Dollar SS Lines v. Merz, 6999.

• Decision Date: 23 January 1934
• Docket Number: No. 6999.,6999.
• Citation: 68 F.2d 594
• Parties: DOLLAR S. S. LINES, Inc., et al. v. MERZ.
• Court: U.S. Court of Appeals — Ninth Circuit

68 F.2d 594 (1934)

DOLLAR S. S. LINES, Inc., et al. v. MERZ.

No. 6999.

Circuit Court of Appeals, Ninth Circuit.

January 23, 1934.

Hugh Montgomery, of San Francisco, Cal., for appellants.

Lelia R. Leep, of San Francisco, Cal. (Wm. Shutz, of San Francisco, Cal., on the brief), for appellee.

Before WILBUR, SAWTELLE, and MACK, Circuit Judges.

MACK, Circuit Judge.

From a $2,500 judgment for plaintiff in an action for libel, defendants appeal.

Jurisdiction was predicated on diversity of citizenship. It appears, however, from the pleadings and admissions that the defendants, La Place and Trapp, are citizens of the same state as plaintiff. Unless these defendants are merely nominal parties, the court was without jurisdiction. Appellee, contending that they are nominal parties, asks that we either disregard them or dismiss as to them, and go on to a consideration of the merits. Appellants contend that it is too late to remedy the defect in jurisdiction, and that the judgment must be reversed, with directions to dismiss the entire cause. Both parties, however, ask that, if the defect in jurisdiction can be cured in this court, this should be done, and that the case be then disposed of on the merits.

Defendants La Place and Trapp are not merely nominal or formal parties, even though, as appellee contends, they may have acted only as agents for the other defendants. The cases relied upon by appellee involved parties who had no real interest in the controversy. See, for example, Salem Trust Company v. Manufacturers' Finance Company, 264 U. S. 182, 44 S. Ct. 266, 68 L. Ed. 628, 31 A. L. R. 867 (1924); Wood v. Davis, 18 How. 467, 15 L. Ed. 460 (1855); Hirsch v. Stone, 62 F.(2d) 120 (C. C. A. 5th, 1932). While neither of the defendants Trapp and La Place were indispensable parties to the tort action against their codefendants, they were, nevertheless, properly codefendants if plaintiff chose to hold all of them liable as joint wrongdoers. To this situation the language of this court in Matthew v. Coppin, 32 F.(2d) 100, 102 (1929) is directly applicable.

"Nor must a diversity of citizenship exist as to indispensable parties only. Liability for tort is joint and several, but if two defendants are sued jointly in a federal court for a tort, and a diversity of citizenship does not exist as between the plaintiff and each defendant, the decisions are uniform that the court is without jurisdiction. Devost v. Twin State Gas & Electric Company (C. C. A.) 250 F. 349. And it has been repeatedly held that federal courts are without jurisdiction where there is no diversity of citizenship as between plaintiffs and defendants, whether the parties are deemed indispensable or not, so long as they are not merely nominal or formal parties. * * *

"So, in this case, the plaintiff below having elected to sue the adverse claimants jointly, the court is incapable of distinguishing their case so far as respects jurisdiction from one in which he was compelled to join them."

Neither is there merit in the contention of the appellant that the judgment must be reversed with directions unconditionally to dismiss the cause. True it is that the present defect is not within section 274c of the Judicial Code¹, permitting amendment in the appellate court to remedy a defective allegation of diversity of citizenship when diversity of citizenship in fact exists. There are, however, many instances in which defects of diversity of citizenship jurisdiction, more serious than mere defective allegations, have been permitted to be cured both in trial and appellate courts, and thus the dismissal of the entire cause obviated.

Where, because of the joinder of proper, though not indispensable, parties as defendants, there is not merely on the record but in fact no such diversity of citizenship as to give jurisdiction, the District Court may permit a dismissal of such parties and thereby establish jurisdiction with retroactive effect. Horn v. Lockhart, 17 Wall. 570, 21 L. Ed. 657 (1873), Interstate Refineries, Inc., v. Barry, 7 F.(2d) 548 (C. C. A. 8th, 1925). This procedure may be followed even after a verdict against all the parties has been returned; moreover, judgment could then be entered against the remaining parties, on the original verdict. Mason v. Dullagham, 82 F. 689 (C. C. A. 7th, 1897); Williams v. Great Southern Lumber Co., 13 F.(2d) 246 (D. C. E. D. La. 1926) rev. on other grounds, Great Southern Lumber Co. v. Williams, 17 F. (2d) 468 (C. C. A. 5th, 1927).

It has long since been the settled law in the federal courts, in tort actions in which no jurisdictional question was involved, brought against several jointly instead of against each separately, that the verdict may be set aside and a new trial may be granted in favor of some and judgment entered on the verdict against the others or a judgment reversed by the reviewing court as to some and affirmed as against others, or reversed as to all, with leave to the plaintiff to nonsuit some and with directions to enter judgment on the original verdict as against the others. See Pennsylvania Railroad v. Jones, 155 U. S. 333, 354, 15 S. Ct. 136, 39 L. Ed. 176 (1894); Washington Gaslight Co. v. Lansden, 172 U. S. 534, 555, 19 S. Ct. 296, 43 L. Ed. 543 (1899); J. E. Taylor & Co. v. Empire Lighting Fixture Co., 51 App. D. C. 11, 273 F. 739, 744 (C. A. D. C., 1921). Cf. 21 L. R. A. (N. S.) 209, note (1908). But, if it be apparent from the record that those as against whom such judgment would otherwise be proper might have been injured by reason of the trial having been against all of the parties, then, but then only, would it be the duty both of the trial court and the reviewing court respectively to set aside, not only the judgment, but also the verdict as to all of the parties and to award a complete new trial as against those properly retained as defendants in the case. See Washington Gas Light Co. v. Lansden, supra; Albright v. McTighe, 49 F. 817 (C. C. Tenn., 1892); Strand v. Griffith, 109 F. 597 (C. C. Minn., 1901).

In Camp v. Gress, 250 U. S. 308, 39 S. Ct. 478, 63 L. Ed. 997 (1919), there was the diversity of citizenship requisite for federal jurisdiction as between plaintiff and all defendants. One of the defendants, however, properly objected to the venue, as to him a strictly personal objection, which, as the Supreme Court held, should have been sustained as to that defendant. It could not, however, have been urged by his codefendants either on his or on their behalf; if it had been sustained originally in the District Court, it would have resulted solely in his dismissal from the case. In these circumstances, the Supreme Court held that, while the judgment must be reversed as to him with directions to dismiss, it need not be reversed as to the codefendants. As to them, on examination into the merits of the case the court found no reversible error. Examining further, it also found that they had not been, and could not have been, prejudiced by reason of the other party's improper presence as a codefendant; moreover, as the court stated, it was conceded by counsel that they were not prejudiced by any of the several alleged errors in the trial. See, too, James Dickinson Farm Mortgage Co. v. Harry, 273 U. S. 119, 47 S. Ct. 308, 71 L. Ed. 569 (1927).

In a number of cases it was not apparent from the record and it was not conceded that there was in fact that diversity of citizenship requisite for federal jurisdiction. In these circumstances, the District Court should have required allegation and proof of the necessary diversity or, on failure thereof, have dismissed for want of jurisdiction. The reviewing court in these cases reversed the judgment, but, to avert a complete new trial if otherwise the record was free of reversible error, it examined into the merits of the case. Where, on such examination, it found reversible error apart from the jurisdictional question, it reversed the judgment, with directions to award a new trial. Grace v. American Central Ins. Co., 109 U. S. 278, 3 S. Ct. 207, 27 L. Ed. 932 (1883); Ward v. Morrow, 15 F.(2d) 660 (C. C. A. 8th, 1926). Where, however, it found no such reversible error, while reversing the judgment, it permitted the original verdict to stand. It further authorized the trial court to grant leave to amend so as properly to allege the jurisdictional facts and, in any event, to determine the jurisdictional question. It further directed that, if on such examination the court were found to be without federal jurisdiction, then the case should be dismissed for want of jurisdiction; if, however, jurisdiction were established, then the court was to enter a judgment on the original verdict. Chicago, R. I. & P. Ry. v. Stephens, 218 F. 535 (C. C. A. 6th, 1914); Parker Washington Co. v. Cramer, 201 F. 878 (C. C. A. 7th, 1912); Grand Trunk Western Ry. v. Reddick, 160 F. 898 (C. C. A. 7th, 1908). See, too, A. T. & S. F. Ry. Co. v. Gilliland, 193 F. 608 (C. C. A. 9th, 1912).

Except in the Cramer Case, it is not entirely clear from the opinions of the reviewing courts whether it was intended that, on an appeal from such new judgment on the old verdict, the...