308 F. Supp. 1085 | S.D.N.Y. | 1970
OPINION
Plaintiffs move to remand this action to the New York Supreme Court from which it was removed by the defendant.
The complaint sets forth five separate causes of action by five separate plaintiffs against the same defendant. In broad outline, four of these separate causes of action are based upon allegations that the defendant, which had loaned United States Overseas Airlines, Inc. (hereafter USOA) $1,700,000, secured by guarantees and chattel mortgages upon property owned by one or more of the plaintiffs, improperly converted the collateralized property to the respective plaintiffs’ damages, aggregating almost $14,000,000. The remaining cause of action, the fourth, is by a plaintiff who charges the defendant with conversion of certain of his property not pledged as collateral.
The defendant is a Delaware corporation. USOA, the borrower of the $1,700,-000 and the primary obligor, was also a Delaware corporation. USOA was declared a bankrupt and the first cause of action was brought on its behalf by its trustee. In all the remaining causes of action diversity of citizenship exists between plaintiffs and the defendant and, except for the fourth, the jurisdictional amount requirement is met. We shall consider separately the plaintiffs’ motion to remand with respect to each cause of action.
THE FIRST CAUSE OF ACTION
The removal statute permits removal of “any civil action brought in a State court of which the district courts of the United States have original jurisdiction * *
“(b) Suits by the receiver and the trustee shall be brought or prosecuted only in the courts where the bankrupt might have brought or prosecuted them if proceedings under this Act had not been instituted, unless by consent of the defendant, except as provided in sections 60, 67 and 70 of this Act.”
In its petition for removal the defendant expressly consented to federal district court jurisdiction.
The plaintiffs, in support of the motion to remand, urge that defendant’s consent relates only to venue and not jurisdiction. However, this contention was long ago expressly rejected by the Supreme Court, which held that section 23(b) vests a federal district court with jurisdiction to entertain an action of this type, conditioned upon a defendant’s consent, even though no independent basis of
The plaintiffs further seek to restrict section 23(b) upon a claim that, in addition to the defendant’s consent, that of the trustee also is required to confer jurisdiction, and since he declined such consent by commencing the action in the state court and resisting removal, the suit must be remanded. Plaintiffs’ argument appears to be that although section 23(b) refers only to the consent of the defendant, the trustee’s consent is implied in the context of that section, which governs suits by the trustee and thus necessarily requires that he be the first to choose a federal forum. The only court which has thus far considered the precise issue supports this view.
Nor is there any historical or legislative basis for reading this additional requirement into section 23(b). Indeed, the legislative history looks the other way. The Congressional debates which preceded the enactment of the Bankruptcy Act of 1898 show that the purpose of section 23(b) was to limit the jurisdiction which the federal courts had exercised concurrently with state courts of plenary suits brought by trustees in bankruptcy against adverse claimants.
When Congress wanted to grant or restrict jurisdiction, it did so with precision. Thus it not only specified the consent exception in section 23(b), but also by the same section favored the trustee by excepting suits by the trustee for recovery of property under sections 60, 67 and 70 of the Bankruptcy Act.
Strong support for the view that a trustee’s consent is not required is found in Hyman v. McLendon,
“On the question of jurisdiction, it is perfectly clear that, since the suit was to recover or impress a trust on property not in the possession of the bankrupt and adversely claimed by others, the bankruptcy court would have had no jurisdiction of the controversy if the [adverse claimants] had objected. In such case suit must be brought in the court that would have had jurisdiction in the absence of bankruptcy. 11 U.S.C.A. § 46. It is well settled, however, that .the bankruptcy court does have jurisdiction of such a controversy if the parties consent. [citations omitted] And the parties consented here. It is said that there was no consent on the part of the trustee in bankruptcy; but the trustee in bankruptcy was an officer of the court and could have no will with respect to the matter contrary to the court’s direction. Consequently when the [adverse claimants] petitioned the court to adjudicate the matter in controversy and the court ordered that this be done, the consent of the trustee followed the order, [citations omitted]*1089 * * * [W]hen the defendants by their petition submitted themselves to the jurisdiction of the bankruptcy court and asked that the rights of the trustee as against themselves be there determined, there can be no question as to the court’s power to make the determination.”
In the instant ease the petition for removal was the proper means for the defendant, the adverse claimant, to consent to federal court jurisdiction. The consent of the trustee is not required. Accordingly, given the defendant’s consent here, the district court would have had original jurisdiction pf the trustee’s action and the requisites of removal under section 1441(a) are satisfied.
The motion to remand the first cause of action is denied.
SECOND, THIRD AND FIFTH CAUSES OF ACTION
The foregoing determination readily disposes of the plaintiffs’ motion to remand with respect to these causes of action, each brought on behalf of a separate plaintiff. Diversity of citizenship and the jurisdictional amount exist in each instance; consequently, the motion to remand is denied.
THE FOURTH CAUSE OF ACTION
There remains for final consideration the fourth cause of action, where diversity of citizenship exists, but the jurisdictional amount is lacking, since recovery is sought only in the sum of $4,000.
We need not consider defendant’s contention that plaintiff deliberately reduced his damages to defeat removal of his action to this court. The alleged conversion by the defendant of each separate plaintiff’s property constitutes a wrong personal to each plaintiff and gives rise to a separate and independent cause of action in favor of such plaintiff.
The motion to remand is denied in all respects.
. See 28 U.S.C. §§ 1441, 1446-1447 (1964).
. 28 U.S.C. § 1441(a) (1964).
.11 U.S.C. § 46 (1964).
. Schumacher v. Beeler, 293 U.S. 367, 55 S.Ct. 230, 79 L.Ed. 433 (1934); see Williams v. Austrian, 331 U.S. 642, 652-654, 67 S.Ct. 1443, 91 L.Ed. 1718 (1947).
. See Whitman v. Chicago & N. W. Ry., 70 P.Supp. 9 (D.Minn.1947).
. Williams v. Austrian, 331 U.S. 642, 652-653, 67 S.Ct. 1443, 1448 (1947); see Schumacher v. Beeler, 293 U.S. 367, 371-377, 55 S.Ct. 230 (1934).
. See Williams v. Austrian, 331 U.S. 642, 649, 67 S.Ct. 1443 (1947); id. at 662-671 (Frankfurter, J., dissenting) ; Schu-macher v. Beeler, 293 U.S. 367, 374, 55 S.Ct. 230 (1934); Bardes v. Hawarden Bank, 178 U.S. 524, 532-538, 20 S.Ct. 1000, 44 L.Ed. 1175 (1900).
. See, e.g., 30 Cong.Rec. 601-02 (1897) (Remarks of Sen. Lindsay); id. at 696-97 (Remarks of Sen. Lindsay); 31 Cong. Rec. 1785 (1898) (Remarks of Rep. Henderson); cf. 30 Cong.Rec. 604 (1897); 31 Cong.Rec. 1892 (1898). See also Eyster v. Gaff, 91 U.S. 521, 525, 23 L.Ed. 403 (1875).
. See, e.g., 30 Cong.Rec. 601-02 (1897) (Remarks of Sen. Lindsay).
. 11 U.S.C. §§ 96, 107, 110 (1964).
. 140 F.2d 76 (4th Cir.), cert. denied, 322 U.S. 739, 64 S.Ct. 1055, 88 L.Ed. 1572 (1944).
. The Bankruptcy Court is the federal district court. See Bankruptcy Act § 1 (10), 11 U.S.C. § 1(10) (1964) ; MacDonald v. Plymouth County Trust Co., 286 U.S. 263, 266, 52 S.Ct. 505, 76 L.Ed. 1093 (1932); Page v. Arkansas Nat. Gas Corp., 286 U.S. 269, 271, 52 S.Ct. 507, 76 L.Ed. 1096 (1932).
. The trustee’s appeal from this order was dismissed for lack of a timely appeal, 102 F.2d 189 (4th Cir.), cert. denied, 308 U.S. 563, 60 S.Ct. 74, 84 L.Ed. 472 (1939) ; subsequently the Court of Appeals dismissed an application by the trustee for writ of mandamus or prohibition to require the district court to refrain from proceeding with the trial upon the merits, 103 F.2d 294 (4th Cir.), cert. denied, 308 U.S. 563, 60 S.Ct. 74, (1939).
. Hyman v. McLendon, 140 F.2d 76, 78-79 (4th Cir.), cert. denied, 322 U.S. 739, 64 S.Ct. 1055, 88 L.Ed. 1572 (1944).
. See Reynolds v. Bryant, 107 F.Supp. 704 (S.D.N.Y.1952) ; Scheideler v. Jones, 105 F.Supp. 726 (S.D.N.Y.1952) ; Hammer v. British Type Investors, Inc., 15 F.Supp. 497 (S.D.N.Y.1933). See generally American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951) ; Twentieth Century-Fox Film Corp. v. Taylor, 239 F.Supp. 913 (S.D.N.Y.1965) ; Young Spring & Wire Corp. v. American Guarantee & Liab. Ins. Co., 220 F.Supp. 222, 227-230 (W.D.Mo. 1963).
. Komlos v. Compagnie Nationale Air France, 209 F.2d 436, 440 (2d Cir.1953), cert. denied, 348 U.S. 820, 75 S.Ct. 31, 99 L.Ed. 646 (1954).
. See Twentieth Century-Fox Film Corp. v. Taylor, 239 F.Supp. 913, 921-22 (S.D.N.Y.1965); Reynolds v. Bryant, 107 F.Supp. 704, 706 (S.D.N.Y.1952); Baltimore Gas & Elec. Co. v. United States Fidelity & Guaranty Co., 159 F.Supp. 738 (D.Md.1958).