Virginia-Carolina Chemical Co. v. Sundry Ins. Cos.

• Decision Date: 22 March 1901
• Citation: 108 F. 451
• Parties: VIRGINIA-CAROLINA CHEMICAL CO. v. SUNDRY INS. COS.
• Court: U.S. Court of Appeals — Fourth Circuit

108 F. 451

VIRGINIA-CAROLINA CHEMICAL CO. v. SUNDRY INS. COS.

United States Circuit Court, D. South Carolina.

March 22, 1901

Mitchell & Smith, for plaintiff.

King &amp Spalding and Smythe, Lee & Frost, for defendants.

SIMONTON Circuit Judge.

These cases come up on a motion to remand the causes to the state court. The plaintiff, the Virginia-Carolina Chemical Company a corporation of the state of Virginia, brought its several actions in the court of common pleas for Charleston county against 15 corporations, to wit: The Manchester Fire Assurance Company, of the United Kingdom of Great Britain and Ireland; Caledonian Insurance Company, of the United Kingdom of Great Britain and Ireland; the Liverpool & London & Globe Insurance Company, of the United Kingdom of Great Britain and Ireland; North British & Mercantile Insurance Company of London & Edinburgh, of the United Kingdom of Great Britain and Ireland; the Commercial Union Assurance Company, Limited of London, England, a corporation of the United Kingdom of Great Britain and Ireland; Phoenix Assurance Company of London, a corporation of the United Kingdom of Great Britain and Ireland; the Lancashire Insurance Company of Manchester England, a corporation of the United Kingdom of Great Britain and Ireland; Norwich Union Fire Insurance Society, a corporation of the United Kingdom of Great Britain and Ireland; Scottish Union & National Insurance Company of Edinburgh, a corporation of the United Kingdom of Great Britain and Ireland; the Western Assurance Company of toronto, Canada, a corporation of the dominion of Canada; the Home Insurance Company of the City of New York, a corporation of the state of New York; Connecticut Fire Insurance Company of Hartford, Conn., a corporation of the state of Connecticut; the National Fire Insurance Company of Hartford, Conn., a corporation of the state of Connecticut; the Hartford Insurance Company, a corporation of the state of Connecticut; and the German-American Insurance Company of New York, a corporation of the state of New York,-- in as many separate suits. In every case was filed a petition for removal, with bond, in the state court, praying removal on the ground of diversity of citizenship. The motion in each case was denied. Notwithstanding a copy of the record in each case was filed in this court, the causes were docketed, and now in each case a motion is made to remand the cause to the state court. The motions are based on the record as it comes from the state court, to wit, the complaint and petition for removal. The propriety of the removal is tested by the record. The petition is a part of the record. Water Co. v. Keyes, 96 U.S. 201, 24 L.Ed. 656.

Two grounds are stated, upon one or both of which the motion to remand is urged. One is that this court, sitting in this district, cannot entertain a controversy between two corporations neither of which was created by the state of South Carolina, and so not a resident of this district; and that, if this objection can be waived, such waiver must appear either expressly on the record, or by some act, such as a general appearance, from which waiver can be presumed. This ground applies only to such of the defendants as are corporations of states of this Union other than South Carolina. The privilege of requiring suit to be brought in the district of residence inures only to such corporations. An alien corporation can be sued in any district in which valid service can be made on the defendant. In re Hohorst, 150 U.S. 661, 14 S.Ct. 221, 37 L.Ed. 1211; In re Louisville Underwriters, 134 U.S. 488, 10 S.Ct. 587, 33 L.Ed. 991. The second ground is that each of the original policies was made out to W. G. Crenshaw, Jr., and was assigned. to the Virginia-Carolina Chemical Company, and so an assignee of a chose in action; that the record does not disclose whether Crenshaw is a citizen or an alien, and, if the former, of what state he is a citizen.

1. Can this court, sitting in this district, entertain a suit wholly between citizens of other states than South Carolina, neither of whom reside in this district? Unless this court can entertain such a suit originally, these cases must be remanded. Circuit courts have jurisdiction over controversies wholly between citizens of different states, or between citizens and aliens, when the amount in controversy exceeds $2,000, exclusive of interest and costs. Act 1888 (25 Stat. 433, Sec. 1). The concluding part of the section, 'but when the jurisdiction is founded on the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of the plaintiff or defendant,' has been uniformly held to confer a privilege on the defendant which he can waive. Trust Co. v. Mcgeorge, 151 U.S. 129, 14 Sup.Ct. 286, 38 L.Ed. 98. Nor need the waiver be in express words. It is implied unless seasonable objection be made. Martin v. Railroad Co., 151 U.S. 688, 14 Sup.Ct. 533, 38 L.Ed. 311. And so the circuit courts of the United States have held that, unless this privilege is exercised, they can entertain a controversy, notwithstanding the fact that neither the plaintiff nor defendant is resident within this district. Uhle v. Burnham (C. C.) 42 F. 1; Purcell v. Mortgage Co. (C. C.) 42 F. 465; Sherwood v. Valley Co. (C. C.) 55 F. 1; Cowell v. Water-Supply Co. (C. C.) 96 F. 769; Duncan v. Associated Press (C. C.) 81 F. 417.

But it is urged that in the present case the defendants have made no such waiver, expressly or by implication. The case comes here only on the petition and bond, which are silent on this point; and as it comes here in the same plight as it left the state court, the defendants may here plead their privilege, and so defeat the jurisdiction of both courts. The supreme court of the United States in Bushnell v. Kennedy, 9 Wall. 393, meets this argument:

'It is true, as said in argument, that the section provides that after removal the cause shall proceed in the same manner as if it had been brought by original process. But we cannot recognize the validity of the inference that the defendant, before pleading in the circuit court, may move to dismiss the case for want of jurisdiction. This construction would enable the nonresident defendant in a state court to remove the suit against him into a circuit court, and then, by a simple motion to dismiss, defeat the jurisdiction of both courts. Such a construction, unless imperatively required by the plain language of the act, is wholly inadmissible, and it is clear that the language of the act does not require it. Its plain meaning is that the suit shall proceed, not that it shall proceed unless the defendant moves to dismiss. The defendant is not in court against his consent, but by his own act, and the suit is to proceed as if brought by original process, and the defendant had waived all exception to jurisdiction, and pleaded to the merits. * * * The act of defendant is something more than consent,-- something more than waiver of, and objection to, the jurisdiction. It is a prayer for the privilege of resorting to federal jurisdiction, and he cannot be permitted afterwards to question it.'

The same doctrine is ably presented by Curtis, J., in Sayles v. Insurance Co., 2 Curt. 212, Fed. Cas. No. 12,421, and by Johnson, Circuit Judge, in Warner v. Railroad Co., 13 Blatchf. 231, Fed. Cas. No. 17,186. See also De Lima v. Bidwell, 21 Sup.Ct. 743, 45 L.Ed.-- .

There is yet another standpoint from which this question can be reviewed. The removal section of the act of 1888 (25 Stat. 433, Sec. 2), gives the right of removal by the defendant, then being nonresident of the state, in any suit of a civil nature, at law or in equity, of which the circuit courts of the United States are given jurisdiction, which the circuit courts of the United States are given jurisdiction, in section 1 of that act. This section refers only to the first part of section 1, by which jurisdiction is conferred. It has no relation to the clause of that section relating to the district in which suit may be brought. Railroad Co. v. Davidson, 157 U.S. 208, 15 S.Ct. 563, 39 L.Ed. 672. The right of removal is given wholly to the defendant, without any reference, in a remote degree, to the plaintiff or his wishes. So no waiver on the part of the plaintiff is necessary or proper.

2. The record shows that the plaintiff holds the policy of insurance as assignee of one Crenshaw, and the citizenship of Crenshaw nowhere appears. There can be no doubt that the act of 1887, corrected in 1888, was intended to restrict the jurisdiction of the federal courts. The supreme court and some of the circuit courts had held that a suit could be removed into the federal courts from the state courts, although such a suit could not have been brought originally in the federal court. Clafin v. Insurance Co., 110 U.S. 81, 3 Sup.Ct. 507, 28 L.Ed. 76; City of Lexington v. Butler, 14 Wall. 282, 20 L.Ed. 809; Glenn v. Walker (C.C.) 27 F. 578. To this the act was specially directed, and no case can be removed into the federal court from the state court of which the federal court could not have original jurisdiction. Tennessee v. Union & Planters' Bank, 152 U.S. 454, 14 Sup.Ct. 654, 38 L.Ed. 511; Railroad Co. v. Davidson, 157 U.S. 201, 15 Sup.Ct. 563, 39 L.Ed. 672. The circuit court of the United States cannot entertain jurisdiction of a suit by an assignee, unless such suit could have been brought in the federal court by the assignor, and that fact must appear in the record. Corbin v. Black Hawk Co., 105 U.S. 659, 26 L.Ed. 1136. The constitutionality of this restriction is discussed and sustained in Holmes v. Goldsmith, 147 U.S. 151, 13 Sup.Ct. 288, 37 L.Ed. 118.

The question, then, is, did the plaintiff in each of these...