Browne v. Hartford Fire Insurance Company

• Decision Date: 07 January 1959
• Docket Number: No. 58 C 1673.,58 C 1673.
• Parties: Albert BROWNE and Frank S. Ryskiewicz d/b/a Park Bowling Alley, Plaintiffs, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, Springfield Fire & Marine Insurance Company, a Corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

168 F. Supp. 796

Albert BROWNE and Frank S. Ryskiewicz d/b/a Park Bowling Alley, Plaintiffs, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, Springfield Fire & Marine Insurance Company, a Corporation, Defendants.

No. 58 C 1673.

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

January 7, 1959.

Dixon & Seidenfield, Waukegan, Ill., for plaintiffs.

Samuel Levin, Chicago, Ill., for defendants.

CAMPBELL, District Judge.

On August 14, 1958, plaintiffs filed a complaint seeking recovery under their contract of insurance for claimed loss from windstorm in the Circuit Court of Lake County, Illinois, against defendants, Hartford Fire Insurance Company and Marine Insurance Company. Summons was served on the defendants on August 22, 1958, and on September 10, 1958, a petition for removal of the cause from the Circuit Court of Lake County, Illinois, was filed in this Court and the cause was removed.

Petitioners set forth in their grounds for removal that there is involved an amount in excess of $10,000 exclusive of interest and costs and that the named defendants, Hartford Fire Insurance Company and Springfield Fire and Marine Insurance Company were incorporated in and therefore are citizens of the states of Connecticut and Massachusetts respectively whereas the plaintiffs are citizens of the county of Lake, State of Illinois. There is no mention in any of the pleadings of the principal place of business of either of the defendants. The only allegations with respect to the business of either defendant are contained in the complaint which alleges that both of these defendants are qualified, authorized, and are in fact doing business in the State of Illinois and that all the dealings between the parties in this case took place in the City of Waukegan, County of Lake, and State of Illinois.

On September 25, 1958, plaintiffs filed a motion to remand this cause to the Circuit Court of Lake County, Illinois, on the ground that jurisdiction does not exist in this Court as alleged. The petition for removal bases jurisdiction upon the general diversity section (Title 28 U.S.C. § 1332) of the United States Code which section was amended effective July 28, 1958. Subsection (c) of the Amended section 1332 provides as follows: "For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business."

The plaintiffs contend that the defendants in their petition for removal, have failed to allege that defendant corporations do not have their principal places of business in the State of Illinois as required by the amended Sec. 1332 and that therefore, there is a fatal defect in the petition since it contains no proper allegation of diversity of citizenship. Accordingly they assert there are no grounds for removal (28 U.S.C. § 1332; 28 U.S.C. § 1441) and that the cause should be remanded. 28 U.S.C. § 1447 (c).

The underlying purpose of diversity of citizenship legislation is to provide a separate forum for out-of-State citizens against supposed local prejudices. The purpose of removal legislation is to give a non-resident defendant who has been unwillingly brought into a State court, the right to remove to the presumably unprejudiced forum of the Federal court.

There is no question but that the recent trend in legislation has been to restrict jurisdiction in regard to removal causes in order to reduce the high volume of State cases that have been pouring into the United States Courts. Also, removal sections traditionally have been strictly construed and all doubts have always been resolved against removal.

The latest amendment to Sec. 1332 continues this policy. The legislative purpose of Sec. 1332 is discussed in the Congressional Record, June 30, 1958, at pages 11502-11509 and is set out in the U.S.Code Congressional and Administrative News, 1958, at pages 2595, 2596, as follows:

"It is now established doctrine that a corporation, for the purposes of jurisdiction is deemed a citizen of the State in which it is incorporated * * * It is by virtue of this rule, which is now long standing and thoroughly imbedded in our jurisdiction, that so-called out-of-State corporations may sue and be sued under the diversity jurisdiction where it is sued or being sued by a citizen of a State other than the State of its incorporation. This fiction of stamping a corporation a citizen of the State of its incorporation has given rise to the evil whereby a local institution, engaged in a local business and in many cases locally owned, is enabled to bring its litigation into the Federal courts simply because it has obtained a corporate charter from another State * * * This circumstance can hardly be considered fair because it gives the privilege of a choice of courts to a local corporation simply because it has a charter from another State, an advantage which another local corporation that obtained its charter in the home State does not have. The underlying purpose of diversity of citizenship legislation * * * is to provide a separate forum for out-of-State citizens against the prejudices of local courts and local juries by making available to them the benefits and safeguards of the Federal courts. Whatever the effectiveness of this rule, it was never intended to extend to local corporations which, because of a legal fiction, are considered citizens of another State. It is a matter of common knowledge that such incorporations are primarily initiated to obtain some advantage taxwise in the State of incorporation or to the obtain the benefits of the more liberal provisions of the foreign State's corporation laws. Such incorporations are not intended for the prime purpose of doing business in the foreign State. It appears neither fair nor proper for such a corporation to avoid trial in the State where it has its principal place of business by resorting to a legal device not available to the individual citizen. Because of these circumstances, and others, the Judicial Conference of the United States has recommended that the law be amended so that a corporation shall be regarded not only as a citizen of the State of its incorporation but also a citizen of the State in which it maintains its principal place of business. This will eliminate those corporations doing a local business with a foreign charter but will not eliminate those corporations which do business over a large number of States, such as railroads, insurance companies, and other corporations whose businesses are not localized in one particular State. Even such a corporation, however, would be regarded as a citizen of that one of the States in which was located its principal place of business."

It is clearly seen from this statement of purpose that amended Sec. 1332 (c) is not specifically directed at corporations such as defendants in the case at bar, nor is it specifically directed at a case of this nature. However, this knowledge does not solve the problem at hand since it is plain from the Statute that the...