San Antonio Suburban Irrigated Farms v. Shandy

• Decision Date: 14 December 1928
• Docket Number: No. 3296.,3296.
• Citation: 29 F.2d 579
• Parties: SAN ANTONIO SUBURBAN IRRIGATED FARMS v. SHANDY.
• Court: U.S. District Court — Panama Canal Zone

29 F.2d 579 (1928)

SAN ANTONIO SUBURBAN IRRIGATED FARMS v. SHANDY.

No. 3296.

District Court, D. Kansas, First Division.

December 14, 1928.

Mark Adams, of Wichita, Kan. (Vermilion, Evans, Carey & Lilleston, of Wichita, Kan., on the brief), for plaintiff.

Irving M. Platt, of Junction City, Kan., for defendant.

McDERMOTT, District Judge.

This motion squarely presents a question that has vexed the courts for many years, upon which there is much judicial opinion and a direct conflict of decision, where there is no controlling authority in this circuit, and where the letter of the statute is opposed to the principle underlying the removal of causes. The trouble arises in Code states, where an effort to simplify resulted in confusion.

The question is: Where a nonresident plaintiff sues a resident defendant on a cause of action involving less than the jurisdictional amount; where the defendant not only answers, but files a cross-petition, asking affirmative relief against the plaintiff for more than $3,000 (in addition to denying any liability to the plaintiff) — query, may the plaintiff remove the controversy?

The plaintiff sued on promissory notes, given pursuant to a contract to buy some Texas land for $8,000, of which $1,000 was paid in cash; $3,000 was paid by the notes sued on; the balance of $4,000 was to be paid by vendor's lien notes. The suit was commenced in the state court; the defendant answered, denying liability on the ground of fraud; concurrently with the answer he filed a "cross-petition," setting up the contract, alleging the same fraud as alleged in his answer, and asking that the $1,000 paid be returned, and that his contract, with its additional liability of $4,000, be canceled and set aside. Within the time prescribed by statute to answer this cross-petition, the plaintiff removed. May it do so?

Many of the cases cited involve questions not necessary to decide, and which are not authorities upon the case here presented; for example, cases where the defendant is sued for $1,000, files a counterclaim for $4,000, and the counterclaiming defendant seeks to remove, or where the removing party seeks to add $2,000 sued on to $2,000 counterclaimed for, to make the jurisdictional amount, or where the plaintiff, with an original claim exceeding the jurisdictional amount, with therefore a choice of forums, chose the state court, and thereafter, upon the coming in of the counterclaim, sought to change his forum, or where, under the state practice, the counterclaim was improper, and could be stricken on motion, or cases under the old law, where a party waived the right to remove by appearance.

The cross-petition of the defendant is proper under the Kansas Code. Section 60-710, Rev. St. Kansas 1923, gives the defendant the right to sue on a counterclaim and to ask affirmative relief; section 60-712 provides that, when the counterclaim makes new parties necessary, they may be brought into the case by summons, or the court may require the counterclaim to be made the subject of a new action. The defendant is not barred by his failure to counterclaim (Stroup v. Pepper, 69 Kan. 241, 76 P. 825), although such a counterclaim as is filed here is entirely permissible (Hodge v. Bishop, 96 Kan. 419, 151 P. 1105; Miller v. Thayer, 96 Kan. 278, 150 P. 537; Bank v. Elliott, 97 Kan. 64, 154 P. 255).

Under the Kansas procedure, the cross-petition is what its name implies, a petition against the plaintiff. The statute provides for a reply to the answer of the defendant, and also for alleging "new matter * * * constituting a defense to such new matter in the answer." Section 60-717, R. S. Kan. 1923. While the original claim sued on is in the control of the plaintiff, and he may dismiss at any time before final submission (section 60-3105, R. S. Kan. 1923), the control of the cross-petition is in the defendant, and not the plaintiff, and, even if the plaintiff dismisses his action, the case goes on upon the issue joined on the cross-petition (Venable v. Dutch, 37 Kan. 515, 15 P. 520, 1 Am. St. Rep. 260). In the latter case the court said:

"After plaintiff dismissed his cause of action, the defendant under his answer seeking to quiet his title is virtually plaintiff in all things save in name; the facts alleged in his answer must be sufficient to constitute a cause of action, and the relief to which he is entitled must be properly demanded; the burden of proof is upon him, and he must establish his cause of action by a preponderance of testimony before he is entitled to a judgment in his favor; being in the place of a plaintiff, and subject to his burdens, he also possesses his rights, and therefore it is within the discretion of the court to allow him to amend his pleading by adding another count."

In support of the motion to remand, defendant cites Foster's Federal Practice, vol. 3, pp. 2900, 2954 (6th Ed.), which supports defendant's position and cites a few of the older cases; the language of the statute which accords the right to remove to "the defendant, or defendants therein, being nonresidents of the state"; and the case of West v. Aurora, 6 Wall. 139, 18 L. Ed. 819. It should also be said that the removal act of 1875 (section 3 18 Stat. 471) accorded the right to remove to "either party, or any one or more of the plaintiffs or defendants entitled to remove * * *"; the present law (28 USCA § 73) is limited in terms to "defendant or defendants," and the defendant here is entitled to the benefit of the rule of statutory construction that Congress intended something by the change in phraseology.

The language of the opinion in West v. Aurora, supra, is broad enough to support defendant's motion to remand. The decision itself is not. In the first place, the removal statute then required the defendant to remove "at the time of entering his appearance," and this it did not do. Again, the record was so fragmentary that it was impossible to tell whether the paragraphs in the answer were, properly speaking, a counterclaim at all, and the court said that the state of the record was "fatal to the supposed right of removal." In its opinion the court spoke of the allegations of the answer as "in the nature of defensive pleas, coupled with a prayer for injunction and general relief." If they were "defensive pleas," the question here presented was not before the court. Again, it appears from the record of this litigation in the state courts that, in fact, enough was involved to enable the plaintiff to have gone into the United States court at the outset, an option not present in the case at bar. Aurora v. West, 22 Ind. 88, 85 Am. Dec. 413; Id., 25 Ind. 148.

To these authorities, supporting the right to remove, may be added the following decisions: Waco Hardware Co. v. Michigan Store Co., 91 F. 289 (5th C. C. A.); Illinois Central R. Co. v. Waller & Co., 164 F. 358 (C. C. Ky.); Glover Machine Works v. Cooke, 222 F. 531 (D. C. Ky.); Mohawk Rubber Co. v. Terrell, 13 F.(2d) 266 (D. C. Mo.). There are numerous dicta to the same effect in cases where the defendant sought to raise the jurisdictional amount by counterclaim and then remove, cases not in point here.

The decisions holding contra, upholding the right of a nonresident plaintiff, who was compelled to go to the state court in the first instance, to remove when confronted with a counterclaim exceeding the jurisdictional amount, are: Carson Lbr. Co. v. Holtzclaw, 39 F. 578 (C. C. Mo.); Walcott v. Watson, 46 F. 529 (C. C. Nev.); Price & Hart v. Ellis & Co., 129 F. 482 (C. C. Ark.); Pierce v. Desmond, 11 F.(2d) 327 (D. C. Minn.); Zumbrunn v. Schwartz, 17 F.(2d) 609 (D. C. Ind.); Consolidated Textile Co. v. Iserson, 294 F. 289 (D. C. N. Y.). There are dicta to the same effect in other cases, where the precise point was not before the court.

In this state of the authorities, the duty of the court is to decide the question in accord with what it believes to be the intent of Congress. The Circuit Court of Appeals of this circuit, speaking through Judge Sanborn, has said that the right of removal is a valuable constitutional right, and ought not to be denied because of the existence of a doubt; rather, the learned justice said, in case of doubt the right of removal should be sustained, because in that event an error may be corrected on appeal, while an error the other way is not appealable. Boatmen's Bank v. Fritzlen, 135 F. 650 (8th C. C. A.).

The entire scheme of the Judiciary Act is to give a nonresident, who either sues or is sued for more than $3,000, the right to have his controversy determined in a national court. The right arose because of a then existing jealousy among the colonies, which has largely disappeared; the right is still of great value, because of the opportunity it affords nonresidents to have their matters submitted to a jury not affected by local prejudices and...