Marival, Inc. v. Planes, Inc.

• Citation: 302 F. Supp. 201
• Decision Date: 26 June 1969
• Docket Number: No. 12189.,12189.
• Parties: MARIVAL, INC. v. PLANES, INC., a corporation, and Larry Block, an individual, Defendants and Third-Party Plaintiffs, v. UNITED STATES of America and Tampa Air Center, Inc., Third-Party Defendants.
• Court: U.S. District Court — Northern District of Georgia

302 F. Supp. 201

MARIVAL, INC. v. PLANES, INC., a corporation, and Larry Block, an individual, Defendants and Third-Party Plaintiffs, v. UNITED STATES of America and Tampa Air Center, Inc., Third-Party Defendants.

No. 12189.

United States District Court N. D. Georgia, Atlanta Division.

June 26, 1969.

Sloane, Hockett & Iverson, Des Moines, Iowa, for plaintiffs.

Stokes & Manning (Joseph R. Manning), Atlanta, Ga., for defendants.

Beverly B. Bates, Asst. U. S. Atty., Atlanta, Ga., for the United States.

Frank B. Hamilton, Jr. and/or Michael Sierra Hardee, Ott & Hamilton, Tampa, Fla., for Tampa Air Center.

ORDER

EDENFIELD, District Judge.

This case is before us on a motion to dismiss by the third-party defendant Tampa Air Center, Inc., for lack of proper venue and for absence of in personam jurisdiction. We do not reach the venue question because of our decision that, on the present record, in personam jurisdiction is absent.

This case was originally brought in state court and was removed by defendants to this court on the grounds of diversity jurisdiction. As a preliminary matter, we question our jurisdiction over this case. Plaintiff corporation is a citizen of Iowa and defendants are Georgia residents. Yet, 28 U.S.C. § 1441(b) specifically states that:

"Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action diversity, as in the instant case shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." Emphasis added.

Defendants, being residents of the State — Georgia — in which the action is brought, would seem improper parties to secure removal. Normally, a federal district court in this situation would simply remand the case to state court. However, the plaintiff has not questioned removal to federal court, nor does it appear it will in the future.¹ It is, of course, hornbook law that subject matter jurisdiction cannot be waived and may be challenged at any point. Nor can the federal courts permit the parties by agreement, whether formal or informal, to confer subject matter jurisdiction on the court. If subject matter jurisdiction is absent, the court must dismiss the case, on its own motion if necessary. However, it is equally well established that plaintiff may waive objection to a non-removable action or an action improperly removed, if the federal court would have had — as here — jurisdiction over the matter if it had been initially brought there. Monroe v. United Carbon Co., 196 F.2d 455 (5th Cir., 1952), Bailey v. Texas, Co., 47 F.2d 153 (2d Cir., 1931); Donahue v. Warner Bros. Pictures, 194 F.2d 6 (10th Cir., 1952); Chevrier v. Metropolitan Opera Ass'n., 113 F.Supp. 109 (S.D.N.Y., 1953). As one court put it:

"* * * 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." Handley-Mack Co. v. Godchaux Sugar Co., 2 F.2d 435, 437 (6th Cir., 1924).

Professor Moore upholds this view, stating that:

"* * * An irregularity in removal is waivable and, if waived, a federal court has power to proceed with a removed case that is within its original jurisdiction but is not one subject to removal, as where there is diversity but the defendant is a citizen of the state in which the action is brought. * * *" 1A Moore, Federal Practice, ¶ 0.15711 at 356 (2d ed.).

We do not interpret this authority as requiring a federal district court to assume jurisdiction, but only as estopping plaintiff from challenging removal jurisdiction after a certain point in time. However, in the instant case, we will maintain jurisdiction, in the light of plaintiff's waiver, since the case has proceeded well past the point of initial removal.

We now proceed to Tampa's motion to dismiss, as to which the facts in this case have particular importance. Defendant Block's unchallenged affidavit gives the most complete account of the facts available, although it is unfortunately sketchy. On or about April 15, 1967, Mr. Block, President of defendant Planes, Inc., received a long distance telephone call in Atlanta from Mr. Frank Fallon, Vice President and General Manager of Tampa Air Center, inquiring about the purchase of an Aero Commander airplane defendant had for sale. Mr. Fallon expressed a desire to trade their Cessna 310-D for defendant's Aero Commander, but no other negotiations transpired. It was agreed that Mr. Block would fly the Aero Commander to Tallahassee, Florida, for Mr. Fallon's inspection and approval and that Mr. Fallon would have the Cessna 310-D there for defendant's inspection. Upon their meeting in Florida, it was agreed that Tampa would buy the Aero Commander in return for its Cessna 310-D, and for its Cessna 172, which was not present for inspection. While defendant states that the trade depended upon defendant's subsequently inspecting the Cessna 172 in Atlanta, on April 20, 1967, the Cessna 310-D and Aero Commander were exchanged in Florida in the initial meeting. As Mr. Block states in his affidavit, "on or about the 20th day of April, 1967, he Block returned to Atlanta, Georgia, in the said Cessna 310-D and Mr. Fallon returned in the said Aero Commander." Pursuant to their agreement in Florida, an employee of Tampa, Mr. Dale Quigley, flew the Cessna 172 to Atlanta, and upon satisfactory inspection, Block gave Quigley $500, payable to Tampa, finalizing the agreement.

Tampa's motion to quash service of process for lack of in personam jurisdiction depends upon the statutory and constitutional reach of Georgia Code § 24-113.1, the Georgia "long-arm" statute. In this diversity case, § 24-113.1, dealing with amenability of nonresident persons, such as Tampa, to personal jurisdiction in Georgia, is controlling. It is now clear, after some controversy, see, e.g., Jaftex Corp. v. Randolph Mills, Inc., 282 F.2d 508 (2d Cir., 1960), that Federal Rules 4(d) (3), (7) do not establish a federal standard for amenability of a corporation to service of process, and that in diversity cases, state law must govern. Arrowsmith v. United Press International, 320 F.2d 219, 6 A.L.R.3d 1072 (2d Cir., 1963); Jennings v. McCall Corp., 320 F.2d 64 (8th Cir., 1963); Walker v. General Features Corp., 319 F.2d 583 (10th Cir., 1963); Smartt v. Coca-Cola Bottling Corp., 318 F.2d 447 (6th Cir., 1963). See, also, Kaplan, Federal Rules Amendments, 77 Harv.L.Rev. 601, 629-632 (1964). Georgia Code § 24-113.1 provides:

"Personal jurisdiction over nonresidents of State. — A court of this State may exercise personal jurisdiction over any nonresident, or his executor or administrator, as to cause of action arising from any of the acts, ownership, use or possession enumerated in this section, in the same manner as if he were a resident of the State, if in person or through an agent, he

"(a) Transacts any business within this State; or

"(b) Commits a tortious act within this State, except as to a cause of action for defamation of character arising from the act; or

"(c) Owns, uses, or possesses any real property situated within this State."

In the main action, plaintiff has sued defendant for damages arising from the alleged unairworthy condition of the Cessna 310-D, which defendants sold to plaintiff in April of 1968. Plaintiff bases its suit on fraudulent misrepresentation, and breach of express and implied warranties. Defendants' third-party action against Tampa alleges breach of express and implied warranties on the Cessna 310-D, initially sold to defendants by Tampa. Defendants base their opposition to Tampa's motion to dismiss on the fact that Tampa transacted business in Georgia as to the Cessna 310-D, which is the subject matter of their third-party suit. The ultimate question is whether Tampa's activities constitute the transaction of any business within Georgia.

Generally in long-arm cases, the court must decide if the activities in question fall within the scope of the state statute, and, if so, whether the due process clause of the Fourteenth Amendment is satisfied by an inclusive construction. Our task in the instant case is made easier by the fact that, absent state cases on this subject, we hold the Georgia long-arm statute to be coterminous with the due process clause. The broad language of the Georgia statute, expanding notions of jurisdiction, and the experience in other jurisdictions with similar statutes, indicates, that an expansive reading should be given to § 24-113.1. See, e. g., Buckley v. New York Times Co., 338 F.2d 470, 472-473 (5th Cir. 1964); Orton v. Woods Oil & Gas Co., 249 F.2d 198, 200, 202 (7th Cir., 1957), construing the Illinois long-arm statute, Ill.Rev.Stat.1955, §§ 16, 17, which is almost identical to Georgia's statute; Green v. Robertshaw-Fulton Controls Co., 204 F.Supp. 117, 128-129 (S.D.Ind., 1962); McGee v. International Life Ins. Co., 355 U.S. 220, 222, 78 S. Ct. 199, 2 L.Ed.2d 223 (1957). Thus, in the instant case, Tampa would be amenable to this court's jurisdiction under the long-arm statute if its activities in Georgia are sufficient to meet applicable constitutional standards.

Constitutional standards for in personam jurisdiction over nonresident corporations have undergone a radical mutation since the day when corporations were thought to have no existence outside their state of incorporation. Bank of Augusta v. Earle, 13 Pet. 519, 38 U.S. 519, 10 L.Ed. 274 (1839). Absent a personal appearance or personal service of process in the forum state, corporations could not be sued outside the state of their legal...