Dery v. Wyer

• Citation: 265 F.2d 804
• Decision Date: 26 March 1959
• Docket Number: No. 41,Docket 24735.,41
• Parties: Elizabeth M. DERY, as Administratrix of the Goods, Chattels and Credits which were of Percy A. Dery, Deceased, Plaintiff, v. William WYER, as Trustee of The Long Island Railroad Company, Defendant and Third-Party Plaintiff-Appellant, McKeon Lumber Corporation, Third-Party Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

265 F.2d 804 (1959)

Elizabeth M. DERY, as Administratrix of the Goods, Chattels and Credits which were of Percy A. Dery, Deceased, Plaintiff, v. William WYER, as Trustee of The Long Island Railroad Company, Defendant and Third-Party Plaintiff-Appellant, McKeon Lumber Corporation, Third-Party Defendant-Appellee.

No. 41, Docket 24735.

United States Court of Appeals Second Circuit.

Argued November 10, 1958.

Decided March 26, 1959.

COPYRIGHT MATERIAL OMITTED

William F. McNulty, New York City (William J. O'Brien, New York City, on the brief), for defendant and third-party plaintiff-appellant.

Joseph Kane, New York City (Evans, Orr, Gourley & Pacelli, and Walter G. Evans, New York City, on the brief), for third-party defendant-appellee.

Before HINCKS, LUMBARD and MOORE, Circuit Judges.

HINCKS, Circuit Judge.

In November, 1953, plaintiff's intestate, a brakeman employed by the Long Island Railroad Company, was killed when he was knocked from the side of a moving freight car by a gate post located on the land of McKeon Lumber Company. Under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., the plaintiff-administratrix, a citizen of New York, brought an action against the defendant as trustee of the Railroad. The defendant filed a third-party complaint against the Lumber Company, claiming full indemnity for any loss for which it might be held liable to the plaintiff. Both the Railroad and the Lumber Company were citizens of New York. With the litigation in this posture, the plaintiff's action was settled for $30,000; thereafter the third-party action was tried to the court, upon an agreed stipulation of the facts. Judge Abruzzo decided that both the Railroad and the Lumber Company were at fault. The situation, he held, was governed by the terms of a written agreement between the parties which provided that "if any * * * liability * * * shall arise from the joint or concurring negligence of both parties it * * * shall be borne equally." His judgment therefore provided that each should contribute $15,000 to this settlement. From this judgment the Railroad appeals claiming to be entitled to complete indemnity.

The district court's jurisdiction over the third-party complaint was not questioned below but at our request the point was briefed by the parties and is before us now. The questions for decision are whether the district court had jurisdiction to entertain the third-party complaint, independent grounds of federal jurisdiction being absent;¹ and whether federal jurisdiction over the third-party claim, if it once attached, survived the settlement of the main action upon which federal jurisdiction depended. We think that both questions must be answered in the affirmative.

The contemporary sanction for third-party procedure in the federal courts is Rule 14 of the Federal Rules of Civil Procedure, 28 U.S.C.A. which provides that a defendant with the permission of the court, on a claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff, may implead a person not theretofore a party to the action who "is or may be liable to him for all or part of the plaintiff's claim against him."² The general purpose of the rule was "to avoid two actions which should be tried together to save the time and cost of a reduplication of evidence, to obtain consistent results from identical or similar evidence, and to do away with the serious handicap to a defendant of a time difference between a judgment against him and a judgment in his favor against the third-party defendant." 3 Moore's Federal Practice, ¶ 14.04.

To understand the basic theory of Rule 14 it is necessary to remember that in the Federal Rules of Civil Procedure the word "claim" has a somewhat broader connotation than that which prior to the Rules pertained to a "cause of action." "It is used to denote the aggregate of operative facts which give rise to a right enforceable in the courts." Original Ballet Russe v. Ballet Theatre, 2 Cir., 133 F.2d 187, 189. As this court noted in Clark v. Taylor, 2 Cir., 163 F.2d 940, 942: "The theory adopted in the new rules * * * has been that the `transaction' or `occurrence' is the subject matter of a claim, rather than the legal rights arising therefrom; additions to or subtractions from the central core of fact do not change this substantial identity * * *." American Fidelity & Casualty Co. v. Owensboro Milling Co., 6 Cir., 222 F.2d 109; 2 Moore's Federal Practice, page 359 et seq. The same aggregate or core of facts may give rise not only to rights in the plaintiff against the defendant but also to rights in the defendant against third parties. Under Rule 14, as amended, in the discretion of the court a defendant in the very action which determines the plaintiff's right against him may have a determination of any right of his against another which arises out of the same transaction or set of facts which gave rise to the plaintiff's claim. It is the theory of the Rule that the defendant's right against the third party is merely the outgrowth of the same aggregate or core of facts which is determinative of the plaintiff's claim. In this view, the court which has jurisdiction over the aggregate of facts which constitutes the plaintiff's claim needs no additional ground of jurisdiction to determine the third-party claim which comprises the same core of facts. It is, we think, in this sense that the court is said to have ancillary jurisdiction over the third-party claim.

The great weight of authority amongst the federal district courts is to the effect that when federal jurisdiction over the subject-matter of the main action once attaches the court has ancillary jurisdiction to decide a third-party dispute growing out of the same core of facts and hence within the scope of the Rule even though the dispute, separately considered, is lacking in the attributes of federal jurisdiction. This appears from the cases listed in 3 Moore's Federal Practice, ¶ 14.26 n. 6 and 1958 Supplement, page 496. See also Foster v. Brown, Chesnut, Judge, D.C.D.Md., 22 F.R.D. 471. In a number of appellate court opinions there is discussion which clearly supports that conclusion. Lesnik v. Public Industrial Corp., 2 Cir., 144 F. 2d 968; Walmac Co. v. Isaacs, 1 Cir., 220 F.2d 108; United States v. Acord, 10 Cir., 209 F.2d 709, certiorari denied 347 U.S. 975, 74 S.Ct. 766, 98 L.Ed. 1115; Sheppard v. Atlantic States Gas Co., 3 Cir., 167 F.2d 841; Williams v. Keyes, 5 Cir., 125 F.2d 208, certiorari denied 316 U.S. 699, 62 S.Ct. 1297, 86 L.Ed. 1768. Cf. American Fidelity & Casualty Co. v. Owensboro Milling Co., supra. In Bernstein v. N. V. Nederlandsche-Amerikaansche, 2 Cir., 173 F.2d 71, this court recognized the presence of ancillary jurisdiction over a third-party claim thus importing that no independent ground of jurisdiction was required, although, as it happened, an independent ground, diversity, was there present.

Our conclusion as to the ancillary character of a third-party claim under Rule 14 is fortified by cases in the cognate field of compulsory counterclaims under Rule 13. This court is committed to the majority rule that such a counterclaim — even one which impleads a new party³ — may rest on ancillary jurisdiction without need for an independent ground of federal jurisdiction. United Artists Corp. v. Masterpiece Productions, Inc., 2 Cir., 221 F.2d 213; Lesnik v. Public Industrial Corp., 2 Cir., 144 F.2d 968, 975. See Moore v. New York Cotton Exchange, 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750; 3 Moore's Federal Practice, ¶ 13.15.

A rule of procedure, of course, however convenient and salutary it may be, is without efficacy to extend the jurisdiction of a court. See Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148; Fed.Rules Civ.Proc., Rule 82. But Rule 14 does not extend jurisdiction. It merely sanctions an impleader procedure which rests upon the broad conception of a claim as comprising a set of facts giving rise to rights flowing both to and from a defendant. For solution of the incidental jurisdictional problems which often attend utilization of the procedure, the concept of ancillary jurisdiction, which long antedated the Federal Rules, may often be drawn upon. See, e. g., Dewey v. West Fairmont Gas Coal Co., supra; Moore v. New York Cotton Exchange, supra; Empire Lighting Fixture Co. v. Practical Lighting Fixture Co., 2 Cir., 20 F.2d 295; Lesnik v. Public Industrial Corp., supra; 3 Moore's Federal Practice, ¶ 14.02; The Ancillary Concept and the Federal Rules, 64 Harv.L.Rev. 968. In this case, we hold, the jurisdiction which the court below had acquired over the plaintiff's claim was broad enough to comprehend jurisdiction of the ancillary third-party claim and that the ancillary jurisdiction attached when the impleader was accomplished.

We also hold that the ancillary jurisdiction over the third-party complaint was not lost when the main cause of action was settled. Generally, in a diversity action, if jurisdictional prerequisites are satisfied when the suit is begun, subsequent events will not work an ouster of jurisdiction. Mullen v. Torrance, 9 Wheat. 536, 6 L.Ed. 154; St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845; Hardenbergh v. Ray, 151 U. S. 112, 14 S.Ct. 305, 38 L.Ed. 93. This result is not attributable to any specific statute or to any language in the statutes which confer jurisdiction. It stems rather from the general notion that the sufficiency of jurisdiction should be determined once and for all at the threshold and if found to be present then should continue until final disposition of the action. Moreover, in cases involving the impact of jurisdictional problems on the joinder of claims under Rule 18 it has been held that jurisdiction of the ancillary claim survives the final disposition of the main claim. American Fidelity & Casualty Co. v. Owensboro Milling Co., supra; ...