Spragins v. Citizens Nat. Bank of Evansville, GC-83-10-WK-O.

• Decision Date: 07 March 1983
• Docket Number: No. GC-83-10-WK-O.,GC-83-10-WK-O.
• Parties: ESTATE OF C.A. SPRAGINS, Sr., Deceased; C. Allen Spragins, Jr., Executor, Remanding Parties, v. CITIZENS NATIONAL BANK OF EVANSVILLE, Removing Party.
• Court: U.S. District Court — Northern District of Mississippi

563 F. Supp. 424

ESTATE OF C.A. SPRAGINS, Sr., Deceased; C. Allen Spragins, Jr., Executor, Remanding Parties, v. CITIZENS NATIONAL BANK OF EVANSVILLE, Removing Party.

No. GC-83-10-WK-O.

United States District Court, N.D. Mississippi, Greenville Division.

March 7, 1983.

Jerome C. Hafter, Greenville, Miss., for remanding parties.

Fred C. DeLong, Jr., Greenville, Miss., for removing parties.

ORDER

KEADY, District Judge.

Citizens National Bank of Evansville as a party attempting to remove this action to federal district court seeks review of the Order entered on February 18, 1983, by United States Magistrate J. David Orlansky remanding the cause to the Chancery Court of Washington County, Mississippi. The bank asserts that the Magistrate erred by holding that it is not a "defendant" for purposes of removal. The issue thus presented has seldom arisen and rarely been discussed with clarity. We concur with Magistrate Orlansky's conclusions and, on the basis of his well-reasoned opinion hereto attached, we affirm. Accordingly, it is

ORDERED

That the bank's application for review is hereby DENIED and the Magistrate's February 18, 1983, Order is hereby AFFIRMED. The Clerk of this Court shall serve, by certified mail, a certified copy of this Order and the February 18, 1983, Order of Remand upon the Clerk of the Chancery Court of Washington County, Mississippi.

MEMORANDUM ORDER

J. DAVID ORLANSKY, Magistrate.

Presently before the court is the motion of the Estate of C.A. Spragins, Sr., Deceased (Estate), and C. Allen Spragins, Jr., Executor (Executor), by and through their counsel of record, to remand the above entitled action to the Chancery Court of Washington County, Mississippi, from which it was removed by Citizens National Bank of Evansville (Bank). The parties agree that the issue presented is whether the Bank is in the position of a "defendant," who may remove the action to federal court pursuant to 28 U.S.C. §§ 1441 and 1446.

The facts are not in dispute. On December 10, 1981, the Bank filed a complaint against C. Allen Spragins, Sr. and C. Allen Spragins, Jr. in the United States District Court for the Southern District of Indiana, Eastern Division, seeking recovery of sums allegedly due and owing under certain written guaranty agreements executed by the Spragins. The Spragins answered and raised several affirmative defenses. This litigation is still pending in Indiana.

On August 27, 1982, shortly after the death of C. Allen Spragins, Sr., his estate was opened in the Chancery Court of Washington County. The Executor published notice on September 3, 10, and 17, 1982 to all persons having claims against the estate to present them to the Chancery Clerk for probate and registration within ninety days from the date of the first publication, or they would be forever barred. The Bank filed its claim in the estate proceedings for the same indebtedness which is the subject of the Indiana litigation, and the Chancery Court "probated and allowed" the claim on September 24, 1982.

On December 8, 1982, the Executor filed an answer contesting the Bank's claim, asserting affirmative defenses, and incorporating by reference the answer filed in the Indiana litigation by C. Allen Spragins, Sr. during his lifetime. The Executor then caused a fiat to issue, setting the claim for hearing on February 14, 1983. Before that hearing could be held, the Bank removed the proceedings on its claim to this court.

28 U.S.C. § 1441 provides, inter alia:

"(a) 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.

"(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought."

Furthermore, 28 U.S.C. § 1446 again makes clear that state court proceedings may be removed to federal courts only by "defendants." Therefore it must be determined whether or not, in regard to its claim against the Estate, the Bank is the "defendant." Otherwise, the action was not removable, both because the Bank, as plaintiff, could not remove under §§ 1441 and 1446, and because the defendants are citizens of Mississippi.

For purposes of removal, federal law determines who is the plaintiff and who is the defendant. Chicago R.I. & P.R. Co. v. Stude, 346 U.S. 574, 575, 580, 74 S.Ct. 290, 292, 294, 98 L.Ed. 317 (1954); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104, 61 S.Ct. 868, 870, 85 L.Ed. 1214 (1941); 1A Moore, Federal Practice (2d Ed.), ¶ 0.1577, at 116. In Mason City & Fort Dodge Railroad Co. v. Boynton, 204 U.S. 570, 27 S.Ct. 321, 51 L.Ed. 629 (1907), the Supreme Court articulated a functional test for determining which party is the defendant for purposes of removal. The plaintiff, Justice Holmes stated, is the party whose intent to achieve a particular result, such as the recovery of property or money, is the "mainspring of the proceedings," and who is responsible for the continued existence of the action. The party opposing or resisting the plaintiff's claim is the defendant, who may remove. Id., at 579-80, 27 S.Ct. at 323.

The Bank argues that, despite the filing of its claim against the Estate, thus initiating the action, it is not the "plaintiff," but rather the Estate should be considered the "plaintiff" because it "instigated" the action by publishing its notice to creditors and by requiring that the Bank file its claim or run the risk of having it forever barred. A similar argument was rejected by the Supreme Court in Columbia Gas & Electric Corp. v. American Fuel & Power Co., 322 U.S. 379, 64 S.Ct. 1068, 88 L.Ed. 1137 (1943), where a trustee in bankruptcy, joined by the United States Department of Justice, filed objections to claims of Columbia Gas. The issue there was whether the United States was a "complainant" within the meaning of § 2 of the Expediting Act, 15 U.S.C. § 29. The court held that the trustee and the United States were in the position of defendants, rather than complainants, since they were resisting the claims of Columbia Gas, even though, procedurally, they caused the immediate controversy by contesting them. Thus, Columbia Gas, which had filed its claims in response to the institution of bankruptcy proceedings, was the "complainant." Id., at 383-84, 64 S.Ct. at 1071.

The same principle was applied to a removal situation in Magnusson v. American Allied Insurance Co., 286 F.Supp. 573 (D.Minn.1968), where it was held a claimant in a state receivership proceeding was not the "defendant" entitled to remove, despite its having filed its claim in response to a notice to creditors. Since the claimant sought "to vindicate contractual obligations in the courts," it fell "within the criteria of a plaintiff." Id., at 575. See also, Sears, Roebuck & Co. v. Glenwal Co., 325 F.Supp. 86, 88 (S.D.N.Y.1970).

The Bank further argues that it should be considered the "defendant" in this action because it was required to probate its claim or run the risk of having it barred. It is settled Mississippi law that a creditor is not required to probate a claim in response to the executor's notice to creditors in order to preserve its rights when an action on the claim was instituted during the decedent's lifetime and was pending at his death. Dillard & Coffin Co. v. Woollard, 124 Miss. 677, 87 So. 148 (Miss.1921). The Bank was not "forced" to appear in the Washington County Chancery Court, but rather elected to assert its claim in that forum, and it cannot be heard to complain on that account.

The Bank also argues that since the Estate has asserted affirmative defenses and has the burden of proof on those defenses, the Estate should be considered the "plaintiff." There is no merit in this argument, since the parties' status for purposes of removal is not affected by any affirmative defenses or counter-pleadings. A "plaintiff" against whom a counterclaim or affirmative defense is asserted does not thereby become a "defendant" within the meaning of the removal statutes. Shamrock Oil & Gas Corp. v. Sheets, supra, 313 U.S. at 106, 61 S.Ct. at 871; 1A Moore, supra. "Once a plaintiff always a plaintiff." Coastal Air Service, Inc. v. Tarco Aviation Service, Inc., 301 F.Supp. 586, 588 (S.D.Ga.1969).

Finally, the Bank argues that this court's decision should be controlled by Roach v. First National Bank of Memphis, 84 F.2d 969 (5 Cir.1936), a case arising in Mississippi and involving somewhat similar facts. In Roach a bank probated a claim against the decedent's estate, which was contested in state court by the administrator. The bank then removed the proceedings to federal court, but the administrator, believing removal to have been improper, continued to press the state court proceedings. The bank sought, and was granted, a federal injunction prohibiting further state proceedings, and the granting of such injunctive relief was affirmed by the Fifth Circuit. In affirming the district court the Fifth Circuit said:

"The proceeding by the administrator to expunge the claim was removable. Hess v. Reynolds, 113 U.S. 73 5 S.Ct. 377, 28 L.Ed. 927 ...." 84 F.2d, at 970.

It is that statement in Roach upon which the Bank relies to defeat remand. Indeed, it is the only authority cited by the Bank on the precise point at issue.

The court's use of the quoted language in Roach is somewhat puzzling. Several circumstances contribute to this state of affairs.

The appellant in Roach (the...