenship; that on this state of facts plaintiff is given in the first instance the election to sue either in the district of his residence or in the district of the residence of the defendant. If plaintiff elects to sue in the district of his own residence, defendant, being a nonresident, has the absolute right to remove the suit to the federal court of such district.

The provisions of section 51 limiting the bringing of the suit in the first instance are limitations to bind the plaintiff, and do not bind the defendant. The provisions of section 51 expressly so state, and do not in any manner undertake to regulate or control or limit the right given by section 28 to defendant. If plaintiff, being a resident of one state, and defendant of another, bring his suit in a federal court of a third state, defendant can, by appearing generally, waive the objection as to venue, and such court has jurisdiction to try such suit. If therefore, plaintiff brings his suit in a state court, defendant is given by section 28 the right to remove it to this same court, and it has just as much jurisdiction to try such case as if plaintiff had originally brought it there.

I therefore conclude that the motion to remand should be denied.

In re BURG.
(District Court, N. D. Texas, Dallas Division. August 13, 1917.)

No. 1345.

1. BANKRUPTCY Em77-FILING PETITION-NUMBER OF CREDITORS.

Relative to right, under Bankr, Act July 1, 1898, c. 541, 30 Stat. 544, of a single creditor for $500 to file petition to have the debtor adjudged bankrupt, permissible if there be less than 12 creditors, holders of small claims for household supplies, payable monthly, will be disregarded, under

the maxim of de minimis. 2. FRAUD 59(1)-FRAUD OF PRINCIPAL MEASURE OF DAMAGES.

The only complaint of one employed to sell as agent on commission a particular machine being that it did not come up to the representations made in the literature sent out by the employer, his measure of damages is not that for breach of contract, but that for deceit, which is the loss

sustained, and does not include the profits of which he has been deprived. 3. BANKRUPTCY Cm91(1)→SOLVENCY-BURDEN OF PROOF.

On contest of a petition in involuntary bankruptcy based on fraudulent concealment of property, the debtor has, under Bankr. Act, § 3, subd. O (Comp. St. 1916, § 9587), the burden of showing his solvency. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

4. BANKRUPTCY Ow54-SOLVENCY-ASSETS-CONCEALED PROPERTY.

Funds which the alleged bankrupt has concealed cannot be included in

his assets in determining his solvency. 5. BANKRUPTCY m56%ACT OF BANKRUPTCY-"CONCEALMENT" OF PROPERTY.

It was a concealment of his property, constituting an act of bankruptcy, for the debtor, on demand by a creditor to know what he had done with money, to reply that he had it in a safe place, and that it was available on a settlement, but that he had offsets amounting to more than the creditor's claim.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Concealment.]

In Bankruptcy. In the matter of C. N. Burg, alleged bankrupt. Bankruptcy adjudged.

Etheridge, McCormick & Bromberg, of Dallas, Tex., for petitioning creditors.

Crane & Crane, of Dallas, Tex., for bankrupt.

JACK, District Judge. The Waterloo Gasoline Engine Company, alleging that it was a creditor of Burg in an amount in excess of $500, and that he had less than 12 creditors, filed petition praying his adjudication as a bankrupt.

Defendant filed answer in which he excepted to the plaintiff's petition, on the ground that he had more than 12 creditors, and, further answering, denied that he was bankrupt, denied that he had committed any act of bankruptcy, and specially denied that he was indebted to the petitioning creditor, against whom he pleaded a claim in offset.

[1] The list filed by defendant showing his creditors at the date of the filing of the petition discloses 24, not including the plaintiff. Only 3 of them were for more than $100, the highest being for $252.56, and 12 of them were for sums under $5. These small claims were current accounts for groceries, drugs, dry goods, milk, gas and oil, telegrams, telephone bills, water, light and gas bills, etc., such as are contracted and paid for from month to month. Such creditors are practically secured, as their bills have to be paid from month to month before further necessities can be obtained. The bankruptcy law is never invoked by any such small creditors, who themselves have adequate remedy for the collection of their accounts by cutting off further supplies. As to these accounts, I think the maxim, “De minimis non curat lex," applies. Such was the holding of Judge Treber in Re Blount (D. C.) 142 Fed. 265. As was well said in that case:

“If the contention of the respondent is to be sustained, the involuntary feature of the Bankruptcy Act would be a dead letter; for any insolvent who desired to prefer some of his creditors, leaving out one or two, could always manage to have as many as 20 creditors by purchasing for his personal use and that of his family small things amounting to sums ranging, as in the case at bar, from 10 cents to $2, and having them charged. By paying them the succeeding month, after he had made some small purchases, to be charged again, it would always leave a number of creditors ready to be used whenever proceedings of this kind are instituted against him. It is hardly reasonable to suppose that creditors of that kind, who feel secure in having their bills promptly paid, would want to incur the risk of losing a good customer in order to join a bona fide creditor to institute proceedings in bankruptcy. All laws

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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