Source: https://supreme.justia.com/cases/federal/us/341/6/case.html
Timestamp: 2016-07-29 02:09:56
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Matched Legal Cases: ['§ 1446', '§ 1441', '§ 1441', '§ 71', '§ 1441', '§ 1441', '§ 71', '§ 71', '§ 1441', '§ 71', '§ 71', '§ 1441', '§ 1441', '§ 1441', '§ 1441', '§ 1441', '§ 1441']

American Fire & Cas. Co. v. Finn :: 341 U.S. 6 (1951) :: Justia U.S. Supreme Court Center Log In
› American Fire & Cas. Co. v. Finn
American Fire & Cas. Co. v. Finn 341 U.S. 6 (1951)
U.S. Supreme CourtAmerican Fire & Cas. Co. v. Finn, 341 U.S. 6 (1951)American Fire & Casualty Co. v. FinnNo. 252Argued December 7, 1950Decided April 9, 1951341 U.S. 6CERTIORARI TO THE UNITED STATES COURT OF APPEALS
2. Because of the presence of a citizen of Texas on each side, the District Court would not have had original jurisdiction of this suit, either as stated in the complaint or in the posture of the case at the time of judgment. Therefore, the judgment of the District Court must be vacated. Pp. 341 U. S. 16-19. Page 341 U. S. 7
Petitioner, the American Fire and Casualty Company, a Florida corporation, and its codefendant, the Indiana Lumbermens Mutual Insurance Company, an Indiana corporation, removed, in accordance with 28 U.S.C. § 1446, a suit brought by respondent Finn in a Texas state court against the two corporations and an individual, Page 341 U. S. 8 Reiss, local agent of both corporations and a resident of Texas. The suit was for a fire loss on Texas property suffered by respondent, a resident of Texas. Respondent tried to have the case remanded before trial, but was unsuccessful. After special issues were found by the jury, judgment was entered against petitioner for the amount of insurance claimed and costs, and in favor of the other two defendants. The District Court denied the motion to vacate the judgment, and the Court of Appeals affirmed. 181 F.2d 845. The latter court concluded there were causes of action against the foreign insurance companies "separate and independent" from that stated against the resident individual. Since the causes against the companies would have been removable if sued on alone, the entire suit was removable. 28 U.S.C. § 1441(c). That ruling required consideration of the changes concerning removal made by § 1441(c), which superseded 28 U.S.C. (1946 ed.) § 71. The Court of Appeals said:
Consideration of the ruling on the motion to vacate the judgment requires a determination of whether the suit contained separate and independent causes of action under § 1441(c), and, if the conclusion is that it did not, a ruling on the effect of a judgment after a removal without right, initiated by the party against whom the judgment was ultimately rendered. As prompt, economical and sound administration of justice depends to a large degree upon definite and finally accepted principles governing important areas of litigation, such as the respective jurisdictions of federal and state courts, we granted certiorari. Page 341 U. S. 9 340 U.S. 849. See also Mayflower Industries v. Thor Corporation, 184 F.2d 537; Bentley v. Halliburton Oil Well Cementing Co., 174 F.2d 788.
One purpose of Congress in adopting the "separate and independent claim or cause of action" test for removability by § 1441(c) of the 1948 revision in lieu of the provision for removal of 28 U.S.C. (1946 ed.) § 71 was by simplification to avoid the difficulties experienced in determining the meaning of that provision. [Footnote 1] Another and important Page 341 U. S. 10 purpose was to limit removal from state courts. [Footnote 2] Section 71 allowed removal when a controversy was wholly between citizens of different states and fully determinable between them. Such a controversy was said to be "separable." The difficulties inherent in old § 71 show plainly in the majority and concurring opinions in Pullman Co. v. Jenkins, 305 U. S. 534, 305 U. S. 542. See note, 41 Harv.L.Rev. 1048. Often plaintiffs in state actions joined other state residents as defendants with out-of-state defendants so that removable controversies wholly between citizens of different states would not be pleaded. The effort frequently failed, see Pullman Co. v. Jenkins, at 305 U. S. 538, and removal was allowed. Our consideration of the meaning and effect of 28 U.S.C. § 1441(c) should be carried out in the light of the congressional intention. Cf. Pullman Co. v. Jenkins, supra, at 305 U. S. 547; Phillips v. United States, 312 U. S. 246, 312 U. S. 250.
The Congress, in the revision, carried out its purpose to abridge the right of removal. [Footnote 3] Under the former provision, Page 341 U. S. 11 28 U.S.C. (1946 ed.) § 71, separable controversies authorized removal of the suit. "Controversy" had long been associated in legal thinking with "case." It covered all disputes that might come before federal courts for adjudication. In § 71 the removable "controversy" was interpreted as any possible separate suit that a litigant might properly bring in a federal court so long as it was wholly between citizens of different states. So, before the revision, when a suit in a state court had such a separate federally cognizable controversy, the entire suit might be removed to the federal court. [Footnote 4]
A separable controversy is no longer an adequate ground for removal unless it also constitutes a separate and independent claim or cause of action. Compare Barney v. Latham, 103 U. S. 205, 103 U. S. 212, with the revised § 1441. Congress has authorized removal now under § 1441(c) only when there is a separate and independent claim or Page 341 U. S. 12 cause of action. [Footnote 5] Of course, "separate cause of action" restricts removal more than "separable controversy." In a suit covering multiple parties or issues based on a single claim, there may be only one cause of action and yet be separable controversies. [Footnote 6] The addition of the word "independent" gives emphasis to congressional intention to require more complete disassociation between the federally cognizable proceedings and those cognizable only in state courts before allowing removal.
In a suit turning on the meaning of "cause of action," this Court announced an accepted description. Baltimore Page 341 U. S. 13 S.S. Co. v. Phillips, 274 U. S. 316. [Footnote 10] This Court said, 274 U.S. at 274 U. S. 321:
See Magnolia Petroleum Co. v. Hunt, 320 U. S. 430, 320 U. S. 443. [Footnote 11] Considering the previous history of "separable controversy," the broad meaning of "cause of action," and the Page 341 U. S. 14 congressional purpose in the revision resulting in 28 U.S.C. § 1441(c), we conclude that, where there is a single wrong to plaintiff for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c). [Footnote 12]
In making this determination, we look to the plaintiff's pleading, which controls. Pullman Co. v. Jenkins, 305 U. S. 534, 305 U. S. 538. [Footnote 13] The single wrong for which relief is sought is the failure to pay compensation for the loss on the property. Liability lay among three parties, but it was uncertain which one was responsible. Therefore, all were joined as defendants in one petition. First, facts were stated that made the petitioner, American Fire and Casualty Company, liable. It was alleged that the company, through its agent Reiss, insured the property destroyed for the amount claimed, that Reiss gave plaintiff credit for the premium, controlled her insurance, agreed to keep the property insured at all times. She further Page 341 U. S. 15 alleged that the Company issued the policy, but Reiss retained the document in his possession and refused to deliver it after the fire. Then followed a prayer for judgment against the Company.
"That such acts and conduct on the part of said Joe Reiss as agent for the said two insurance companies, renders said Joe Reiss, agent, the Joe Reiss Insurance Agency, and the American Fire and Casualty Insurance Company of Orlando, Florida, and the Indiana Lumbermens Mutual Insurance Company of Indianapolis, Indiana, jointly and severally Page 341 U. S. 16 liable for the full amount of the damages that plaintiff has suffered by reason of said fire in the amount of Five Thousand Dollars."
There are cases which uphold judgments in the district courts even though there was no right to removal. [Footnote 14] In those cases, the federal trial court would have had original jurisdiction of the controversy had it been brought in the federal court in the posture it had at the time of the actual trial of the cause or of the entry of the judgment. That is, if the litigation had been initiated in the federal court on the issues and between the parties that comprised the case at the time of trial or judgment, the federal court would have had cognizance of the case. This circumstance Page 341 U. S. 17 was relied upon as the foundation of the holdings. [Footnote 15] The defendant who had removed the action was held to be estopped from protesting that there was no right to removal. Since the federal court could have had jurisdiction originally, the estoppel did not endow it with a jurisdiction it could not possess.
The jurisdiction of the federal courts is carefully guarded against expansion by judicial interpretation or by Page 341 U. S. 18 prior action or consent of the parties. [Footnote 17] To permit a federal trial court to enter a judgment in a case removed without right from a state court where the federal court could not have original jurisdiction of the suit even in the posture it had at the time of judgment, would, by the act of the parties, work a wrongful extension of federal jurisdiction and give district courts power the Congress has denied them.
The judgment of the Court of Appeals must be reversed, and the cause remanded to the District Court with directions to vacate the judgment entered and, if no further steps are taken by any party to affect its jurisdiction, [Footnote 18] Page 341 U. S. 19 to remand the case to the District Court of Harris County, Texas, with costs against petitioner. Tennessee v. Union & Planters Bank, 152 U. S. 454, 152 U. S. 464.
E.g., Tolbert v. Jackson, 99 F.2d 513, 514 (a valuable case); Des Moines Elevator & Grain Co. v. Underwriters Grain Assn., 63 F.2d 103; Nichols v. Chesapeake & Ohio R. Co., 195 F. 913.
Baggs v. Martin, 179 U. S. 206; Toledo v. Perenchio, 205 F. 472; Handley-Mack v. Godchaux, 2 F.2d 435; Bailey v. Texas Co., 47 F.2d 153.
Also see, e.g., Wabash R. Co. v. Barbour, 73 F. 513, 516; Capron v. Van Noorden, 2 Cranch 126.
Mere irregularity in the removal may be waived where the suit might originally have been brought in the Federal District Court. Baggs v. Martin, 179 U. S. 206. [Footnote 2/1] That was a suit against a receiver which could have been instituted in the federal court. It was removed there by the receiver and judgment rendered against him. The court did not stop to inquire whether there had been a compliance with the removal provisions, holding that, under those circumstances, it did not lie in the mouth of the receiver to deny the jurisdiction he had sought. And see Toledo, St.L. & W. R. Co. v. Perenchio, 205 F. 472; Handley-Mack Co. v. Godchaux Sugar Co., 2 F.2d 435, 437; Bailey v. Texas Co., 47 F.2d 153, 155.
The suit against petitioner could have been brought originally in the Federal District Court, since there was diversity of citizenship and the claim under the fire insurance policy was over $3,000. The requirements of diversity of citizenship and jurisdictional amount may not, Page 341 U. S. 20 of course, be waived. But a different provision of the statute is involved here. It is § 1441(c) of the Judicial Code, which reads:
But the judgment sought to be reviewed here was rendered by the District Court only against petitioner, who could have been sued there originally [Footnote 2/2] and who invoked the jurisdiction of the District Court. As the court observed in the closely analogous case of Bailey v. Texas Co., supra, 47 F.2d at 155, "the resulting situation is equivalent to initiating an action in the District Court in which the defendant appears." [Footnote 2/3] I think it is abusive of the interests of justice when the challenge now made is raised Page 341 U. S. 21 to the dignity of a jurisdictional question. Any requirement of § 1441(c) that was not met in this case rose to no level higher than an irregularity, so far as petitioner is concerned. Both Reiss and the other nonresident defendant have been dismissed from the case. The only judgment before the Court is one which satisfies the requirements of original jurisdiction. Petitioner -- the one who invoked federal jurisdiction and as a result suffered the consequences of this judgment -- should not now be heard to complain. Baggs v. Martin, supra, should govern this case.
We have here no joint liability between a nonresident defendant and a resident defendant, as was the situation in Chicago, B. & Q. R. Co. v. Willard, 220 U. S. 413, 220 U. S. 418. And see Alabama Great Southern R. Co. v. Thompson, 200 U. S. 206; Rupp v. Wheeling & L.E. R. Co., 121 F. 825. The remedy sought against Reiss was alternative to the remedy sought against petitioner.