Court Opinion

ID: 8880664
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:26:58.06016+00
Date Added: 2024-06-11T17:06:37.955614
License: Public Domain

ANDERSON, Circuit Judge,
with whom LUMBARD, Chief Judge, and MOORE, Circuit Judge, concur (dissenting):
In view of the majority’s strong reliance on Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023 (1905), as a justification for brushing aside the argument of the appellants, on their motion for rehearing, that the majority holding places an unfair burden on a nonresident (thereby compelled to defend an action in New York, regardless of other contacts, provided only that in per-sonam jurisdiction can be obtained over his insurance company) it is necessary to comment on the Harris case.
Assuming the continued constitutional viability of the Harris rule,1 that the ob*121ligation of a debtor to pay clings to and accompanies him wherever he goes and that the debt is subject to garnishment in any state in which the debtor is subject to in personam jurisdiction,2 nevertheless that case is clearly distinguishable from the procedure sanctioned by Seider, Simpson, et al. In the first place, the Supreme Court in Harris was considering “ordinary debts,” 3 whereas the complex package of rights and duties which derive from an automobile liability insurance policy is something quite different. The debt in Harris was fixed in amount, and concededly currently owed, but the Seider “debt,” consisting of the obligations to defend and indemnify, is indefinite, not readily ascertainable in amount, and contingent, i. e. with respect to the obligation to defend, upon the obtaining of jurisdiction over and the commencement of suit against the insured, and also, with respect to the obligation to indemnify, upon the security by the plaintiff of a judgment against the defendant insured. Moreover, as Judge Croake noted in Podolsky v. Devinney, 281 F.Supp. 488, 494 (S.D.N.Y.1968), “the obligation to defend is an important right of the insurer, essential in protecting its financial interest in the outcome of the litigation.” Seider is the first case ever to hold that an insurer’s contractual obligations under an automobile liability policy are subject to foreign attachment and thereby furnish quasi in rem jurisdiction over a non-resident defendant. See the excellent article entitled “Jurisdiction by Attachment of Liability Insurance” by Malcolm L. Stein, 43 N.Y.U. L.Rev. 1075, Dec. 1968.
There is another distinction between Harris and Seider,4 In Harris the debt- or-garnishee, as a natural person, could be physically present in only one state at a time; therefore, although the situs of the debt might change, there could never exist more than one quasi in rem jurisdictional situs at any given time. In Seider the garnishee is an interstate corporation subject to jurisdiction in the state of incorporation as well as in the states where it is doing business. If Seider stands, other states will be compelled to follow New York’s example by engrafting a Seider procedure onto their attachment statutes. The inevitable result will be a rash of contrary and inconsistent adjudications, particularly in multi-party cases, well described by Professor Siegel as “jurisdictional chaos.” He says:
“Balk at least enabled a single state to be isolated as the situs of the intangible. Under Seider, that is not possible; all of the states in which the insurer does business could seize the policy; and -if they were to do so (i. e. adopt Seider) there would be a kind of jurisdictional chaos awaiting in major accident cases.
* * -X- * -X* *
Suppose the other states do adopt it? If all of them can then lay claim to being the ‘situs’ of the policy to the same extent that New York makes that claim under Seider, it is not difficult to contemplate a race-to-attach (or seize or sequester or secure ‘trustee process’ or whatever else a state may call the quasi in rem process that goes under the *122name of ‘attachment’ in New York) in multi-party accidents.” 5
The rule of Harris, which in effect sanctions the mere presence of the garnishee as a sufficient jurisdictional base, “cannot be justified in terms of fairness.” Developments in the Law-State Court Jurisdiction, 73 Harv.L.Rev. 909, 960 (1960). In other words, the relevant contact with the forum state which establishes a jurisdictional base is not attuned to the modern jurisdictional search to attain substantial justice by balancing interests.
The majority opinion is quite correct in observing that the Harris rule imposed a substantial burden on Mr. Balk in forcing him to litigate, if he should elect to contest, wherever his debtor’s pereginations might take him. It does not follow that if Balk was treated unfairly, then appellants can be treated with a much greater degree of unfairness. The unstated assumption that Harris controls the case at bar should be rejected. In view of the age of that case, the revolution in jurisdictional thinking since 1905 and the criticism of its potential unfairness in modern terms,6 the rule of that case should be confined to its facts, and applied only in cases where there is a fixed obligation, when the amount may be determined with fair certainty and any contingency concerns nothing more than time of maturity.
Exception must also be taken to the majority’s view that the availability of removal under § 1404(a) “bears strongly” on the decision of the constitutional issue. The constitutionality of this procedure should not rest on the dubious assumption that discretion will always be exercised as the Constitution demands. In addition, 28 U.S.C. § 1441(b) provides that where diversity is the claimed basis of federal jurisdiction, a civil action
“ * * * shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”
In other words, if any of the defendants in a multi-party action is a New York resident, the non-resident co-defendants would be barred from the benefit of § 1404(a). (The majority opinion conveniently notes other “exceptions” in footnote 4.) Nor should the constitutionality of this procedure turn on whether the matter in controversy exceeds $10,000.
For these reasons and for those set forth in the prior dissenting opinion I reassert my disagreement with the majority decision.

. Several commentators have noted that Harris v. Balk is, from the point of view of modern jurisdictional thinking, an anachronism. E. g., von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Bev. 1121, 1178 (1966) ; Developments in the Law-State Court Jurisdiction, 73 Harv.L.Bev. 909, 957-960 (1960). The following passage suggests that it may have outlived its usefulness:
* * * Harris, in view of modern practice and theory, is not sacrosanct. The decision is from the Pennoyer era when the exercise of personal jurisdiction was severely circumscribed and the garnishment of intangibles served as a valuable substitute for personal jurisdiction. The formalism involved in determining the situs of the debt was necessary to spell out a presence within the forum so that “power” over the intangible could be exercised. Besort was had to the fiction that the debtor carried the debt with him so that it could be garnished whenever personal jurisdiction could be attained over him. The modern concept of personal jurisdic*121tion leaves little justification for the garnishment of intangibles. Moreover, the formalism of the Harris approach is likely to result, as in Seider, in garnishment in a forum which has no substantial contact with or interest in the litigation. Advanced thinking has called for the abolition of Harris. Note, Seider v. Roth: The Constitutional Phase, 43 St. John’s L.Rev. 58, 65, 66. (1968) [“St. John’s Note”].

. 198 U.S. at 222-223, 25 S.Ct. at 626-627.

. “We speak of ordinary debts, such as the one in this case.” Id., at 223, 25 S.Ct. at 626.

. These distinctions have not escaped other courts and commentators. E. g., Simpson v. Loehmann, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 645-646, 234 N.E.2d 669 (1967) (Burke, J., dissenting); David D. Siegel, Seider v. Roth; U. S. Courts Paced with Special Problems, N.Y.L.J. March 14, 1969, p. 5, cols. 4-6; St. John’s Note, supra, n. 1 at 66, 67.

. Siegel, loc. cit. col. 4.

. See n. 1, supra.