State of Nebraska v. Northwestern Engineering Co.

• Decision Date: 17 June 1946
• Docket Number: Civil Action No. 158.
• Citation: 69 F. Supp. 347
• Parties: STATE OF NEBRASKA v. NORTHWESTERN ENGINEERING CO. et al.
• Court: U.S. District Court — District of Nebraska

69 F. Supp. 347

STATE OF NEBRASKA v. NORTHWESTERN ENGINEERING CO. et al.

Civil Action No. 158.

District Court, D. Nebraska, North Platte Division.

June 17, 1946.

Walter R. Johnson, Atty. Gen., for State of Nebraska.

Yale C. Holland, of Kennedy, Holland, DeLacy & Svoboda, of Omaha, Neb., and H. R. Hanley, of Rapid City, S. D., for defendants.

DONOHOE, District Judge.

This is an action commenced by the State of Nebraska in the District Court of Cheyenne County, Nebraska, to recover for the allegedly negligent acts of the defendants, who are residents and citizens of the State of South Dakota.

Two causes of action are pleaded in the petition. The plaintiff, for its first cause of action, alleges that on June 13, 1945, one Loyal M. Zink was a patrolman in the Nebraska Safety Patrol, and an employee of the plaintiff. It is alleged that on that day, the defendant, Cyrus F. Colvin, while acting as a truck driver for the defendant Northwestern Engineering Company, operated the defendants' truck in such a negligent manner as to collide with an automobile driven by Loyal M. Zink, and that, as a result of the collision, Zink was killed.

In the second cause of action the plaintiff seeks to recover from the defendants the value of the automobile which was being operated by Zink at the time of the collision, it being alleged that such automobile was the property of the plaintiff, and that it was completely destroyed in the accident.

The action has been removed to the Federal District Court by the defendants on the grounds of diversity of citizenship, and the plaintiff has filed a Motion to Remand the action to the state court.

The question, quoting from the plaintiff's brief in support of the motion, is: "May an action commenced in a state court by the state be removed to a United States Court on the grounds of diversity of citizenship?"

It is the general rule that a state is not a "citizen" within the contemplation of the provisions of the Removal Act, 28 U.S.C.A. § 71, permitting removal of suits from a state court to a United States District Court on the grounds of diversity of citizenship. Stone v. State of South Carolina, 117 U.S. 430, 6 S.Ct. 799, 29 L.Ed. 962; County of Upshur v. Rich, 135 U.S. 467, 10 S.Ct. 651, 34 L.Ed. 196; Postal Telegraph Cable Co. v. State of Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231; State of Missouri v. Homesteaders Life Association, 8 Cir., 90 F.2d 543. But this general rule must be understood in the light of the facts of the cases wherein it has been announced.

Whether an action commenced in a state court by a state is removable by the defendant on the grounds of diversity of citizenship depends upon whether the state is the real party in interest or only a nominal party. See Title Guaranty & Surety Co. of Scranton, Pa. v. State of Idaho, for the use of Allen, 240 U.S. 136, 36 S.Ct. 345, 60 L.Ed. 566. If the state is the real party in interest, the defendant may not remove the action on the grounds of diversity of citizenship. State of Iowa ex rel Welty v. Northwestern Light & Power Co., D.C. Iowa, 18 F.Supp. 303; State of Louisiana v. Texas Co., D.C.La., 38 F. Supp. 860. See also note in 147 A.L.R. 786, and cases there cited commencing at 798.

If, on the other hand, the state is only a nominal party, and not the real party in interest, the action may be removed by the defendant upon the grounds of diversity of citizenship; depending, however, upon whether there is diversity as between the real party in interest and the defendant. State of Maryland v. Baldwin, 112 U.S. 490, 5 S.Ct. 278, 28 L.Ed. 822; Missouri, K. & T. R. Co. v. Missouri R. R. & Warehouse Commissioners, 183 U.S. 53, 22 S.Ct. 18, 46 L.Ed. 78; Ex parte State of Nebraska, 209 U.S. 436, 28 S.Ct. 581, 52 L.Ed. 876.

In other words, it is the citizenship of the real, as distinguished from the nominal, party which governs the matter of removability in diversity cases. In re Water Right of Utah Construction Co., D.C.Idaho, 30 F.2d 436; Bernblum v. Travelers Ins. Co., D.C.Mo., 9 F.Supp. 34 and cases there cited.

In Black's Dillon on Removal of Causes, at p. 136, it is said:

"When the plaintiff on the record has no real interest in the subject matter of the controversy, and can derive no advantage from the judgment, but the suit is required to be brought in his name because he holds the formal right to sue, although the action is really prosecuted for the benefit of another, the record plaintiff is only a nominal party, whose citizenship will not affect the right of removal. Such right will depend upon the relative citizenship of the real party in interest and the defendant."

In Ex parte State of Nebraska, 209 U.S. 436, 28 S.Ct. 581, 584, 52 L.Ed. 876, the State of Nebraska, its Attorney General, the Nebraska State Railway Commission, and certain individuals, as members of the Commission, brought an action in a Nebraska court against the Chicago, Burlington & Quincy Railway Company to enjoin the company from charging more for the transportation of freight and passengers within the state of Nebraska than the rates fixed for such transportation in certain Acts of the State Legislature. The company filed a petition for removal of the action to the Circuit Court on the ground that the suit was a controversy wholly between citizens of different states. Plaintiffs filed a motion to remand the case to the Supreme Court of Nebraska, and this motion was overruled by the Circuit Court.

The Supreme Court, dismissing a petition for a Writ of Mandamus to compel the remanding of the action to the Supreme Court of Nebraska, said:

"We must add that the mere presence on the record of the state as a party plaintiff will not defeat the jurisdiction of the Federal court when it appears that the state has no real interest in the controversy. And in the present case the circuit court was not bound to adjudicate the question merely by an inspection of the nominal parties to the record, for the mere presence of the state of Nebraska as a party plaintiff was not of itself sufficient necessarily to defeat the jurisdiction of the Federal court. It became, and was, the duty of the circuit court to determine the question whether the state of Nebraska was an actual party plaintiff in the present suit, and to determine that question by consideration of the nature of the case as presented by the whole record, and not `by a reference to the nominal parties to the record.'"

It was further said:

"The question whether the state of Nebraska is the real party plaintiff must be determined from the consideration of the nature of the case as disclosed by the record. If the nature of the case is such that the state of Nebraska is the real party plaintiff, the Federal court will so decide for all purposes of jurisdiction, even though the state were not named as a party plaintiff. If the nature of the case is such that the state is not a real party plaintiff, the Federal court will so decide for the purposes of jurisdiction, even though the state is named nominally as a party plaintiff.

"The question whether such a case as this is one in which the state is the real party in interest and the real party plaintiff was determined by this court in Missouri, Kansas & Texas Railway Co. v. Missouri R. R. & Warehouse Commissioners, 183 U.S. 53, 46 L.Ed. 78, 22 S.Ct. 18, where the only question presented was whether, in a suit brought to enjoin a railroad company from charging greater rates within the State of Missouri than those fixed by state authority, the state of Missouri was the real party plaintiff. The state was not joined as a party plaintiff, but the question had to be determined, not by a view of the nominal parties to the record, but from the consideration of the nature of the case as shown by the whole record. The defendant company presented to the state court a petition for removal, which was denied. The supreme court of the state held that it was proper to go behind the face of the record and inquire who was the real party plaintiff; and, after making such examination, decided that the state was the real party plaintiff, and that the Federal court had no jurisdiction on the removal. The case was brought to this court for a review of the decision of the supreme court of Missouri, and this court recognizing the rule that a mere inspection of the parties named as the plaintiffs was not conclusive, examined the record and the nature of the case, and, in an opinion rendered by Mr. Justice Brewer held that the nature of the case was such that the state of Missouri was not a real party in interest and not a real party plaintiff."

That the name "State of Nebraska" appears in the title of the instant action is not controlling in determining whether this is a suit between citizens of different states, since a federal court will look behind and through the nominal parties on the record to ascertain who are the real parties. Likewise, the mere fact that the state may have some beneficial interest in the ultimate recovery in the action does not, of itself, make the state a party to the action, so as to prevent removal. State of Missouri v. Homesteaders Life Association, 8 Cir., 90 F.2d 543.

What is the status of the State of Nebraska as the plaintiff in this case?

The status of the state as a party to the action will, for the purpose of considering the right of removal, be determined by the law of the forum state. Thompson v. Railroad Companies, 6 Wall. 134, 18 L. Ed. 765; Turk v. Illinois Central Railroad Co., 6 Cir., 218 F. 315.

It is the contention of the state that, by reason of the provisions of the Workmen's Compensation Law of Nebraska, R.S. '43, Sec. 48-118, relating to actions against third parties for the death or injury of an employee, the state as an employer is authorized to maintain this action to recover compensation payments which it is bound to pay to the dependents of Loyal M. Zink and, further, to recover damages suffered by...