Bishop v. Hendricks

• Decision Date: 17 April 1974
• Docket Number: No. 73-1725.,73-1725.
• Citation: 495 F.2d 289
• Parties: C. G. BISHOP, Administrator of the Estate of Arthur Lee Baker, Jr., Deceased, Appellant, v. S. HENDRICKS, Jr., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

495 F.2d 289 (1974)

C. G. BISHOP, Administrator of the Estate of Arthur Lee Baker, Jr., Deceased, Appellant, v. S. HENDRICKS, Jr., Appellee.

No. 73-1725.

United States Court of Appeals, Fourth Circuit.

Submitted February 6, 1974.

Decided April 17, 1974.

William T. Jones, Greenwood, S. C., on brief for appellant.

James H. Watson and Carl G. Ferguson, Leatherwood, Walker, Todd & Mann, Greenville, S. C., on brief for appellee.

Before CRAVEN, RUSSELL and FIELD, Circuit Judges.

DONALD RUSSELL, Circuit Judge:

This is an action to recover under the wrongful death statute of South Carolina.¹ It arose out of a motor collision occurring in Newberry County, South Carolina. The deceased was a life-long citizen of South Carolina. The statutory beneficiaries of the action are likewise life-long citizens of South Carolina. The beneficiaries retained counsel to prosecute the wrongful death action on their behalf. After consulting with their counsel, they applied to the local probate court for the appointment of the plaintiff-appellant, a citizen of Georgia and a relative by marriage of the beneficiaries, as administrator in whose name the action might be prosecuted. This action was thereupon commenced as a diversity action in the District Court against the lessee-operator of the other vehicle involved in the accident.² The lessee of the other vehicle, who is the appellee on this appeal, was a citizen of South Carolina. He moved to dismiss the action for lack of diversity claiming in support of his motion that when a deceased leaves, as the deceased did in this case, no estate to be administered and the sole reason for the appointment of an administrator is to provide a nominal party plaintiff to institute the action, the benefits of which, if successful, pass directly to the statutory beneficiaries without any general administration, the citizenship of the administrator should be disregarded and the citizenship of the beneficiaries of the action should control in ascertaining federal diversity jurisdiction. The appellant-administrator countered with the contention that such a rule was applicable only when it could be found that the sole motive for the appointment of an out-of-state fiduciary was to create federal jurisdiction. The District Court, however, concluded, as did the Court in Nickell v. Westervelt (D.C.Va.1973) 354 F.Supp. 111, 112, and Johnson v. Worley (D.C.Va.1972) 353 F.Supp. 1381, 1382, that Miller v. Perry (4th Cir. 1972) 456 F.2d 63, "held that diversity of citizenship" in such a case as that here "is determined by the citizenship of the beneficiaries rather than by the citizenship of the administrator", and it reached that conclusion despite its remark that in its opinion the "motive" for the appointment of the out-of-state administrator in this case was not the creation of federal jurisdiction. It accordingly dismissed the action for want of jurisdiction. The administrator appeals. We affirm.

The appellant would confine the scope of Miller to the peculiar facts of that case; and since the facts in this case are different, he argues Miller is without application. Miller, however, was not phrased in the narrow terms of its own facts. The language of Miller was manifestly intended as a declaration of what one commentator has correctly denominated as "a substantial change in diversity jurisdiction".³ The Court in that case was focusing generally on the broad, fundamental problem of determining the real party in interest, not in a procedural but in a jurisdictional sense,⁴ and in making clear what, in the light of the decision in Kramer v. Caribbean Mills (1969) 394 U.S. 823, 89 S.Ct. 1487, 23 L.Ed.2d 9, was an "improper" or "collusive" joinder under Section 1359, 28 U.S.C. The emphasis "was on a fresh appraisal of an old problem."⁵ By its decision, the Court was making a choice between the old, purely mechanical or "ritualistic" rule that an administrator, validly appointed, is always the real party in interest whose citizenship fixes diversity jurisdiction and what, on the other hand, has been aptly described as the more recent "substantive real party in interest test" as determined by the facts of the particular case.⁶ The Court recognized that "there was nothing sacred in the customary rule that an administrator's citizenship governs, a principle which serves policies of judicial economy rather than federal-state comity" and concluded as a matter of principle that substance should prevail over mere procedure, that federal courts on jurisdictional issues should "assess the substantive relations between the parties to the controversy"⁷ and that they should make "a realistic determination with respect to the presence of diversity."⁸ It found authority for such an approach in Kramer, which directed, as construed in Miller, "that the duties and responsibilities of administrators should be taken into account in federal determinations of the relevancy of the citizenship of such a personal representative to the presence of diversity jurisdiction."⁹ It held specifically that when the responsibilities of the administrator are solely to institute the wrongful death action — when he is what one Court has described as "an administrator ad litem" and no more¹⁰ — the Court would "hinge the diversity determination to the citizenship of the wrongful death action beneficiaries, rather than to that of their representative."¹¹

The result reached in Miller had long found advocates among legal scholars.¹² It has received wide approval from the legal commentators.¹³ It is in conformity with the rule as stated by Professor Moore in his authoritative text:

"Where a party sues (or is sued) as a receiver, representative of a class, assignee, subrogee, executor or administrator it is normally his citizenship that is material when jurisdiction is dependent upon the character of the parties. This is true also of the general guardian of an infant, or the curator or committee of a lunatic, when under the law of the state where such fiduciary is appointed he has the status of a real fiduciary. But if the law of the state gives the administrator, guardian, or other representative the status of only a nominal fiduciary then the beneficiary or the ward, not the administrator or guarddian, is the real party in interest, and it is the citizenship of the beneficiary or ward, as the case may be, that is determinative." 3A, Moore\'s Federal Practice, pp. 112-4 (footnotes omitted).

"Such a determination", also, has the virtue that it "insures that federal jurisdiction will be invoked only when necessary to protect the party whose personal interest in the suit might be prejudiced by the presence of local bias", which "has been the historical view for why diversity jurisdiction originated". Note, Federal Jurisdiction — Citizenship of the Beneficiary Controls in Wrongful Death Actions Requiring a Resident Administrator, 51 N.C.L.Rev. 639, 646, and n. 44 (1973).¹⁴ To permit the appointment of a nominal non-resident fiduciary to create federal diversity jurisdiction would clearly "run counter to the general policy of viewing the federal courts as tribunals of limited jurisdiction whose subject matter jurisdiction principles should be applied with restraint,"¹⁵ and, through its artificial creation of diversity, would represent an "improper manufacture of jurisdiction"¹⁶ in obvious violation of the purposes of Section 1359.

Even if it be conceded that the rule in Miller is normally of general application, the appellant, however, would restrict it to situations where the reason or "motive" assigned for the appointment of the administrator was to create diversity jurisdiction. It may be assumed that if there is a valid reason for the appointment of an out-of-state administrator that gives to his representation greater substantiality than a mere administrator ad litem, the citizenship of the administrator may be determinative of diversity. This exception was implicit in Miller, which drew a clear distinction between the situation where the administrator was merely an agent to sue "without stake" in the litigation as it were and where he had some substantial interest or stake in the proceedings. It was, also, recognized by implication in Lester v. McFaddon. But it must be remembered that, in a situation where an out-of-state administrator files a wrongful death action on behalf of resident beneficiaries, involving the death of a resident decedent in an accident occurring within the state, want of diversity will be presumed unless the record provides sufficient support for the conclusion that the representation of the administrator is not nominal but was based on a valid and substantial reason.¹⁷ But for the reason or motive for the appointment to give the necessary substantiality to his representation that his citizenship will be regarded for diversity it must be more than an expression of sentiment or personal preference¹⁸ or mere kinship with either the beneficiaries or the decedent.¹⁹ Nor can it be established by some self-serving profession of good faith in the appointment. The reason or motive that will render the out-of-state administrator's citizenship important for diversity purposes must be one that harmonizes with the thrust and purposes of Section 1359 itself.²⁰ The history of Section 1359 makes clear its purpose. It was enacted as Section 5 of the Act of March 3, 1875, 18 Stat. 470, for the purpose of denying the use of federal courts in suits which did not "really and substantially involve a dispute or controversy properly within the jurisdiction" of the federal courts. This the statute stated in express terms. When this section and the assignee provision of the original Judiciary Act of 1789 were combined in the revision of 1948, this statement of express purpose was omitted but not because it was the intention of the revisers to alter in any way the purpose of the statute;²¹ the purpose of the revision and of the omission was...