Source: https://supreme.justia.com/cases/federal/us/329/482/
Timestamp: 2019-04-22 20:21:50+00:00

Document:
"If a party dies and the claim is not thereby extinguished, the court within 2 years after the death may order substitution of the proper parties. If substitution is not so made, the action shall be dismissed as to the deceased party."
Held: more than two years after the deaths of defendants, actions may not be revived and their representatives substituted, and the actions should be dismissed -- even though the failure to act within the specified period was the result of "excusable neglect" within the meaning of Rule 6(b). Pp. 329 U. S. 484-486.
The District Court denied motions to revive certain actions against certain parties and substitute their legal representatives more than two years after the deaths of the original parties, and dismissed the actions under Rule 25(a) of the Federal Rules of Civil Procedure. 1 F.R.D. 589. The Circuit Court of Appeals affirmed. 153 F.2d 685. Affirmed, p. 329 U. S. 486.
"If a party dies, and the claim is not thereby extinguished, the court within 2 years after the death may order substitution of the proper parties. If substitution is not so made, the action shall be dismissed as to the deceased party."
"When, by these rules or by a notice given thereunder or by order of court, an act is required or allowed to be done at or within a specified time, the court, for cause shown, may, at any time in its discretion . . . , (2) upon motion, permit the act to be done after the expiration of the specified period where the failure to act was the result of excusable neglect; but it may not enlarge the period for taking any action under Rule 59, except as stated in subdivision (c) thereof, or the period for taking an appeal as provided by law."
It is said that since, by Rule 25(a), substitution may be made within two years after the death of a party, substitution is, within the meaning of Rule 6(b), an act "allowed" to be done "within a specified time" which the court may on a showing of "excusable neglect" permit to be done after the two-year period. That argument is reinforced by reliance on the provision in Rule 6(b) which grants but two exceptions to the power of enlargement of time. Since Rule 25(a) is not included in the exceptions, it is argued that the time allowed by that rule may be enlarged under Rule 6(b). And it is pointed out that the facts of the present cases establish that the failure of the receiver to act within the two-year period was the result of "excusable neglect," [Footnote 3] thus giving the District Court discretion to allow the substitution under Rule 6(b).
We agree, however, with the Circuit Court of Appeals. Rule 25(a) is based in part on 42 Stat. 352, which limited the power of substitution to two years from the death of a party. [Footnote 4] And even within that two-year period, substitution could not be made unless the executor or administrator was served "before final settlement and distribution of the estate." That statute, like other statutes of limitations, was a statute of repose. It was designed to keep short the time within which actions might be revived, so that the closing and distribution of estates might not be interminably delayed. [Footnote 5] That policy is reflected in Rule 25(a). Even within the two-year period, substitution is not a matter of right; the court "may" order substitution, but it is under no duty to do so. Under the Rule, as under the statute, the settlement and distribution of the estate might be so far advanced as to warrant a denial of the motion for substitution within the two-year period. In contrast to the discretion of the court to order substitution within the two-year period is the provisions of Rule 25(a) that, if substitution is not made within that time, the action "shall be dismissed" as to the deceased. The word "shall" is ordinarily "the language of command." Escoe v. Zerbst, 295 U. S. 490, 295 U. S. 493. And when the same Rule uses both "may" and "shall," the normal inference is that each is used in its usual sense -- the one act being permissive, the other mandatory. See United States v. Thoman, 156 U. S. 353, 156 U. S. 360.
his failure to act within the prescribed time limits. There would be more force in petitioner's argument if Rule 25(a) had, without more, set a two-year period within which substitution might be made. But Rule 25(a) does not stop there. It directs the court to dismiss the action if substitution has not been made within that time. That is action required of the court, not of a party. And Rule 6(b) should not be construed to override an express direction of action to be taken by the court. See Wallace v. United States, 142 F.2d 240, 244.
Reasons of policy support this construction. It is, to be sure, stipulated that, in five of the present cases, the estate is "still open and undistributed;" in one, it is "still open;" in another, it has been distributed. At least where an estate is ready to be closed, or where there has already been a distribution, revivor may work unfairness and be disruptive of orderly and expeditious administration of estates. But it is not enough to say that, if Rule 6(b) and Rule 25(a) are construed to permit substitution after the two-year period, the court need not allow it where unfairness or prejudice would result. For the normal policy of a statute of limitations is to close the door -- finally, not qualifiedly or conditionally. The federal law embodied in Rule 25(a) has a direct impact on the probate of estates in the state courts. It should not be construed to be more disruptive of prompt and orderly probate administration in those courts than its language makes necessary.
THE CHIEF JUSTICE and MR. JUSTICE REED took no part in the consideration or decision of this case.
Petitioner brought actions against approximately 5,000 shareholders scattered throughout the United States and some in foreign countries. During the progress of the litigation, some changed their residences. And it was stipulated that petitioner, with a limited staff, could not during this time keep up with the changes of residence or deaths of defendants.
Cf. Ainsworth v. Gill Glass & Fixture Co., 104 F.2d 83, with Burke v. Canfield, 72 App.D.C. 127, 111 F.2d 526, and Mutual Benefit Health & Accident Assn. v. Snyder, 109 F.2d 469.
But see Baltimore & Ohio R. Co. v. Joy, 173 U. S. 226; Winslow v. Domestic Engineering Co., 20 F.Supp. 578.
And see H.Rep. No. 429, 67th Cong., 1st Sess., p. 2.
may order substitution of the proper parties. If substitution is not so made, the action shall be dismissed as to the deceased party. . . ."
I find no basis for thinking that the time limitation prescribed by the first sentence of Rule 25(a) was intended to be treated differently than any other prescribed by the Rules, except those concerning which they expressly forbid enlargement. The committee which drafted the Rules was highly competent, spent years in exacting preparation, and was thoroughly cognizant of what it intended to propose concerning time limitations. Meticulous attention was given to them. By count, the index shows 134 references to provisions relating to time for taking various actions.
The committee knew their volume and variety. It was conscious also of the many difficulties and injustices which had arisen by virtue of rigid time limitations, whether laid by statute, rule of court, or judicial decision. [Footnote 2/3] The deliberately chosen policy was to do away with those rigidities and to substitute sound discretionary limitations, except as otherwise expressly directed. [Footnote 2/4] This policy was stated clearly, fully, and I think accurately in the Rules themselves by the addition of Rule 6, of which subdivision (b) is expressly applicable here.
act was the result of excusable neglect. [Footnote 2/5]"
This was applicable in any situation "when, by these rules or by a notice given thereunder or by order of court, an act is required or allowed to be done at or within a specified period," with two and only two exceptions. These were to forbid enlarging the time for taking any action under Rule 59, except as stated in subdivision (c) thereof, and the period for taking appeal. Rule 73. The forbidden enlargements under Rule 59 involve matters concerning the granting of new trials.
Those limitations were applicable here, in my opinion, and admittedly they were satisfied.
the committee's action and the reasons given for it confirm, rather than disavow, the section's originally intended meaning.
In my opinion, the judgment should be reversed, and the cause remanded to the District Court for the exercise of the discretion given by the Rules.
The Notes of the Advisory Committee on the original Federal Rules state that Rule 25(a) "is based upon Equity Rule 45 (Death of Party -- Revivor) and U.S.C. Title 28, § 778 (Death of parties; substitution of executor or administrator)." Prior to 1921, what is now 28 U.S.C. § 778 did not apply to suits in equity. Equity Rule 45, with its provision that a motion for substitution might be made within "a reasonable time," was governing. But, by 42 Stat. 352, it was provided that the revival of equity suits should be by scire facias, and a two-year statute of limitations was made applicable. See 28 U.S.C.A. (1928) § 774 to End, p. 99, "Compiler's note."
However, in general, the Rules were intended to supersede, rather than incorporate, previously existing statutory or other provisions where the wording was different, and the committee's statement that Rule 25(a) "is based upon Equity Rule 45" as well as 28 U.S.C. § 778, together with the different wording of the rule and that section, may indicate that the committee either considered Equity Rule 45 still effective, for which there seems to have been some judicial authority, see Electropure Sales Corp. v. Anglim, 21 F.Supp. 451, 452; Gaskins v. Bonfils, 4 F.Supp. 547, 550-551, or intended to adopt it in substance as the basis and effect of Rule 25(a). Had the purpose been to incorporate 28 U.S.C. § 778, there would have been no necessity for changing the wording, except in relation to the scire facias procedure. See note 10 infra and text.
See text at note 6, infra.
See Rules 6(b), (c) and 60, all of which have received wide comment. See also notes 4 and 10.
See Proceedings of the Institute on the Federal Rules of Civil Procedure at Washington, and of the Symposium at New York City (1939) 83-84; Proceedings of the Institute on the Federal Rules of Civil Procedure at Cleveland (1938) 210-211; Hearings before the Committee on the Judiciary of the House of Representatives with Regard to the Rules of Civil Procedure for the District Courts of the United States, 75th Cong., 3d Sess., 60.
"Rule 6(b) ENLARGEMENT. When by these rules or by a notice given thereunder or by order of court an act is required or allowed to be done at or within a specified time, the court for cause shown may at any time in its discretion (1) with or without motion or notice, order the period enlarged if application therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) upon motion permit the act to be done after the expiration of the specified period where the failure to act was the result of excusable neglect; but it may not enlarge the period for taking any action under Rule 59, except as stated in subdivision (c) thereof, or the period for taking an appeal as provided by law."
See note 5. If Rule 25(a) constitutes in effect a statute of limitations, as the Court holds, it may be inquired whether, even upon proper application made within the two-year period under Rule 6(b)(1), see note 5, the Court could enlarge the time by extension, as seems clearly contemplated by the clause "or as extended by previous order."
See note 5. The rules are replete with provisions for action to be taken within specified periods by the courts upon their own initiative, as well as upon motion by the parties. Rule 6(b) is itself an illustration. Certainly it cannot be said, in view of the rule's comprehensive language, that it applies only to actions to be taken by the parties and has no application to the large number of instances in which limitations of time are imposed for action to be taken by the courts. Such a construction would bring back many of the evils the Rules were designed to avoid. It would defeat perhaps as many of the literal and intended applications of Rule 6(b) as it would preserve.
"The period of time provided for the doing of any act or the taking of any proceeding is not affected or limited by the expiration of a term of court. The expiration of a term of court in no way affects the power of a court to do any act or take any proceeding in any civil action which has been pending before it."
The Advisory Committee, in its Report of Proposed Amendments to the Rules of Civil Procedure (1946) 2-6, points out that District Courts and Circuit Courts of Appeals in some cases have refused to apply Rule 6(b) to other Rules as well as Rule 25(a), see, e.g., Wallace v. United States, 142 F.2d 240; Reed v. South Atlantic Steamship Co., 2 F.R.D. 475; Mutual Benefit Health & Accident Assn. v. Snyder, 109 F.2d 469; cf. Burke v. Canfield, 72 App.D.C. 127, 111 F.2d 526, though other cases have ruled the other way. See, e.g., Schram v. O'Connor, 2 F.R.D.192; Ainsworth v. Gill Glass & Fixture Co., 104 F.2d 83.
But see note 10 and text.
Report of Proposed Amendments to Rules of Civil Procedure for the District Courts of the United States (1946) 31-32.
"If a party dies and the claim is not thereby extinguished, the court upon application made within 2 years after the death shall order substitution of the proper parties. If the application is made after 2 years, the court may order substitution, but only upon the showing of a reasonable excuse for failure to apply within that period. If substitution is not so made, the action shall be dismissed as to the deceased party. . . ."
"This amendment guards against possible injustice in a case where there is some reasonable excuse for not applying for substitution within the 2-year period. It has been held that the court has no power to permit substitution after the expiration of the 2-year limit, irrespective of the circumstances. Winkelman v. General Motors Corp., 30 F.Supp. 112; Anderson v. Brady, 1 F.R.D. 589; Photometric Products Corp. v. Redtke, 5 F.R.D. 394; Anderson v. Yungkau, 153 F.2d 685, cert. granted, 328 U.S. 829."
"In a number of cases, the effect of Rule 6(b) on the time limitations of these rules has been considered. Certainly the rule is susceptible of the interpretation that the court is given the power in its discretion to relieve a party from failure to act within the times specified in any of these other rules, with only the exceptions stated in Rule 6(b), and in some cases the rule has been so construed."
"With regard to Rule 25(a) for substitution, it was held in Anderson v. Brady, and in Anderson v. Yungkau, 153 F.2d 685, cert. granted, 328 U.S. 829, that, under Rule 6(b), the court had no authority to allow substitution of parties after the expiration of the limit fixed in Rule 25(a)."
"individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares."
"individually responsible for all contracts, debts, and engagements of such association, each to the amount of his stock therein at the par value thereof in addition to the amount invested in such stock."
"It is sufficient at this time to state that the liability of the shareholders of Banco would be measured by the number of shares of stock of the Bank, whether several or only fractional, represented by each share of stock of Banco, and that the assessment liability of each share of stock of Banco would be a like proportion of the assessment liability of the shares of the Bank represented by the former."
321 U.S. 349, 321 U. S. 368-369. And in Frank v. Giesy, 117 F.2d 122, 125, it was held that the omission in § 64 of the pro rata limitation of § 63 was intended to strengthen the position of creditors, making each shareholder's liability several and fully enforceable, though others go free. In First Nat. Bank v. First Nat. Bank, supra, the shareholder made to pay was held entitled to enforce contribution against others not proceeded against. The shareholder's liability is secondary only, McClaine v. Rankin, 197 U. S. 154, 197 U. S. 161; First National Bank v. Nichols, 294 Mass. 173, 181, 200 N.E. 869, and, though one is not relieved either wholly or in part because others are not compelled to pay, neither is any required to pay more proportionately than is needed from the fund actually collected to discharge the bank's obligations. Bank of Ware Shoals v. Martin, 17 F.Supp. 61, 63. The liability is not a debt, but is one merely assuring payment of the bank's obligations. McClaine v. Rankin, supra.
The Court's decision, therefore, in effect, cuts off any possibility shareholders forced to pay may have for reduction of the amounts of their payments either through the receiver's enforcement of the liability directly against decedent shareholders' estates or by seeking contribution from them after the two-year period. And this is done regardless of the estate's comparative ability to pay, of whether it is in an early or a late stage of administration, and of when the death occurs. Thus, in these cases, only one estate has been closed and one other is nearing that stage; but, so far as appears, the other five remain open and undistributed.

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