Ivy River Land & Timber Co. v. American Ins. Co. of Newark, N.J.

• Citation: 130 S.E. 864,190 N.C. 801
• Decision Date: 23 December 1925
• Docket Number: 557.
• Parties: IVY RIVER LAND & TIMBER CO. ET AL. v. AMERICAN INS. CO. OF NEWARK, N. J., ET AL.
• Court: United States State Supreme Court of North Carolina

130 S.E. 864

190 N.C. 801

IVY RIVER LAND & TIMBER CO. ET AL. v. AMERICAN INS. CO. OF NEWARK, N. J., ET AL.

No. 557.

Supreme Court of North Carolina

December 23, 1925

Appeal from Superior Court, Buncombe County; Lane, Judge.

Action by the Ivy River Land & Timber Company and others against the American Insurance Company of Newark, New Jersey, and another. From an order granting a motion by defendant named for removal to federal court, plaintiffs appeal. Affirmed.

Entire suit is removable to federal court on application of one of parties to controversy.

The plaintiff Ivy River Land & Timber Company was the owner of a large amount of lumber, in which its coplaintiffs were interested as mortgagees thereof. The American Insurance Company, November 11, 1924, issued and delivered to the plaintiff Ivy River Land & Timber Company a certain policy of insurance, wherein it agreed to insure the said plaintiff against loss or damage by fire in the sum of $10,000 on its said lumber, and December 11, 1924, the Dixie Fire Insurance Company issued a like policy in like sum on said lumber. Both policies contained loss-payable clauses, by which plaintiff Central Bank & Trust Company and the Bankers' Trust & Title Company became interested in said insurance policies. These policies contained the usual "80 per cent coinsurance clause," by which it is stipulated that the insured shall, at all times, maintain insurance on the property insured of not less than 80 per cent. of the actual cash value thereof, and that in failing so to do the insured shall be an insurer to the extent of such deficit, and in that event shall bear its proportion of any loss; also a prorata liability clause as follows:

"This company shall not be liable for a greater proportion of any loss or damage than the amount hereby insured shall bear to the whole insurance covering the property, whether valid or not, and whether collectable or not."

The property covered by these policies was totally destroyed by fire. In addition to the policies issued by the defendants plaintiff had other policies of insurance on this lumber aggregating $41,500. Plaintiff prayed for a judgment against the defendants in the sum of $20,000.

In apt time the defendant American Insurance Company, of Newark, N J., filed its petition and bond for removal to the federal court. The American Insurance Company of Newark, N. J., is and has at all times been a corporation of the state of New Jersey and not a corporation of the state of North Carolina. The Dixie Fire Insurance Company has at all times been a corporation of the state of North Carolina and not a corporation of any other state. The value of the lumber destroyed is sufficient to cover the amount of all insurance thereon.

Mark W. Brown, of Asheville, for appellants.

Jones, Williams & Jones, of Asheville, for appellee.

VARSER J.

The cause of action alleged against the defendant American Insurance Company, a New Jersey corporation, must be separate and distinct, that is, separable from the cause of action alleged against the Dixie Fire Insurance Company, a North Carolina corporation, in order to permit the removal to the District Court of the United States for the Western District of North Carolina. This separability depends upon whether the cause of action is several or joint. Bank v. Hester, 188 N.C. 68, 123 S.E. 308; Morganton v. Hutton, 187 N.C. 740, 122 S.E. 842. The removal statute, Judicial Code, § 28 (U. S. Comp. St. 1918, § 1010), provides, among other causes for removal, that:

"When in any suit mentioned in this section there shall be a controversy that is wholly between citizens of different states, and which can be fully determined as between them [ Railroad v. Grayson, 119 U.S. 240, 7 S.Ct. 190, 30 L.Ed. 382; Wilson v. Oswego Township, 151 U.S. 56, 14 S.Ct. 259, 38 L.Ed. 70; Storage Co. v. Ins. Co. of North America, 151 U.S. 368, 14 S.Ct. 367, 38 L.Ed. 195], then either one or more of the defendants actually interested in such controversy may remove said suit into the District Court of the United States."

A suit may, in this jurisdiction, consist of several legally distinct controversies, and in such suit a person is entitled to remove when such person is a defendant and the cause of action asserted against such person is separate and distinct, that is, may be wholly determined between such defendant and the plaintiff, or plaintiffs, so asserting it, and all the indispensably necessary parties on one side are citizens of different states from those on the other. Hyde v. Ruble, 104 U.S. 407, 26 L.Ed. 823; Ayres v. Wiswall, 112 U.S. 187, 5 S.Ct. 90, 28 L.Ed. 693; Geer v. Mathieson, 190 U.S. 428, 23 S.Ct. 807, 47 L.Ed. 1122; Graves v. Corbin, 132 U.S. 571, 10 S.Ct. 196, 33 L.Ed. 462; Yulee v. Vose, 99 U.S. 539, 25 L.Ed. 355; Corbin v. Van Brunt, 105 U.S. 576, 26 L.Ed. 1176; Fraser v. Jennison, 106 U.S. 191, 1 S.Ct. 171, 27 L.Ed. 131.

If the defendant or defendants who seek to remove, are jointly liable, either in tort (Railway Co. v. Dowell, 229 U.S. 102, 33 S.Ct. 684, 57 L.Ed. 1090; McAllister v. Railroad Co., 243 U.S. 302, 37 S.Ct. 274, 61 L.Ed. 735), or in contract (Railroad v. Ide, 114 U.S. 52, 5 S.Ct. 735, 29 L.Ed. 63; Pirie v. Tvedt, 115 U.S. 41, 5 S.Ct. 1034, 1161, 29 L.Ed. 331; Core v. Vinal, 117 U.S. 347, 6 S.Ct. 767, 29 L.Ed. 912; Sloane v. Anderson, 117 U.S. 275, 6 S.Ct. 730, 29 L.Ed. 899), the requisite separability does not exist.

If they are severally liable each defendant is liable only for the amount due by virtue of the cause of action alleged against him, and is not liable for the cause of action alleged against his codefendant who is a resident of the same state with the plaintiff, then such defendant who is a resident of a different state from that of the plaintiff may remove. Barney v. Latham, 103 U.S. 205, 26 L.Ed. 514; Venner v. Sou. Pacific Co. (C. C. A.) 279 F. 832, 836, certiorari denied, 258 U.S. 628, 42 S.Ct. 461, 66 L.Ed. 799; City of Winfield v. Wichita (C. C. A.) 267 F. 47. Separable causes of action remain separable, although assigned to one plaintiff, when viewed on a motion to remove (Patterson v. Bucknall [D. C.] 203 F. 1021), and same is true in a suit on individual note as to one defendant who is also sued on a joint note with another defendant ( Old Dominion Oil Co. v. Superior Oil Co. [ [D. C.] 283 F. 636).

The test as to whether the alleged cause of action as to the defendants, who are of diverse citizenship, is separate and distinct is whether a separate suit could have been maintained between plaintiff or plaintiffs against the defendants in separate actions, and the determination of neither of such separate suits is essential to the disposition of the other. Morganton v. Hutton, supra; Geer v. Mathieson, supra; Peper v. Fordyce, 119 U.S. 469, 7 S.Ct. 287, 30 L.Ed. 435; Fraser v. Jennison, 106 U.S. 191, 1 S.Ct. 171, 27 L.Ed. 131; Boatman's Bank v. Fritzlen, 135 F. 650, 68 C. C. A. 288, writ to review denied by U.S. Supreme Court, 198 U.S. 586, 25 S.Ct. 803, 49 L.Ed. 1174; Id., 212 U.S. 368, 29 S.Ct. 366, 53 L.Ed. 551; Torrence v. Shedd, 144 U.S. 531, 12 S.Ct. 726, 36 L.Ed. 528. A joint tort is not separable. McAllister v. Railroad Co., supra; Hill v. Railroad, 178 N.C. 607, 101 S.E. 376; Meyer v. Const. Co., 100 U.S. 457, 25 L.Ed. 593; Blake v. McKim, 103 U.S. 336, 26 L.Ed. 563; Hyde v. Ruble, 104 U.S. 407, 26 L.Ed. 823; Salem Trust Co. v. Finance Co., 264 U.S. 188, 44 S.Ct. 266, 68 L.Ed. 628, 31 A. L. R. 867; Ferry v. Wiggins (D. C.) 287 F. 422; City of Winfield v. Wichita, supra; Boatman's Bank v. Fritzlen, supra; Torrence v. Shedd, supra; Chesapeake & O. Ry. Co. v. Dixon, 179 U.S. 132, 21 S.Ct. 67, 45 L.Ed. 121; Sou. Ry. v. Carson, 194 U.S. 136, 24 S.Ct. 609, 48 L.Ed. 907; Railroad v. Bohon, 200 U.S. 221, 26 S.Ct. 166, 50 L.Ed. 448, 4 Ann. Cas. 1152; Railroad v. Willard, 220 U.S. 413, 31 S.Ct. 460, 55 L.Ed. 521; Railroad v. Schwyhart, 227 U.S. 184, 33 S.Ct. 250, 57 L.Ed. 473; Hughes on Federal Procedure (2d Ed.) 333.

In determining this question, the rule is that only indispensably necessary parties should be considered. Ferry v. Wiggins Co. (D. C.) 287 F. 421; Allen v. Hauss (D. C.) 290 F. 253; Galluchat v. Pittman (D. C.) 288 F. 917; Barney v. Latham, supra; Beal v Railroad (D. C.) 298 F. 180; Bank v. Hester, supra; Cochran v. Montgomery County, 199 U.S. 272, 26 S.Ct. 58, 50 L.Ed. 182, 4 Ann. Cas. 451; Sutton v. English, 246 U.S. 204, 38 S.Ct. 254, 62 L.Ed. 664; Webb v. Sou. Ry. Co. (D. C.) 235 F. 583; Venner v. Sou. Pac. Co. (C. C. A.) 279 F. 837; Colleton Mercantile & Mfg. Co. v. Savannah River L. Co. (C. C. A.) 280 F. 361; City of Winfield v. Wichita Natural Gas Co., supra; Salem Trust Co. v. Manufacturers' Finance Co. (C. C. A.) 280 F. 805; Old Dominion Oil Co. v. Superior Oil Co., supra; Smathers v. Leith, 92 N. J. Eq. 169, 111 A. 406. The complaint is the basis for determining the question of separability. Chicago, Rock Island & Pac. Ry. v. Dowell, 229 U.S. 102, 113, 33 S.Ct. 684, 57 L.Ed. 1090; Railway v. Thompson, 200 U.S. 206, 26 S.Ct. 161, 50 L.Ed. 441, 4 Ann. Cas. 1147; Ill. Central R. R. v. Sheegog, 215 U.S. 308, 30 S.Ct. 101, 54 L.Ed. 208; Staton v. Railroad, 144 N.C. 135, 56 S.E. 794; Hollifield v. Telephone Co., 172 N.C. 714, 90 S.E. 996; Patterson v. Lumber Co., 175 N.C. 92, 94 S.E. 692; Hough v. Railroad, 144 N.C. 700, 702, 57 S.E. 469; Smith v. Quarries Co., 164 N.C. 338, 80 S.E. 388; Powers v. Railroad, 169 U.S. 92, 18 S.Ct. 264, 42 L.Ed. 673; Chesapeake & Ohio Ry. Co. v. Dixon, supra; Railroad v. Ide, 114 U.S. 52, 5 S.Ct. 735, 29 L.Ed. 63; Morganton v. Hutton, supra; Roberts v. Underwood Typewriter Co. (D. C.) 257 F. 584; Barney v. Latham, supra; Davis v. Rexford, 146 N.C. 418, 424, 59 S.E. 1002; Thorn, etc., Co. v. Fuller, 122 U.S. 535, 7 S.Ct. 1265, ...