Atlantic Nat. Bank of Boston v. Hupp Motor Car Corp.
| Decision Date | 08 April 1938 |
| Citation | 300 Mass. 196,14 N.E.2d 167 |
| Parties | ATLANTIC NAT. BANK OF BOSTON et al. v. HUPP MOTOR CAR CORPORATION et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Suit in equity on a claim for rent by the Atlantic National Bank of Boston and others against the Hupp Motor Car Corporation and others. From an order accepting a petition and bond for removal to the District Court of the United States for the District of Massachusetts and directing that the superior court proceed no further, the plaintiffs appeal.
Order reversed.Appeal from Superior Court, Suffolk County; Walsh, Judge.
M. Jenckes, R. Donaldson and Malcolm C. Stewart, all of Boston, for plaintiffs.
J. T. Noonan, of Boston, for defendants.
On April 11, 1935, the plaintiff entered in the Superior Court the bill together with a writ in which the bill was not ‘inserted’ as a declaration was inserted in the writ at common law, Whiting v. Houghton, 228 Mass. 429, 117 N.E. 825; G.L.(Ter.Ed.) c. 214, §§ 7, 8, although the writ commanded the sheriff to summon the defendants to appear and answer to the plaintiff ‘in a bill in equity.’ But no point was made of that matter. Instead, the defendant Hupp Motor Car Corporation, a Virginia corporation (hereinafter called the defendant), unsuccessfully attacked the service upon its agent in this Commonwealth. Atlantic National Bank of Boston v. Hupp Motor Car Corporation, Mass., 10 N.E.2d 131.
The gist of the bill is as follows: In 1930 a wholly owned subsidiary of the defendant called Commonwealth Alcorn Company, a Massachusetts corporation, bought land in Boston and erected thereon a building for the sale of automobiles manufactured by the defendant, giving an unrecorded lease thereof to the defendant, dated August 1, 1930, for the term of twenty years, at a monthly rental of $2,666.67, the lessee paying the taxes and all other expenses of the upkeep of the property. With the consent of the lessor, the defendant sublet the entire premises to another partly owned subsidiary of the defendant, Boston Hupmobile Company, Inc., a Massachusetts corporation, for the entire term of twenty years.
Atlantic Securities Company, a Massachusetts corporation, lent the sum of $250,000 to Commonwealth Alcorn Company for the purpose of financing the erection of its building, taking therefor a note secured by mortgage on the building and land, dated January 30, 1930. The mortgage was expressly made subject to the proposed lease and sublease, already described. On September 9, 1930, this note and mortgage were assigned to the plaintiff, a national banking association which, for the purposes of the removal of causes to the Federal courts, is deemed a citizen of Massachusetts. U.S.C. title 28, § 41(16), 28 U.S.C.A. § 41(16). Continental National Bank of Memphis v. Buford, 191 U.S. 119, 24 S.Ct. 54, 48 L.Ed. 119;American Bank & Trust Co. v. Federal Reserve Bank of Atlanta, 256 U.S. 350, 357, 41 S.Ct. 499, 65 L.Ed. 983, 25 A.L.R. 971.
The note became due on January 30, 1935. At that time $210,000 was due as principal, with interest from October 30, 1934. The mortgaged premises were then not worth the principal sum. In order to defeat recovery by the plaintiff, the defendant caused Boston Hupmobile Company, Inc., to surrender its sublease, and itself surrendered its lease, or pretended to do so, for the purpose of ending its liability for rent. Commonwealth Alcorn Company, the lessor, acted under the domination of the defendant in accepting the surrender of the lease, and received no consideration. This was done in anticipation of a default in payment of the mortgage note on January 30, 1935, and with the design to make such default. Another subsidiary of the defendant, called Courtney & Eldredge, Inc., a Massachusetts corporation, was formed, and it became tenant at will of Commonwealth Alcorn Company at a monthly rental of $500. None of the details of the scheme were known to the plaintiff until after February 26, 1935, when the plaintiff entered upon the premises for the purpose of foreclosure and demanded from the defendant rent under the lease.
The bill asked that the pretended surrender of the lease by the defendant be declared null and void, that the claim of the plaintiff for rent against the defendant be established and enforced, that the shares of stock owned by the defendant in its various subsidiaries be applied to the satisfaction of the debt of the defendant to the plaintiff, and for various forms of incidental relief. We assume, without deciding, that the presence of the three Massachusetts corporations, subsidiaries of the defendant, as parties defendant to the bill, may be disregarded as unessential, and that the suit could have been removed to the Federal District Court for the District of Massachusetts on the ground of diverse citizenship by proper proceedings taken not later than the time when answer was required on or about May 1, 1935. Rule 25 of the Superior Court (1932). Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903;Martin's Adm'r v. Baltimore & Ohio Railroad Co., 151 U.S. 673, 14 S.Ct. 533, 38 L.Ed. 311;Dunbar v. Rosenbloom, 230 Mass. 176, 119 N.E. 829;U.S.C. title 28, §§ 41(1), 71, 72, 28 U.S.C.A. §§ 41(1), 71, 72.
On December 21, 1937, a judge of the Superior Court allowed amendments which created the questions raised upon the present appeal. These amendments made parties plaintiff the trustees, citizens of Massachusetts, appointed by this court in another proceeding for the holders of mortgage participation certificates entitled to the beneficial interest in the note and mortgage given by Commonwealth Alcorn Company to Atlantic Securities Company, to which trustees the original plaintiff by its receiver had assigned on January 14, 1937, all rights under said note and mortgage and all rights in or under this suit. These amendments also added to the bill allegations that on January 6, 1937, the original plaintiff gave notice in writing to the defendant that for breach of covenant in the lease to the defendant it would enter and repossess the property leased, that on February 10, 1937, the trustees did so enter and repossess the property leased, that a new lease of the property for five years from August 1, 1937, at a rent of $13,000 a year was made, and that such rent was all that could be obtained. A prayer was added asking for damages assessed as of the termination of the lease representing the ‘difference between rental value of the premises for the remainder of the term of said lease and the rent and other payments named in said lease to be made in the total amount of $19,000 per annum from 1937 to 1950 or $247,000.’ There was a provision in the lease to the defendant that in case of termination of the lease the defendant covenanted that it would ‘pay to the lessor as damages such a sum as at the time of such termination represents the difference between the rental value of the premises for the remainder of the said term and the rent and other payments herein named.’
Within the ten days allowed for answer to the amendment of December 21, 1937, by Rule 25 of the Superior Court (1932), the defendant filed a petition for the removal of the case to the District Court of the United States for the District of Massachusetts, and complied with the conditions of such removal. The judge in the Superior Court accepted the petition and bond for removal, and ordered that the court proceed no farther in this suit. The appeal of the plaintiffs brings the case here. G.L. (Ter.Ed.) c. 214, § 19. Duff v. Hildreth, 183 Mass. 440, 67 N.E. 356. See, also, Lawrence Trust Co. v. Chase Securities Corp., Mass., 198 N.E. 905;Graustein v. Dolan, 282 Mass. 579, 583, 185 N.E. 489.
By the Constitution of the United States, article 3, § 2, the judicial power of the United States extends to ‘controversies * * * between citizens of different States.’ But the right to remove a case from a State court to a Federal court is not necessarily as broad as the judicial power of the United States. The right of removal is no broader than the Federal statute. Gaines v. Fuentes, 92 U.S. 10, 17, 18, 23 L.Ed. 524;Pringle v. Storrow, 256 Mass. 561, 563, 153 N.E. 26, 49 A.L.R. 1222;Columbian National Life Ins. Co. v. Cross, Mass., 9 N.E.2d 402. By U.S.C. title 28, § 41(1), 28 U.S.C.A. § 41(1), a suit of a civil nature, at common law or in equity, where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and is between citizens of different States, is within the original jurisdiction of a District Court of the United States. By section 71, any ‘suit of a civil nature, at law or in equity, of which the district courts of the United States are given jurisdiction, in any State court, may be removed into the district court of the United States for the proper district by the defendant or defendants therein, being nonresidents of that State.’ By section 72, the petition for removal must be filed in the State court ‘at the time, or any time before the defendant is required by the laws of the State or the rule of the State court in which such suit is brought to answer or plead to the declaration or complaint of the plaintiff, for the removal of such suit into the district court to be held in the district where such suit is pending.’ Obviously, unless the amendments of December 21, 1937, created a new right of removal, the removal was claimed too late. The decisive question is, whether those amendments did create a new right of removal.
It is true, that a suit not removable, considered as a whole, because not wholly between citizens of different States, may have within it a separable controversy that is wholly between citizens of different States. In such a case the defendant or defendants in that separable controversy may exercise the right of removal, and the removal will operate to remove the entire suit. Gainesville v. Brown-Crummer Investment Co., 277...
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