Detres v. Lions Building Corporation

• Decision Date: 13 June 1956
• Docket Number: No. 11686.,11686.
• Citation: 234 F.2d 596
• Parties: Eugenia Medina DETRES, Hipolito Detres, Darria Ortiz and Miriam Ortiz Detres, a minor (by Eugenia Medina Detres, next friend), Plaintiffs-Appellants, v. LIONS BUILDING CORPORATION and Myrtle J. Christie, Herman Jaksch d/b/a Lions Restaurant and Paul Koger, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

234 F.2d 596 (1956)

Eugenia Medina DETRES, Hipolito Detres, Darria Ortiz and Miriam Ortiz Detres, a minor (by Eugenia Medina Detres, next friend), Plaintiffs-Appellants, v. LIONS BUILDING CORPORATION and Myrtle J. Christie, Herman Jaksch d/b/a Lions Restaurant and Paul Koger, Defendants-Appellees.

No. 11686.

United States Court of Appeals Seventh Circuit.

June 13, 1956.

Joseph M. Tobias, Norval A. Brown, Chicago, Ill., for appellant.

Paul H. Heineke, Paul E. Price, Robert L. Brody, Clarence R. Conklin, William H. Schrader, Louis F. Dennen, George J. Gore, Chicago, Ill. (Arthur J. Baer, Jr., Heineke, Conklin & Schrader, McKinley & Price, Chicago, Ill., of counsel), for appellees.

Before MAJOR, FINNEGAN and SWAIM, Circuit Judges.

SWAIM, Circuit Judge.

This case presents for review a decision of the United States District Court for the Northern District of Illinois, Eastern Division, which held that it did not have jurisdiction under 28 U.S.C.A. § 1332 of an action for damages based on a statute of the State of Illinois which the plaintiffs, citizens of Puerto Rico, filed against the defendants who are citizens of Illinois.

The applicable part of the diversity statute, as amended in 1948, provides as follows:

"(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and is between:

"(1) Citizens of different States:

* * * * *

"(b) The word `States\', as used in this section, includes the Territories and the District of Columbia."

The plaintiffs contend that Puerto Rico at the time this action was filed was, and still is, a Territory of the United States within the meaning of Section 1332(b), 28 U.S.C.A.

After various answers were filed the defendants filed a motion asking the trial court to dismiss the action upon its own motion for want of jurisdiction. In support of this motion the defendants alleged that in both the original complaint and in the amended complaint the plaintiffs had stated that they were citizens of the Territory of Puerto Rico; that "the former insular possession of Puerto Rico is not now, and was not on August 13, 1953, a Territory, but a Commonwealth `within our union with the United States'"; and that therefore "Section 1332, 28 U.S.C.A. does not confer jurisdiction upon the United States District Court of an action between a citizen of a state and a citizen of the Commonwealth of Puerto Rico." In response to this motion the District Court dismissed this action, and thereafter denied the plaintiffs' motion to vacate the order of dismissal and to permit them to amend their complaint to show that they were citizens of the Commonwealth of Puerto Rico.

The first question presented is whether citizens of the Commonwealth of Puerto Rico are citizens of a Territory of the United States within the meaning of Section 1332, 28 U.S.C.A. There can be no doubt that citizens of Puerto Rico come within the purpose of the diversity section of the Code, which was to guard against possible discrimination by state courts in favor of resident over nonresident litigants, 54 Am.Jur., page 710, but we are admonished by many decisions that this section, granting to federal courts jurisdiction over diversity cases, must be strictly construed. In Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 675, 86 L.Ed. 951, the Court said:

"The policy of the statute conferring diversity jurisdiction upon the district courts calls for its strict construction. Citations. Accordingly, if a plaintiff\'s allegations of jurisdictional facts are challenged by the defendant, the plaintiff bears the burden of supporting the allegations by competent proof."

See also City of Indianapolis v. Chase National Bank, 314 U.S. 63, 62 S.Ct. 15, 86 L.Ed. 47; and Trust Co. of Chicago v. Pennsylvania Railroad Co., 7 Cir., 183 F. 2d 640, 642, 21 A.L.R.2d 238. However, strict construction does not require that a plaintiff who alleges facts bringing himself within the diversity section should be denied the privilege of maintaining his action in the federal courts without an opportunity to prove the facts necessary to sustain his allegations as to diversity.

The trial court in the instant case decided as a matter of law that a citizen of Puerto Rico was not a citizen of a "territory" and was, therefore, not entitled to bring an action under the diversity section of the Code against citizens of the State of Illinois. We think this decision was erroneous.

It seems clear to us that for many years prior to July 25, 1952, when the new constitution of Puerto Rico was declared to be in force, the island of Puerto Rico, the adjacent islands belonging to the United States and the waters of those islands, had been considered by the government and the courts as a Territory of the United States.

Puerto Rico was ceded to the United States by Spain under the Treaty of Paris in 1898, 30 Stat. 1755. For a short period of time it was under military government. By the Foraker Act, 31 Stat. 77, April 12, 1900, Congress established a temporary civil government for Puerto Rico to administer local affairs and to provide revenue. That Act provided for a bill of rights, for a territorial governor and other executive officers, and for a legislative department and a judicial department. Under the Foraker Act most of the officials for Puerto Rico were appointed by the President of the United States, with the advice and consent of the Senate, but the members of the House of Delegates, one of the two branches of the legislative assembly, were chosen by the qualified voters of Puerto Rico. The then inhabitants of Puerto Rico, with some exceptions, and their children born thereafter were declared to be citizens of Puerto Rico and entitled to the protection of the United States. Such inhabitants together with citizens of the United States residing in Puerto Rico were to constitute a body politic under the name "People of Puerto Rico." That Act provided that the laws and ordinances then in force in Puerto Rico should continue in force and effect except insofar as they were inconsistent with the applicable statutory laws of the United States and with the provisions of the Foraker Act or which were altered thereafter pursuant to the provisions of that Act.

Congress next turned its attention to the form of government for Puerto Rico in 1917. The Organic Act of 1917, 39 Stat. 951, c. 145, 48 U.S.C.A. § 731 et seq., sometimes referred to as the Jones Act, granted further local legislative powers to the government of Puerto Rico. This Act provided for the election by the qualified electors of Puerto Rico of a resident commissioner to the United States and provided that he should be entitled to receive official recognition by all departments of the United States. In the Organic Act all inhabitants of Puerto Rico, with certain minor exceptions, were declared to be citizens of the United States.

In 1947 Congress amended the Organic Act of Puerto Rico, 61 Stat. 770, 48 U.S. C.A. § 771 et seq., by providing for the election by the qualified voters of Puerto Rico of a governor, and for his impeachment and removal from office by the legislature of Puerto Rico. This 1947 Act also provided for the appointment by the governor, with the advice and consent of the Senate of Puerto Rico, of the heads of the executive departments of the government of Puerto Rico.

In its opinion in this case the District Court, after briefly describing the government of Puerto Rico prior to 1950, said, 136 F.Supp. 699, 701:

"It was clear that Puerto Rico qualified as a Territory for purposes of acts of Congress which included the Territories. Citation of many decisions which so held. The Island conformed to one of the commonly quoted definitions of a territory as a `portion of the country not included within the limits of any state, and not yet admitted as a state into the Union, but organized under the laws of Congress with a separate legislature, under a territorial governor and other officers appointed by the President and Senate of the United States.\' Citing authorities."

After pointing out that while Puerto Rico was a completely organized territory but was not a territory incorporated into the United States and that, therefore, Congress was not under an obligation to provide ultimate statehood for it, the District Court said, 136 F.Supp. at page 701:

"Nevertheless, Puerto Rico was a territory, and unquestionably the provisions for diversity jurisdiction in Section 1332 were thought to include citizens of Puerto Rico."

However, in the trial court the defendants argued, and the court accepted their argument, that after the approval of the constitution for Puerto Rico and the change of the name to the Commonwealth of Puerto Rico the island could no longer be considered a "territory" as the term is used in the diversity section of the Code.

The first act by Congress granting Puerto Rico the right to a constitutional government was Public Law 600, Ch. 446, Laws of the 81st Congress, 2nd Session, 64 Stat. 319, approved July 3, 1950. That Act stated: "fully recognizing the principle of government by consent, this Act is now adopted in the nature of a compact so that the people of Puerto Rico may organize a government pursuant to a constitution of their own adoption." 48 U.S.C.A. § 731b. It was provided that the Act should be submitted to the qualified voters of Puerto Rico for their acceptance or rejection; that if the Act was approved by a majority of the voters voting, the legislature of Puerto Rico was authorized to call a constitutional convention to draft a constitution for the island of Puerto Rico; and that the constitution should provide for a republican form of government and should include a bill of rights. After the adoption of the constitution by the people of Puerto Rico, the President of the United States was authorized to transmit the constitution to the...