Columbia Digger Co. v. Rector

• Decision Date: 14 July 1914
• Docket Number: 1218.
• Citation: 215 F. 618
• Court: U.S. District Court — Western District of Washington
• Parties: COLUMBIA DIGGER CO. v. RECTOR et al.

215 F. 618

COLUMBIA DIGGER CO. v. RECTOR et al.

No. 1218.

United States District Court, W.D. Washington, Southern Division.

July 14, 1914

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Giltner & Sewall, of Portland, Or., for plaintiff.

Miller Crass & Wilkinson, of Vancouver, Wash., for defendants Sparks and another.

CUSHMAN District Judge.

Plaintiff, an Oregon corporation, sues the defendants for material furnished defendants Rector & Daly, and used by them in a street improvement in Vancouver, Wash. The defendants Sparks and Blurock were sureties upon the bond of Rector & Daly, given to the city for the performance of the work, which bond was also for the benefit of materialmen. The complaint alleges that, after entering upon the performance of the contract, Rector & Daly abandoned it and turned it over to their sureties, with all their rights thereunder; that the sureties completed the contract, and received, in money and bonds, from the city of Vancouver, $11,633.98. The sureties answer, denying the receipt of anything in excess of $9,158.70, and alleging the expenditure of this amount in completing the contract. They further allege that, under the agreement between the plaintiff and the contractors, Rector & Daly, it was provided that payments made from time to time from the street improvement should be credited, by plaintiff, to the general, unsecured indebtedness of Rector & Daly, and that plaintiff would look to the sureties, Sparks and Blurock, for its pay for the material furnished for this particular improvement; that the sureties were ignorant of this arrangement; that it was carried out and constitutes a fraud upon the sureties; that the amount so paid plaintiff exceeds the amount claimed by it for material furnished; that it had been fully paid for such materials from money derived from the improvement; that Rector & Daly have been adjudged bankrupts, and, if the sureties are compelled to pay this claim, they will be unable to recover from them. The cause was tried to the court, upon stipulation without a jury. After the trial, a question was raised as to the court's jurisdiction, which is based upon the diverse citizenship of the parties. Plaintiff is an Oregon corporation. The defendants Sparks and Blurock are alleged to be citizens of the state of Washington. The allegation of the complaint as to Rector & Daly is:

'That the defendants A. B. Rector and Charles Daly are and were at all the times herein mentioned copartners doing business under the firm name and style of Rector & Daly, and engaged in a general contracting business in the city of Vancouver, county of Clarke, state of Washington.'

The following general propositions are well settled:

Where the necessary diverse citizenship does not exist, jurisdiction cannot be conferred by the consent of the parties.

The court, on its own motion, will dismiss the action when it appears to it the necessary diverse citizenship does not exist.

The requisite diverse citizenship does not exist when one of the defendants is a citizen of the same state as the plaintiff.

Each of the members of a partnership must have the requisite citizenship to give the court jurisdiction, and it is neither conferred nor withheld by reason of the state of the partnership's organization, or in which it conducts business. Nor does any presumption arise therefrom that the members of the partnership are citizens of said state. Carnegie, Phipps & Co. v. Hulbert, 53 F. 10, 3 C.C.A. 391; Chapman v. Barney, 129 U.S. 677, 9 Sup.Ct. 426, 32 L.Ed. 800; Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 20 Sup.Ct. 690, 44 L.Ed. 842; Ralya Market Co. v. Armour & Co. (C.C.) 102 F. 530 (third syllabus); Bruett & Co. v. Austin D.E. Co. (C.C.) 174 F. 668 (second syllabus).

This court being one of limited jurisdiction, the jurisdiction must be made to appear clearly and distinctly, either by the pleadings or the record. Chapman v. Barney, 129 U.S. 677, 681, 9 Sup.Ct. 426, 32 L.Ed. 800; Robertson v. Cease, 97 U.S. 646, 649, 24 L.Ed. 1057.

The complaint sets out, as an exhibit, a copy of the contract between Rector & Daly and the city of Vancouver, in which it is provided:

'This agreement made and entered into this 6th day of May, A.D. 1911, by and between A. B. Rector and Charles Daly, copartners doing business under the firm name and style of Rector & Daly, both of the city of Vancouver, county of Clarke, and state of Washington. * * * '

The exhibit, although a part of the record, does not furnish the necessary allegation of citizenship. To say one is 'of' a place is neither to allege temporary residence nor such residence as to show a domicile, which latter it would have to do in order to aver the necessary citizenship. Horne v. Hammond Co., 155 U.S. 393, 15 Sup.Ct. 167, 39 L.Ed. 197.

The bond sued on is the joint and several bond of the defendants. At common law, the plaintiff, suing on such an obligation, might sue all the parties jointly or each severally (9 Cyc. 708 (3)). The common law in this respect is modified in the state of Washington by section 192, Rem. & Bal. Code., which provides:

'Persons severally liable upon the same obligation or instrument, including the parties to bills of exchange and promissory notes, may all, or any of them, be included in the same action, at the option of the plaintiff. ' Pacific Bridge Co. v. U.S.F. & G. Co., 33 Wash. 47, 73 P. 772.

Such a statute, under the Conformity Act (Act June 1, 1872, c. 255, Sec. 5, 17 Stat. 197, section 914, Rev. St. 4 Fed.Stat.Ann. 563 (U.S. Comp. St. 1901, p. 684)), controls in this court as to what parties are necessary. Sawin, Adm'r, v. Kenny, 93 U.S. 290, 23 L.Ed. 926. Rector & Daly are therefore not indispensable parties. Hicklin v. Marco, 56 F. 549, 6 C.C.A. 10.

'The obligation assumed by the surety in such cases is coextensive with that of the principal debtor, and if the plaintiff sees fit to sue the surety, together with the principal, in a suit brought to enforce the obligation, the presence of the surety upon the record cannot be ignored, in an application made to remove the case to the federal court, on the theory that the surety is merely a nominal party. ' Mut'l Reserve Fund Life Ass'n v. Farmer, 77 F. 929, 931, 23 C.C.A. 574, 577.

'Where defendants' liability is joint as well as several, and plaintiff elects to sue them jointly, this determines the character of the suit; and neither defendant can treat it as several against him, so as to authorize him to remove it. ' Moore v. Los Angeles Iron & Steel Co. (C.C.) 89 F. 73; Pirie v. Tvedt, 115 U.S. 41, 5 Sup.Ct. 1034, 1161, 29 L.Ed. 331; Torrence v. Shedd, 144 U.S. 527, 12 Sup.Ct. 726, 36 L.Ed. 528.

The defendants Rector & Daly are not only named as defendants in the complaint in the case at bar, but summons was sued out, directing them to appear and defend. Summons was never served on them.

'It is a general rule, except when it has been otherwise provided by statute, that the action is deemed commenced, so far as the parties to it are concerned, from the time the writ or summons is sued out.' 1 Cyc. 747.

In Washington, actions are commenced by the service of summons, or the filing of the complaint with the county clerk, as clerk of the court. 1 Rem. & Bal. Code, Sec. 220. With the action in this situation, it would appear that all that is necessary, if aught is necessary to oust the court of jurisdiction, would be for one of the defendants, Rector or Daly, to appear herein, providing he were a citizen of Oregon, which, in the absence of other allegation, will be presumed. Thus would the court's jurisdiction be jeopardized to the moment of judgment, a most weak and unsatisfactory position. The mere fact that the record does not show service of summons upon Rector and Daly does not necessarily have the same effect as an affirmative showing upon the record that they have been dismissed from the action, for, as long as not dismissed, the summons remains an invitation, if not a command, for them to appear, which would not be the case after a dismissal.

Upon the suggestion of want of jurisdiction, after hearing the evidence and arguments upon the issues made on the merits by the pleadings, the plaintiff now has moved to dismiss as to Rector & Daly. This renders it unnecessary to determine the effect upon the jurisdiction of no service being shown upon such parties.

While Chief Justice Marshall, in Conolly v. Taylor, 2 Pet. 556, 7 L.Ed. 518, announced the rule to be that, where the bill failed to show jurisdiction by omitting to state the character of the parties, while the court could not exercise jurisdiction while the defect remained, yet 'it might be corrected at any time before the hearing,' it is clear that this was a careful statement of the doctrine only as far as the needs of that case required it to be announced. By later cases such amendments have been allowed upon the entry of the final decree, and even after reversal by the Appellate Court and remand. Carneal v. Banks, 10 Wheat. 181, 6 L.Ed. 297; Tug River Coal & Salt Co. v. Brigel, 86 F. 818, 30 C.C.A. 415; Grove v. Grove (C.C.) 93 F. 865; Holloway & Bro. v. White-Dunham Shoe Co., 151 F. 216, 80 C.C.A. 568, 10 L.R.A. (N.S.) 704.

The motion to dismiss is granted, and the court held to have jurisdiction of the cause between the remaining parties.

Upon the trial, plaintiff objected to any testimony to support the defense that the payments made by Rector & Daly should be applied in reduction of defendants' obligation, as sureties, on the ground that it was an equitable defense and in the federal court, could not, for that reason, be made in a law action. The defense of payment is a matter in bar and not set-off. 30 Cyc. 1252A. Particular...