Sutherland v. United States

• Citation: 74 F.2d 89
• Decision Date: 21 November 1934
• Docket Number: No. 10050.,10050.
• Parties: SUTHERLAND et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

74 F.2d 89 (1934)

SUTHERLAND et al. v. UNITED STATES.

No. 10050.

Circuit Court of Appeals, Eighth Circuit.

November 21, 1934.

Elton L. Marshall, of Kansas City, Mo. (R. B. Hamer, of Omaha, Neb., and I. N. Watson, Henry N. Ess, and Paul Barnett, all of Kansas City, Mo., on the brief), for appellants.

Robert W. Strange, Supervising Counsel, National Recovery Administration, of Washington, D. C. (Charles E. Sandall, U. S. Atty., and Ambrose C. Epperson, Asst. U. S. Atty., both of Omaha, Neb., on the brief), for the United States.

Before GARDNER, SANBORN, and WOODROUGH, Circuit Judges.

SANBORN, Circuit Judge.

The United States brought this suit in equity against Robert W. Sutherland and Mae G. Sutherland, partners as Sutherland Lumber Company, and Sutherland Lumber Company, a copartnership, in the District Court of the United States for the District of Nebraska, to enjoin them from violating the National Industrial Recovery Act (48 Stat. 195) and certain codes of fair competition promulgated thereunder. The bill of complaint alleged that the "defendants, Robert W. Sutherland and Mae G. Sutherland, trading as the Sutherland Lumber Company, are now, and have been before and since the said June 16, 1933, doing business in the District of Nebraska with their place of business situated at 2920 West `L' Street, Omaha, Nebraska, located in the Omaha Division of the said District of Nebraska, and defendant Sutherland Lumber Company is a co-partnership composed of the said Robert W. Sutherland and Mae G. Sutherland, doing business as aforesaid." Upon the filing of the complaint, the court granted a restraining order, and service of the order and subpoena was made upon the manager of the retail lumber yard operated by the partnership in Omaha. The Sutherlands were husband and wife and their residence was in Kansas City, Mo. Neither of them was a resident, citizen, or inhabitant of the district of Nebraska. Thereafter the defendants appeared specially and moved to set aside the service of the subpœna on the ground that such service was insufficient under Equity Rule 13 (28 USCA § 723), which requires that "the service of all subpœnas shall be by delivering a copy thereof to the defendant personally, or by leaving a copy thereof at the dwelling-house or usual place of abode of each defendant, with some adult person who is a member of or resident in the family"; and that by virtue of section 112, title 28, U. S. C. (28 USCA § 112), the suit was not maintainable in the district of Nebraska because none of the defendants was an inhabitant of that district.

The motion was granted as to the individual defendants, but overruled as to the partnership upon the ground that it was a separate legal entity domiciled in Nebraska which had been properly served with process. In so holding, the court relied upon Nebraska Compiled Statutes, 1929, §§ 20-313 and 20-314, which, in substance, provide that a partnership may sue and be sued in the usual name by which it is known; that it shall not be necessary to set out in the process or pleadings or to prove at the trial the names of the members of the firm; that process against such firm may be served by leaving a copy at the usual place of business with a member of the firm or with a clerk or general agent thereof; and that executions issued upon any judgments rendered in such proceedings shall be levied upon partnership property only.

The defendants entered no general appearance in the court below, and the court granted a preliminary injunction against the partnership. From the interlocutory decree, this appeal is taken.

The first question to be determined is whether this suit could be maintained in the district of Nebraska against the partnership.

For the purpose of this opinion, we shall assume, without deciding, that the partnership was, under the laws of Nebraska, a separate legal entity, with a domicile in the district; that it was properly served with subpœna; and that the National Industrial Recovery Act (48 Stat. 195) requires that it be treated as a person for the purposes of federal jurisdiction.

"Section 51 of the Judicial Code (section 112, title 28, U. S. C. 28 USCA § 112), which deals with the venue of suits originally begun in the District Courts — re-enacting in part a similar provision in the Judiciary Act of 1888 (25 Stat. 433, 434, c. 866) provides, subject to certain exceptions not material here, that `no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.' That is to say, the suit must be brought within the district of which the defendant is an inhabitant, unless the general federal jurisdiction is founded upon diversity of citizenship alone, in which case it must be brought either in that district or in the district in which the plaintiff resides.

"While this provision does not limit the general jurisdiction of the District Courts, it confers a personal privilege on the defendant, which he may assert, or may waive, at his election, if sued in some other district. Lee v. Chesapeake Railway, 260 U. S. 653, 655, 43 S. Ct. 230, 67 L. Ed. 443, and cases cited. If this privilege is seasonably asserted, the suit must be dismissed for want of jurisdiction over the person of the defendant. Macon Grocery Co. v. Atlantic Coast Line, 215 U. S. 501, 510, 30 S. Ct. 184, 54 L. Ed. 300, and cases cited." Seaboard Rice Milling Co. v. Chicago, R. I. & P. R. Co., 270 U. S. 363, 365, 46 S. Ct. 247, 70 L. Ed. 633.

The defendants "seasonably asserted" their privilege in this suit by special appearance, and have not waived it. Harkness v. Hyde, 98 U. S. 476, 479, 25 L. Ed. 237; Southern Pac. Co. v. Denton, 146 U. S. 202, 206, 13 S. Ct. 44, 36 L. Ed. 942. Hence, unless the partnership can be said to have been an inhabitant of Nebraska within the meaning of the federal venue statute, the court should have dismissed this suit for want of jurisdiction.

The jurisdiction of the District Courts of the United States depends upon the acts of Congress passed pursuant to the power conferred upon it by the Constitution of the United States, and cannot be restricted or enlarged by state statutes. Goldey v. Morning News, 156 U. S. 518, 523, 15 S. Ct. 559, 39 L. Ed. 517; Toland v. Sprague, 12 Pet. 300, 328, 9 L. Ed. 1093; Phelps v. Oaks, 117 U. S. 236, 239, 6 S. Ct. 714, 29 L. Ed. 888; Southern Pac. Co. v. Denton, 146 U. S. 202, 13 S. Ct. 44, 47, 36 L. Ed. 942, supra.

"And whenever Congress has legislated upon any matter of practice, and prescribed a definite rule for the government of its own courts, it is to that extent exclusive of the legislation of the state upon the same matter. Ex parte Fisk, 113 U. S. 713, 721, 5 S. Ct. 724 28 L. Ed. 1117; Whitford v. Clark County, 119 U. S. 522, 7 S. Ct. 306 30 L. Ed. 500.

"The acts of congress, prescribing in what districts suits between citizens or corporations of different states shall be brought, manifest the intention of congress that such suits shall be brought and tried in such a district only, and that no person or corporation shall be compelled to answer to such a suit in any other district. Congress cannot have intended that it should be within the power of a state by its statutes to prevent a defendant, sued in a circuit court of the United States in a district in which congress has said that he shall not be compelled to answer, from obtaining a determination of that matter by that court in the first instance, and by this court on writ of error." Southern Pacific Co. v. Denton, 146 U. S. 202, 209, 13 S. Ct. 44, 47, 36 L. Ed. 942, supra.

Moreover, the Conformity Act, section 724, title 28, U. S. C. (28 USCA § 724), has no application to suits in equity in the courts of the United States. Dravo v. Fabel, 132 U. S. 487, 490, 10 S. Ct. 170, 33 L. Ed. 421.

That this partnership was not a citizen of Nebraska within the meaning of the statutes regulating the jurisdiction of the federal courts is clear.

"A partnership has, as such, no citizenship for the purpose of federal jurisdiction, and such jurisdiction in actions by or against partnerships is governed by the citizenship of the individual partners, who are not presumed to be citizens of the state in which the partnership is domiciled." 25 C. J. 759, § 69.

"The rule that for purposes of jurisdiction and within the meaning of the clause of the Constitution extending the judicial powers of the United States to controversies between citizens of different states, a corporation was to be deemed a citizen of the state creating it, has been so long recognized and applied that it is not now to be questioned. No such rule, however, has been applied to partnership associations although such associations may have some of the characteristics of a corporation. When the question relates to the jurisdiction of a circuit court of the United States as resting on the diverse citizenship of the parties we must look in the case of a suit by or against a partnership association to the citizenship of the several persons composing such association." Great Southern Fireproof Hotel Co. v. Jones, 177 U. S. 449, 456, 20 S. Ct. 690, 693, 44 L. Ed. 842. See, also, Chapman v. Barney, 129 U. S. 677, 682, 9 S. Ct. 426, 32 L. Ed. 800; Carnegie, Phipps & Co. v. Hulbert (C. C. A. 8) 53 F. 10; Thomas v. Board of Trustees, 195 U. S. 207, 25 S. Ct. 24, 49 L. Ed. 160; Levering & Garrigues Co. v. Morrin (C. C. A. 2) 61 F. (2d) 115, 117; Puerto Rico v. Russell & Co., 288 U. S. 476, 479, 480, 53 S. Ct. 447, 77 L. Ed. 903.

But the contention of the government is that the authorities which hold that the citizenship of a firm is to be determined by the citizenship of the partners are not applicable to a...