Town of Edenton v. Hervey Foundation, Civ. No. 168.

• Decision Date: 20 May 1947
• Docket Number: Civ. No. 168.
• Citation: 71 F. Supp. 998
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: TOWN OF EDENTON v. HERVEY FOUNDATION, Inc.

71 F. Supp. 998

TOWN OF EDENTON v. HERVEY FOUNDATION, Inc.

Civ. No. 168.

District Court, E. D. North Carolina, Elizabeth City Division.

May 20, 1947.

Ehringhaus and Ehringhaus, of Raleigh, N. C., and John W. Graham, of Edenton, N. C., for plaintiff.

R. H. McNeill, of Washington, D. C., and George H. McNeill, of Morehead City, N. C., for defendant.

GILLIAM, District Judge.

The suit was begun in the (State) Superior Court of Chowan County, North Carolina, and before expiration of the time allowed by the laws of North Carolina for the defendant to answer or plead to the complaint it filed a petition to remove to this Court on the ground of diversity of citizenship. The required bond was simultaneously filed. Thereafter the Clerk of the Superior Court of Chowan County entered an order of removal, to which the plaintiff objected, and subsequent to the entry of this order the defendant filed (or attempted to file) with the Clerk of the State Court an answer to the complaint, therein setting out a cross-action or cross-complaint alleging that it had been damaged in its business reputation and standing, and otherwise, by the allegations in the complaint and also by the wrongful institution of the suit, seeking recovery of a large sum of money from the plaintiff. The Clerk certified the entire record, including defendant's answer to this Court. The plaintiff is a North Carolina municipal corporation and the defendant is a foreign corporation, and the amount in controversy as determined by the allegations of the complaint is more than $3,000, exclusive of interest and costs. Upon the docketing of the record in this Court plaintiff moved that the suit be remanded to the State Court because of the filing of defendant's answer with the Clerk of that Court, inasmuch as the answer set forth a cross-action against the plaintiff.

The plaintiff's position is that by the filing of the cross-action asking damages of the plaintiff the defendant invoked the aid of the State Court and thereby waived any right which it otherwise had to have the suit removed to this Court; while the position of the defendant is that the answer with cross-complaint was not actually filed in the State Court, but was delivered to the Clerk of that Court to be forwarded for filing in this Court, and that even if the answer was filed in the State Court the jurisdiction of that Court, which had been terminated by the order of removal to this Court, was not thereby restored; that only an order of this Court could restore the jurisdiction of the State Court.

In looking for the correct answer to the question raised, two settled principles bearing upon the question should be noted. First, a non-resident of this State, when sued by a resident of this State in a State Court, if the jurisdictional amount is involved as it is here, has the option of submitting to the jurisdiction of the State Court or of removing the suit to the United States District Court, and this right of removal is to be deemed waived only by specific, positive action indicating that to be his intention. As said in the case of McMillen v. Indemnity Insurance Co., D. C., 8 F.2d 881, at page 883: "The defendant should not be deprived of its constitutional and statutory right to a trial in the court of the United States upon the ground of waiver, `unless a clear case of intent to submit and have a hearing in the state court is made to appear." There are other authorities to this effect. Secondly, it is setled law that upon the filing of petition for removal, together with the required bond, and the entry of an order of removal, a State Court's jurisdiction ceases, the Federal Court's jurisdiction attaches, and further proceedings in the State Court are of no effect. In fact, the authorities go further and hold that the Federal Court's jurisdiction attaches immediately upon filing of a sufficient petition and bond. The removal statute itself provides: "It shall then be the duty of the State court to accept said petition and bond and proceed no further in such suit." 28 U.S. C.A. § 72.

Even if defendant's purpose was to file its pleading in the State Court it could not have done so with any effect, because at that moment there was no suit there pending in which such pleading might have been filed. But the defendant asserts in an affidavit filed by counsel, and there is no evidence to the contrary, that the pleading was filed "* * * upon the assurance by the Clerk that the whole record in this case would be forwarded by him to the Office of the United States District Court at Elizabeth City," and further that "* * * at no time did the defendant or his counsel ever contemplate waiving his right to the removal to the Federal Court." The first assertion is supported by the fact that the answer bears no filing notation by the Clerk of the State Court, and the latter is borne out by defendant's present position and by every move made by it since the institution of the action in the State Court except,...