Harlem River Produce Co. v. Aetna Cas. & Sur. Co., 65 Civ. 574.

• Decision Date: 28 June 1965
• Docket Number: No. 65 Civ. 574.,65 Civ. 574.
• Citation: 257 F. Supp. 160
• Parties: HARLEM RIVER PRODUCE CO., Inc., Plaintiff, v. AETNA CASUALTY AND SURETY COMPANY, Export-Import Bank of Washington et al., Defendants.
• Court: U.S. District Court — Southern District of New York

257 F. Supp. 160

HARLEM RIVER PRODUCE CO., Inc., Plaintiff, v. AETNA CASUALTY AND SURETY COMPANY, Export-Import Bank of Washington et al., Defendants.

No. 65 Civ. 574.

United States District Court S. D. New York.

June 28, 1965.

Bernstein, Weiss, Hammer & Parter, New York City, for plaintiff.

Robert M. Morgenthau, U. S. Atty., for Southern Dist. of New York, by Alan G. Blumberg, Asst. U. S. Atty., for defendants.

MEMORANDUM

TENNEY, District Judge.

Plaintiff moves herein, pursuant to Section 1447(c) of Title 28 of the United States Code, to remand the above-entitled action to the Civil Court of The City of New York, County of New York, on the ground that the action was improperly removed and is not within the jurisdiction of this Court. It is plaintiff's position that petitioner, (defendant, Export-Import Bank of Washington, hereinafter referred to as "Eximbank") relied solely upon Section 1442 of Title 28 of the United States Code as the basis for removal, and that said section of the Code is inapplicable to the within action.

Plaintiff, on or about February 11, 1965, commenced an action in the Civil Court of The City of New York against several insurance companies and the petitioner, Eximbank, to recover the total sum of $8,431.41, alleging in the complaint that said defendants, through the agency of the Foreign Credit Insurance Association, issued policies of insurance to the plaintiff and had failed and refused to pay claims of the plaintiff arising under said policies.

On or about February 24, 1965, the defendant, Eximbank, filed a petition¹ to remove said action to this Court, wherein it alleged:

"1. Petitioner is an agency and instrumentality of the United States of America, having been created and deriving its powers and authority pursuant to the laws of the United States of America.

2. On or about February 11, 1965, the above-entitled Civil action was commenced in the Civil Court of the City of New York, County of New York, against petitioner and various other persons to recover sums totalling $8,431.41 plus interest and costs.

3. Petitioner is being sued in the said action solely and exclusively for alleged acts committed by it as an agency of the United States, pursuant to rights, title and authority conferred by Act of Congress.

* * * * * *

WHEREFORE, petitioner prays that the said action may be removed from said Civil Court into this Court for trial and determination as provided for by Title 28, Section 1442 of the United States Code." (Emphasis added.)

Plaintiff contends that Eximbank has relied solely on Section 1442 of Title 28 and that the interpretation and application of that section to the removal at bar is unwarranted and improper. Initially, plaintiff asserts that Section 1442 deals exclusively with civil or criminal actions against officers of the United States or officers of an agency of the United States for an act under color of said office, and that the section is not applicable to an action against a federal corporation organized under a statute of the United States which is sued for breach of contract.

Plaintiff also contends that an action against a federal corporation is only removable if the prerequisite jurisdictional amount of $10,000 is present.

Eximbank takes the position that the facts stated in its petition of removal establish removal jurisdiction both under Section 1442(a) (1) and under Section 1441 of Title 28. Defendant Eximbank further contends that the "wherefore" clause of the petition of removal which mentions only Section 1442 is surplusage and does not limit this Court's power to sustain the removal pursuant to Section 1441 or any other applicable statute.

In support of its position that removal of an action against a federal agency is proper under Section 1442(a) (1), petitioner cites James River Apartments Inc. v. Federal Housing Administration, 136 F.Supp. 24 (D.Md.1955). The James River Apartments case involved a suit originally brought in the Circuit Court No. 2 of Baltimore City for a declaratory judgment, under the Maryland Code of Public General Laws, that the Federal Housing Administration was not entitled to inspect the books and records of the plaintiff corporation or, if the right existed, it was limited to determining whether or not plaintiff had complied with the terms of its Articles of Incorporation and any information obtained by said inspection could not be disclosed to others.

The case was removed by the Federal Housing Administration to the United States District Court. The Court found that it had original jurisdiction under Title 28 of the United States Code, Section 1331, as the cause of action arose under the laws of the United States and the amount in controversy was in excess of the jurisdictional amount (then $3,000). Removal was also grounded on the fact that it was removable without regard to the citizenship or residence of the parties under Title 28 of the Code, Section 1441(a) & (b). The Court also found that it had original jurisdiction under Section 1332 of Title 28 as the requirements of jurisdictional amount and diversity of citizenship were met.

The removal was sustained under Section 1442(a) (1) as well.

While it may be argued that the James River Apartments case is authority for the proposition that an action against a federal agency may be removed to the United States District Court under Section 1442(a) (1) (as well as under Sections 1441, 1331 and 1332) a reading of the Reviser's Note to Section 1442, the Legislative History and a multitude of cases arising thereunder would appear to lead to a contrary result.

The Reviser's Note to Section 1442(a) reads as follows:

"* * *

Section consolidates sections 76 and 77 of Title 28, U.S.C.1940 ed.

The revised subsection (a) (1) is extended to apply to all officers and employees of the United States or any agency thereof. Section 76 of Title 28, U.S.C., 1940 ed., was limited to revenue officers * * *. No basis is apparent for including some and excluding others.

* * *

Changes were made in phraseology."

The Court has also been referred to Garden Homes, Inc. v. Mason, 249 F.2d 71 (1st Cir.1957), cert. denied, 356 U.S. 903, 78 S.Ct. 562, 2 L.Ed.2d 580 (1958), and Sarner v. Mason, 128 F.Supp. 165 (D.N.J.), aff'd, 228 F.2d 176 (3d Cir. 1955), cert. denied, 351 U.S. 924, 76 S.Ct. 781, 100 L.Ed. 1454 (1956) as supporting removal under Section 1442 in an action against a federal agency. Since Garden Homes, Inc., supra, involved suit against an officer of the named agency, and Sarner, supra, involved suit against an officer of the agency as well as the agency as titled defendants, it cannot be stated that either case strictly stands for the proposition that removal is proper under Section 1442 as against an agency of the United States, as the determinations appear to be based on the action against the officer of the agency rather than the agency itself.

Eximbank further urges that removal pursuant to Section 1442(a) (1) is proper on the authority of State of Texas ex rel. Falkner v. National Bank of Commerce, 290 F.2d 229 (5th Cir.), cert. denied, Falkner v. National Bank of Commerce, 368 U.S. 832, 82 S.Ct. 55, 7 L.Ed. 2d 35 (1961). In that case it was held that the District Court had jurisdiction on removal, and that since the Secretary of Treasury was authorized by federal statutes to permit national banks to open and maintain banking facilities on federal military installations in Texas, the State could not place limitations upon such facilities under the provision against branch banking. Although it is clear that the named defendants are national banks, a reading of the Court's decision indicates that removal was sustained under Section 1442(a) (1) on the theory that the real party defendant was the Secretary of the Treasury (an officer of the United States and agent of the United States) and not the named defendant banks. The Court stated: "We think that the petitions for removal showed at least a colorable claim that the appellees were acting under an officer of the United States and that the appellees were acting under color of law, as agents of the United States within the meaning of § 1442(a) (1), supra." State of Texas ex rel. Falkner v. National Bank of Commerce, supra, 290 F.2d at 231.

It therefore would be more correct to conclude that removal was approved in the above-cited cases pursuant to Section 1442(a) on the basis that the named defendant banks were acting under an officer of the United States, the Secretary of the Treasury, and not just as an agency of the United States.

Except for the cases noted, research of Section 1442(a) (1) reveals its application only to removals involving officers of the United States or agencies thereof as opposed to removal by the agencies themselves. Such an interpretation also appears to be the view in this Circuit. See Bradford v. Harding, supra, 284 F. 2d at 309-310.

In summary "the purpose of the statute section 1442(a) (1) , as stated in Jones v. Elliott, D.C.E.D.Va.1950, 94 F.Supp. 567, is to accomplish the evident Congressional purpose that all suits against officers of the United States Government for acts done within the ambit of their authority be tried only in Courts of the United States. Cf., Hood v. United States, 9 Cir., 1958, 256 F.2d 522." Ove Gustavsson Contracting Co. v. Floete, 176 F.Supp. 841, 843 (E.D.N.Y. 1959).

It would therefore appear that sustaining removal under Section 1442 (a) (1) would be tenuous at best.²

In addition to reliance on Section 1442 (a) (1), Eximbank grounds its removal on Section 1441 as well. Thus Eximbank takes the position that the facts stated in the petition of removal establish removal jurisdiction not only under Section 1442(a) (1) of Title 28 but under Section 1441 as well, and the reference in the "wherefore" clause only to Section 1442(a) (1) is to be deemed surplusage. In other words, Eximbank asserts that this reference does not limit this Court's power to...