Meyers-Arnold Company v. Maryland Casualty Company, Civ. A. No. 5061.

• Decision Date: 10 December 1965
• Docket Number: Civ. A. No. 5061.
• Citation: 248 F. Supp. 140
• Parties: MEYERS-ARNOLD COMPANY, a Corporation, Plaintiff, v. MARYLAND CASUALTY COMPANY, a Corporation, Defendant.
• Court: U.S. District Court — District of South Carolina

248 F. Supp. 140

MEYERS-ARNOLD COMPANY, a Corporation, Plaintiff, v. MARYLAND CASUALTY COMPANY, a Corporation, Defendant.

Civ. A. No. 5061.

United States District Court D. South Carolina, Greenville Division.

December 10, 1965.

Charles W. Marchbanks, of Rainey, Fant & Horton, Greenville, S. C., for plaintiff.

James M. Shoemaker, Jr., and C. Thomas Wyche, of Wyche, Burgess, Freeman & Parham, Greenville, S. C., for defendant.

HEMPHILL, District Judge.

Plaintiff's motion of November 19, 1965, asking this Court to remand the cause to the Court of Common Pleas for Greenville County, S. C., precipitates a decision as to whether removal lies. The original Summons¹ and Complaint, dated September 20, 1965, were filed in the State Court, and the action commenced by service on defendant insurance company² September 21, 1965 as provided by South Carolina Statute.³ On October 8, 1965, defendant filed in this Court its Petition for Removal, but failed to allege requisites of jurisdiction here in order to come within the limited jurisdiction of 28 U.S.C. § 1332(a),⁴ admittedly applicable. Realizing the omission was fatal, on October 16, 1965, defendant filed motion⁵ to amend the Petition for Removal to include necessary allegations of diversity and amount, the truth of diversity and amount of demand being evident.

For complete orientation this Court recites that the complaint alleged plaintiff department store to be a South Carolina Corporation, defendant a foreign insurance company (corporation); that plaintiff through its Greenville, S. C., store purchased a contract of insurance, comprehensive in coverage, which guaranteed plaintiff indemnity or surety by defendant against dishonesty, misappropriation, etc., on the part of plaintiff's employees; that while coverage was in full effect employee Marion C. Gilliland as payroll clerk, and in incidental capacity, fraudulently converted, etc., $16,658.92; prayer of the complaint demanded judgment for the money amount and other relief.

Defendant did not object to State jurisdiction under State procedure,⁶ but sought removal under provisions of 28 U.S.C.A. § 1446(a), (b) which reads:

(a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a verified petition containing a short and plain statement of the fact which entitle him or them to removal together with a copy of all process, pleadings and orders served upon him or them in such action.

(b) The petition for removal of a civil action or proceeding shall be filed within twenty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within twenty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a petition for removal may be filed within twenty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

Plaintiff contends that, because defendant's petition of October 8, 1965 was admittedly defective as to Section 1446(a), supra, removal fails. This Court has recently reiterated⁷ the rule that the burden is on petitioner to establish grounds of removal of state court action to this forum. Unless the motion of October 16th is granted, allowing amendment to correct and conform, remand must lie.

Time here injects into the spectrum of consideration. The action having been commenced September 21, 1965, time to answer or otherwise plead,⁸ 20 days, would expire October 11, 1965.⁹ Plaintiff would invoke the passage of time to foreclose defendant here.

Before the twenty day period had elapsed under either State or Federal computation of time for procedural action by defendant, the Congress enacted Public Law 89-215, approved into law September 29, 1965, 79 Stat. 887 legislating:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (b) of section 1446 of title 28, United States Code, is amended to read as follows:

"(b) The petition for removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

"If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable. Emphasis added.

The legislative history reveals passage by the House of Representatives March 15, 1965, by the Senate September 17, 1965. The brief, lucid, House Report¹⁰ sums up the purpose of H.R. 3989 as:

The bill would simply amend subsection (b) of Section 1446, title 28, United States Code, by striking out the word "twenty" where it appears and substituting the word "thirty," thereby extending by 10 days the period within which removal petitions may be filed.

To supplement this summary this order recites the letter from Warren Olney, III, Director of the Administrative Office of the United States Courts to the Speaker of the United States House of Representatives, of January 11, 1965.¹¹

Hon. John W. McCormack Speaker, House of Representatives Washington, D. C.

Dear Mr. Speaker: On behalf of the Judicial Conference of the United States I am transmitting herewith a draft of the bill to amend subsection (b) of section 1446 of title 28, United States Code, to extend to 30 days the time for filing petitions for removal of civil actions from State to Federal courts.

In a recent study of the removal procedure prescribed by chapter 89 of title 28, United States Code, a subcommittee of the Judicial Conference Committee on Revision of the Laws found that the existing 20-day period for filing a petition for the removal of a civil action from a State to a Federal court is so short as to make it impractical to remove many actions to the Federal court even though valid grounds for removal exist. The difficulty arises largely because of State provisions for substituted service on nonresident defendants by service on the secretary of state or other State officer as the agent of the nonresident. Where such substituted service is effected, there is frequently an understandable delay in procuring local counsel. By the time local counsel is obtained the 20 days for filing the removal petition frequently has run and the right to removal is thus lost. This is true particularly where an insurer assumes the defense and it is necessary for the defendant to turn the papers over to the insurer who in turn must forward them to local counsel. The time to answer after substituted service is in excess of 20 days in 30 States. In the majority of these States such time is 30 days, in others longer and in some shorter.

Moreover, where personal service rather than substituted service is made, the time to answer is also more than 20 days in many States. Similar problems arise because of the tendency of the defendant, perhaps not familiar with his Federal rights, to delay retainer of counsel until the end of the period within which answer is required.

The Judicial Conference is of the view that the proposed amendment is desirable and should be enacted. Representatives of this Office will be glad to appear at any hearing by the committee to which the bill may be referred and to provide any further information that may be desired.

Sincerely yours,

If the amendment is allowed defendant, it is within the 30 days, which would expire October 21, 1965. If the 30 day rule is inapplicable, and the amendment is allowed, defendant is within time under provisions of Rule 15¹² of the Federal Rules. This Court, under the liberal provisions of Rule 15 and with application of additional statute 28 U.S.C. § 1653,¹³ allows the amendment.

This Court interprets the intent of Congress as a clear mandate to liberalize the time of seeking removal in the interest of justice. It was neither the intent of Congress, nor is found in this case any effect, to deprive plaintiff here, or any other litigant, of a substantial right. The treatment is of a purely procedural nature.¹⁴

The argument that the application here applied reads into the statute a retroactive, or retrospective, factor or mandate not intended by Congress must fail. The General rule, stated in 50 Am.Jur. Statute § 482 is:

A retrospective law, in a legal sense, is one which takes away or impairs vested rights acquired under existing laws, or creates a new obligation and imposes a new duty, or attaches a new disability, in respect of transactions or considerations already past. Hence, remedial statutes, or statutes relating to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy of confirmation of rights already existing, do not come within the legal conception of a retrospective law, or the general rule against the retrospective operation of statutes. To the contrary, statutes or amendments pertaining to procedure are generally held to operate retrospectively, where the statute or amendment

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