First National Bank of Chicago v. Mottola

• Decision Date: 04 February 1969
• Docket Number: No. 68 C 1987.,68 C 1987.
• Parties: The FIRST NATIONAL BANK OF CHICAGO, etc., Plaintiff, v. Thomas E. MOTTOLA, Executor of the Estate of John D. Hertz, Jr., and individually; et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

302 F. Supp. 785

The FIRST NATIONAL BANK OF CHICAGO, etc., Plaintiff, v. Thomas E. MOTTOLA, Executor of the Estate of John D. Hertz, Jr., and individually; et al., Defendants.

No. 68 C 1987.

United States District Court N. D. Illinois, E. D.

February 4, 1969.

COPYRIGHT MATERIAL OMITTED

Edgar Bernhard, D'Ancona, Pflaum, Wyatt & Riskind, Chicago, Ill., for plaintiff.

James J. Kenny, Miami, Fla., John W. Hough, John R. F. Baer, Henry L. Mason, III, Leibman, Williams, Bennett, Baird & Minow, Chicago, Ill., for defendants; Kelly, Black, Black & Kenny, Miami, Fla., Spray, Price, Hough & Cushman, Chicago, Ill., of counsel.

OPINION

WILL, District Judge.

This action is brought by the First National Bank of Chicago for the construction of a will. Plaintiff, as trustee, seeks instructions on whether the will of John D. Hertz, Jr., exercised testamentary powers of appointment given him under the terms of certain trusts established by his father and mother in 1922. Named in the complaint as defendants are Thomas Mottola, individually and as Executor of the Estate of John Hertz, Jr., and eleven other individuals and institutions.

It appears from the face of the complaint that one defendant, John Ettlinger, is a trust remainderman. He takes only if the powers of appointment were not exercised under the will. One defendant, Helen Hexter, is both a trust remainderman and a residuary legatee under the will. Except for the executor, all the other defendants are residuary legatees, who take only if the powers were exercised.

The complaint was originally filed on September 10, 1968, in the Chancery Division of the Circuit Court of Cook County, Illinois. On October 24, 1968, defendant Mottola, as executor, filed a petition, pursuant to 28 U.S.C. § 1441, removing the action to this Court. Defendant Ettlinger now moves to remand the cause to the State Court.

In support of his motion, Ettlinger submits two separate and distinct grounds. First, he contends that the action was improvidently removed in that all of the defendants did not join in the removal petition. Second, he contends that this Court does not have jurisdiction of the subject matter because there is an absence of complete diversity of citizenship between the parties. In respect to this latter contention, Ettlinger points out that the Court is under a duty to re-align the parties according to their real interests, and that, when this is done, he and defendant Sturgis, who are both citizens of California, fall on opposite sides of the case.

The Necessity of the Joinder of All the Defendants in the Petition

The Federal Removal Statute provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants * * *." 28 U.S.C. § 1441(a). The words "the defendant or the defendants" have uniformly been construed to require that defendants be treated collectively. As a general rule, in the absence of a separable controversy, all the defendants who are sued jointly in the state court must join in the petition for removal.¹ The consent of a non-resident defendant who has not been served with process, however, is not necessary to the removal of the cause. Since it is possible that such a defendant may never be served or, at least, may not be served before the time for filing a petition to remove has expired, it is only reasonable that the other defendant or defendants, who have been served, be permitted to exercise their right of removal in his absence.²

Three defendants in the instant case were served before the removal petition was filed. Defendant Mottola was served on September 25th and filed his appearance on October 23, 1968. Defendant Michelle Montgelas Vanderkief also filed her appearance on the same date. Defendant Ettlinger was served on October 11, 1968. The suit was subsequently removed solely upon the petition of Mottola, as Executor; Ettlinger and Vanderkief did not join in the petition.

The executor insists, however, that, under the circumstances of the case, it was not necessary to join the other defendants. Specifically, he contends that Ettlinger's consent is not necessary because his interest in the suit is opposed to the interests of the other defendants. The joinder or consent of Vanderkief and the other defendants is alleged to be unnecessary because the petitioner, as executor of the Estate, is the only real party in interest.

The denomination given the parties in the pleadings is not always conclusive. In determining whether federal jurisdiction exists, a federal district court is obliged to examine the underlying, substantive interests of the parties in the dispute. If a party's actual interest is not reflected by his alignment in the pleadings it is the duty of the court to rearrange the party on the proper side of the suit.³ Such re-alignment is required both where it has the effect of defeating or creating jurisdiction.⁴

In the instant case, the pleadings clearly indicate that the real interest of defendant Ettlinger is in direct opposition to those of the executor and the residuary legatees. Ettlinger is a remainderman under the trusts in question. As a remainderman, he will realize a financial gain only if this Court holds that powers of appointment given to John D. Hertz, Jr. were not exercised in his will and that the residuary legatees are not entitled to the assets of the trusts. Under these circumstances, it is obvious that Ettlinger's position is diametrically opposed to that of the other defendants on the controlling issue.⁵ The relative positions of the parties, therefore, requires that he be re-aligned. In respect to the other defendants, he may properly be characterized as a party-plaintiff.⁶

As in cases of original diversity jurisdiction, where the removal jurisdiction of a federal court is invoked on the basis of diversity, the characterization of a party as defendant or plaintiff in the state action is not determinative. The court is first obliged to examine the substantive interests of the parties and align them in a manner which is consistent with their actual interests.⁷ The propriety of removal is then considered in the light of the parties' respective positions in the suit.⁸

Ettlinger suggests, nevertheless, a caveat to these general principles. He submits that a realignment of the parties is relevant only to the question of diversity for removal and that it is irrelevant to the general requirements of the joinder of all the defendants in the removal petition. Accordingly, he contends that his relative position in the instant suit does not excuse his omission from the removal petition.

This proposition would seem both unfounded and arbitrary. It is clear that it is the established policy in the federal courts to consider the actual realities of the dispute, rather than the nominal positions assigned to the parties by the pleader. The proposed distinction, if accepted, would create only an anomaly. There is no reason why the nominal position assigned to a party in the pleadings should control the question of joinder but be deemed immaterial to the question of diversity. The joinder requirement is designed only to insure a unanimous choice of a federal forum by the defendants. It cannot reasonably be understood to give a party who in reality occupies a position in conflict with that of other defendants a veto over the removal of the action.

This conclusion is buttressed by the language of the Supreme Court in its opinion in the Removal Cases, 100 U.S. 457, 25 L.Ed. 593 (1879). Construing the removal statute then in effect, the Court stated,

Under the old law the pleadings only were looked at, and the rights of the parties in respect to a removal were determined solely according to the position they occupied as plaintiffs or defendants in the suit. . . . Under the new law the mere form of the pleadings may be put aside, and the parties placed on different sides of the matter in dispute according to the facts. This being done, when all those on one side desire a removal, it may be had, if the necessary citizenship exists. Id. at 469 (emphasis added).

While under the present removal statute only a defendant may remove, the observations of the Court concerning the alignment of the parties and their joinder in the removal petition are still pertinent. In the instant case, the fact, therefore, that petitioner did not obtain the joinder or consent of Ettlinger to the amended petition for removal does not render the petition defective. Since Ettlinger actually occupies the position of a party-plaintiff, his consent cannot be deemed necessary to the removal of the suit.⁹

Similarly, the omission of defendant Vanderkief from the removal petition is not a fatal defect. Vanderkief and the other residuary legatees are neither necessary nor indispensable parties to this action. Their interests are adequately represented by the executor, and their consent or joinder in the executor's petition for removal, therefore, was unnecessary.

A defendant who seeks to remove a suit from a state to a federal court is entitled to contend that a party joined by the plaintiff is not a necessary party.¹⁰ It is well established that the joinder of formal or unnecessary parties cannot prevent the removal of an action to a federal court.¹¹ In determining the propriety of removal on the basis of diversity of citizenship, only the citizenship of the real parties in interest controls.¹² The citizenship of formal or unnecessary parties is ignored.¹³ Likewise, only indispensable defendants are required to join in the petition for removal; the consent of nominal or formal parties is not necessary.¹⁴

Defendant Mottola was duly appointed by a Florida probate court as the Executor of the Estate of John Hertz, Jr. Under Florida law, he is obligated to collect and take possession of the decedent's personal property wherever situated, pay the...