Southern Pac. Co. v. Arlington Heights Fruit Co.

191 F. 101, 111 C.C.A. 581, 1911 U.S. App. LEXIS 4914

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 9, 1911
• Docket: No. 1,804
• Status: Published

Opinions

WOLVERTON, District Judge

(after stating the facts as above). The appellants make three contentions: First. That the Circuit Court was without jurisdiction of the parties ^defendant, because the suit was not instituted in the districts, respectively, of which they were citizens and inhabitants. This proceeds upon the ground that the suit was not one founded upon' diversity of citizenship only, but upon the further ground, as well, that a federal question is involved. Second. That the court was without power to determine as to the reasonableness or unreasonableness of a rate in advance of a determination of that question by the Interstate Commerce Commission. Third. That the injunctive relief sought cannot be granted because of the absence of indispensable parties. The appellees insist that appellants have waived their first contention by a general appearance or what is thought to be tantamount thereto by combining with their plea to the jurisdiction of the court a plea to the merits of the controversy. Logically this question should be first determined.

[1] By Act March 3, 1887, c. 373, 24 Stat. 552, as corrected by Act Aug. 13, 1888, c. 866, 25 Stat. 433 (U. S. Comp. St. 1901, p. 508), it is provided that the Circuit Courts of the United States shall have original cognizance, concurrent with the courts of the several states, of all suits of a civil nature, at common law or in equity,/ where the matter in dispute exceeds an amount stated, and arising under the Constitution or laws of the United States, or in which there shall be a controversy between citizens of different states. It is further enacted that no person shall he arrested in one district for trial in another in any civil action before a Circuit or District Court; and no civil suit shall be brought before either of said courts against any person by any original process or proceeding in any other district than that whereof he is an inhabitant, but, where the jurisdiction is founded only on the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of either the plaintiff or the defendant. 1 Supplement to Revised Statutes of the United States, pp. 611, 612. Thus it appears that, when a federal question is involved, the defendant must be sued in the district of which he is a resident and inhabitant, but, when the suit is based on diversity of citizenship only, he may be sued as well in the district where the plaintiff is an inhabitant.

It is insisted here that a federal question is involved, which may be conceded for the present, and the proper venue for laying the suit was in the respective districts of the defendant railway companies. The place where a defendant may be sued, however, is a privilege personal to him, and in any case where the court has jurisdiction over the subject-matter he may by submitting himself to the territorial jurisdiction of the court waive that privilege. Thereupon the court, having acquired jurisdiction of the person, may pass judgment respecting the subject-matter. So that, whether the defendants were sued in the district where plaintiffs reside or in some district other than that of their respective citizenship, they might, by surrendering to the territorial jurisdiction of the court, waive their personal privilege of being sued in their own particular district. In re Moore, 209 U. S. 490, 28 Sup. Ct. 585, 706, 52 L. Ed. 904.

The question now is, Have the defendants, the railway companies, by their appearance in the cause, considering the manner of such appearance, waived that personal privilege? This entails a review of some of the leading cases upon the subject. We should keep in mind as we proceed the especial contention of the complainants, which is that the defendants have waived this privilege by combining a plea to the merits of the controversy with a plea to the jurisdiction of the court.

The first case called to our notice is Fitzgerald Cons. Co. v. Fitzgerald, 137 U. S. 98, 11 Sup. Ct. 36. 34 L. Ed. 608. This was an action instituted in the district of Nebraska against a corporation of Iowa. After the defendant had filed a demurrer to the complaint, an answer, and an amended answer, challenging the legal sufficiency of the complaint as well as the merits of the cause of action, and while the cause was on trial before a jury, it interposed a plea to the jurisdiction of the court, which plea was overruled. Answering an assignment of error upon this ruling, the Supreme Court says:

“These proceedings were taken by defendant after discovering the alleged ground of objection to the service, and there was no action on its part confined solely to the purpose of questioning the jurisdiction over the person. That such jurisdiction resulted under the circumstances admits of no doubt.”

Here was a general appearance and a plea to the merits before the jurisdiction of the court over the person was challenged. Hence he was held to have waived his right to insist upon the latter question.

The next case is that of St. Louis, etc., Ry. Co. v. McBride, 141 U. S. 127, 11 Sup. Ct. 982, 35 L. Ed. 659. The record in this case contains no process of service. The first paper filed upon the part of the defendant was a demurrer to the complaint; based upon the following grounds: That the court was without jurisdiction of the person of the defendant, that it was without jurisdiction of the subject-matter of the action, and that the complaint did not state facts sufficient to constitute a cause of action. The demurrer being overruled, a trial was had, resulting in judgment for the plaintiffs. Speaking of this procedure as it pertains to the jurisdiction respecting the person of the defendant, the court said:

“Its first appearance was, not to raise the question of jurisdiction alone, but also that of the merits of the case. Its demurrer, as appears, was based on three grounds, two referring to the question of jurisdiction, and the third, that the complaint did not state facts sufficient to constitute a cause of action. There was therefore in the first instance a general appearance to the merits. If the case was one of which the court could take jurisdiction, such an appearance waives, not only all defects in the service, but all special privileges of the defendant in respect to the particular court in which the action is brought.”

Another case is that of Interior Construction Co. v. Gibney, 160 U. S. 217, 16 Sup. Ct. 272, 40 L. Ed. 401. That was an action upon a bond. The defendant company entered a. general appearance, but afterwards pleaded in abatement that two others of the defendants were not citizens in the state and district wherein the action was instituted, and it was held by the court that such general appearance waived the right afterwards to object to the jurisdiction of the court over the person; the court saying:

“But the provision as to the particular district in which the action shall be brought does not touch the general jurisdiction of the court over such a cause between such parties; but affects only the proceedings taken to bring the defendant within such jurisdiction, and is a matter of personal privilege, which the defendant may insist upon, or may waive, at his election, and the defendant’s right to object that an action within the general jurisdiction of the court is brought in the wrong district is waived by entering a.general appearance, without taking the objection.”

The most recent case -announcing the particular principle is that of Western Loan & Savings Co. v. Butte & Boston Consolidated Mining Company, 210 U. S. 368, 28 Sup. Ct. 720, 52 L. Ed. 1101. The action was there instituted neither in the district of the plaintiff nor of the defendant, but the defendant first appeared by filing its demurrer to the complaint, alleging, first, that the court had no jurisdiction of the subject of the action; second, that the court had no jurisdiction of the person of the defendant; third, that the complaint did not state facts sufficient to constitute a cause of action; fourth, that the complaint was uncertain; and, fifth, that the complaint was unintelligible. The court, however, held that where a diversity of citizenship exists, so that the suit is cognizable in some Circuit Court, the objection to the jurisdiction of the particular court in which the suit is instituted may be waived by appearing and pleading to the merits. In considering whether the defendant had submitted to the jurisdiction oí the court, the court said:

“It (defendant) invoked and obtained a ruling on the merits so far as the legal sufficiency of the cause of action is concerned.”

Hence that the defendant had waived its personal privilege of being sued in its own district.

In Mahr v. Union Pacific Railway Co. (C. C.) 140 Fed. 921, it was held, in effect, that where the defendant, in a motion to quash the service of summons, assigned as reasons for the motion matters going to the subject of the action, it amounted to a general appearance, notwithstanding the use of appropriate words which usually attend an appearance intended to be limited and special.

So it was held, also, in Peale v. Marian Coal Co. (C. C.) 172 Fed. 639, that the defendants waived their right to be sued in a particular district by setting up as one of the grounds of demurrer to the bill of complaint that the plaintiff was not entitled to the relief prayed for “This." says the court, “called for a judgment on the merits, which the court could not undertake to render, except-as it first assumed jurisdiction of the controversy. * * * If sustained, it amounted to a decision that the plaintiff had no case on his own showing, and the defendants could not call on the court for this, and in the same breatii insist that the bill should be dismissed because the parties were not rightly before it.”

On the other hand, there are many cases which hold to the principle that, where a special appearance has been entered for the purpose of raising the jurisdictional question only, it does not operate to waive the right to insist upon being sued in the district of the citizenship of the defendant. In the case of Harkness v. Hyde, 98 U. S. 476, 25 L. Ed. 237, tlie defendant appeared specially by counsel appointed for the purpose of moving the court to dismiss the action on the ground that the service of the summons was made upon him in a place other than in the bailiwick of the sheriff making the service. The court in deciding the case says:

“The right of thy defendant to insist upon the objection to the illegality of the service was not waived by the special appearance of counsel for him to move the dismissal of the action on that ground, or what we consider as intended, that the service be set aside, nor, when that motion was overruled, by their answering for him to the merits of the action. Illegality in a proceeding by which jurisdiction is to be obtained is in no case waived by the appearance of the defendant for the purpose of calling the attention oY the court to such irregularity: nor is the objection waived when being urged it is overruled, and the defendant is thereby compelled to answer. He is not considered as abandoning his objection because he does not submit to further proceedings without cent (‘station. It is only where he pleads to the; merits in the first instance, without insisting upon the illegality, that-the objection is deemed to be waived.”

Another case in the same line is Southern Pacific Co. v. Denton, 146 U. S. 202. 13 Sup. Ct. 44, 36 L. Ed. 942. The defendant there, by leave of court, filed “an answer or demurrer” “for the special purpose and no other,” using his language, “until the question herein raised is decided, of objecting to the jurisdiction of this court,” but reserved the right in case the court overruled the demurrer to be allowed to answer to the merits. The court overruled the demurrer, and the defendant subsequently answered, and it was insisted that by this procedure the defendant waived the jurisdiction of the court over its person. The court, after deciding that there was no such waiver by the proceedings, continued:

“The want of jurisdiction, being apparent on the face of the petition, might be taken advantage of by demurrer, and no plea in abatement was necessary. Coal Co. v. Blatchford, 11 Wall. 172 [20 L. Ed. 179]. The defendant did file a demurrer for the special and single purpose of objecting to the jurisdiction; and it was only after that demurrer had been overruled, and the defendant had excepted to the overruling thereof, that an answer to the merits was filed. Neither the special appearance for the purpose of objecting to the jurisdiction, nor the answer to the merits after that objection had been overruled, was a waiver of the objection.”

The court then cites the case of Harkness v. Hyde in support of the principle.

Another case is Mexican Central Railway v. Pinkney, 149 U. S. 194, 13 Sup. Ct. 859, 37 L. Ed. 699. In this case the defendant appeared specially for the purpose of excepting to the service of the citation, and the court, after reviewing the authorities, reaffirmed the doctrine of the foregoing cases.

The latest case upon the subject, and one which upon the facts is of very close analogy to the one at bar, is Davidson Marble Co. v. Gibson, 213 U. S. 10, 29 Sup. Ct. 324, 53 L. Ed. 675. That was on writ of error to the Circuit Court for the Northern District of California. A demurrer and a motion to quash and dismiss were filed at the same time. The demurrer assigned grounds therefor, among others, first, that the court had no jurisdiction of the defendants or either of them; second, that the plaintiff was not a resident or citizen of the Northern District of California; third, that the defendants were not, nor was either of them, a resident or citizen of the Northern District of California; fourth, that the plaintiff was a citizen and resident of the state of Pennsylvania, and the defendants, and each of them, were citizens and residents of the state of Illinois; fifth, that the court had no jurisdiction of the subject of the action; and, sixth, that the court had no jurisdiction of the controversy alleged in the complaint. The motion to quash the service and dismiss the action is as follows:

“The defendants above named and each of them hereby appear specially in the above-entitled cause for the purpose only of moving the said court to quash, and set "aside the service of the summons in the said cause, and to dismiss the said action, upon the ground that the said court has no jurisdiction of the persons of the defendants, and upon the further ground that the said court has no jurisdiction of the person of the plaintiff; and upon the further ground that neither the plaintiff nor the defendants, or any or either of them, are citizens of the state of California or residents of the Northern District of California in the Ninth judicial circuit, and upon the further ground that the said court has no jurisdiction of the controversy at issue. The said motion will be based upon the complaint of the plaintiff and all subsequent proceedings and the return of service of summons herein.”

The motion to quash was denied, and the demurrer overruled. The defendants declining to plead further, a judgment was entered against them, from which the writ of error was prosecuted. After indicating that the case was governed by that part of act March 3, 1887, as corrected by Act Aug. 13, 1888 (25 Stat. 433, c. 866), which provides that no civil suit shall be brought before any of the Circuit Courts of the United States against any person by any original process or proceeding in any other district than that whereof he is an inhabitant, Mr. Justice Moody says:

“It follows, therefore, that the court below was without jurisdiction of this cause, and, as the defendants have taken no action whatever in response to the summons, except to appear specially and object to the jurisdiction, it cannot possibly be said that the objection to the jurisdiction has been waived.”

And later:

“The defendants appeared specially, as they had a right to do, solely for the purpose of objecting to the jurisdiction. They were not bound to agree to submit their objection to the final decision of the judge of the Circuit Court, and the rule of court which treated the special appearance, without such an agreement, as a general appearance is invalid.”

So it was determined in that case that the appearance made in the form and manner as above indicated was a special appearance for the purpose of contesting the authority of the court to take jurisdiction of the person of the defendant, and it was accordingly held that waiver of jurisdiction was not made by such an appearance.

The defendants’ first ground as assigned in their pleas is distinctly an objection to the jurisdiction of the court over their persons. The second and third grounds go to the jurisdiction of the court as a court of equity. Thus it is urged by the second ground that the court has no jurisdiction to determine the reasonableness or unreasonableness of a freight rate fixed by the railway companies prior to any determination as to that fact by the Interstate Commerce Commission. This does not involve the jurisdiction of the court over the person as a federal court to take cognizance of the matter, but it goes to the power or right of a court of equity to determine the cause. So it is as to the third objection made by the pleas. The result is, therefore, that the defendant companies have in reality combined a plea to the jurisdiction of the court over the person with 3. plea to the jurisdiction of the court as a court of equity to determine the cause which is presented by the complainants. As is said in the case of Smith v. McKay, 161 U. S. 355, 358, 16 Sup. Ct. 490, 492 (40 L. Ed. 731) :

“When the requisite citizenship of the parties appears, and the subject-matter is such that the Circuit Court is competent to deal with it, the jurisdiction of the court attaches, and whether the court should sustain the complainant’s prayer for equitable relief, or should dismiss the bill with leave to bring an action at law, either would be a valid exercise of jurisdiction. If any error were committed in the exercise of such jurisdiction, it could only be remedied by an appeal to the Circuit Court of Appeals.”

The question there contested was whether the appeal should have been taken to the Circuit Court of Appeals rather than direct to the Supreme Court of the United States; it being insisted that the appeal was taken upon the jurisdictional question only.

In the. present case one of the defendants answered, the other two demurred, but all of them were insisting all the while upon their special plea to the jurisdiction of the court over their respective persons. Unless it be, therefore, that, by combining a ground of_ want of jurisdiction over the person with the objection that the complainants are without equity as' shown by their bill, the defendants have submitted themselves to the territorial jurisdiction of the court, they ought not to be further proceeded against. The case at bar upon principle does not differ materially from the Gibson Case. There the motion to quash the summons and to dismiss the action combined the two grounds as distinctly as here, and the demurrer's were based upon like grounds, which were also acted upon and overruled by the court, yet it was determined - there was no waiver as respects jurisdiction over the person. It would seem to be deducible, therefore, from these authorities from the Supreme Court, including the Gibson Case, that when the defendant appears specially for the express purpose of challenging the jurisdiction of the court over the person for want of proper service, or upon the ground that the venue is not laid in his judicial district, although he may have combined in his motion or plea to the jurisdiction matter going to the subject of the suit or action, he does not thereby waive jurisdiction over his person. The purpose of the defendant is to be gathered rather from the nature of his appearance. If, being special, it is to insist unquestionably upon want of jurisdiction of the court, there would be no waiver. By appearing generally the party submits himself to the jurisdiction of the court for all purposes of which the court can take cognizance. The manner of the appearance would be taken as an indication of the purpose of the pleader to submit to the court’s jurisdiction, notwithstanding an objection to the contrary. But, where the appearance is declared in unmistakable language to be special, the pleader’s intendment that it is not so is not always to be deduced from the fact of the combination of an objection to the jurisdiction with an objection to the subject-matter. Of course, the court cannot pass judgment upon the subject-matter without at the same time having jurisdiction of the person, yet if the defendant insists upon his objection to the jurisdiction over his person, and he is in a position to insist thereon, the court ought to give him the benefit of that objection and pass judgment respecting it. In the case at bar all three of the grounds assigned by the plea went to the jurisdiction of the court in one sense — the first to the jurisdiction over the person, and the last two. to the jurisdiction of the court as a court of equity. In either case, if the plea was well taken, the bill of complaint would have to be dismissed, but the court could not proceed tó a ruling upon the two latter objections, without first entertaining jurisdiction of the person. Now, if it be that the defendants have confused the kind of jurisdiction they were insisting upon, as might well happen, or believed they had a legal right to combine the objections, it nevertheless appears that it was distinctly their purpose to appear specially in the first instance with a view of raising the jurisdictional question, to be disposed of before the merits were reached. We are therefore of the opinion that, under such circumstances, tlie defendants have not waived their personal privilege of being sued within their own district.

[2] Having arrived at this conclusion, there remains but one other question to be determined, and that is whether the defendant companies were suable within the Southern District of California; they being citizens and inhabitants of states other than the state of California. This precise question has been determined in the case of Macon Grocery Co. v. Atlantic Coast Line R. R. Co., 215 U. S. 501, 30 Sup. Ct. 184, 54 L. Ed. 300, favsorably to the contention of the appellants. That was a case in equity like this, to enjoin the putting into operation and effect of an alleged unlawful rate during the pend-ency of the question of the reasonableness or unreasonableness of the rates before the interstate Commerce Commission. The case was instituted in the Circuit .Court of the United States for the Southern District of Georgia. The complainants were citizens of the state of Georgia, and the defendants were railroad corporations of states other than the state of Georgia. Specially appearing for the purpose, the various defendants respectively' filed a plea to the jurisdiction of the court, each defendant asserting, in substance, an exemption from being sued in a district of which it was not an inhabitant. Demurrers to the pleas were sustained by the Circuit Court. This ruling was reversed by the Court of Appeals. Coming to the Supreme Court, it was there said:

“While sustaining the demurrer the Circuit Court yet declared: ‘It is true that in this ease the illegality of the alleged increase in rates must necessarily, in large measure, he determined by the federal law. The legality or illegality of the alleged combination in restraint of trade must be determined by the same law, and it seems to be conceded that, generally speaking, this court would not have jurisdiction of these questions finally except under conditions which do not exist here. That is to say, the court can only for final determination entertain the federal question in tlie district of which the defendants are inhabitants.’ Despite these views, however, as the court considered, if tlie averments of the bill were taken as true, there was ‘a threatened and immediate violation of the federal law of the gravest character to a large number of people,’ irreparable injury would be occasioned if the increase in rates was allowed to go into effect, and, as there was not time for those affected to have protection or seek recourse elsewhere, jurisdiction was entertained for the purpose of giving temporary relief.”

Thus was presented for determination the sole question whether the Circuit Court of the United States for the Southern District of Georgia sitting as a court of equity had jurisdiction over the persons of the defendant railroad corporations, inhabitants of states other than the state of Georgia, to entertain the bill for the temporary relief of restraining the railroad companies from putting into effect the alleged unlawful rate pending the consideration of the question of its reasonableness or unreasonableness before the Interstate Commerce Commission. After careful and exhaustive consideration, the Supreme Court held that the jurisdiction of the court over the defendants did not exist for granting tlie relief sought. In concluding the opinion, the court, speaking through Mr. Justice White, had this further to say; '

“We are of opinion that the Jurisdiction statute of 1888 is applicable, even upon the assumption that the cause of action was alone cognizable in a court of the. United States, as the particular venue of the action was not provided for elsewhere than in that statute.”

Thus the judgment of the Circuit Court of' Appeals was affirmed, reversing the judgment of the trial court.

In the particulars here reviewed the Macon Grocery Company Case overrules the cases of the Northern Pacific Railway Co. v. Pacific Coast Lumber Manufacturers’ Association, 165 Fed. 1, 91 C. C. A. 39, and the Union Pacific Ry. Co. v. Oregon & Washington Lumber Manufacturers’ Ass’n, 165 Fed. 13, 91 C. C. A. 51, heretofore decided' by this court, and it must be so considered. It is due to the learned judge presiding in the Circuit Court to say that his judgment was controlled by these cases; the Macon Grocery Company Case not having been decided at the time.

It is conceded by both parties that a federal question is involved by the present controversy. . Indeed, it could not be denied that plaintiffs’ right for relief is based upon' the regulations of the interstate commerce act as well as the regulations of the Sherman anti-trust act. A federal question being involved, although there be diversity of citizenship, clearly the defendants have the absolute right under the statute of being sued within the district of which they are citizens and inhabitants.

This conclusion renders it unnecessary to pass upon the two remaining contentions of the defendants, namely, that the court is without jurisdiction to determine whether or not the rate prescribed by the defendants for transportation of lemons was reasonable or unreasonable, or whether or not the court can exercise jurisdiction over the defendants here appearing' without the presence of other connecting carriers, who were parties to the tariff rate so established.

It results from these considerations that the decree of the court below must be reversed. The cause will be remanded, with directions to dismiss the suit.