Farrell v. Ducharme

Decision Date20 February 1970
Docket NumberCiv. A. No. 5603.
Citation310 F. Supp. 254
PartiesRobert E. FARRELL, Guardian of Vincent B. Boynton v. Norman M. DUCHARME.
CourtU.S. District Court — District of Vermont

James J. McNamara, McNamara, Fitzpatrick & Sylvester, Burlington, Vt., for plaintiff.

Albert W. Coffrin, Coffrin & Pierson, Burlington, Vt., for defendant.

OPINION

LEDDY, Chief Judge.

Robert E. Farrell, a citizen of Massachusetts, as guardian of Vincent B. Boynton, brought an action in the United States District Court for the District of Vermont against Norman M. Ducharme, a citizen of Vermont. The complaint alleges that on March 29, 1969, Vincent B. Boynton, a minor and a citizen of Vermont, was injured as a result of the defendant's negligent operation of a motor vehicle.

The defendant filed a motion to dismiss the action alleging that this court lacks jurisdiction of the subject matter since the plaintiff has been improperly or collusively joined to invoke jurisdiction in violation of 28 U.S.C.A. § 1359 (1964). At the hearing held on the motion, Mary Boynton, mother of the ward, testified and a certified copy of the guardian's certificate was introduced in evidence.

From the evidence, it appears that on May 29, 1969, Robert E. Farrell of Cambridge, Massachusetts, was appointed guardian of Vincent B. Boynton, age eleven years, by the Probate Court within and for the District of Chittenden and State of Vermont.

Mary Boynton, mother of Vincent, discussed the possibility of bringing suit on his behalf with Attorney James McNamara of Burlington in May of 1969. Mr. McNamara advised Mrs. Boynton that it would be advisable to have a guardian appointed to bring suit on behalf of her son. Mrs. Boynton decided that her older brother, Robert, plaintiff herein, of Cambridge, Massachusetts, was best fitted to act as guardian for Vincent. Mrs. Boynton had moved to Vermont from Massachusetts. Her mother died when she was two years old, and Robert was eighteen years old. After the death of her mother, Robert took charge of the family affairs and a close relationship developed between Robert and Mrs. Boynton. Mrs. Boynton did not feel that she would make a suitable guardian. She felt that a man would handle Vincent's affairs more effectively and that her brother Robert, in particular, would look at matters involving the guardianship more objectively than she would as Vincent's mother. She also noted the existence of a close relationship between Vincent and Robert. Mrs. Boynton is now employed by the Visiting Nurses Association but at the time of Vincent's accident, she was a welfare recipient. She is divorced from her husband and legal custody of Vincent was awarded to her during divorce proceedings. She has no other relatives in Vermont except a twenty-three year old daughter who is married and has a family of her own. She felt that her daughter was not a proper person to be guardian. The only significant asset presently subject to the guardian's control is the possible proceeds which might be recovered in litigation arising out of Vincent's accident.

Title 14 V.S.A. § 2652 (Supp. 1969) prescribes the duties of a guardian of a minor as follows:

A guardian of a minor appointed by the probate court shall have the care and management of the estate and, except as otherwise provided, the custody and tuition of the minor. Such guardian shall furnish him suitable employment, and provide for his education and instruction in science or some trade or profession, according to his circumstances.

Mr. Farrell was appointed primarily because, under the circumstances, he could best carry out the duties imposed by the statute. While it also appears that the acquisition of federal jurisdiction was an incidental purpose or motivation for the appointment in the case, I find from the evidence that this was not the sole or even the dominant purpose. The question thus revolves around the proper application of 28 U.S.C.A. § 1359 (1964) to Mr. Farrell's appointment. This section provides:

A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.

The body of case law surrounding this provision is presently in a state of flux. Until recently, the law in this Circuit did not consider the appointment of a fiduciary solely to create jurisdiction "collusive" under the statute, Lang v. Elm City Construction Co., 324 F.2d 235 (2d Cir. 1963); Corabi v. Auto Racing, Inc., 264 F.2d 784, 75 A.L.R.2d 711 (3d Cir. 1959) as long as the appointment was a "real" transfer of powers and control. See Ferrara v. Philadelphia Laboratories, Inc., 272 F.Supp. 1000 (D. Vt.1967), aff'd per curiam, 393 F.2d 934 (2d Cir. 1968).

Following similar decisions in the Third and Fourth Circuits, the Second Circuit reversed its previous position in O'Brien v. AVCO Corp., 425 F.2d 1030 (2d Cir. Nov. 13, 1969). O'Brien redefines the jurisdictional prohibitions of section 1359 in this Circuit. Plainly encompassed within these prohibitions are those guardianship appointments which have as their sole purpose the creation of diversity jurisdiction.

Beyond the narrow situation where the singularity of purpose is obvious or admitted, the O'Brien rule is somewhat unclear. Two questions involving the scope of the decision must be resolved before it can be applied to this case. The first question is whether the O'Brien rule requires an investigation into the actual motives and purposes of every appointment or whether the nature of the appointment itself and the existence of certain facts (i.e. the lack of other estate assets save the expected return from the lawsuit) render it collusive regardless of actual motivation. The second question is whether jurisdiction is collusively created only where the appointment of an out of state fiduciary is deemed solely for the purpose of conferring jurisdiction or whether O'Brien intended to reach any appointment where one of the purposes, even though incidental, appears to be the creation of jurisdiction.

I.

In this case, a nonresident happens to be the most logical and natural choice for appointment as Vincent's guardian. The estate, however, contains only the potential proceeds of a lawsuit. The initial question then is whether the appointment of a nonresident guardian, responsible only for possible proceeds from litigation, is deemed collusive without reference to a finding of actual motivation. I do not think O'Brien goes that far.

O'Brien involves an administrator appointed for the limited purpose of prosecuting a wrongful death action. Judge Kaufman compares the appointment of this administrator, whose sole function is to collect the proceeds of a lawsuit and turn them over to the beneficiary, with an assignment of a contract right solely for the purpose of collection, emphasizing the structural concepts of both. He notes that as a jurisdictional device the assignment for collection was condemned by the Supreme Court in Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969). He concludes that the appointment before him in O'Brien cannot be distinguished from the assignment in Kramer for the purposes of section 1359.

Before the role of actual motive is understood in light of O'Brien, it should be analyzed in light of Kramer. That case involved the jurisdictional effect of an assignment for collection made by a foreign corporation to a Texas assignee. The debtor was also a foreign citizen and the Supreme Court found that the selection of an assignee was made only to create the necessary diversity. In holding that the assignment was directed solely toward the institution of a collection suit in a federal forum, the Supreme Court recognized that whenever an assignment for collection is made, litigational tactics are involved and not a true transfer of ownership. Kramer relies heavily on the 1885 Supreme Court case of Farmington Village Corporation v. Pillsbury, 114 U.S. 138, 5 S.Ct. 807, 29 L.Ed. 114 (1885), which clearly separates those assignments which transfer real ownership rights and incidentally create diversity, from those typified by the assignment for collection in which the plaintiff of record is basically a nominal party whose name is being used only as an instrument of litigation, 114 U.S. at 143-145, 5 S.Ct. 807.

While Kramer dwells on the jurisdictional hazards which are inherent in every assignment for collection, it does not hold that the bare transactional nature of the assignment alone is indicative of collusiveness. It does not, in my opinion, adopt a pure real party in interest test which would nullify the jurisdictional effectiveness of the assignment for collection without reference to the actual purpose behind it.1 The Supreme Court noted that the plaintiff assignee had little previous connection with the matter and indeed admitted that the assignment was in substantial part motivated by a desire to create the necessary jurisdiction. 394 U.S. at 827-828, 89 S. Ct. 1487. The Court reasserted the vitality of those assignment cases upholding jurisdiction where the assignee is the real owner. In so doing, it noted that when the assignment is absolute there are no jurisdictional hazards, and "* * * the transfer is not `improperly or collusively made,' regardless of the transferor's motive." (Emphasis added.) 394 U.S. at 828, 89 S.Ct. at 1490, n. 9.

The Supreme Court's reference to the irrelevance of actual motive in the case of an absolute assignment is to be contrasted with its emphasis on the circumstances and actual motivations behind the assignment for collection made to the plaintiff Kramer. The Court suggests that actual purpose or motive is the final test and should be subject to close scrutiny when, but only when, the functional nature of the assignment lends itself to the manufacturing of jurisdiction by allowing the legal assignor to retain the major interest in...

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