Court Opinion

ID: 9651489
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:20:14.296777+00
Date Added: 2024-06-11T18:12:34.283109
License: Public Domain

JONES, Circuit Judge
(concurring).
I fully concur in the opinion for the Court but, in view of the dissent, I am constrained to add to the debate.
Before the matters of complaint can become appropriate for treatment or discussion on their merits, we first have the duty of ascertaining the pertinent law and of following it accordingly. I pass, therefore, immediately to a consideration of the controlling law.
Federal jurisdiction of the instant cases rests solely on the ground of diversity of citizenship. The applicable law, therefore, is the law of the State local to the situs of tlie District Court. The rule of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, is equally pertinent to federal court equity suits where jurisdiction depends on diversity of citizenship. Ruhlin v. New York Life Insurance Co., 304 U.S. 202, 205, 58 S.Ct. 860, 82 L.Ed. 1290. Furthermore, a federal court, so bound, must follow the local rule of conflicts as well. See Klaxon Company v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477. So far, there would seem to be no disagreement among the members of this Court. The difference of opinion arises with regard to what law a Pennsylvania court would apply, directly or by reference, were the suits on trial in a court of that State. I think the answer is peculiarly forsworn for us by our earlier decision in Overfield v. Pennroad Corporation et al., 3 Cir., 113 F.2d 6.
When the Overfield case was here before on the plaintiff’s appeal from the District Court’s dismissal of her suit for want of jurisdiction, we reversed and reinstated the bill, for further proceedings. In reversing, we necessarily had to pass upon each of the reasons assigned by the defendants in support of their motion to dismiss, whether or not the court below had done so. One of those reasons was (113 F.2d at page 9) that the District Court lacked jurisdiction “because the present action involves the internal affairs and management of a Delaware corporation not transacting business in the Commonwealth of Pennsylvania or the Eastern District thereof [the situs of the District Court].”
Upon resorting to Pennsylvania law, we held that the suit did “not involve the management or control of the internal affairs of Pennroad, the foreign corporation” and that “The relief sought is the imposition of liability upon the Pennsylvania Railroad Company and former directors of Pennroad for alleged wrongdoing and an accounting by the railroad to Penn-road for consequent losses.” Accordingly, we overruled the defendants’ plea of no jurisdiction on the authority of Loan Society v. Eavenson, 241 Pa. 65, 88 A. 295.
Such being the situation, it cannot be said under any Pennsylvania rule that a court of that State, having taken jurisdiction of the causes, would make reference to and apply the law of the State of the foreign corporation’s domicil for the adjudication of the rights of the parties if they were before a court of Pennsylvania. Obviously, if the law of the foreign corporation’s domicil were pertinent, because the suit involved the management of the *900internal affairs of the corporation, then, the case would not present a right ordinarily cognizable in a court of Pennsylvania. Thompson v. Southern Connellsville Coke Co., 269 Pa. 500, 112 A. 533. We must, therefore, either apply the law applicable to the instant suits as a Pennsylvania court would do or else we deny the basis for a cause of action cognizable under the law of that State.
That the matters of complaint averred by the plaintiffs would be adjudged in Pennsylvania according to the law of torts, I think the Eavenson case makes plain. That suit was “a proceeding to compel the defendants to account for losses sustained by the corporation by reason of their negligent and fraudulent acts * * * while they were acting in their official capacity as directors.” Any investigation into the management of the affairs of the corporation was necessary only “to establish the tortious acts of the defendants” for which reparation was sought. See the Eavenson case, supra, 241 Pa. at page 69, 88 A. at page 296.
Whether the tort law to be applied in the instant cases is to be found directly from Pennsylvania’s own rules or by reference to the law of other States, in accordance with Pennsylvania’s rule of conflicts, depends, in the first instance, on the place of the commission of the alleged wrongs. If, perchance, - they were perpetrated in as many different States as the dissent suggests, then, conceivably, Pennsylvania in order to avoid a confusion of standards or because of uncertainty as to the place of the wrongs might apply its own law. After all, “the extent to which [a state] shall apply in its own courts a rule of law of another state is itself a question of local law of the forum.” Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 445, 64 S.Ct. 208, 216, 150 A.L.R. 413. But, from whatever source Pennsylvania would derive the law applicable to the instant suits, none of it would come from the law of Delaware where, undeniably, none of the alleged wrongs can be said to have been committed.
So far as I am aware, Pennsylvania has no rule which would require a court of that State in a trial for a tort (whether on the court’s law or equity side), to apply the law of the domicil of the aggrieved foreign corporation by or in behalf of which the suit was brought. Nor do I think that any of the Pennsylvania cases cited in the dissent suggests to the contrary. In any event, whether a Pennsylvania court would derive the pertinent law directly from that State’s own substantive rules or, by reference, from the law of another State, it would be Pennsylvania law none the less, when applied, and the question still remains whether a Pennsylvania court is required, merely because a claimant is of foreign domicil, to afford its facilities for the litigation of a claim which the State’s statutes of limitation denounce as stale.
It seems plain (and I do not understand the dissent to dispute) that a Pennsylvania court would be under the duty of applying that State’s statutes of limitation, when interposed, to suits for causes such as are pleaded in the instant cases. That is so whether the suits be brought on the court’s law or equity side, the jurisdiction of equity for the purpose being concurrent. See cases cited in majority opinion. A federal court, bound to follow the law of the State, could hardly do otherwise. If a cause of action becomes cognizable in a federal court sitting in Pennsylvania, because it would be likewise cognizable in a court of that State, but the federal suit is to be relieved of the impediments which a Pennsylvania court would be bound to enforce, if pleaded, then a right under Pennsylvania law will be accorded to federal court litigants in that State which they would not enjoy in a court of the State. Such a result, if effected, would constitute an unwarranted impairment of the rule of Erie Railroad Co. v. Tompkins.
Wherein then is the escape from the barrier of the pleaded limitations? It is suggested that it lies in the fact that the instant suits are in equity in a federal court. But, as already noted, the rule of Erie Railroad Co. v. Tompkins extends to suits in equity in federal courts when their jurisdiction depends upon diversity of citizenship. Ruhlin v. New York Life Insurance Co., supra. In any event, the suggested immunity in a federal equity court from the bar of limitations to be found in otherwise applicable local law is by no means absolute. The recent case of York v. Guaranty Trust Co. of New York, 2 Cir., 143 F.2d 503, which the dissent cites and relies upon, expressly recognizes (143 F.2d at page 527) that applicable local statutes of limitation have been enforced by federal courts, sitting in equity in diversity cases, where “either (a) there was no *901showing whatever of any inequitable conduct of the defendant accounting for plaintiff’s ignorance of his rights or (b) the plaintiff, after becoming aware of his rights, slept on them.” Not one, but both, of the specified contingencies were present here as the indisputable facts of these cases make plain.
The absence of any disqualifying concealment is fully treated with in the majority opinion. I shall not, therefore, duplicate the discussion. It may be pointed out, however, that the pertinent inquiry upon a search for concealment is not bounded by how much could have been told Pennroad’s stockholders but by how much the directors were under a legal duty to disclose to them. There is hardly a definable limit to what an outraged imagination, sprung from a chastened hindsight, may not later suggest as having been appropriate matter for prior disclosure. It should also be borne in mind that, according to the trial court’s undisputed findings, not a single one of the present plaintiffs or intervenors ever demanded any information of Pennroad or of its directors and, of course, no information was refused them, as the trial court also found.
But, it is said that even if the instant suits are subject to Pennsylvania’s statutes of limitation, the Overfield suit was filed timely. In the light of the record now before us, I utterly fail to see any basis for that statement. Not once, but three times, the trial court separately affirmed that “Neither of these suits was brought within six years after the commission of the acts complained of.” And, in a fourth instance, the trial court found to the same effect, but in affirmative language, as follows: “Each suit was begun more than six years after the acts of which plaintiffs complain had occurred.” Nor have I been able to discover, from an examination of the voluminous record and briefs, where those findings are disputed by anyone.
The fact that the Overfield suit, which complained only of the National Freight Company transaction, was filed within one day of six years from the time of the action taken by Pennroad’s directors looking to the disposition of Penn-road’s interest in the National Freight Company did not serve to toll the statute. The matter of complaint in respect of the National Freight Company is not the directors’ sale of it but their investing Penn-road’s money in it which, in its entirety, happened more than six years prior to the filing of the Overfield suit. So that, even if the seven other separate matters of complaint, which the Weigle suit first brought upon the record well over six years after their occurrence, could legally be tacked on to the National Freight Company transaction of the Overfield complaint as. constituting, similar overt acts of one continuing conspiracy, the suits would still be outlawed, for the earliest of them was not brought within six years of the happening of any of the matters complained of.
The validity of the reasoning of the majority opinion and the legal merit of the disposition which this Court now makes of the instant appeals seem to me to stand unimpaired.
GOODRICH, Circuit Judge, agrees with this concurrence.