Grubbs v. General Electric Credit Corporation 8212 257
| Decision Date | 18 April 1972 |
| Docket Number | No. 71,71 |
| Parties | T. R. GRUBBS dba T. R. Grubbs Tire & Appliance, Petitioner, v. GENERAL ELECTRIC CREDIT CORPORATION. —257 |
| Court | U.S. Supreme Court |
Respondent, a New York corporation, brought suit for $66,000 on a promissory note against petitioner, a citizen of Texas, in a Texas state court, and petitioner filed a cross-action for $25,000 seeking damages for slander, conversion, and conspiracy in restraint of trade. A later cross-action included the United States, which held a judgment against petitioner, as a party defendant. The action was removed to the Federal District Court for trial of the issues, on petition of the United States. The District Court, without objection, considered all the issues and awarded petitioner a $20,000 judgment against respondent. The Court of Appeals, sua sponte, held that the District Court lacked jurisdiction and ordered the case returned to the state court. Held: Where after removal a case is tried on the merits without objection and the federal court enters a judgment, the issue on appeal is not whether the case was properly removed, but whether the District Court would have had original jurisdiction if the case had been filed in that court. Here there was diversity jurisdiction in the District Court if the action had been brought there originally. Pp. 702—706.
447 F.2d 286, reversed and remanded.
Bill J. Cornelius, Jefferson, Tex., for petitioner.
Hubert D. Johnson, Dallas, Tex., for respondent.
Petitioner recovered a money judgment against respondent in the United States District Court for the Eastern District of Taxes, and respondent appealed to the United States Court of Appeals for the Fifth Circuit. That court held the District Court lacked jurisdiction of the case, and reversed the judgment with instructions that the case be remanded to the Texas state court whence it had been removed. This Court granted certiorari, 404 U.S. 983, 92 S.Ct. 446, 30 L.Ed.2d 366. We have concluded that, whether or not the case was properly removed, the District Court did have jurisdiction of the parties at the time it entered judgment. Under such circumstances the validity of the removal procedure followed may not be raised for the first time on appeal, and we accordingly reverse the judgment of the Court of Appeals.
In September 1964 respondent General Electric Credit Corp. (GECC) commenced a lawsuit against petitioner Grubbs by the filing of a petition in the Texas state trial court. The petition sought recovery upon a promissory note claimed to have been previously executed by petitioner to GECC in the principal sum of some $66,000. Two years later, petitioner Grubbs filed an amended answer and 'cross-action,' seeking damages from respondent and from the General Electric Co. (GE) by reason of alleged slander, conversion, and conspiracy in restraint of trade.1 GE appeared in the state court in answer to petitioner's cross-action against it, and respondent likewise filed an answer.
The following year, petitioner filed a second amended answer and cross-actions, one of which included the United States as an added party defendant. The basis asserted by petitioner for naming the United States as a party was the fact that the latter held an out- standing judgment against petitioner, as did several of his other creditors, and petitioner prayed the state court to determine priorities among the judgment liens. Responding to the gathering momentum of this long-dormant lawsuit, the United States then filed in the United States District Court for the Eastern District of Texas a petition for removal of the action to that court 'for trial and determination upon the merits of all issues or claims therein, as is provided by Title 28, Section(s) 1444, 1441(c) and 1446.'
All of the parties treated the effect of the removal petition as placing before the District Court not only the claim by petitioner against the United States for adjudication of lien priorities, but also respondent's claim against petitioner on the promissory note and petitioner's claim for damages against respondent based on conspiracy to restrain trade and tortious interference with business relations.
At no time following the filing of the removal petition by the United States did respondent, by motion to remand or otherwise, object to the District Court's taking jurisdiction of the entire 'action.' In that court, the United States answered petitioner's cross-action and filed its own 'cross-action' against respondent and GE, asserting that the latter two had maliciously interfered with the contractual relationship between petitioner and the United States, and seeking damages as a result of this alleged wrong.
The case was ultimately tried to the District Court without a jury. That court held against respondent on its promissory-note claim, held in favor of petitioner on his claim against respondent for tortious interference, and awarded $20,000 damages thereon, and dismissed the claims of petitioner and the United States against GE and the claim of the United States against respondent. The court further found that it was unable to determine the priority of liens as between the various parties. Judgment was accordingly entered in favor of petitioner Grubbs and against respondent GECC in the amount of $20,000, and providing that the remaining parties take nothing by their actions.
GECC appealed to the Court of Appeals, which on its own motion questioned the jurisdiction of the District Court. After calling for supplemental briefs on the issue, the Court of Appeals decided that the only conceivable basis for jurisdiction of the action in the District Court was the removal by the United States purportedly in accordance with 28 U.S.C. § 1444. That court held, however, that petitioner's 'interpleader' of the United States and other parties for a determination of priority of judgment liens was a spurious basis for joining the United States as a party defendant under 28 U.S.C. § 2410. Therefore, in the view of that court, the provisions of 28 U.S.C. § 1444, authorizing removal by the United States of an action brought under 28 U.S.C. § 2410, were not available to the Government. Concluding, thus, that the removal had not been authorized by statute, the Court of Appeals decided that there was no other basis for the District Court's jurisdiction of the action, and that the case should be remanded to the state court in which it had originated.
Longstanding decisions of this Court make clear, however, that where after removal a case is tried on the merits without objection and the federal court enters judgment, the issue in subsequent proceedings on appeal is not whether the case was properly removed, but whether the federal district court would have had original jurisdiction of the case had it been filed in that court. In Baggs v. Martin, 179 U.S. 206, 21 S.Ct. 109, 45 L.Ed. 155 (1900), a receiver appointed by a federal court was sued in state court and removed the action to the federal court that appointed him. Following judgment on the merits, the receiver sought reversal of the judgment on the ground that the case was not properly removable from the state court. Since the federal court that had earlier appointed the receiver would have had original jurisdiction of an action against him, this Court held that he could not then object to the removal of the case when removal had come as a result of his own action.
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...19. See, for example, General Electric Credit Corporation v. Grubbs, 447 F.2d 286, 287 (5th Cir. 1971), rev'd. on other grounds in 405 U.S. 699 (1971), Merge v. Sharott, 341 F.2d 989, 995 (3d Cir. 1965), George H. Evans & Co. v. United States, 169 F.2d 500, 502 (3d Cir. 1948), and Ferguson ......
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Appendix A
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§22.7 Significant Authorities
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§22.6 Analysis
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