Mayflower Industries v. Thor Corp.

• Citation: 184 F.2d 537
• Decision Date: 08 August 1950
• Docket Number: No. 10205.,10205.
• Parties: MAYFLOWER INDUSTRIES v. THOR CORP. et al.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

184 F.2d 537 (1950)

MAYFLOWER INDUSTRIES v. THOR CORP. et al.

No. 10205.

United States Court of Appeals Third Circuit.

Argued June 20, 1950.

Decided August 8, 1950.

Rehearing Denied September 11, 1950.

Gilbert W. Oswald, Philadelphia, Pa. (Bernard G. Segal, James J. Leyden and Edward W. Mullinix, all of Philadelphia, Pa., Ruback, Albach & Weisman, Newark, N. J., and Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., on the brief), for appellant.

Walter C. Lundgren, New York City, (Thomas J. Brogan, Jersey City, N. J., Franklin B. Lincoln, Jr., New York City, Justin A. Stanley, Chicago, Ill., Thomas B. K. Ringe, Philadelphia, Pa., and Lundgren, Bartels & Lincoln, New York City, and Isham, Lincoln & Beale, Chicago, and Morgan, Lewis & Bockius, Philadelphia, Pa., on the brief), for Thor Corp.

Richard J. FitzMaurice, Orange, N. J., for Teldisco.

Before GOODRICH, McLAUGHLIN and HASTIE, Circuit Judges.

HASTIE, Circuit Judge.

This appeal has been taken from an interlocutory order of the District Court for the District of New Jersey denying a preliminary injunction. Section 1292(1) of title 28 of the United States Code, 28 U.S.C.A. § 1292(1), authorizes an immediate appeal from such an order.

With the case thus properly before us, a preliminary question arises whether this litigation was removable from the state court in which it originated. Although the denial of a motion to remand itself would not support an interlocutory appeal, the question of removability is jurisdictional and therefore is before us for consideration once it appears that the case is properly here for review of an appealable order. Mansfield C. & L. M. R. Co. v. Swan, 1884, 111 U.S. 379, 4 S.Ct. 510, 28 L.Ed. 462; Deckert v. Independence Shares Corp., 1940, 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189.

This action was brought originally in a New Jersey court by Mayflower, a New Jersey corporation, against Thor, an Illinois corporation, and Teldisco, a New Jersey corporation. The complaint was based on an alleged breach of a distributorship contract under which Mayflower was the exclusive distributor of Thor's products in New Jersey, and one of two Thor distributors in New York and Pennsylvania. Mayflower alleged that, without cause or legal justification, Thor cancelled this contract. It is further alleged that Teldisco, with knowledge of the improper cancellation, entered into an agreement with Thor to act as its New Jersey distributor, and commenced acting in that capacity immediately after the cancellation. It is also alleged that Teldisco's "entry into said contractual arrangement with the defendant Thor corporation together with Teldisco's sales campaign in pursuance of this agreement constitutes an unlawful, wanton and malicious conspiracy by both defendants to injure the plaintiff in its lawful business and to deprive the plaintiff of the fruits thereof." Injunctive relief and damages are asked against both defendants.

On Thor's initiative, the cause was removed to the United States District Court for the District of New Jersey. A motion for remand was denied. A further motion by Mayflower for a preliminary injunction was denied. Thereupon this appeal was taken.

The jurisdictional issue is decisive and we consider it alone. There is no federal jurisdiction because the cause was not removable.

The controversy between the two New Jersey corporations, Mayflower and Teldisco, standing alone would not be removable. The Mayflower-Thor controversy would. Therefore, the present case is not removable unless the Mayflower-Teldisco controversy and the Mayflower-Thor controversy present "separate and independent claims or causes of action".

Section 1441(c) of the Judicial Code¹ provides, in relevant part, as follows: "Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed * * *."

This language was intended to and does narrow the right to remove as it had existed under the Judicial Code of 1911, 36 Stat. 1094, where all that was needed, in addition to diversity, was a separable controversy. Pullman Company v. Jenkins, 1939, 305 U.S. 534, 538, 59 S.Ct. 347, 83 L.Ed. 334; see Moore's Commentary on the U. S. Judicial Code (1949) page 239. "Separate" alone might connote no more than the separability of controversies for purposes of litigation. But that is not enough here. We believe the adjectives "separate and independent" were used in conjunction to convey some meaning which would not have been apparent from the use of one adjective alone. At least their common underlying connotation of absence of some significant connection is emphasized. In the context of the present litigation it is enough to say that a consideration of the interests of the parties and the relationship of the two claims in subject matter and essential factual basis lead to the conclusion that the claims of Mayflower against Thor and Teldisco do not constitute "separate and independent" causes of action within the meaning of Section 1441(c).

As revealed by the record, the business reality is that a manufacturer has changed distributors in a certain area, the operative transactions occurring practically simultaneously. From the point of view of the complainant, Mayflower, the termination of its distributorship and the substitution of Teldisco as sole New Jersey distributor of Thor's product immediately thereafter are at most but two aspects of a single economic injury. This is true whether or not Mayflower's conclusion with reference to a "conspiracy" between Thor and Teldisco is deemed on its face a legally sufficient pleading of this basis of liability.

It is even more significant that the circumstances and alleged illegality of the termination of Mayflower's distributorship by Thor constitute the principal controversial issue in the establishment of any cause of action by Mayflower against Teldisco. There is almost complete coincidence of the basic operative facts. Thus analyzed, the claims are not separate and independent.

For present purposes, this analysis and the interests and relationships it reveals are particularly important because the avoidance of possible local prejudice against outsiders has been a principal and justifying end of diversity jurisdiction from its beginning.² In deciding under what circumstances two claims combined in one suit are "separate and independent" so that the domestic controversy does not impair the removability of the entire litigation from a state court to a court of the United States, it is proper to consider the ends to be achieved by removal of the one claim which standing alone is removable.

Here the controversy arises because a foreign corporation undertook to deprive one New Jersey corporation of an economically advantageous relationship and to confer the benefits in question upon another New Jersey corporation. What one domestic corporation loses and complains of, another domestic corporation gains and defends in the same law suit. Thus the interplay of interests is such that when the two claims are litigated together the foreign corporation is protected from any local prejudice against an outsider which might exist if it alone were sued.

For these reasons we conclude that this case was not removable and thus the matter of granting or denying a preliminary injunction should not have been adjudicated by the district court. In these circumstances, the order appealed from must be vacated and the case remanded to the district court with instructions to remand to the state court of original jurisdiction.

It will be so ordered.

GOODRICH, Circuit Judge, concurring.

This concurrence represents no disagreement with what Judge Hastie has said but since the statutory language we are concerned with is new and the problem is of some importance, it is thought that the presentation of another point of view on the same question may be helpful.

Since there is diversity of citizenship between Mayflower and Thor but not between Mayflower and Teldisco, our problem under Section 1441(c) of the Revised Title 28 is to determine whether there is pleaded against Thor a cause of action which is "separate and independent" from that which is pleaded against Teldisco. While the words of the statute are not self-explanatory and the point not perfectly clear, it seems to me the more logical view is that this case does not present a removable controversy. Counsel for both sides say that Bentley v. Halliburton Oil Well Cementing Co. 5 Cir., 1949, 174 F.2d 788, the only appellate case dealing with the new removal statute, was correctly decided. I agree and think we have here the same situation which faced the Fifth Circuit in the Bentley case, although upon a somewhat more complicated set of facts.¹

In that case there were two tortfeasors whose combined negligence invaded the right of the plaintiff to be free from negligent injury to his person. Plaintiff could have sued either and got a judgment. Or he could have sued them successively and procured a judgment first against one and then against the other. Restatement, Judgments § 94. But the satisfaction of either judgment would have settled the plaintiff's rights. Restatement, Judgments § 95. He could have proceeded no further against anybody. The conclusion I draw from this is that the invasion of one legally protected interest, i. e., the right to personal security, was the thing which was involved, and since it all occurred in the same transaction the rights of the plaintiff against the various defendants were not "separate and independent." Hence, the controversy was not removable.

The joint tortfeasor situation involved in the Bentley case would not have presented a removable controversy under the Judicial Code as it read prior to the 1948 revision. McAllister v. Chesapeake & Ohio R. Co., 1917, 243 U.S. 302, 37 S.Ct. 274, 61...