Finn v. American Fire & Casualty Co.

Decision Date19 October 1953
Docket NumberNo. 14196.,14196.
Citation207 F.2d 113
CourtU.S. Court of Appeals — Fifth Circuit

Thos. M. Mobley, Bailey P. Loftin, Houston, Tex., James R. Gough, Houston, Tex., of counsel, for appellant.

David Bland, Houston, Tex., Austin Y. Bryan, Jr., Houston, Tex., of counsel, for appellee.

Before HOLMES, STRUM, and RIVES, Circuit Judges.

HOLMES, Circuit Judge.

This is the second appearance of this case before us. Our former opinion is reported in 181 F.2d 845. The action was brought in a state court of Texas by a resident of that state to recover for a loss by fire. Two foreign insurance companies and a resident agent of the companies were named as defendants. The single wrong for which relief was sought was the failure of the defendants, or any of them, to compensate the plaintiff for the loss; and the three defendants were joined because of the uncertainty as to which of the three was liable. After September 1, 1948, on the joint petition of the two nonresident defendants, the entire suit was removed to the federal court, where plaintiff's motion to remand was overruled and a jury trial was had, which resulted in a verdict and judgment against the present appellee, American Fire and Casualty Company.

On certiorari, the Supreme Court held that, in the light of the allegations of the complaint, there was no right of removal of the case from the state to the federal court. Therefore, the judgment of the Court of Appeals was reversed and the cause remanded to the district court with directions to vacate the judgment entered and, if no further steps were taken by any party to affect its jurisdiction, to remand the case to the state court. 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702. The Supreme Court expressly did not pass upon the propriety of allowing a new judgment to be entered on the old verdict without a new trial if a dismissal as to the resident defendant were allowed by the district court after vacation of the old judgment. American Fire & Casualty Co. v. Finn, 341 U.S. at page 18, note 18, 71 S.Ct. at page 542.

After the case was remanded and the judgment vacated, the district court allowed the plaintiff to dismiss as to the resident defendant and the Lumbermens Insurance Co., thereby perfecting its jurisdiction. See Conolly v. Taylor, 2 Pet. 556, 562, 27 U.S. 556, 562, 7 L.Ed. 518; Drumright v. Texas Sugarland Co., 5 Cir., 16 F.2d 657. No terms were imposed on either party for the allowance of this amendment.

The trial court thought that, prior to the amendment, it had been wholly without jurisdiction; and, assigning that ground alone, it set aside the proceedings in the former trial conducted on August 3rd and 4th, 1949, and granted a new trial. This holding was based, we think, upon a misconception of the law, and is subject to review. Fairmount Glass Works v. Cub Fork Coal Co., 287 U.S. 474, 482, 53 S.Ct. 252, 77 L.Ed. 439; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 247, 248, 60 S.Ct. 811, 84 L.Ed. 1129; Weaver v. Marcus, 4 Cir., 165 F.2d 862, 864, 175 A.L.R. 1305; 3 Am.Jur., Appeal and Error, Sec. 981.

We agree with the opinion in Dollar S. S. Lines v. Merz, 9 Cir., 68 F.2d 594, that, after amendment, the court had jurisdiction to enter judgment upon the original verdict. See also Interstate Refineries v. Barry, 8 Cir., 7 F.2d 548, 550; Levering & Garrigues Co. v. Morrin, 2 Cir., 61 F.2d 115, 121; International Ladies' Garment Workers' Union v. Donnelly, Garment Co., 8 Cir., 121 F.2d 561, 563; Alderman v. Elgin, J. & E. Ry. Co., 7 Cir., 125 F.2d 971, 973, opinion by Circuit Judge, now Associate Justice, Minton.

The court did not exercise its discretionary power to grant a new trial; in fact the same court, though with a different judge sitting, had refused to set aside the verdict and grant a new trial, had overruled a motion for judgment notwithstanding the verdict, and had entered a judgment for the plaintiff on the verdict. Three different judges presided at various proceedings during the two trials of this case. The only reason that the judge, who granted the new trial after the remand of the case, assigned for setting aside the first verdict was that the federal court was wholly without jurisdiction when it was rendered. Prior to the amendment, federal jurisdiction was imperfect or defective, but it was not wholly lacking. The district court had jurisdiction to determine its own jurisdiction, to order the pleadings recast and the parties realigned according to their real interests, and at any time before final judgment to dismiss or remand for want of federal jurisdiction as justice required, 28 U.S.C. § 1441(c).

After the remand of the case, the district judge had a discretion, which he did not exercise, to grant a new trial on the ground that the appellee was injured by reason of the trial having been conducted against all of the parties including the resident defendant, within the rule stated in Dollar S. S. Lines v. Merz, 9 Cir., 68 F.2d 594, 595, followed in Donnelly Garment Co. v. Dubinsky, D. C.W.D.Mo., 47 F.Supp. 65, 66. This court is in substantially as good position to pass upon that question as was the judge who granted the new trial in this case after remand. We have, therefore, carefully read the testimony on the first trial as set forth in the record on the former appeal, of which we take judicial notice. DeBearn v. Safe Deposit & Trust Co., 233 U.S. 24, 32, 34 S.Ct. 584, 58 L.Ed. 833. From that reading, we are not convinced that the appellee was prejudiced in any way by the presence of the resident defendant upon the first trial. After the judgment was vacated and federal jurisdiction was perfected by amendment of the pleadings, we think that the plaintiff was fairly and justly entitled to a new judgment on the old verdict.

That the plaintiff, on the first trial, should have voluntarily dismissed the action as to the resident defendant before the entry of judgment is clearly indicated by the opinion of the Supreme Court, which says: "The posture of this case even at the time of judgment also barred federal jurisdiction. A Texas citizen was and remained a party defendant. The trial court judgment, after decreeing recovery against American Fire & Casualty Company on the jury's verdict, added, over American's objection," that the plaintiff take nothing as against defendants Indiana Lumbermens and Joe Reiss, "`and that such Defendants go hence without day with their costs.' By this decree the merits of the litigation against Reiss were finally adjudicated. The request of respondent to dismiss Reiss after the judgment was not acted upon by the trial court." 341 U.S. 17, 71 S.Ct. 542.

The removal jurisdiction of the United States district courts is purely statutory; it is sometimes broader, sometimes narrower, than its original jurisdiction; but it is always subject to constitutional limitations. Formerly the petition for removal was first filed in the state court where the suit was pending. Judicial Code of 1912, Chapter 231, approved March 3, 1911, 36 Stat. 1087, 1169. Now the petition to remove is first filed in the federal court, Code of 1948, 28 U.S.C. § 1446; but questions of joinder, nonjoinder, misjoinder, fraudulent joinder, and multifariousness, are and formerly were for the ultimate decision of the federal Court. Barney v. Latham, 103 U.S. 205, 216, 26 L.Ed. 514.

The changes in the Judicial Code of 1948, abolishing the separable controversy as a ground of removal, were intended to restrict not to enlarge federal removal jurisdiction. As stated by the Supreme Court: "The Congress, in the revision, carried out its purpose to abridge the right of removal", and "care was taken to maintain opportunity for state trial of non-federal matters." 341 U.S., at page 10 and note 3, 71 S.Ct. at page 538. All jurisdictional difficulties, occasioned by the removal of the entire action, are dissolved in the federal court by its power to dismiss or remand all non-removable issues or controversies as justice requires. 28 U.S.C. § 1441(c). It has no power to adjudicate such separate and independent claims or issues not arising from the same transaction or from an interlocked series of transactions. Tillman v. Russo Asiatic Bank, 2 Cir., 51 F.2d 1023, 80 A.L.R. 1368.

A literal construction of Section 1441 (c) of Title 28 of the United States Code might render a part of the paragraph unconstitutional. While it provides for the removal of the entire case, and that the federal court may determine all issues therein, it contemplates the dismissal or remand for want of jurisdiction of all non-removal issues and controversies which constitute separate and independent claims or causes of action not arising out of the same transaction or from a related series of transactions. See an article on the removal of separate and independent non-federal causes of action, entitled "The Federal Court's Hospital Back Door," etc., 66 Harvard Law Review, 423. Cf. Hoffman v. Lynch, D.C., 23 F.2d 518.

The facts in each portion of the complaint in this case involved Reiss, the resident defendant, and the damages sued for came from a single incident: therefore, the Supreme Court held that the claim against Reiss was not separate and independent but arose out of "the same facts and transactions" as the claims against the non-resident insurance companies. When the suit was voluntarily dismissed, however, as to all of the defendants except the appellee, against whom a verdict had been rendered, the amendment of the pleadings related to the date of filing of the original suit and cured the defect in the district court's jurisdiction of the controversy between the remaining parties. Rule 15(c) and Rule 21, Federal Rules of Civil Procedure, 28 U.S.C.; 3 Moore's Federal Practice (2d ed.), Sections 15.09 and 15.15, pp. 836, et seq., and 850, et seq.

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