Summary
In Lowry Co. v. National City Bank of New York (D.C.) 28 F.2d 895, opinion of Judge Thacher, September 26, 1928, where there was a separate controversy between the original and proposed defendants, a motion to bring in a new party defendant was granted, for in that case the plaintiff was a Delaware corporation; the original defendant, National City Bank of New York, a New York corporation, and the defendant, which it was proposed to bring in, was a Delaware corporation. Consequently the court did have jurisdiction of the controversy between the defendants, as there was diversity of citizenship.
Summary of this case from Sperry v. Keeler Transportation LineOpinion
September 26, 1928.
Root, Clark, Buckner, Howland Ballantine and Rushmore, Bisbee Stern, of New York City (Vincent R. Smalley, of New York City, of counsel), for plaintiff.
Shearman Sterling, of New York City (Carl A. Mead and William Deering Howe, both of New York City, of counsel), for defendant.
At Law. Action by Lowry Co., Inc., against the National City Bank of New York. On motion of defendant for an order directing that the Dunbar Molasses Company and the Dunbar Molasses Corporation be brought in as parties. Motion granted.
On motion of defendant for an order directing that Dunbar Molasses Company, Inc., and Dunbar Molasses Corporation, be brought in as parties to this action, that a supplemental summons and a pleading alleging the claim of the defendant against said corporations be served upon them, and that they plead thereto, so that the claim of the defendant against them may be determined in this action. The motion is based upon the provisions of section 193 of the Civil Practice Act of the state of New York, subdivisions 2 and 4:
"Sec. 193. Determination of rights of parties before the court. * * *
"2. Where any party to an action shows that some third person, not then a party to the action, is or will be liable to such party wholly or in part for the claim made against such party in the action, the court, on application of such party, may order such person to be brought in as a party to the action and direct that a supplemental summons and a pleading alleging the claim of such party against such person be served upon such person and that such person plead thereto, so that the claim of such moving party against such person may be determined in such action, which shall thereupon proceed against such person as a defendant therein to such judgment as may be proper. * * *
"4. The controversy between the defendants shall not delay a judgment to which the plaintiff is entitled, unless the court otherwise directs."
The cause of action alleged in the complaint is based upon the alleged refusal of the defendant to accept and pay certain drafts alleged to have been drawn and presented for payment with other documents in compliance with the terms of a commercial letter of credit issued by the defendant. From the motion papers it appears that the Dunbar Molasses Company, Inc., agreed to indemnify the defendant for all payments made by it pursuant to this letter of credit, that the Dunbar Molasses Corporation guaranteed payment at maturity of all indebtedness which might become due from the Dunbar Molasses Company, Inc., to the defendant, and that therefore, if the defendant is liable to the plaintiff for the nonpayment of the drafts, then the two molasses companies will in turn be liable to the defendant.
The plaintiff does not oppose the motion in so far as Dunbar Molasses Company, Inc., a Louisiana corporation, is concerned, but objects to the entry of an order bringing in Dunbar Molasses Corporation, which is a Delaware corporation, on the ground that diversity of citizenship now existing between the plaintiff, a Delaware corporation, and the defendant, a national bank located in the city of New York, will be destroyed, and the jurisdiction of the court thus defeated.
Conformity to the practice in the state courts prescribed by section 914, R.S. (28 USCA § 724), is necessarily subject to limitations imposed by the Constitution and laws of the United States upon the jurisdiction of the District Courts, and by statutes regulating procedure in these courts. The provisions of the Civil Practice Act of the state here in question embody a most desirable reform in judicial procedure. The procedure authorized assures the settlement in one suit of separate controversies relating to the same subject-matter, ancillary to and dependent upon the outcome of the original cause of action. Thus, in a single proceeding, opportunity is afforded for the final determination of the rights and liabilities of all concerned which grow out of the same matter. The procedure may be compared to the practice in admiralty which has been developed under the fifty-sixth rule of the Supreme Court, which is founded upon the inherent power to bring into the suit other parties whose presence will enable the court to do substantial justice in regard to the entire matter. The Hudson (D.C.) 15 F. 162. Subject to the limitation upon the power of this court to hear and determine only such cases and controversies as are within the statutory definition of its jurisdiction, this remedial statute should receive liberal application and interpretation.
In Wilson v. United American Lines (D.C.) 21 F.2d 872, a motion to bring in a defendant under this section of the Civil Practice Act was denied, because there was no diversity of citizenship between the original defendant and the party sought to be brought in. In that case it was said: "This bringing in by the defendant of another party by the original defendant is in the nature of a new and separate action, for the pleadings are not necessarily the same as in the original action and the judgment is separate; the judgments differ, both as to parties and possibly as to the amount."
Consequently it was held that the court had no jurisdiction of this separate controversy, because diversity of citizenship did not exist between the original defendant and the party brought in for the purpose of recovery over. But in the case at bar diversity of citizenship does exist between the parties to the separate controversy. The new parties are not necessary or indispensable parties to the case made by the original complaint. They are strangers to the plaintiff, and, while their interests may be adverse to the plaintiff, their presence cannot defeat the jurisdiction of this court. It is, of course, well settled that the District Courts of the United States have original jurisdiction, if all the parties on one side are of citizenship adverse to those on the other, and jurisdiction cannot be defeated by joining formal or unnecessary parties. Salem Co. v. Manufacturers Co., 264 U.S. 182, 189, 44 S. Ct. 266, 68 L. Ed. 628, 31 A.L.R. 867; Phelps v. Oaks, 117 U.S. 236, 6 S. Ct. 714, 29 L. Ed. 888; Hardenbergh v. Ray, 151 U.S. 112, 14 S. Ct. 305, 38 L. Ed. 93; Porto Rico v. Ramos, 232 U.S. 627, 34 S. Ct. 461, 58 L. Ed. 763; Von Herberg v. City of Seattle (C.C.A.) 27 F.2d 457, 459.
Since the only controversy to which the Molasses Corporation will be a party, if brought in, is between citizens of different states, the motion should be, and is, granted.