Silverstein v. Pacific Mut. Life Ins. Co. of California

• Decision Date: 02 September 1936
• Citation: 16 F. Supp. 315
• Parties: SILVERSTEIN v. PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA.
• Court: U.S. District Court — Northern District of New York

16 F. Supp. 315

SILVERSTEIN v. PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA.

District Court, N. D. New York.

September 2, 1936.

Sidney N. Zipser, of New York City, (Thomas W. McDonald, of Port Henry, N. Y., and Herman B. Zipser, of New York City, of counsel), for plaintiff.

Katz & Sommerich, of New York City (Ainsworth & Sullivan and Warner M. Bouck, all of Albany, N. Y., of counsel), for defendant.

COOPER, District Judge.

Defendant, by order to show cause granted May 20, 1936, moves to enjoin and restrain plaintiff from taking any further proceedings in the above-entitled case in the Supreme Court of the State of New York, County of Essex, in the Fourth Judicial District of the State, in which the action was brought, unless and until the cause shall be remanded to that court. Plaintiff by cross-notice of motion moves this court to remand this cause to the state court.

Both motions were returnable June 6, 1936, at Albany, and by agreement argument was postponed to July 13, 1936, at Albany.

The plaintiff is a resident of the state of New York, presumably in the county of Essex. Defendant is a California corporation and is authorized by the laws of the state of New York to transact business in the state of New York and to be sued in the state courts thereof. The amount involved in this suit is in excess of $3,000.

The chronology is important in this case.

February 14, 1936. The summons was served.

March 6, 1936. The complaint was served. Under the laws of the state of New York, defendant has twenty days after the service of the complaint to serve an answer. The time to answer may be extended by stipulation or order of the court.

March 11, 1936. Defendant's attorney served demand for change of venue from Essex county to Kings county on the ground that plaintiff was actually a resident of the county of Kings.

On March 27, 1936. Mr. Justice McLaughlin, Supreme Court, Kings County, granted an order, requiring the plaintiff to show cause why the place of trial should not be changed from Essex county to Kings county. The order was returnable at a special term at Elizabethtown April 9, 1936, and contained provision extending the defendants time to answer or otherwise move with respect to plaintiff's complaint until ten days after hearing the determination of the motion.

March 25, 1936. Plaintiff served cross-notice of motion for an order retaining the place of trial in Essex county upon the ground that the convenience of material witnesses and the ends of justice would be promoted thereby in addition to plaintiff's residence in Essex county. This was also returnable April 9th, at the same special term at Elizabethtown.

April 9, 1936. Defendant's motion for change of venue and plaintiff's cross-motion to retain venue in Essex county both heard by Mr. Justice Alexander of the Supreme Court at Elizabethtown in Essex County, N. Y.

April 9, 1936. Defendant's motion for change of venue denied. Plaintiff's cross-motion to retain venue in Essex county granted. Defendant ordered to answer plaintiff's complaint by April 15, 1936.

April 11, 1936. Defendant appealed to the Appellate Division from Mr. Justice Alexander's order denying its motion for change of venue and granting plaintiff cross-motion.

April 13, 1936. Defendant obtained an order to show cause for a stay pending appeal to the appellate division from Mr. Justice Schenck of the Third Judicial District, with residence at chambers in Albany, N. Y.

The order to show cause extended defendant's time to answer or otherwise move with respect to plaintiff's complaint until ten days after hearing and determination of the motion for a stay. This order to show cause was served on the plaintiff's attorney April 14th and was returnable before Mr. Justice Bergen, at a term of the Supreme Court, Albany County, N. Y., on April 24, 1936.

April 20, 1936. Order to show cause argued and opposed by plaintiff on the ground that that court had no jurisdiction and alleging the order to show cause was obtained in violation of rules 63, 87, and 88 of the Rules of Civil Practice and was not returnable in the judicial district in which Essex county is located nor any adjoining county.

April 29, 1936. While the motion was pending undetermined before Mr. Justice Bergen, defendant brought application for removal of this cause to the federal court in the Northern District, returnable before the Supreme Court of the State of New York at Schenectady, N. Y., in the Fourth Judicial District.

On May 1, 1936, the argument was postponed until May 6, 1936, by consent.

May 5, 1936. Plaintiff moved in the Appellate Division to dismiss the defendant's appeal for failure to prosecute said appeal.

May 6th. Application for removal heard by Mr. Justice Lawrence at Schenectady. Certified copy of the application, bond, and record have since been filed with the clerk of this court.

May 12th. Mr. Justice Lawrence handed down a memorandum denying defendant's application to remove the cause to the federal court.

May 13th. Appellate Division entered an order dismissing defendant's appeal.

May 13th. Decision of Mr. Justice Bergen denying defendant's motion for stay pending appeal and denying defendant's motion for extension of time to answer or otherwise move and also denying plaintiff's attorneys application to vacate the stay contained in Mr. Justice Schenck's order of April 13, 1936. All on the ground that no justice of the Supreme Court in the Third Judicial District had the power to grant such a motion by reason of subdivision 1 of rule 63 of the Rules of Civil Practice; that said motion must be made in the Fourth Judicial District or in a county adjoining Essex county. All such decisions were without prejudice to like motions in the Fourth Judicial District, and so far as vacating the extension of time to answer without prejudice to an application to Mr. Justice Schenck or to the court in the Fourth Judicial District.

May 14, 1936. Plaintiff moved by order to show cause for an order vacating and setting aside the stay of proceedings and extension of time to answer granted the defendant by Mr. Justice Schenck at Albany on April 13th, on the ground that the defendant had obtained said order to show cause and extension of time in violation of rules 63, 87, and 88 of the Rules of Civil Practice, pursuant to the decision of Mr. Justice Bergen. This order to show cause was returnable May 21, 1936, at Lake George, Warren county, in the Fourth District.

May 20, 1936. This court granted this order returnable June 8th at Albany, requiring the plaintiff to show cause why he should not be enjoined and restrained from taking any further proceedings in this action in the Supreme Court of the State of New York unless and until this cause should be remanded to this court, and stayed all proceedings in that court until the determination of this motion.

May 21st. The said order of this court was served May 21, 1936, upon the parties and the argument set for that day on the order to show cause before the N. Y. State Supreme Court at Lake George, N. Y., did not take place and there was no hearing thereon.

May 25, 1936. Plaintiff by cross-motion moves this court to remand its cause to the said Court on 12 specific counts.

If this cause has been properly removed to this court, then the defendant's motion for stay of proceedings in the state court should be granted and plaintiff's motion to remand should be denied. If this cause has not been properly removed to this court, or if, upon the facts, it should be remanded to the state court, then defendant's motion to stay the proceedings in the state court must be denied.

The main considerations which control the decisions in this case are:

(1) Was the defendant a foreign corporation having the right to apply for removal of this case to the federal court?

(2) Was petition for removal and bond presented in time?

(3) Is the decision of the state court, in refusing to remove the cause to this court, binding on this court?

Plaintiff's contention relative to No. 1, that a foreign corporation becomes a resident of the state of New York for purposes of suit in federal as well as state courts upon compliance with state statutes, is untenable. Southern R. Co. v. Allison, 190 U.S. 326, 23 S.Ct. 713, 47 L.Ed. 1078; St. Louis & S. F. R. Co. v. James, 161 U.S. 545, 16 S.Ct. 621, 40 L.Ed. 802; Missouri Pac. R. Co. v. Castle, 224 U.S. 541, 32 S.Ct. 606, 56 L.Ed. 875; Wachtel v. Diamond State Engineering Corporation, 215 App.Div. 15, 213 N.Y.S. 77; Maisch v. City of New York, 193 N.Y. 460, 86 N.E. 458.

For purposes of the jurisdiction of federal courts a corporation organized in another state is a resident of that state and does not lose the diversity of citizenship upon removal proceedings because it is also authorized to do business in the state of New York.

The plaintiff hardly questions the right of removal if section 72 is complied with. In its brief (page 5) plaintiff says: "The right of the defendant to remove this cause is not questioned in the application, provided the procedure required by section 72 of the U.S.C.A. title 28 is followed." The contention of the plaintiff is that it was not followed.

Removal of causes where the defendant is a nonresident of the state in whose court the action is brought is governed by 28 U. S.C.A. § 72 (Judicial Code § 29).

This section provides that such defendant, to remove the cause from the state to the federal court, "may make and file a petition, duly verified, in such suit in such State court at the time, or any time before the defendant is required by the laws of the State or the rule of the State court in which such suit is brought to answer or plead to the declaration or complaint of the plaintiff, for the removal of such suit into the district court to be held in the district where such suit is pending, and shall make and file therewith a bond. * * * It shall then be the duty of the State court to accept said...