Lipschitz v. Napa Fruit Co.

223 F. 698, 139 C.C.A. 228, 1915 U.S. App. LEXIS 1782
CourtCourt of Appeals for the Second Circuit
DecidedApril 13, 1915
DocketNo. 194
StatusPublished
Cited by12 cases

This text of 223 F. 698 (Lipschitz v. Napa Fruit Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lipschitz v. Napa Fruit Co., 223 F. 698, 139 C.C.A. 228, 1915 U.S. App. LEXIS 1782 (2d Cir. 1915).

Opinion

ROGERS, Circuit Judge.

This is an action upon a contract for the sale of prunes. The plaintiff sold to defendant 4,500 boxes of Clover Blossom prunes, which were to be shipped in accordance with the terms of a certain contract. It was denied in the answer, but admitted at the trial, that 3,000 of these boxes were delivered to defends ant, atid accepted and paid for by him, in accordance with the terms of the agreement. But the claim of plaintiff as to the remaining 1,500 boxes was that it tendered them to defendant on various occasions in New York in accordance with the terms of the contract, and that defendant in violation of the contract refused to accept the same, and thereupon plaintiff stored them in a warehouse in New York, subject to defendant’s order, and brought this action to recover the sum of (13,234.36, with interest from January 10, 1912.

, The evidence showed that in the sale of California dried fruits two forms of contract were used, which differed in their terms. One provided for shipment by rail and the other by water. The form used in rail shipments provided as follows:

“If shipment is not accepted or disapproved within three full business days after arrival, and goods are subject to buyer’s privilege of examination, contract shall be considered fully complied with on seller’s part, and invoice, if unpaid, becomes immediately due and payable. (Note: In the event of the shipment being inaccessible on arrival seller or seller’s agent should be notified within said three days.)”

And the form used in water shipments provided as follows:

“In view of the recognized increased hazard of water shipment, due to climate and other conditions, buyer hereby expressly assumes all risks after examination by an official inspector of the Dried Fruit Association of California, and issuance by him of an Association certificate as to quality (and in the case of prunes count), and issuance by seller oí a sworn certificate of weight. Cost of inspection to be paid by seller.”

The contract under which the transaction in question was entered upon was a water shipment contract containing the provision last quoted, although defendant urged upon the court that, if there existed a contract at all, it was a rail shipment contract which contained the first of the above quoted provisions. Under a contract for water shipment the prunes were accepted in California and were to be paid for on presentation of the draft within 10 days from date of shipment, which was about 3 weeks previous to the arrival of the goods under ordinary conditions. The certificate of inspection on the coast was made, as seen in the provision cited, a final acceptance of the goods.

The plaintiff forwarded for collection to the Chase National Bank of New York a draft drawn by it on defendant for the sum of $3,-167.67. This draft was dated December 27, 1911, and was payable 10 [700]*700days after date to the order of the First National Bank of Napa, and had marked thereon “Invoice No. 1540.” The head of the collection department of the bank testified that the draft was presented to defendant for payment and payment was refused. Under the contract the draft should have been accompanied by the bill of lading, a certificate of weight, and a certificate of inspection. The bank messenger who presented the draft testified that these documents were attached to the draft when he presented it for payment. The fruit broker who-had charge of the matter for plaintiff states that between March and August, 1912, he had a good many conversations with defendant about the payment of the draft. He testified:

“I repeatedly asked him when lie would pay the draft, and he kept saying-that he couldn’t pay it at that time, because he didn’t have the money, but just as soon as he got rid' of some of the goods he had in warehouse he would take up the drafts. That was the only reason he gave for not wanting to-pay .that draft. I had conversations with him every week; in fact, almost every day or so. Our offices are in the same district, right across the street from his. I would meet him on the street 15 times a day, or in our office,, and this was a very natural topic of conversation.”

He also testified that the bank, after defendant refused payment of the draft and the prunes were released to his firm, turned over at the same time the draft, and the certificate of weight, the certificate off count, and the certificate of inspection.

The defendant claims that the complaint should have been dismissed' because:' (1) The court had no jurisdiction; (2) because plaintiff failed to prove that attached to the draft was a sworn certificate off weight; (3) that there was no proof of a contract definite in terms; (4) that under the Uniform Sales Act, which is part of the law of the state of New York and of this, jurisdiction, the only form of action the plaintiff could bring was an action for damages and not for the purchase price.

[1] As the jurisdiction of the court is challenged, that question must be first determined. The plaintiff is a California corporation,, and the defendant is a citizen of the state of New York. This diversity of citizenship gives the court jurisdiction, unless the circumstances of the case are such as to take it out of the general rule. It appears that prior to the commencement of this action the plaintiff assigned the cause of action to one Oskar Bergh, a citizen of the state-of New York. ' Thereupon Bergh sued defendant on this cause of action in one of the courts of the state of New York. This action subsequently was discontinued by stipulation, and it was stated therein that the action was discontinued without prejudice to thé right to maintain the-action in another court. Bergh thereafter reassigned the claim to plaintiff. It is undisputed that Bergh could not have brought the suit in the federal courts, he and the defendant both being citizens of the-state of New York. The defendant therefore insists that, as the plaintiff’s assignor could not have maintained the suit in the federal court, the assignee is equally precluded. The provision specifically precluding such assignees bringing their suits in the federal courts was included in the first Judiciary Act enacted in 1789, and has been the [701]*701law of the land ever'since. The provision is part of section 24 of the Judicial Code now in force and reads as follows:

“No District Court shall have cognizance of any suit (except upon .foreign bills of exchange) to recover upon any promissory note or other chose in action in favor of any assignee, or of any subsequent holder if such instrument be payable to bearer * * * unless sueh suit might have been prosecuted in such court to recover upon said note or other chose in action if no assignment had been made.” Judicial Code (Act March 3, 1911), § 21, subd. 1.

The intent of the statute was to prevent citizens of the same state from creating a diversity of citizenship by assignment, and from thereby conferring upon the assignee by indirection a right to sue in the courts of the United States which otherwise he would not have possessed. The jurisdictional requirements under the statute seem to be two:

(1) The original parties to the chose in action sued upon must have been citizens of different states, so that an action might have been maintained in the federal courts had the chose in action never been assigned.

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Bluebook (online)
223 F. 698, 139 C.C.A. 228, 1915 U.S. App. LEXIS 1782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lipschitz-v-napa-fruit-co-ca2-1915.