Markham v. City of Newport News

Decision Date19 June 1961
Docket NumberNo. 8216.,8216.
PartiesMarvine MARKHAM, Appellant, v. CITY OF NEWPORT NEWS, a municipal corporation, Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

Stanley E. Sacks and Harold M. Stern, Norfolk, Va. (Sacks & Sacks, Norfolk, Va., on the brief), for appellant.

Harry L. Nachman, City Atty., Newport News, Va., for appellee.

Before HAYNSWORTH and BOREMAN, Circuit Judges, and FIELD, District Judge.

HAYNSWORTH, Circuit Judge.

Whether a state may prevent resort to the federal diversity jurisdiction for enforcement of a right created by the state is the question. The District Court held that it could.1 We disagree.

The plaintiff, a citizen of California, commenced this action in the United States District Court for the Eastern District of Virginia against the City of Newport News, Virginia. She alleged that while driving her automobile on a street in Newport News, she and her vehicle fell into a sewer manhole which the city had wrongfully uncovered and left unguarded. She sought damages for injuries she claimed to have sustained.

Though all of the requisites of the federal diversity jurisdiction are present, the action was dismissed on the basis of a Virginia statute providing that no tort action against a city or other political subdivision of the Commonwealth shall be instituted "except in a court of the Commonwealth established under or pursuant to the Constitution of Virginia and having jurisdiction and venue * * *."2 The District Court was of the opinion that the statute did more than control venue of actions commenced in Virginia's courts, was intended to prevent resort to the federal diversity jurisdiction and was a valid enactment binding upon the District Court.

We agree with the District Judge's interpretation of the statute. The fact that it was subsequently codified as § 8-42.1 of Chapter 33 of Title 8 of Virginia's code in disregard of the plain direction of the General Assembly that it be codified as § 8-757.1 of chapter 34,4 cannot alter the clearly expressed intention of the General Assembly. The limitation upon maintenance of the action in any court other than one established under Virginia's constitution so clearly excludes the courts of the United States that we cannot put any other construction upon it. A United States District Court may be "one of the `proper courts at the county of Dauphin'"5 or "a court of competent jurisdiction in Travis County, Texas,"6 but the District Court for the Eastern District of Virginia cannot be said to be "a court of the Commonwealth established under or pursuant to the Constitution of Virginia." 184 F. Supp. 661.

We come then to the effectiveness of the statute to achieve its purpose.

The jurisdiction of the United States District Courts is fixed by the Congress, its acts being in implementation of Article 3, Section 2 of the United States Constitution. The Constitution provides that the judicial power of the United States shall extend to controversies between citizens of different states. Congress has authorized exercise of that power if the amount in controversy exceeds a specified amount, now $10,000.7 The cases in the diversity jurisdiction involve rights created by a state, rights which are subject to definition, limitation and, frequently, negation by the state. The fact that the substantive right is a creature of the state, however, does not suggest that the state may deny the judicial power the states conferred upon the United States when they ratified the Constitution or thwart its exercise within the limits of congressional authorization. In determining its own jurisdiction, a District Court of the United States must look to the sources of its power and not to acts of states which have no power to enlarge or to contract the federal jurisdiction.

It became axiomatic, therefore, as will be shown presently, that whenever there was a substantive right enforceable in a judicial proceeding in any court of the state, it was enforceable in the courts of the United States if the controversy was between citizens of different states and involved the minimum amount of money.

Newport News, nevertheless, relying on Detroit v. Osborne, 1890, 135 U.S. 492, 10 S.Ct. 1012, 34 L.Ed. 260 argues strenuously that the existence of the right is a matter of local law and that state negation of the right was recognized as controlling in federal courts long before Erie Railroad Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. This leads the city to the conclusion that the state may condition enforcement of the right in any way she sees fit, including a limitation of judicial proceedings to her own courts. Virginia, of course, may impose conditions precedent to enforcement of the right in any court. It has provided that an action such as this may not be maintained unless written notice of the accident is given to the city within sixty days after accrual of the cause of action.8 Power to impose conditions precedent which will operate in the same way and lead to the same result whether the action be brought in the courts of the state or those of the United States does not carry with it power to oust the federal jurisdiction.9 However extensive the power of the state to deal with the substantive right, it has no power to defeat the jurisdiction of the federal courts. As the Supreme Court said:

"* * * In all cases, where a general right is thus conferred, it can be enforced in any Federal court within the State having jurisdiction of the parties. It cannot be withdrawn from the cognizance of such Federal court by any provision of State legislation that it shall only be enforced in a State court. * * *" Railway Company v. Whitton\'s Administrator, 1871, 13 Wall. 270, 286, 80 U.S. 270, 286, 20 L.Ed. 571.

This and similar questions have been frequently before the Supreme Court of the United States, particularly in the latter part of the last century.

It arose first in a context of state statutes requiring claims against the estates of insolvents and decedents to be proven in the particular court of the state having supervisory jurisdiction over settlement and administration of the estate. The Supreme Court consistently held that the question of debt or no debt was one for judicial determination and that actions to determine that question could be maintained in the courts of the United States when the requisites of the diversity jurisdiction were present.10 Neither considerations of convenience in the administration of estates nor the restrictions of the state statutes could defeat the jurisdiction conferred upon the courts of the United States by the Constitution and the acts of Congress.

When the controversy was between citizens of different states, the right to remove to a federal court a condemnation proceeding to determine just compensation was upheld notwithstanding the fact that the state's exercise of its power of eminent domain was an attribute of its sovereignty and despite state statutes providing for such proceedings in designated state courts.11

A state may exclude a foreign corporation and, generally, it may impose terms upon which it will permit a foreign corporation to do intrastate business within its borders. However, it may not condition the right to do business upon surrender of the foreign corporation's right to invoke the federal diversity jurisdiction.

The first case presenting this question involved a Wisconsin statute requiring, as a condition of transacting business in that state, a foreign fire insurance company to agree in writing that it would not remove to a federal court any action commenced against it in Wisconsin's courts. A company which had signed such an agreement undertook the removal of an action against it in violation of its agreement. The Wisconsin court denied the removal petition, but the Supreme Court reversed, holding that neither the statute nor the agreement was an effective deprivation of the company's right of removal.12 Subsequently it was held that Iowa could not impose its penalties when a foreign corporation, refusing to sign such an agreement, conducted its business in Iowa without having qualified.13

For a time the decisions in the Supreme Court were in conflict as to whether a state might revoke the license of a foreign corporation which exercised its right to resort to the federal diversity jurisdiction. In three cases it was held that it could withdraw its permission to do business for that reason, though in each case it was recognized that the state was powerless to prevent the removal of any action commenced in its courts which was removable under federal law.14 There was in parallel a conflicting line of decisions that a state could not impose such a penalty upon resort to the federal diversity jurisdiction.15 The conflict was settled in a holding that the state could not revoke its permit because a licensed foreign corporation exercised its right to invoke the federal diversity jurisdiction.16

The Supreme Court has held ineffective state attempts to limit tort actions to her own courts. Wisconsin sought to limit her wrongful death action, which she could have repealed entirely, to her own courts. The limitation was held not to be binding upon federal courts sitting in Wisconsin, which, when adjudicating a cause of action arising under the Wisconsin statute, should ignore the limitation.17 The Territory of New Mexico, finding that actions for personal injury and wrongful death arising in New Mexico customarily were being prosecuted in the courts of other states with resulting oppression of the business interests of the territory and derogation of the dignity of her courts, sought to limit enforcement of such rights created by the territory to her own courts. The Supreme Court held that the courts of Texas could enforce the substantive rights subject to the conditions precedent of notice and of time limitations imposed by New...

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