Niccum v. Northern Assur. Co.

• Citation: 17 F.2d 160
• Parties: NICCUM et ux. v. NORTHERN ASSUR. CO., Limited, et al.
• Decision Date: 08 January 1927
• Court: U.S. District Court — Panama Canal Zone

17 F.2d 160 (1927)

NICCUM et ux. v. NORTHERN ASSUR. CO., Limited, et al.

District Court, D. Indiana, Ft. Wayne Division.

January 8, 1927.

Eichhorn, Gordon & Edris, of Buffton, Ind., and John A. Kersey, of Marion, Ind., for plaintiffs.

Burke G. Slaymaker and Slaymaker, Turner, Merrell, Adams & Locke, all of Indianapolis, Ind., for the Northern Assur. Co., Ltd.

SLICK, District Judge.

The original complaint in this action was filed in the Grant circuit court in the state of Indiana on May 8, 1925. On petition of the defendant the Northern Assurance Company, Limited, filed September 29, 1925, the case was removed to this court. The petition of the plaintiffs to remand the case to the state court is up for decision.

Plaintiffs, Lewis Niccum and Vesta Niccum, husband and wife, are citizens of Michigan. Defendant Arthur L. Swope is a citizen of Indiana, and defendants Joseph Schuman and Dorothy Schuman, husband and wife, are citizens of Illinois. Defendant the Northern Assurance Company, Limited, is a corporation and a citizen of Great Britain.

The complaint alleges that the plaintiffs, Lewis and Vesta Niccum, owned real estate which they sold to Joseph and Dorothy Schuman, who immediately mortgaged the property back to the plaintiffs jointly for $1,000 purchase money, stipulating in the mortgage to insure the property for the protection of plaintiff's mortgage. The mortgage was recorded. Joseph and Dorothy Schuman then sold the property to defendant Swope, the deed of conveyance stipulating that Swope assumed the mortgage, but in this stipulation and by mistake the mortgage is described as a mortgage to but one of the plaintiffs. Swope, in compliance with his agreement assuming the mortgage, procured the insurance policy sued on in this action, with a mortgage clause attached, payable to one of the plaintiffs, according to the stipulation in the Schuman deed, but not in accordance with the mortgage contract for the insurance. A rider was attached to the policy of insurance, providing for the payment in case of loss to one of the plaintiffs of a portion of the insurance money as his interest may appear. There was a loss under the policy, and Lewis and Vesta Niccum sue for $1,500, and ask that the mistake in the assumption clause in said deed and the provision in the partial assignment of said insurance policy be corrected.

Defendant the Northern Assurance Company, Limited, appeared to said action in the state court and filed a demurrer. Thereafter defendant Arthur L. Swope appeared and filed a cross-complaint against the defendant the Northern Assurance Company, Limited, and summons on the cross-complaint was issued to the Assurance Company, returnable October 1, 1925. The prayer in the cross-complaint is for $7,000, and asks the court to determine the title to the proceeds of said insurance policy, and that the portion of the loss as evidenced by said mortgage be allotted to the person or persons lawfully entitled to the same, and for judgment against said Assurance Company.

The plaintiffs alone make the motion to remand. Their first contention is that the motion to remove came too late. It should be noted in this connection that the petition to remove was not filed until a general appearance had been made and a demurrer to the complaint filed; but at the time of this general appearance by the defendant the Northern Assurance Company, Limited, and at the time of the filing of the demurrer, the demand in the complaint was limited to $1,500, and of course there existed no grounds for removal. However, when defendant Swope filed his cross-complaint, the sum total of the demands against the Northern Assurance Company was raised to $7,000, and this brought the sum or value well over the $3,000 required by the statute. Where the original pleading does not present a removable case, but subsequent events make it plain that there exists a removable controversy between the original parties, removal may be made as soon as it appears. Foster's Federal Practice (6th Ed.) vol. 3, p. 2965.

Plaintiffs contend, further, that there was no removable ground, for the reason that there is not a separable controversy between citizens of different states; the Northern Assurance Company, Limited, being an alien corporation, and not a citizen of any state. As to the proposition, is there a separable controversy between the Niccums and Swope, or the Schumans? The Niccums are interested in recovering on the insurance policy filed as an exhibit in this action. Swope is interested in recovering upon the same policy. The Schumans are not in court, except that they have been named as defendants and publication has been ordered against them. They have not appeared; but, if they should appear, they would be interested in seeing that Swope and the Niccums recovered against the defendant Assurance Company.

Where defendants are interested in separate parts of the same subject-matter, no separate controversy is presented. Foster's Federal Practice (6th Ed.) vol. 3, p. 2937. Certainly defendant Swope and the Niccums are interested in separate parts of the same subject-matter in this action, to wit, the money to be recovered on a judgment rendered against defendant the Assurance Company. If the Schumans are sufficiently served by publication to permit them to be defaulted in case they do not voluntarily appear, the question would arise whether they are necessary parties to this action. No judgment is sought against either of them. The only purpose the pleader had in making them parties was to reform a provision in the deed which they made to Swope, and to reform the assignment evidenced by the rider on the insurance policy, so that these instruments may be introduced in evidence at the trial.

On the question of separability, the rule is succinctly stated in Fraser v. Jennison, 106 U. S. 191, 1 S. Ct. 171, 27 L. Ed. 131, as follows:

"The case must be one capable of separation into parts, so that, in one of the parts, a controversy will be presented with citizens of one or more states on one side, and citizens of other states on the other, which can be fully determined without the presence of any of the other parties to the suit as it has been begun."

The case at bar does not fall within this class. It does not present any question that can be fully determined, or even tried, without the presence of defendant The Northern Assurance Company, Limited, a citizen of Great Britain.

By Act of March 3, 1911, designated as the Judicial Code (Comp. St. § 968 et seq.), the Circuit Courts were abolished and the jurisdiction of the District Courts enlarged. Authority for this is found in article 3, § 1, of the Constitution, which reads: "The judicial power of the United States shall be vested in one Supreme Court and in such inferior courts as the Congress may from time to time ordain and establish." Chapter 1 of the act to codify, revise, and amend the laws relating to the judiciary, called the Judicial Code, provides for the organization of the District Courts, chapter 2 defines the jurisdiction of these courts, and chapter 3 provides for removal of causes from state courts to the United States District Courts. It is chapters 2 and 3 of the Judicial Code, then, that must be examined to determine the question of the right of removal in this case.

Chapter 2, among other things not material here, provides that the District Courts shall have original jurisdiction in causes where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and is between citizens of a state and citizens or subjects of a foreign state. That part of chapter 3, § 28 (Comp. St. § 1010), pertinent to this inquiry, reads as follows:

"Any suit of a civil nature, at law or in equity, arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, of which the District Courts of the United States are given original jurisdiction by this title, which may now be pending or which may hereafter be brought in any state court, may be removed by the defendant or defendants therein to the District Court of the United States for the proper district. Any other suit of a civil nature, at law or in equity, of which the District Courts of the United States are given jurisdiction by this title, and which are now pending or which may hereafter be brought, in any state court, may be removed into the District Court of the United States for the proper district by the defendant or defendants therein, being nonresidents of that state. And when in any suit mentioned in this section there shall be a controversy which is wholly between citizens of different states, and which can be fully determined as between them, then either one or more of the defendants actually interested in such controversy may remove said suit into the District Court of the United States for the proper district."

It should be remembered that the right to remove from a state to a federal court is purely statutory. No such right existed at common law. A careful reading of the above-quoted statute will disclose three general classes of cases where removal is permitted, not including the one involving local prejudice:

First. Any suit of a civil nature in law or equity arising under the Constitution or laws of the United States, or treaties made or to be made, of which the District Courts have original jurisdiction, may be removed by the defendant or defendants.

Second. Any other suit of a civil nature, at law or in equity, of which the District Courts are given jurisdiction by this title, now pending or hereafter brought in a state court, may be removed by defendant or defendants, being nonresidents of the state where the suit is...