Court Opinion

ID: 9443907
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:33:47.468619+00
Date Added: 2024-06-11T17:29:38.638182
License: Public Domain

STRUM, Circuit Judge (dissenting).
With deference to the views of my colleagues, I think the judgment appealed from should be affirmed, not reversed.
When this case was heretofore before the Supreme Court, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702, 703, that court held that federal jurisdiction was lacking throughout the first trial because there was a citizen of Texas on both sides of the controversy, and that the cause was not removable under 28 U.S.C.A. § 1441 (c), for which reasons it reversed the first judgment. The Supreme Court expressly left open for the “consideration and decision of the District Court” the question whether a new judgment could be entered on the original verdict without a new trial. See note 18, 341 U.S. text 19, 71 S.Ct. text 542, 95 L.Ed. text 711.
The district court considered that question and held that since the district court was without jurisdiction throughout the first trial, and that proceeding therefore a nullity, there should be a trial de novo between the parties as they stood after the Texas citizen, Reiss, and Lumbermen’s Insurance Company were dismissed as defendants. This change in the parties materially changed the cause of action upon which plaintiff then sued.1
In granting a trial de novo, the district judge is well supported by both reason and authority. In Dollar S. S. Lines v. Merz, 9 Cir., 68 F.2d 594, 597, cited with approval in the majority opinion, a similar situation was presented. That court *118said: “While the writer of this opinion * * * would hold that the District Court may in its discretion enter such judgment (on the original verdict) or grant a new trial, the majority of the court are of the opinion that a new trial must be granted, inasmuch as the District Court completely lacked jurisdiction to hold the former trial.” (Italics supplied.) The district judge here granted a new trial for precisely the same reason. Yet the majority, while citing the Dollar case with approval, reverses the district judge for so doing. To that I can not assent. In my opinion, the district judge neither erred nor abused his discretion, but acted soundly and justly in ordering a new trial. The parties by the amendment were commencing virtually a new suit between only two of the former parties. The district judge thought that these parties should have a trial de novo on this new controversy, and upon the altered issues, which I think was a sound view of the matter. Nothing could be more logical or just.
In my opinion, the other eases cited by the majority do not sustain, they oppose, the majority position. In Atchison, T. & S. F. Ry. Co. v. Francom, 9 Cir., 118 F.2d 712, a case presenting this same situation was expressly reversed for a new trial.
The case of Interstate Refineries v. Barry, 8 Cir., 7 F.2d 548, merely holds that a jurisdictional amendment made during the course of a trial relates back to the beginning of the suit. That case is not authority for the mandatory entry of judgment on a verdict rendered prior to the amendment, as here ordered by the majority.
The majority also cites to support its position, Levering & Garrigues Co. v. Morrin, 2 Cir., 61 F.2d 115, 121. That case holds that it was for the district court to determine whether, in these circumstances, a decree should be entered on the record already made, or a new trial granted. That case is not authority for mandatorily ordering the district court to enter judgment on a previous verdict returned when the court was without jurisdiction. In Alderman v. Elgin, J. & E. Ry. Co., 7 Cir., 125 F.2d 971, cited by the majority, the court stated that it agreed with the writer of the opinion in Dollar S. S. Lines v. Merz, 9 Cir., 68 F. 2d 594, 597. As already stated, the-writer of that opinion said that he “would hold that the District Court may in its discretion enter such judgment or grant a new trial”. The majority also-relies on International, etc., Union v. Donnelly Garment Co., 8 Cir., 121 F.2d 561. That case also left it to the discretion of the district court to determine whether a decree should be rendered on the existing record, or a trial de novo• awarded, and upon remand the district, court awarded a new trial, just as did the district judge here. See 47 F.Supp. 65.
I quite agree to the proposition that a. jurisdictional amendment may be allowed with retroactive effect.2 I also agree-that where no prejudice will ensue, a district court may, after granting the amendment, enter judgment on the existing record, or upon a verdict returned prior to the amendment. But not one of the foregoing cases holds, as does the majority here, that it is error to grant a. new trial in these circumstances, nor that the district court should be manda-torily required to enter judgment on the first verdict rendered when the court, was without jurisdiction. On the contrary, every one of these cases which did not specifically order a new trial left it to the discretion of the district judge *119whether there should be a new trial or judgment entered on the original record. The books will be searched in vain for a case which supports the majority holding, particularly one in which, as here, the change made in the parties also works a material change in the cause of action asserted by plaintiff. The statute, 28 U.S.C.A. § 1653, provides that jurisdictional allegations may be amended “upon terms,” which, to me, implies discretion in the district judge to impose a new trial as a “term” of granting the amendment. The district judge did not categorically provide in his order that the amendment was granted on the “terms” that there be a new trial, but in one order he set aside the proceedings in the first trial as a nullity, dismissed Reiss as a defendant, denied plaintiff’s motion for judgment on the original verdict, granted leave to amend the pleadings to conform to the altered parties, and granted a new trial on the issues to be made by the amended pleadings. Clearly the effect of such an order is to impose a new trial as a “term” of granting the jurisdictional amendment.
If a showing of prejudice is essential to the granting of a trial de novo in these circumstances, it sufficiently appears here. The presence of Reiss as a party in the first trial enabled the plaintiff to introduce evidence as to him at that time, which would not be admissible as to the sole remaining defendant, American Insurance Company, on the second trial. Obviously, there was something prejudicial to the insurer in the first trial that did not appear in the second trial, for the verdict on the first trial was for $5,-000, while on the second, with the other defendants out of the case, it was for $1,850.
Moreover, to enter judgment for $5,-•000 on the original verdict, permits the plaintiff to have a recovery far greater than she is entitled to under the only policy in issue after the jurisdictional amendment was made, which the second jury found to be a “builder’s risk,” not a valued, policy. Under this policy liability is limited to “the actual values * * * placed into or made a part of” the new building. Upon ample supporting evidence, the jury at the second trial found that this was the type of policy agreed upon between plaintiff and American, and that the total value of the building, including repairs, at the time of the fire was $1,850. In ordering judgment for $5,000 on the original verdict, in which trial the Lumbermen’s $5,000 policy was in issue, as well as American’s, the majority gives the plaintiff a recovery to which she is not entitled.
For these and other reasons, I respectfully dissent.

. The action was originally instituted in a Texas state court by the insured, a citizen of Texas, against American Fire and Casualty Company and Lumbermen’s Insurance Company, who had previously issued a policy on the property, claiming that she was covered by one or the other of the policies. Both insurers were corporations foreign to Texas. Plaintiff also joined the agent, Reiss, who represented both companies, and who was a citizen of Texas, claiming that the agent was individually liable to her if her recovery against the insurance companies failed. This placed a Texas citizen on each side of the controversy. The foreign insurance companies removed the action to the federal court upon the ground that as to them there was a separable controversy within the meaning of former 28 U.S.C.A. § 71. The Supreme Court held that the revision of the Judicial Code, which became effective September 1, 1948, prior to this removal, worked a change in former 28 U.S.C.A. § 71, which is now sec. 1441(c) of revised Title 28, and that a separable controversy is no longer an adequate ground for removal unless it also constitutes a separate and independent claim or cause of action. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702. Holding that the claim asserted in this action did not conform to the requirements of the revised section, 28 U. S.C.A. § 1441(c), the Supreme Court reversed the judgment for lack of federal jurisdiction. Upon remand to the district court, plaintiff dismissed as to the Texas agent, also as to Lumbermen’s Insurance Company, thus leaving clear diversity between plaintiff and the re*118maining defendant, American Fire and Casualty Company, after -winch the pleadings were substantially amended and a second trial was had. The judgment rendered at the second trial is here under review.

. Mason v. Dullagham, 7 Cir., 82 F. 689; Williams v. Great Southern Lumber Co., D.C., 13 F.2d 246; Gate Way, Inc., v. Hillgren, D.C., 82 F.Supp. 546, affirmed 9 Cir., 181 F.2d 1010; O’Neal v. National Cylinder Gas Co., D.C., 103 F.Supp. 720; Kassner v. U. S. Pictures, D.C., 82 F. Supp. 633; States v. John F. Daly, Inc., D.C., 96 F.Supp. 479.