Court Opinion

ID: 9463131
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:58:49.733575+00
Date Added: 2024-06-11T17:37:56.722516
License: Public Domain

BUTZNER, Circuit Judge
(dissenting):
This case presents the first instance in which a court has utilized the residence of a beneficiary of a wrongful death claim to deny diversity jurisdiction when the residence of the decedent’s local personal representative, whose appointment is required by state law, would otherwise sustain jurisdiction. I dissent because I think the court’s decision, though motivated by a laudable desire for symmetry and reform, is based on a concept of what the law should be rather than what it actually is. Since the decision is supported by neither statute nor precedent, I believe that it is contrary to generally accepted principles governing the jurisdiction of district courts. At the very least, this drastic innovation should be tempered by prospective application.
I start with the unquestioned proposition that a federal court must defer to a state law requiring the appointment of a resident or local fiduciary to institute an action for wrongful death. The North Carolina fiduciary was an indispensable plaintiff. The sole issue, therefore, is which residence, the fiduciary’s or the beneficiary’s, is to be considered in determining diversity jurisdiction. This, of course, must be decided by federal law.
As long ago as 1823, Mr. Justice Story wrote in Childress v. Emory, 21 U.S. (8 Wheat.) 642, 668-669, 5 L.Ed. 705 (1823) that the citizenship of the executor of a decedent’s estate determines diversity jurisdiction. This rule was reaffirmed and applied to suits for wrongful death in Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183, 186, 52 S.Ct. 84, 86, 76 L.Ed. 233 (1931) where the Court said:
“The petitioner insists that where an administrator is required to bring the suit under a statute giving a right to recover for death by wrongful act, and is, as here, charged with the responsibility for the conduct or settlement of such suit and the distribution of its proceeds to the persons entitled under the statute, and is liable upon his official bond for failure to act with diligence and fidelity, he is the real party in interest and his citizenship, rather than that of the beneficiaries, is determinative of federal jurisdiction. This we think is the correct view.”
This rulé of diversity jurisdiction has never been repudiated by the Supreme Court. See 6 Wright and Miller, Federal Practice and Procedure, §§ 1548 and 1556. It is, however, subject to two well-defined exceptions.
The first exception is codified in 28 U.S.C. § 1359.1 The purpose of this statute is to prohibit a party from “improperly or collusively” invoking diversity jurisdiction. Manifestly, the fiduciary’s citizenship should not confer jurisdiction if his appointment violates § 1359. We have correctly applied the statute’s proscription to suits brought by out-of-state fiduciaries who were imported to manufacture diversity between litigants residing in the forum state. *646See, e. g., Bishop v. Hendricks, 495 F.2d 289 (4th Cir. 1974); Lester v. McFaddon, 415 F.2d 1101 (4th Cir. 1969). The case now before us, however, differs from Bishop and Lester.
The record in this case unequivocally demonstrates that the North Carolina fiduciary was not appointed for the purpose of manufacturing diversity jurisdiction. The reason for the appointment was valid and substantial — the North Carolina law required that a local resident be named as an ancillary administrator. The plaintiff had no choice in the citizenship of the appointee. As the majority opinion acknowledges, the purity of the claimant’s motive is beyond question.2 It is the absence of an out-of-state fiduciary, appointed solely to manufacture jurisdiction, that distinguishes this case from Bishop and Lester, rendering them inapposite.
The two other cases, on which the majority relies, interpreting § 1359, are also not controlling. In Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969), the Court held that the assignment of a debt, admittedly motivated to manufacture diversity jurisdiction, was improper or collusive within the meaning of § 1359. The Court noted, 394 U.S. at 828 n. 9, 89 S.Ct. 1487, the possibilities of abuse arising out of the appointment of out-of-state fiduciaries. But it gave no hint or suggestion that the appointment of a local citizen, as required by state law, was improper or collusive. Similarly, McSparran v. Weist, 402 F.2d 867 (3rd Cir. 1968), dealt with a suit brought by an out-of-state fiduciary named solely to manufacture diversity jurisdiction.
Section 1359 was enacted in its present form as a part of the 1948 revision of the judicial code. The Reviser’s Note states that the statute is confined to cases where a device for conferring jurisdiction “is improperly or collusively made. . . .”3 Nevertheless, the new rule adopted by the court today dispenses with the necessity of proving collusion or other impropriety. It deletes these elements of the statute, and creates a per se rule to deny jurisdiction, even when, in compliance with the law of the state, a local fiduciary is selected in good faith. Neither the text of the Act nor the Reviser’s explanation justifies this construction of § 1359.
The second exception to the general rule that the citizenship of the administrator determines diversity jurisdiction exists where application of a state statute requiring a local fiduciary to bring suit would violate the Supremacy Clause by eliminating federal jurisdiction. This exception was the basis of our decision in Miller v. Perry, 456 F.2d 63 (4th Cir. 1972).
In Miller, we held that the citizenship of non-resident beneficiaries rather than that of the resident ancillary administrator, whose appointment was required by law, determined jurisdiction in a suit brought against resident defendants. Any other conclusion, we emphasized, would insulate state citizens from federal actions brought by out-of-state beneficiaries for wrongful death. Therefore, we conferred jurisdiction to avoid holding the state law in conflict with the Supremacy Clause. In the case now before us, however, the defendant is not a citizen of North Carolina, so the appointment of a local administrator as required by state law will not bar federal jurisdiction. The constitutionality of the state law, therefore, is not in jeopardy, and the reason for applying Miller does not exist. ’
The problems inherent in determining diversity jurisdiction by the citizenship of a personal representative have long been recognized. See generally 6 Wright and Miller, Federal Practice and Procedure § 1557. As the most preferable reform, the American Law Institute proposes to attribute the citizenship of the decedent to the personal *647representative for the purpose of determining jurisdiction. See American Law Institute, Study of the Division of Jurisdiction between State and Federal Courts, official draft 1969, §§ 1301(b)(4), 1307. The rule, which the court today adopts, falls far short of achieving the simplicity and certainty of the Institute’s proposal.4 Instead of ascertaining the citizenship of one person as prescribed in the Institute’s proposal, courts frequently will be required to consider the situation of many persons in a single case. For this reason, I predict that the new rule will raise far more questions than it settles.5 Apparently the plaintiff will now be required to allege and prove jurisdictional facts with respect to each beneficiary. This in itself unfortunately may add considerable cost and complexity, especially in the discovery stages, to an issue that in most cases would be simple and undisputed under either the present rule or the Institute’s proposal. Cf. J. Frank, American Law: The Case for Radical Reform, esp. at 185' (1969).
Finally, I believe the ruling in this case should be made prospective. This was the device adopted in Lester v. McFaddon, 415 F.2d 1101 (4th Cir. 1969) and in McSparran v. Weist, 402 F.2d 867 (3rd Cir. 1968). In both of those cases, although the claimants admittedly procured the appointment of out-of-state fiduciaries to manufacture jurisdiction, the injustice of applying the rule retrospectively was avoided. Similar injustice occurs here where the claimant is not even tarnished by collusion or impropriety. Moreover, we do not know how many cases are pending in district courts where meritorious claims for wrongful death, brought without collusion or impropriety in reliance on yesterday’s law, will be destroyed if our new rule is not also applied prospectively to them.

. 28 U.S.C. § 1359. provides that “A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.”

. The plaintiff brought suit in North Carolina for lawful, practical reasons. Because the accident occurred in that state, the witnesses are more readily available, and North Carolina law governs.

. See Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 826, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969) where the Reviser’s Note is quoted.

. If, indeed, we can change the present law despite the rule stated in Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183, 186, 52 S.Ct. 84, 76 L.Ed. 233 (1931) and the limited scope of 28 U.S.C. § 1359, we would do better to embrace the Institute’s suggestion.

. Among the more obvious questions are the following: Will the rule apply when the plaintiff is the executor named by the decedent? Will it apply when the personal representative is required to administer assets in addition to the wrongful death claim? If so, how substantial must these assets be? How will jurisdiction be determined when the decedent’s estate is the beneficiary under the wrongful death act? In some states, funeral expenses and medical and hospital expenditure incident to the fatal injuries can be recovered in a suit for wrongful death. Are the creditors pressing these claims deemed beneficiaries within the meaning of the new rule? If each beneficiary is considered to be the real party in interest, is the claim of each beneficiary to be considered “separate and distinct” for the purpose of determining the jurisdictional amount? I mention these potential issues, not to disparage the desirability of reform, but to emphasize that the new rule is not likely to improve the present method of determining jurisdiction.