Lewis v. Manufacturers Casualty Ins. Co.

Decision Date24 September 1952
Docket NumberCiv. A. No. 3764.
Citation107 F. Supp. 465
CourtU.S. District Court — Western District of Louisiana


Godfrey & Edwards, Many, La., for plaintiffs.

Jackson, Mayer & Kennedy, Shreveport, La., for defendant.

Booth, Lockard & Jack, Shreveport, La., amicus curiae.

PORTERIE, District Judge.

This is an action by husband and wife, each individually, and the husband for and on behalf of his minor child, for damages for personal injuries sustained by the wife and child and medical expenses incurred by the husband as a result of the negligent driving of an automobile on April 12, 1952, in DeSoto Parish, Louisiana, by one D. R. Spainhour, who was accompanied at the time by his wife, the owner of the automobile. The plaintiffs and the Spainhours are Louisiana citizens.

Plaintiffs allege that the sole and proximate cause of the accident and their resulting injuries was the negligent operation of the Spainhour automobile.

At the time of the accident, defendant, an insurance corporation organized under and by virtue of the laws of the State of Pennsylvania, was the insurer of Mrs. Spainhour, inter alia, against any liability whatsoever incurred by her or anyone driving her automobile with her permission to any member or members of the public as a result of its negligent operation, within certain limits contained in their policy, not pertinent to the sole issue here.1 While driving his wife's automobile with her permission, of course, Spainhour was the insured.

Defendant has been licensed to do business in this State. At the time of the issuance and delivery of its policy (February 5, 1952), at the time of the accident (April 12, 1952), at the time of filing of this action (June 11, 1952), and at this very time defendant was and is licensed to do and was and is doing business in this State. On March 27, 1951, defendant voluntarily filed its "consent to be sued" by anyone injured by its insureds in Louisiana. All of these dates are subsequent to July 27, 1950, the effective date of Louisiana Act 541 of 1950, LSA-R.S. 22:655, hereafter sometimes called the direct-action statute, and of Louisiana Act 542 of 1950, LSA-R.S. 22:983(E), hereafter sometimes called the consent statute, which Acts are the pertinent law of Louisiana today.

We have had the occasion to adjudicate on numerous constitutional objections leveled at these statutes.2 They have been held constitutional as a proper and permissible regulation of the business of insurance in this State. See, Buxton v. Midwestern Ins. Co., D.C., 102 F.Supp. 500, 5013; cf. Fisher v. Home Indemnity Company, 5 Cir., 1952, 198 F.2d 218, 2194; Cushing v. Maryland Casualty Company, 5 Cir., 1952, 198 F.2d 536.5

This defendant now moves to dismiss this action on the grounds that (a) the complaint fails to state a claim upon which relief can be granted; (b) the provisions of the statute under which this action is instituted, LSA-R.S. 22:655, "are procedural and are, therefore, not applicable herein"; (c) the sole controversy in this action is between plaintiffs and the Spainhours, all Louisiana citizens; and (d) there is no "case" or "controversy" between plaintiffs and defendant.

(a) The complaint so obviously states a claim upon which relief can be granted that we deny this phase of defendant's motion without elaboration. Cf. Rule 8(a); Appendix of Forms, Form 9, Federal Rules of Civil Procedure, 28 U.S.C.A.

(b) LSA-R.S. 22:655 has been declared so many times to be substantive by final authority that we deny this phase of defendant's motion without elaboration by merely citing the latest case on the point. Cushing v. Maryland Casualty Company, 5 Cir., 1952, 198 F.2d 536.

(c) Whether or not there is a controversy between plaintiffs and the Spainhours is immaterial to the issue here.

(d) The sole issue presented, therefore, is whether or not a "controversy" exists between plaintiffs and defendant.

We have already adjudicated that a controversy exists between a wrongfully injured member of the public and the public liability insurer of the tort-feasor, irrespective of the citizenship of the insured-tort-feasor and the wrongfully injured member of the public, and that this Court has jurisdiction to hear and determine that controversy if there is diversity of citizenship between the injured and the insurer and over $3,000, exclusive of interest and costs, is involved. Soileau v. New Amsterdam Casualty Co., Civil Action, File No. 1968. We have been affirmed on the point by a Court which we are bound to follow. New Amsterdam Casualty Co. v. Soileau, 5 Cir., 167 F.2d 767, 6 A.L.R.2d 128.6 Review of the case was refused by the Highest Tribunal in this Nation. New Amsterdam Casualty Co. v. Soileau, 335 U.S. 822, 69 S.Ct. 45, 93 L.Ed. 376. All of which, of itself, we feel, is not only sufficient, but is a mandate to us to immediately foreclose defendant. We may not, with propriety, lightly forsake controlling authority, long-respected precedents, and established practice merely to avoid duties allegedly disagreeable.

But the moving defendant urges now, and again, by specific mention, that there is no "case" or "controversy" between plaintiffs and itself (defendant). Point (d) above. Though, for obvious reasons, this point is already clearly encompassed in the previous decisions, we have decided to re-examine and elaborate on the question and its related field.

The Constitution of the United States, in pertinent part, provides:

"The judicial Power shall extend * * * to Controversies * * * between Citizens of different States * * *". Art. III, § 2, U.S.Const. (Emphasis ours.)

This, simply put, is jurisdiction.

"Judicial power", much too comprehensively defined, yet sufficient for our purpose here, is the authority and the duty of a court to hear, determine, and bindingly pronounce judgment on the rights of parties who bring a case before it and to carry its judgment into effect.

This Court was ordained and established; 28 U.S.C. § 98(b), 28 U.S.C.A. § 98(b); and it was vested with judicial power in controversies between citizens of different states, by the Congress of the United States, pursuant to the authority given the Congress by the people7 in Section 1 of Article III of the Constitution of the United States8, by the following pertinent provisions of our Judicial Code:

"The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and is between:
"(1) Citizens of different States". 28 U.S.C. § 1332, 28 U.S.C.A. § 1332. (Emphasis ours.)
"A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." 28 U.S.C. § 1391(c), 28 U.S. C.A. § 1391(c). (Emphasis ours.)

While a corporation itself can be a citizen of no State, in the sense in which the word "citizen" is used in the Constitution, yet the word "Citizens" as used in Article III, § 2, of the Constitution, has always been held to include corporations. Muller v. Dows, 94 U.S. 444, 24 L.Ed. 207.

It is no longer debatable that a state corporation is a citizen of the state which creates it for the purpose of suing and being sued, "* * * and hence such a corporation is itself deemed to come within that provision of the constitution of the United States which confers jurisdiction upon the federal courts in `controversies between citizens of different states.'" St. Louis & S. F. Ry. Co. v. James, 161 U.S. 545, 16 S.Ct. 621, 627, 40 L.Ed. 802.

The fact that a corporation was organized under and by virtue of the laws of one state and does business in another also, by complying with the laws of the latter, does not affect or change the "citizenship" of the corporation. "It does not thereby become a citizen of the state in which a copy of its charter is filed, so far as to affect the jurisdiction of the Federal courts upon a question of diverse citizenship." Southern R. Co. v. Allison, 190 U.S. 326, 23 S.Ct. 713, 717, 47 L.Ed. 1078.

Defendant was organized under the laws of Pennsylvania; it is a citizen of Pennsylvania. Plaintiffs are all citizens of Louisiana. There is, therefore, complete diversity of citizenship in this action. Defendant is licensed to do business here; it did business here; it does business here; it is found here; it was served and cited here in Louisiana. Cf. Buxton v. Midwestern Ins. Co., D.C., 102 F.Supp. 500, and cases there cited.

This Court, therefore, has jurisdiction in this civil action as this matter exceeds the sum or value of $3,000, exclusive of interest and costs, and is between citizens of different states, if we find a controversy exists between plaintiffs on the one hand and defendant on the other.

Congress has declared, over seven years ago, that the continued regulation of the business of insurance, affected as it is with a public interest, is States' Rights. The McCarran Act, 59 Stat. 33, c. 20, 15 U.S.C. § 1011 et seq., 15 U.S.C.A. § 1011 et seq.; see, also, Buxton v. Midwestern Ins. Co., D.C., 102 F.Supp. 500; Cushing v. Maryland Casualty Company, 5 Cir., 1952, 198 F.2d 536.

The business of insurance is affected by a great and vast public interest. Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 66 S. Ct. 1142, 90 L.Ed. 1342, 164 A.L.R. 476. "Insurance touches the home, the family, and the occupation or the business of almost every person in the United States." United States v. South Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 1167, 88 L.Ed. 1440.

Congress so declaring and the business of insurance being so affected, the law-making body of this State has not only the right, but the duty, to regulate that business; and it may regulate the business of insurance in any manner it sees fit, so long as it...

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