Freeman v. Bee Machine Co

• Decision Date: 01 June 1943
• Docket Number: No. 707,707
• Citation: 63 S.Ct. 1146,319 U.S. 448,87 L.Ed. 1509
• Parties: FREEMAN v. BEE MACHINE CO., Inc
• Court: U.S. Supreme Court

319 U.S. 448

63 S.Ct. 1146

87 L.Ed. 1509

FREEMAN

v BEE MACHINE CO., Inc.

No. 707.

Argued May 4, 5, 1943.

Decided June 1, 1943.

Rehearing Denied Oct. 11, 1943.

See 320 U.S. —-, 64 S.Ct. 27, 88 L.Ed. —-.

Mr. Marston Allen, of Cincinnati, Ohio, for petitioner.

Mr. Cedric W. Porter, of Boston, Mass., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

It was held in Lambert Run Coal Co. v. Baltimore & Ohio R. Co., 258 U.S. 377, 382, 42 S.Ct. 349, 351, 66 L.Ed. 671, that where a state court lacks jurisdiction of the subject matter or of the parties, the federal District Court acquires none on a removal of the case. And see General Inv. Co. v. Lake Shore & M.S. Ry. Co., 260 U.S. 261, 288, 43 S.Ct. 106, 117, 67 L.Ed. 244; Venner v. Michigan Central R. Co., 271 U.S. 127, 131, 46 S.Ct. 444, 445, 70 L.Ed. 868; State of Minnesota v. United States, 305 U.S. 382, 389, 59 S.Ct. 292, 295, 83 L.Ed. 235. That is true even where the federal court would have jurisdiction if the suit were brought there. Lambert Run Coal Co. v. Baltimore & Ohio R. Co., supra. As stated by Mr. Justice Brandeis in that case, 'The jurisdiction of the federal court on removal is, in a limited sense, a derivative jurisdiction.' 258 U.S. page 382, 42 S.Ct. page 351, 66 L.Ed. 671. The question in this case is whether the rule of those decisions is applicable to a situation involving the following facts:

Petitioner is a resident of Ohio; respondent is a Massachusetts corporation. Respondent brought an action at law against petitioner in the Superior Court of Massachusetts for breach of a contract. Petitioner was personally served when he happened to be in Boston. Petitioner appeared specially and caused the action to be removed to the federal District Court in Massachusetts, petitioner being a non-resident of Massachusetts and there being diversity of citizenship and the requisite jurisdictional amount. Judicial Code § 28, 28 U.S.C. § 71, 28 U.S.C.A. § 71. Petitioner thereupon entered a general appearance¹—he answered, interposing several defenses including res judicata; he also filed a counterclaim. He then moved for a summary judgment. Shortly before that motion came on to be heard respondent moved to amend its declaration by adding a complaint for treble damages under § 4 of the Clayton Act.² 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 15. The District Court granted petitioner's motion for summary judgment. 41 F.Supp. 461. But it denied respondent's motion to amend, being of the view that it had no jurisdiction to allow the amendment. 42 F.Supp. 938. In reaching that result the District Court expressed doubts that the venue requirements of § 4 of the Clayton Act were satisfied. But it expressly declined to rest on that basis and placed its decision solely on the Lambert Co. line of cases. On appeal the Circuit Court of Appeals sustained the ruling of the District Court on the motion for summary judgment but disagreed with its view on the motion to amend. 131 F.2d 190. The case is here on a petition for a writ of certiorari which we granted because of the importance of the problem and the contrariety of views which had developed concerning it.³

The Lambert Co. case and those which preceded⁴ and followed it merely held that defects in the jurisdiction of the state court either as respects the subject matter or the parties⁵ were not cured by removal but could thereafter be challenged in the federal court. We see no reason in precedent or policy for extending that rule so as to bar amendments to the complaint, otherwise proper, merely because they could not have been made if the action had remained in the state court.⁶ If the federal court has jurisdiction of the removed cause and if the amendment to the complaint could have been made had the suit originated in the federal court, the fact that the federal court acquired jurisdiction by removal does not deprive it of power to allow the amendment. Though this suit as instituted involved only questions of local law, it could have been brought in the federal court by reason of diversity of citizenship.⁷ The rule of Erie Railroad Co. v. Tompkins 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, is, of course, applicable to diversity causes removed to the federal courts as well as to such actions originating there. But if the federal court has jurisdiction of the removed cause (Mexican Nat. R. Co. v. Davidson, 157 U.S. 201, 15 S.Ct. 563, 39 L.Ed. 672), the action is not more closely contained than the one which originates in the federal court. The jurisdiction exercised on removal is original not appellate. Com. of Virginia v. Rives, 100 U.S. 313, 320, 25 L.Ed. 667. The forms and modes of proceeding are governed by federal law. Thompson v. Railroad Companies, 6 Wall. 134, 18 L.Ed. 765; Hurt v. Hollingsworth, 100 U.S. 100, 25 L.Ed. 569; West v. Smith, 101 U.S. 263, 25 L.Ed. 809; King v. Worthington, 104 U.S. 44, 26 L.Ed. 652; Ex parte Fisk, 113 U.S. 713, 5 S.Ct. 724, 28 L.Ed. 1117; Northern Pacific R. v. Paine, 119 U.S. 561, 7 S.Ct. 323, 30 L.Ed. 513; Twist v. Prairie Oil & Gas Co., 274 U.S. 684, 47 S.Ct. 755, 71 L.Ed. 1297; Rorick v. Devon Syndicate, Ltd., 307 U.S. 299, 59 S.Ct. 877, 83 L.Ed. 1303. Congress has indeed provided that in a suit which has been removed the District Court shall 'proceed therein as if the suit had been originally commenced in said district court, and the same proceedings had been taken in such suit in said district court as shall have been had therein in said State court prior to its removal.' Judicial Code § 38, 28 U.S.C. § 81, 28 U.S.C.A. § 81. While that section does not cure jurisdictional defects present in the state court action, it preserves to the federal District Courts the full arsenal of authority with which they have been endowed. Included in that authority is the power to permit a recasting of pleadings or amendments to complaints in accordance with the federal rules. West v. Smith, supra; Twist v. Prairie Oil & Gas Co., supra, 274 U.S. page 687, 47 S.Ct. page 756, 71 L.Ed. 1297.

It is said, however, that the amendment in question may not be made since the cause of action authorized by § 4 of the Clayton Act may be brought only in a District Court in the district 'in which the defendant resides or is found or has an agent.' 15 U.S.C. § 15, 15 U.S.C.A. § 15. That requirement relates to venue. But venue involves no more and no less than a personal privilege which 'may be lost by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct.' Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 168, 60 S.Ct. 153, 155, 84 L.Ed. 167, 128 A.L.R. 1437. On the face of the present record it would seem that any objection to venue has been waived. There is no indication in the record before us that any such objection was 'seasonably asserted.' Commercial Ins. Co. v. Consolidated Stone Co., 278 U.S. 177, 179, 49 S.Ct. 98, 99, 73 L.Ed. 252; Interior Construction Co. v. Gibney, 160 U.S. 217, 16 S.Ct. 272, 40 L.Ed. 401. As we have noted, the District Court did not place its ruling on the grounds of venue. Nor is there any indication in the record that petitioner raised the venue point in the District Court. But even if we assume that he did, it is not clear that the objection has been preserved here.⁸

But we need not rest on that narrow ground. Petitioner was personally served in the state court action. After the removal of the cause he entered a general appearance and defended on the merits. He also filed a counterclaim in the action. He thus invoked the jurisdiction of the federal court and submitted to it. Merchants' Heat & L. Co. v. Clow & Sons, 204 U.S. 286, 27 S.Ct. 285, 51 L.Ed. 488. He was accordingly 'found' in the district so as to give the District Court power to allow the complaint in that suit to be amended by adding a cause of action under § 4 of the Clayton Act. This venue provision was designed, as stated by Judge Learned Hand in Thorburn v. Gates, D.C., 225 F. 613, 615 'to remove the existing limitations upon the venue of actions between diverse citizens⁹ and to permit the plaintiff to sue the defendant wherever he could catch him.' But 'found' in the venue sense does not necessarily mean physical presence. We noted in Neirbo Co. v. Bethlehem Shipbuilding Corp., supra, 308 U.S. pages 170, 171, 60 S.Ct. pages 155, 156, 84 L.Ed. 167, 128 A.L.R. 1437, that a corporation may be 'found' in a particular district for venue purposes merely because it had consented to be sued there. The fact that it was present 'only in a metaphorical sense' (308 U.S. page 170, 60 S.Ct. page 156, 84 L.Ed. 167, 128 A.L.R. 1437) was not deemed significant. In the present case it is not important that at the time of this amendment petitioner had returned to Ohio and was not physically present in Massachusetts. He was conducting litigation in Massachusetts. He was there for all purposes of that litigation. Having invoked the jurisdiction of the federal court and submitted to it he may not claim that he was present only for the limited objectives of his answer and counterclaim. He was present, so to speak, for all phases of the suit. That presence satisfies the venue provision of § 4 of the Clayton Act for the purpose of this amendment. The Rules of Civil Procedure, 28 U.S.C.A. following section 723c, are applicable to removed cases and 'govern all procedure after removal.' Rule 81(c). They permit joinder of claims (Rule 18) and contain the procedure for amendment of pleadings. Rule 15. And, as we have noted, Congress has directed the District Court after a case has been removed to 'proceed therein as if the suit had been originally commenced in said district court.' Judicial Code § 38, 28 U.S.C. § 81, 28 U.S.C.A. § 81. There can be no doubt but that the court had the power under that statute and under the Rules to permit the joinder of the cause of action under the Clayton Act. If petitioner was subject to the...