Handley-Mack Co. v. Godchaux Sugar Co.

• Decision Date: 14 November 1924
• Docket Number: No. 4037.,4037.
• Citation: 2 F.2d 435
• Parties: HANDLEY-MACK CO. v. GODCHAUX SUGAR CO.
• Court: U.S. Court of Appeals — Sixth Circuit

2 F.2d 435 (1924)

HANDLEY-MACK CO. v. GODCHAUX SUGAR CO.

No. 4037.

Circuit Court of Appeals, Sixth Circuit.

November 14, 1924.

Charles C. Moore, of Chattanooga, Tenn., for plaintiff in error.

J. B. Milligan, of Chattanooga, Tenn. (Milling, Godchaux, Saal & Milling and R. C. Milling, all of New Orleans, La., on the brief), for defendant in error.

Before DENISON, MACK, and KNAPPEN, Circuit Judges.

KNAPPEN, Circuit Judge.

Defendant in error (hereinafter called plaintiff) is a New York corporation, doing business at New Orleans, La., and engaged in the manufacture, refining and sale of sugar. Plaintiff in error (hereinafter called defendant) is a Tennessee corporation, engaged in the wholesale grocery business at Chattanooga. Plaintiff brought this suit claiming damages of more than $9,000, for the breach of a contract made April 23, 1920, for the sale by plaintiff to defendant of 600 barrels of granulated sugar at 25 cents per pound, 200 barrels to be shipped each month during July, August, and September. The July and August shipments were made, accepted and paid for. The September shipments were made, but defendant refused to accept them. There was trial to a jury, and plaintiff had verdict and judgment for $6,000.

Defendant contends here that the contract of sale was void (a) for lack of mutuality; and (b) because contravening the Lever Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115 1/8e et seq.); and that error was committed in refusing to require plaintiff on the trial to elect between certain counts of the declaration.

At the threshold we meet a question of jurisdiction of the District Court. The suit was begun in a state court of Tennessee, and was removed by defendant to the District Court, the right to remove being predicated upon diversity of citizenship and the fact that the suit involved more than $3,000.

Section 28 of the Judicial Code (Comp. St. § 1010) — applicable here — authorizes removal in such case by a nonresident defendant. Act Aug. 13, 1888, 25 Stat. 434, c. 866, § 2. Defendant, being a resident of Tennessee, was not entitled to remove. Martin v. Snyder, 148 U. S. 663, 664, 13 S. Ct. 706, 37 L. Ed. 602; Martin v. Baltimore & Ohio R. Co., 151 U. S. 673, 677, 14 S. Ct. 533, 38 L. Ed. 311; Patch v. Wabash R. Co., 207 U. S. 277, 283, 28 S. Ct. 80, 52 L. Ed. 204, 12 Ann. Cas. 518. No remand, however, was made or asked for. When the case, which had been begun in equity (as under the Tennessee practice was proper), came into the District Court, it was, by order of that court, duly transferred to the law side, and plaintiff directed to amend its pleadings by filing a declaration conforming to the practice at law, which was done and issues joined accordingly. The case duly proceeded to trial and judgment.

Defendant's brief in this court states that it "now desires expressly to waive any question as to the jurisdiction of the court." Plaintiff naturally defends the jurisdiction. Consent of parties can not confer jurisdiction upon the federal court; if the record in that court does not show jurisdiction it is the court's duty, of its own motion, to refuse to exercise it.¹

Under the second section of the Removal Act of 1875 (18 Stat. 470, c. 137 Comp. St. § 1010), either plaintiff or defendant could remove and it was held thereunder that "diverse state citizenship of the parties, or some other jurisdictional fact prescribed by the second section, is absolutely essential, and cannot be waived, and the want of it will be error at any stage of the cause, even though assigned by the party at whose instance it was committed." The second section, which, as already said, contained no limitation as to nonresidence of the moving party was said to be "jurisdictional." Ayers v. Watson, supra; Martin v. Baltimore & Ohio R. Co., supra. And see Chicago, Burlington & Quincy R. Co. v. Willard, supra; Removal Act of 1887-88, 24 Stat. 552, 25 Stat. 433.

Formal and procedural matters under section 3 of the Removal Acts, both of 1875 and 1888, such as those relating to petition, bond, and notice on removal, and matters of venue and personal privilege under other sections, are held waivable. Pacific Removal Cases, 115 U. S. 2, 17, 5 S. Ct. 1113, 29 L. Ed. 319; Powers v. Chesapeake & Ohio R. Co., 169 U. S. at page 98, 18 S. Ct. 264, 42 L. Ed. 673; Ayers v. Watson, supra; General Investment Co. v. L. S. & M. S. R. Co., 260 U. S. 261, 274, 43 S. Ct. 106, 67 L. Ed. 244; Lee v. Chesapeake & Ohio R. Co., 260 U. S. 653, 654, 43 S. Ct. 230, 67 L. Ed. 443.

By article 3, section 2, of the Constitution, the federal courts are expressly given jurisdiction over controversies "between citizens of different states"; and by statute (Judicial Code, § 24 Comp. St. § 991) the District Courts are given jurisdiction of suits of a civil nature "between citizens of different states" when the cause of action involves more than $3,000. By neither Constitution nor statute is the original jurisdiction of the federal courts (dependent on diversity of citizenship and amount in controversy) limited to cases in which the defendant is a nonresident of the state in which the suit is pending. It is only the removal clause in question which confines to a nonresident defendant the authority given. While in Martin v. Snyder, supra, where the decree of the Circuit Court was reversed "for want of jurisdiction" and remand to the state court directed, there was diversity of citizenship (amount in controversy does not affirmatively appear from the reported case; and see Torrence v. Shedd, 144 U. S. 527, 533, 12 S. Ct. 726, 36 L. Ed. 528), it does not appear that any question of attempted waiver, agreement or joint action of parties was presented (nor does such question of waiver, etc., seem to have been presented in Juillard v. Barr C. C. A. 2 177 F. 921, 101 C. C. A. 201); and in the majority of similar cases where remand has been made diverse citizenship and jurisdictional amount in dispute — one or both — fail to appear from the reported case (Railway Co. v. Swan, supra; Graves v. Corbin, 132 U. S. 571, 590, 10 S. Ct. 196, 33 L. Ed. 462; Patch v. Wabash R. Co., supra; Chicago, Burlington & Quincy R. Co. v. Willard, supra).

The subject-matter of the instant suit was thus within the original jurisdiction of the District Court. Defendant's counsel says he had at the time doubt of defendant's right to remove, and that plaintiff's counsel thought the right existed. The latter says that on receipt of the notice of removal he suggested to opposing counsel that defendant was not entitled to remove, but that he would not oppose removal because he had been in doubt (presumably when commencing suit) as to the choice of forum. Plaintiff could have brought its suit originally in the District Court below. Had the legality of the removal been questioned, plaintiff could, and presumably would, have discontinued the suit then pending in the federal court and have sued again, and — if desired — in the same District Court, which would thereby have acquired unquestioned jurisdiction. If not barred by limitation, it could presumably still sue in the court below. Plaintiff's submission to defendant's removal proceeding and the reforming of its pleadings to meet the situation was, in a not improper sense, a short cut to the same result. Save so far as implied in the direction in Martin v. Snyder, to remand a case "reversed for want of jurisdiction," we find no holding of the Supreme Court that a removal by a nonresident defendant — first provided for by the act of 1887-88 (and since Railway Co. v. Swan and Ayers v. Watson) — is vital to the jurisdiction of the District Court to hear the case, in the sense that the court has no discretion but to remand it, in spite of original jurisdiction to hear it and long-continued acquiescence by the parties, as well as the court's trial and decision thereunder.

It may be noted that section 2 of the Removal Act of 1875 (which has been spoken of as "jurisdictional") in terms provided for removal in every class of cases (except criminal) in which original jurisdiction had already been conferred by section 1; also that the provisions of present section 51 of the Judicial Code forbidding the bringing of civil suit in any district other than that of which defendant is an inhabitant, was, when enacted, a part of the original jurisdictional section 1 of the Removal Acts of both 1875 and 1888, and that even before the enactment of the Judicial Code in 1911 (36 Stat. 1087, 1101 Comp. St. § 1033), this requirement was held waivable. Gracie v. Palmer, 8 Wheat. 899, 5 L. Ed. 719.

Whether or not in the early removal cases under the statutes of 1875 and 1887-88 the term "jurisdiction" was used less strictly than it latterly has been, there is persuasive authority tending to support a view that jurisdiction will be retained where, as here, although the case was not technically removable under the statute, the court yet had jurisdiction over the subject-matter of the controversy, and the parties had fully consented to the federal jurisdiction and acted thereunder. Baggs v. Martin, 179 U. S. 206, 21 S. Ct. 109, 45 L. Ed. 155; Guarantee Co. v. Mechanics Co. (C. C. A. 6) 80 F. 766, 771, 26 C. C. A. 146, certiorari denied 169 U. S. 736, 18 S. Ct. 950; Rupp v. Wheeling & Lake Erie R. Co. (C. C. A. 6) 121 F. 825, 58 C. C. A. 161 (see reference at page 826, 58 C. C. A. 162, to Baggs v. Martin); Philadelphia, etc., Co. v. Warford (C. C.) 123 F. 843; In re Moore, 209 U. S. 490, 28 S. Ct. 585, 52 L. Ed. 904, 14 Ann. Cas. 1164; Toledo, St. Louis & Western R. Co. v. Perenchio (C. C. A. 7) 205 F. 472, 123 C. C. A. 540; certiorari denied 231 U. S. 745, 34 S. Ct. 319, 58 L. Ed. 464. Cf. Gregory v. Pike (C. C. A. 1) 67 F. at page 847, 15 C. C. A. 33; Moon on Removal, § 204, p. 637.²

In Baggs v. Martin, supra, it was held that a receiver who had erroneously removed a suit (brought against him in a state court) into the federal court, on the ground...