Rife v. Lumber Underwriters

• Decision Date: 11 April 1913
• Docket Number: 2,232.
• Parties: RIFE et al. v. LUMBER UNDERWRITERS.
• Court: U.S. Court of Appeals — Sixth Circuit

204 F. 32

RIFE et al. v. LUMBER UNDERWRITERS.

No. 2,232.

United States Court of Appeals, Sixth Circuit.

April 11, 1913

[Copyrighted Material Omitted]

C. L Marsilliot and Caruthers Ewing, both of Memphis, Tenn., for plaintiffs in error.

Trezevant Bartels & Trezevant, of Memphis, Tenn., for defendant in error.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

KNAPPEN Circuit Judge.

Plaintiffs in error sued upon two policies of insurance issued by defendant in error, for the recovery of fire loss upon a stock of lumber and other property in plaintiffs' millyard. Plaintiffs submitted to nonsuit as to one policy. As to the other, verdict was directed for defendant.

1. The suit was begun in a state court of Tennessee. It was removed to the federal court for alleged diversity of citizenship of the parties. No motion to remand was made. On the hearing here, the question whether the suit was lawfully removed was raised by a member of this court. That it is the duty of this court to determine whether the record exhibits a case properly removable, regardless of whether any objection was taken to the jurisdiction of the federal court, either in the court below or on appeal, is established by a long line of decisions, among which are Great Southern, etc., Hotel Co. v. Jones, 177 U.S. 449, 453, 20 Sup.Ct. 690, 44 L.Ed. 842; Fred Macey Co. v. Macey (C.C.A. 6th Cir.) 135 F. 725, 726, 68 C.C.A. 363; Chicago, etc., Ry. Co. v. Willard, 220 U.S. 413, 419, 31 Sup.Ct. 460, 55 L.Ed. 521. The question of jurisdiction arises in this way:

In the title to the bill of complaint the defendant was described as 'an insurance corporation or association doing business in Tennessee. ' The petition for removal asserted that the defendant then, and at the time suit was begun, was a resident and citizen of the state and city of New York, and a nonresident of the state of Tennessee, and that the plaintiffs were residents and citizens of Tennessee and Mississippi, respectively. Service of subpoena had been made upon an agent representing the defendant in Tennessee. After the removal, defendant appeared specially, denying the authority of the alleged agent to accept or acknowledge such service, and challenging the jurisdiction of the court over its person; alleging that defendant was not a corporation or a joint-stock company, but a voluntary association composed of 15 individuals named, each of whom (correcting what is conceded to be an error in the printed record as to the stated residence of one member) was alleged to be a citizen and resident of a specified state other than Tennessee, and (according to the undisputed statement in brief of defendant's counsel) was, in effect, alleged to be a citizen of a state other than Mississippi. Alias summons was served upon the commissioner of insurance, as provided by the Tennessee statutes, under which (Shannon's Code, Sec. 3298) associations formed, as is defendant, upon the plan of 'Lloyds,' are authorized to transact in that state insurance other than life upon the same terms and conditions as required of 'insurance companies of the United States or one of the United States'; the defendant association having duly authorized the commissioner to acknowledge service of all legal process. Supplemental process also issued against the attorney in fact of the association. The plea to the merits alleged that the association was not a 'legal entity,' and was neither a corporation nor a joint-stock company.

It is well settled that the record must affirmatively show jurisdiction to make the removal, and that the facts necessary to show diversity of citizenship may not be left to argument or inference. Laden v. Meck (C.C.A. 6th Cir.) 130 F. 877, 65 C.C.A. 361; Thomas v. Board of Trustees, 195 U.S. 207, 210, 25 Sup.Ct. 24, 49 L.Ed. 160. Diversity of citizenship does not appear with sufficient definiteness of detail upon the record in the state court. The bill of complaint does not unequivocally allege that defendant was a foreign corporation, or even a corporation; nor does the petition to remove allege the defendant to be a corporation, much less that it is organized under the laws of a state other than Tennessee or Mississippi. The mere assertion that it is a 'resident and citizen of the state of New York * * * and a nonresident of the state of Tennessee' is not necessarily more than a mere conclusion of the pleader, and standing by itself is not sufficiently definite. Lafayette Ins. Co. c. French, 18 How. 405, 15 L.Ed. 451; Great Southern, etc., Hotel Co. v. Jones, supra, 177 U.S. 454, 20 Sup.Ct. 690, 44 L.Ed. 842; Fred Macey Co. v. Macey, supra, 135 F. 725, 68 C.C.A. 363. And an allegation that defendant is an 'association' is not alone sufficient to show citizenship; for an association which is not a corporation is not a citizen within the meaning of the statutes regulating jurisdiction. Chapman v. Barney, 129 U.S. 677, 682, 9 Sup.Ct. 426, 32 L.Ed. 800; Gt. Southern, etc., Hotel Co. v. Jones, supra, 177 U.S. 449, 456, 457, 20 Sup.Ct. 690, 44 L.Ed. 842; Thomas v. Board of Trustees, supra, 195 U.S. 216, 25 Sup.Ct. 24, 49 L.Ed. 160; Fred Macey Co. v. Macey, supra, 135 F. 726, 727, 68 C.C.A. 363.

The petition for removal, in addition to what has already been stated, contained an assertion of the requisite jurisdictional amount in dispute, and an allegation that 'the controversy in said suit is between citizens of different states. ' The record in the state court as to diversity of citizenship thus showed in general terms: (a) The existence of a controversy between citizens of different states; (b) defendant's residence in and citizenship of New York; and specifically (c) plaintiffs' residence in and citizenship of Tennessee and Mississippi, respectively. It is true the petition misstated defendant's citizenship and residence, but such misstatement, not being challenged, did not affect the jurisdiction to remove. While, therefore, the record in the state court was deficient, in that it failed to show the legal status of the defendant (whether a corporation or an association), it contained assertions in the language of the statute of the existence of the elements entitling defendant to a removal. We therefore think the record in the state court was not so fatally lacking in showing a jurisdiction to remove as to preclude amendment in the federal court, by way of correct and definite showing of the actual status and citizenship of the defendant association and the members composing it.

We think this conclusion sustained by the decision in Kinney v. Columbia Savings & Loan Ass'n, 191 U.S. 78, 24 Sup.Ct. 30, 48 L.Ed. 103, which materially relaxed the strictness formerly applied to the question of jurisdictional showing in removal proceedings. It is true that in the Kinney Case the application in the federal court, to amend the petition for removal, was made before any proceeding on the merits; but we are unable to see that that feature is important where, as here, the record in the federal court, before any proceeding had therein on the merits, showed (as asserted) diversity of citizenship and thus actual jurisdiction to remove. We think the case distinguishable from Thomas v. Board of Trustees, supra, and Fred Macey Co. v. Macey, supra, in that the court could see, as matter of law, from the face of the record, that the board of trustees (in the Thomas Case) and the partnership association (in the Macey Case) were not and could not be citizens within the meaning of the statutes relating to removal, while in this case defendant might be an 'association,' and yet be a corporation. We see no merit in the suggestion that the individual members of the defendant association have not asked removal. If the association could be sued as such, we think it could lawfully take the necessary steps in its defense, including removal.

2. The policy contained a warranty by the assured that 'a continuous clear space of 100 feet shall at all times be maintained between the property hereby insured and any woodworking or manufacturing establishment. ' The undisputed proofs show that at the time of the fire the distance between the mill and the lumber yards was more than 100 feet, and that in one direction there was a continuous clear space of more than 100 feet between the mill and the...