Nyberg v. Montgomery Ward & Co.

• Decision Date: 12 August 1954
• Docket Number: No. 453.,453.
• Citation: 123 F. Supp. 599
• Parties: NYBERG v. MONTGOMERY WARD & CO.
• Court: U.S. District Court — Western District of Michigan

123 F. Supp. 599

NYBERG v. MONTGOMERY WARD & CO.

No. 453.

United States District Court, W. D. Michigan, N. D.

August 12, 1954.

Doyle & Doyle and Thurman B. Doyle, Menominee, Mich., for plaintiff.

Barstow & Barstow and George Barstow, and Steven G. Barstow, Menominee, Mich., and John A. Barr, Chicago, Ill., for defendant.

STARR, District Judge.

Plaintiff, a resident and citizen of Michigan, began this action in the circuit court of Menominee county, Michigan, against the defendant, an Illinois corporation admitted to do business in Michigan, which operates one of its retail stores in the city of Menominee in Menominee county. The plaintiff sought to recover damages for her personal injuries sustained in an explosion, which she claims resulted from the defendant's alleged negligence in connection with the disconnecting of a hot-water tank from a cook stove in her home. The action was removed to this court by the defendant on the basis of the diversity of citizenship of the parties, 28 U.S.C.A. § 1441 et seq., and was tried before the court without a jury. On February 4, 1954, the court filed a written opinion, 125 F.Supp. 116 holding that defendant was entitled to a judgment of no cause of action, and on that date judgment was accordingly entered in its favor.

Plaintiff did not at any time prior to the entry of judgment move to remand the action to the circuit court or in any manner question the jurisdiction of this court on removal. In fact, in a pretrial brief plaintiff's counsel in effect admitted that this court had jurisdiction of the parties and the subject matter of the action. However, on March 12, 1954, subsequent to the entry of judgment in defendant's favor, plaintiff filed a motion to vacate and set aside the judgment and to remand the action to the circuit court of Menominee county. She bases her motion on the contention that there was no diversity of citizenship entitling the defendant to remove the action to this court; that this court was without jurisdiction; that its judgment was void and should be set aside; and that the action should be remanded to the circuit court. In support of this contention plaintiff claims: (1) that by obtaining permission to do business as a foreign corporation in Michigan and by designating a local agent for service of process, the defendant became a domestic Michigan corporation and, therefore, that there was no diversity of citizenship; (2) that the defendant's right to sue or be sued was governed by the law applicable to a Michigan corporation; and (3) that as its claim of Federal jurisdiction is based on diversity of citizenship, the defendant by obtaining permission to do business in Michigan and by designating a local agent, waived its right under 28 U.S.C.A. § 1391(c) (§ 51 of the former Judicial Code, 28 U.S.C.A. § 112) to have the action brought in a Federal court and also waived its right of removal. The plaintiff's contentions must be considered in connection with the law of Michigan relating to foreign corporations and the applicable Federal statutes relating to venue, jurisdiction, and removal. 28 U.S.C.A. § 1332(a) (1) provides in part:

"(a) 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.A. § 1441(a) provides:

"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending."

28 U.S.C.A. § 1391 provides in part:

"(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside. * * *

"(c) 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."

It is clear that the State statutes under which foreign corporations are admitted to do business in Michigan¹ were not intended to, and do not, make the admitted foreign corporation a domestic Michigan corporation and a citizen of Michigan. Furthermore, Michigan law is not applicable or controlling as to Federal court venue and jurisdiction. In the case of Hinchcliffe Motors, Inc., v. Willys-Overland Motors, Inc., D.C., 30 F.Supp. 580, 584, the court said:

"The question of the jurisdiction of this court, however, must be determined with reference to the rule obtaining in federal courts and is not controlled by state statutes or decisions, Hedrick v. Canadian Pac. Ry. Co., supra (D.C., 28 F.Supp. 257), and this is true also with respect to cases removed from a state court. Goldey v. Morning News, 156 U.S. 518, 15 S.Ct. 559, 39 L.Ed. 517; Mechanical Appliance Co. v. Castleman, 215 U.S. 437, 30 S.Ct. 125, 54 L.Ed. 272."

In support of her contentions plaintiff cites Republic Motor Truck Co. v. Buda Co., 212 Mich. 55, 179 N.W. 474. While the State circuit court in that case refused to permit removal to the Federal court, the Supreme Court of Michigan, on appeal from an order denying the defendant's application to dismiss the action for want of jurisdiction, apparently considered that the question of removal was not directly involved, as it held that the Federal court, if appealed to, was the final arbiter of the question of removal regardless of what the State court might hold. In that case the Supreme Court said, 212 Mich. at page 62, 179 N.W. at page 477:

"The federal authorities govern the question of removal, and the federal courts hold on such applications that corporations are conclusively presumed to be residents of the state in which they are created, and domestication elsewhere under laws there so authorizing is apparently not recognized as changing their residence for purposes of litigation."

Furthermore, it is well established that the right of a foreign corporation to resort to a Federal court in the State where the corporation is doing business cannot be abridged by the State law. In Terral v. Burke Construction Company, 257 U.S. 529, 532, 42 S.Ct. 188, 189, 66 L.Ed. 352, the Supreme Court said:

"The principle established by the more recent decisions of this court is that a state may not, in imposing conditions upon the privilege of a foreign corporation's doing business in the state, exact from it a waiver of the exercise of its constitutional right to resort to the federal courts, or thereafter withdraw the privilege of doing business because of its exercise of such right, whether waived in advance or not."

In Martin's Administrator v. Baltimore and Ohio Railroad Company, 151 U.S. 673, 684, 14 S.Ct. 533, 537, 38 L.Ed. 311, the court said:

"The Baltimore & Ohio Railroad Company, not being a corporation of West Virginia, but only a corporation of Maryland, licensed by West Virginia to act as such within its territory, and liable to be sued in its courts, had the right, under the constitution and laws of the United States, when so sued by a citizen of this state, to remove the suit into the circuit court of the United States, and could not have been deprived of that right by any provision in the statutes of the state."

The test as to whether the defendant was entitled to remove the present civil action from the State court to this Federal district court, is whether this court would have had original jurisdiction of the action. 28 U.S.C.A. § 1441(a). In considering the question of jurisdiction and removal in Central States Co-ops v. Watson Bros. Transp. Co., 7 Cir., 165 F.2d 392, the court said at page 394:

"Jurisdiction cannot be waived; neither can it be acquired by assent of the parties. * * * Jurisdiction is subject to the same test where the case is before the court on removal from a State court as though it had been originally brought in the Federal court."

In Sabin v. Home Owners' Loan Corporation, 10 Cir., 147 F.2d 653, 655, 656, the court said:

"The test for determining the removability of an action is whether the United States Court might have exercised original jurisdiction." (See authorities cited.)

In Southern Railway Company v. Allison, 190 U.S. 326, 23 S.Ct. 713, 47 L.Ed. 1078, the plaintiff began suit in the State court of North Carolina against the railway company, a Virginia corporation. The State statute of North Carolina provided that a foreign railroad company which desired to own property or carry on business in that State "shall become a domestic corporation of the state of North Carolina by filing in the office of the secretary of state a copy of its charter". Pub.Acts 1899, c. 62. The State statute further provided: "It may sue and be sued in all courts of this state and shall be subject to the jurisdiction of the courts of this state as fully as if such corporation were originally created under the laws of the state of North Carolina." The defendant railway company, which had complied with the State statute, removed the action to the United States circuit court. When the State supreme court refused to recognize the validity of the order of removal, an appeal was taken to the Supreme Court of the United States. In reversing the State court, the Supreme Court said, 190 U.S. 337, 23 S.Ct. 717:

"A corporation may be made what is termed a domestic corporation, or in form a domestic corporation, of a state in compliance with the legislation thereof, by filing a copy of its charter and by-laws with the secretary of state, yet such fact does not affect the character of the original corporation. It does not thereby become a citizen of the state in which a copy of its charter is filed,

...