Court Opinion

ID: 9454021
Source: CourtListenerOpinion
Date Created: 2023-08-04 18:32:45.640143+00
Date Added: 2024-06-11T17:33:55.771004
License: Public Domain

BIGGS, Circuit Judge
(dissenting in part and concurring in part).
As a Senior Circuit Judge, 28 U.S.C. § 371(b), I was not qualified to vote for rehearing or sit at the rehearing in McSparran, et al. v. Weist, et al., at 402 F.2d 867, a “companion” case to the instant case, for I did not sit at the original argument in McSparran. App. Rule 35, 43 F.R.D. 101, and 28 U.S.C. § 46(c). Nonetheless, I think I am en*881titled to state and I do state that what is said in the dissenting portion of this opinion is in all substantial respects equally applicable to the majority’s Mc-Sparran opinion.
I believe the law as to the application of 28 U.S.C. Section 1359 was stated correctly by this court in Jaffe v. Philadelphia & Western R. Co., 180 F.2d 1010 (1950), in Fallat v. Gouran, 220 F.2d 325 (1955), and in Corabi v. Auto Racing Co., 264 F.2d 748 (en banc, 1959). I shall not repeat generally here what was said in those opinions. I do desire, however, to point out what appear to me to be grave weaknesses in the majority opinion in respect to the application of Section 1359.
The majority opinion states that Jaffe and Corabi are overruled and that Fallat v. Gouran is disapproved to the extent that it indicates approval of “manufactured” diversity, but the court’s reasoning for its rulings goes far beyond this and will lead, in my opinion, to substantial difficulties. The majority opinion states: “We are not here concerned, however, with the capacity to sue under Rule 17, nor with the question whether the fiduciary is the real party in interest. Our problem is whether for purposes of diversity jurisdiction we should look to the citizenship of the representative, here the guardian of the estate of the minor, or to the person on whose behalf he acts.” The language quoted indicates that the court cares not whether the suit be brought by the real party in interest or not and therefore the court’s decision is equally applicable to eases where the plaintiff is the trustee of an express trust, of a resulting trust, or even of a trust ex maleficio, an administrator, a prochein ami, or any other type of fiduciary.
The reasoning and the rulings of the majority seem to turn on the statement: “Here plaintiff [Esposito] has added nothing to a record which shows on its face a naked arrangement for the selection of an out-of-state guardian in order to prosecute a diversity suit.” (Emphasis added). The condition of a “naked arrangement” as a bar to the application of Section 1359 will prove, I think, most troublesome. The primary purpose of the “arrangement” in the case at bar, as in Jaffe v. Philadelphia & Western R. Co., 180 F.2d 1010, 1011 (1950),1 was to collect a judgment and it probably was concluded by counsel for the widow in Jaffe that a larger judgment could be obtained in a federal court or that the case could be more expeditiously tried there. But what would be this court’s ruling in a suit brought by the cestuis of an inter vivos trust where the donor had appointed an out-of-state fiduciary because he wished the cestuis to be able to maintain a diversity suit in a federal court? Would the donor’s purpose be any more or less “naked” than that of the persons who petitioned the Orphans’ Court to appoint Esposito? I think the answer would have to be in the negative. Moreover, under the circumstances which surround the case at bar and cases like it, can it be said that a trustee under an express trust is any more or less naked in interest than a prochein ami or an administrator or an executor? I believe the answer would have to be “No”.
If, as the majority opinion states, the issue of who is the real party in interest has no weight (which I believe to be a correct statement of the law), then does not the majority disregard the decision of the Supreme Court in Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, 48 S.Ct. 404, 72 L.Ed.2d 681 (1928) ? Mr. Justice Butler decided that Section 37 of the Judicial Code of 1911, the precursor of Section 1359, was not applicable where a Tennessee corporation had *882been purposely created and a cause of action assigned to it with other assets by a Kentucky corporation, for the express purpose of creating or “manufacuring” diversity jurisdiction. Mr. Justice Butler said, id. supra at 524, 48 S.Ct. at 405, that Section 37 was inapplicable because “The succession and transfer were actual, not feigned or merely colorable. In these circumstances, courts will not inquire into motives when deciding concerning their jurisdiction. McDonald v. Smalley, et al., 1 Pet. 620, 624, 7 L.Ed. 287. It is enough that respondent is the real party in interest.” (Emphasis added). What palpable difference is there between having a single asset transferred by operation of law to the guardian of the estate of a minor and having all assets of one corporation transferred to another corporation by action of a board of directors and, probably, stockholders? The former is said to demonstrate a “naked” purpose to create diversity, while the latter does not. The first is said to be lacking in propriety and collusive to boot; the second, in the view of a majority of this court is proper and non-collusive. This seems a mere exercise in semantics.
In Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183, 52 S.Ct. 84, 76 L.Ed. 233 (1931), the widow of the decedent who had been appointed administratrix resigned, and upon her request Mecom was appointed administrator. The purpose of Mecom’s appointment was to avoid and not to create diversity of citizenship. But Mr. Justice Roberts cogently stated, id. at 189, 52 S.Ct. at 87: “To go behind the decree of the probate court would be collaterally to attack it, not for lack of jursidiction of the subject-matter or absence of jurisdictional facts, but to inquire into purposes and motives of the parties before that court when, confessedly, they have practiced no fraud upon it.” (Emphasis added). The ruling of the majority is a collateral attack on the decree of State probate courts and as such should not be permitted. Cf. the provisions of Section 1738.2 See also Klaxon Co. v. Stentor Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), which would seem to require the application, at least by analogy, of the principles of the full faith and credit clause, Article IV, Section 1 of the Constitution. Moreover, there is assuredly no fraud asserted in the case at bar and particularly it must be borne in mind that Rule 17, Fed.R. Civ.Proc., 28 U.S.C., as the majority concedes, authorizes Esposito to bring the suit as a party plaintiff.
But in ascertaining what is a “naked arrangement”, would not the United States district court in almost every ease, at its peril and at the peril of the litigants, have to determine what the purpose, “naked”, “primary”, or otherwise, which caused or prompted someone on behalf of some kind of a fiduciary to bring suit in the United States court? And would this not require in almost every instance the taking of evidence and an examination not of objective but of subjective criteria, i. e., what was in the mind of the person or persons who moved in Orphans’ Court or any probate tribunal to appoint an out-of-state executor or administrator? Would not the district court have to weigh a fact of the sort presented by a case like Fallat v. Gouran, supra, where the daughter of the injured person brought the suit? Is it collusive or improper for a daughter to serve as guardian of her mentally ill father? I would say “No” but others might say differently, and findings of fact as well as conclusions of law would probably have to be made by the trial court in most of these cases. While purporting to abolish the “manufacture” of diversity jurisdiction, the majority rule would elevate such manufacturing to an art difficult to define and even more difficult to combat.
What we were at pains to state in Corabi, viz., that there is nothing collusive or improper in openly going before *883a State court on a petition which is a public record to have an out-of-state fiduciary appointed whether that be with the thought of obtaining a larger judgment or to avoid delays of some of our State courts, applies here with equal force. The majority engrafts a novel, and I think an illegal, gloss on Section 1359. I believe that the majority decision will open a fertile field for perjurious testimony and lead to great uncertainty.
I must respectfully dissent from the majority view on the issue of “manufactured” diversity. I concur in the result reached by the majority because under the facts of this case and the law of Pennsylvania, Esposito has not presented a cause of action upon which relief can be granted.
I can perceive no necessity to express any view in this dissenting opinion in respect to the very troublesome issue of prospectivity.
McLAUGHLIN, Circuit Judge, concurs in the opinion of Judge BIGGS herein.

. In Jaffe v. Philadelphia & Western R. Co., 180 F.2d 1010, 1011 (1959), it was said: “Primarily because it was desired to bring the matter in the federal court, a stenographer in the office of the widow’s attorneys, -who is a New Jersey resident, was appointed administratrix ad prosequendum of tlie deceased’s estate.” (Emphasis added, first instance).

. “Such * * * judicial proceeedings [of State tribunals] * * * shall have the same full faith and credit in every court within the United States * * * as they have by law or usage in the courts of such State. * *