Kelbert v. Travelers Insurance Company

• Decision Date: 08 September 1965
• Citation: 245 F. Supp. 31
• Parties: Helen F. KELBERT and Caribe Time Products, Inc., Plaintiffs, v. The TRAVELERS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

245 F. Supp. 31

Helen F. KELBERT and Caribe Time Products, Inc., Plaintiffs, v. The TRAVELERS INSURANCE COMPANY, Defendant.

United States District Court S. D. New York.

September 8, 1965.

Milton Gurwitz, New York City, for plaintiffs.

Terhune, Gibbons & Mulvehill, New York City, for defendant; John G. Donovan, New York City, of counsel.

FEINBERG, District Judge.

This is a motion stated to be brought under 28 U.S.C. § 1332(c) by plaintiffs for an order "transferring and remanding" the action to the Supreme Court of the State of New York, County of New York. Plaintiffs Helen F. Kelbert and Caribe Time Products, Inc., originally brought suit in the state courts in November 1963 against defendant The Travelers Insurance Company. The individual plaintiff is a citizen of the State of New York, and the corporate plaintiff was incorporated under the laws of the Virgin Islands. Defendant insurance company is a Connecticut corporation. The action seeks recovery upon two policies of life insurance issued by defendant upon the life of Rudolph S. Kelbert, husband of the individual plaintiff Helen F. Kelbert, which name plaintiffs as beneficiaries. Defendant's answer claims recovery is barred on the policies because of misrepresentations by the insured.

In December 1963, defendant removed the action to this court pursuant to 28 U.S.C. § 1441, alleging that diversity of citizenship existed. In February 1964, plaintiffs moved in this court for an order permitting them to file a demand for trial by jury, nunc pro tunc, although the time for such demand had passed. This motion was denied on March 10, 1964 after argument before Judge Bryan. The following day, a note of issue was filed. Some seventeen months later, plaintiffs brought this motion to remand to the state courts, apparently (according to oral argument) in an effort to preserve the right to jury trial, which has been lost in this court.

Although the motion purports to be brought pursuant to 28 U.S.C. § 1332(c), it is probable that plaintiffs are seeking relief under 28 U.S.C. § 1447(c). That section provides for remand "if at any time before final judgment it appears that the case was removed improvidently and without jurisdiction * * *." Plaintiffs argue that there is lacking the requisite diversity of citizenship between the individual plaintiff and defendant, claiming that defendant corporation should be regarded as a citizen of the State of New York for the purpose of diversity. The basis for this claim is not clear. By construing plaintiffs' papers liberally, it appears that at least two arguments can be spelled out.

1. Plaintiffs' notice of motion relies on 28 U.S.C. § 1332(c). That section provides that:

(c) For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business: Provided further, That in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.

Plaintiffs may be claiming that because defendant has been authorized by New York's Superintendent of Insurance to do business in this state and has been so engaged, it should be deemed a New York citizen for purposes of diversity under 28 U.S.C. § 1332(c).¹ Prior to 1958, a corporation was deemed a citizen only of the state of its incorporation. In that year, Congress enacted the portion of section 1332(c) quoted above up to the proviso. The Senate Report on the bill states that a corporation, such as an insurance company, whose business is multi-state is "regarded as a citizen of that one of the States in which was located its principal place of business." (Emphasis added.)² The Senate Report also refers to a report of the Committee on Jurisdiction and Venue of the Judicial Conference of the United States. That committee had considered a proposal that a corporation should be deemed a citizen of every state in which it does business. However, that suggestion was rejected, 2 U.S.Code Cong. & Ad. News, pp. 3099, 3111-3112 (1958). Therefore, the contention is without merit that because defendant was authorized to, and does, business in New York it is therefore a citizen of New York for diversity purposes. Kaufman v. General Ins. Co. of America, 192 F.Supp. 238, 242 (S.D. Cal.1961); Wear-Ever Aluminum, Inc. v. Sipos, 184 F.Supp. 364 (S.D.N.Y.1960); 1 Moore, Federal Practice ¶ 0.608.-4 p. 642 (1964); cf. In the Matter of L. F. Popell Co., 221 F.Supp. 534 (S.D.N.Y.), aff'd, L. F. Popell Co. v. Delta Airlines, Inc., 323 F.2d 50 (2d Cir. 1963) (per curiam). Plaintiffs cite two cases in support of their position, Jackson v. National Grange Mut. Liab. Co., 274 App. Div. 330, 83 N.Y.S.2d 602 (3d Dep't 1948), and Webster v. Columbian Nat'l Life Ins. Co., 131 App.Div. 837, 116 N.Y.S. 404 (1st Dep'ts), aff'd, 196 N.Y. 523, 89 N.E. 1114 (1909) (per curiam). However, these cases are not controlling. The portion of Jackson relied on by plaintiffs merely upholds the validity of consent to be sued as a condition of doing business in the state. In Webster, there is dictum that a foreign corporation doing business in the state is deemed a citizen of the state. However, subsequent New York cases appear to regard...