Petition — DeHavilland Aircraft of Canada, Ltd. v. Betar

me Court, U. &. ;

FILED

y = PEC 19 1979

ences

In THE

Supreme Court of the Gunited States

OctoserR TERM, 1979

No. 79-955

DeHAVILLAND AIRCRAFT OF CANADA, LTD.,

Petitioner,

VS.

SAMUEL J. BETAR, Public Administrator of Cook County

(Illinois) «nd Administrator of

the Estate of RAGHUBIR DUTT LAW, Deceased,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0342

Attorneys for Petitioner

Hueu C. GRIFFIN

THomas J. STRUEBER

Of Counsel

Midwest Law Printing Co., Chicago 60601, Financial 6-3988

Ser ene RRR ET ETT Te,

TABLE OF CONTENTS

PAGE

OPINIONS BELOW 2

JURISDICTION 2

QUESTIONS PRESENTED 3

STATUTORY PROVISIONS INVOLVED 3

STATEMENT OF THE CASE 6

Aircraft Accident In Africa—Indian Citizen Killed 6

Appointment Of Illinois Administrator—Suit Filed

In Illinois 6

Removal To District Court—Dismissal Order ........ 7

Appeal 7

REASONS FOR GRANTING THE WRIT:

5,

The Court Of Appeals Decision Directly Con-

flicts With The Decision Of This Court In Mecom

v. Fitzsimmons Drilling Co. 9

Il.

‘‘Subsequent Developments’? In The Law Do

Not Support The Court Of Appeals’ Discarding

Of Mecom. In Any Event, This Court’s Guidance

Is Needed On The Relationship Of 28 U.S.C. § 1359

To Administrator Appointments 11

CONCLUSION . 14

APPENDIX A—Opinion of the United States District

Court for the Northern District of Illinois .................. la

APPENDIX B—Opinion of the United States Court of

Appeals for the Seventh Circuit 5a

APPENDIX C—Order Denying Rehearing En Banc .. 15a

LIST OF AUTHORITIES CITED

Cases

Bass v. Texas Power & Light Co., 482 F. 2d 763 (5th

Cir. 1970) 12

Bishop v. Hendrix, 495 F. 2d 289 (4th Cir. 1974) ............ 12

First National Bank of Chicago v. Mottola, 302 F. Supp.

785 (N.D. Ill. 1969), aff’d. sub noni, First National

Bank of Chicago v. Ettlinger, 465 F. 2d 343 (7th Cir.

1972) . 11

Hanna v. Plumer, 380 U.S. 460 (1965) 13

Harnetiaux’ Estate v. Hartzell, 91 Ill. App. 2d 222, 234

N.E. 2d 81 (1968) 10

Kramer v. Caribbean Mills, 394 U.S. 23 (1969) .......... 11, 12

Lester v. McF'addon, 415 F. 2d 1101 (4th Cir. 1969) ...... 12

McSparran v. Weist, 402 F. 2d 867 (3d Cir. 1968) .......... 12

Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183 M9 i i

O’Brien v. AVCO Corporation, 425 F’. 2d 1030 (2d Cir.

1969) 12

Rogers v. Bates, 431 F. 2d 16 (8th Cir. 1970) -.............. ca ae

Other Authorities

28 U.S.C. § 1254(1) 2

28 U.S.C. § 1332 ‘ 3, 4, 7, 8

28 U.S.C. § 1359 3, 4, 11, 12, 13

Til. Rev. Stats., Ch. 3, § 164 4, 10

eh Fa i A Bie siicicinrectensiinnceinsieiniineniiieniieiadanti 5

Ill. Rev. Stats., Ch. 70, § 2 4, 10

Til. Rev. Stats., Ch. 11014, § 13-2 —_ Se

Ill. Rev. Stats., Ch. 11014, § 22-3 5

ore

wes ne RE A Pert tee - ~

In Tue

Supreme Court of the Gnited States

Ocrosrr Term, 1979

No.

DeHAVILLAND AIRCRAFT OF CANADA, LTD.,

Petitioner,

vs.

SAMUEL J. BETAR, Public Administrator of Cook County

(Illinois) and Administrator of

the Estate of RAGHUBIR DUTT LAW, Deceased,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioner, DeHavilland Aircraft of Canada, Ltd.,

respectfully prays that a writ of certiorari issue to

review the judgment and opinion of the United States

Court of Appeals for the Seventh Circuit reversing the

District Court judgment and ordering the cause re-

manded to Illinois state court.

—

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Seventh Circuit is reported at 603 F. 2d 30(7th Cir.

1979), and is appended hereto (App. 5a-13a). The opinion

of the United States District Court for the Northern Dis-

trict of Illinois, which was reversed by the Court of

Appeals, is reported at 80 F.R.D. 400 (N.D. Ill. 1977),

and is appended hereto (App. la-4a).

JURISDICTION

The judgment of the Court of Appeals for the Seventh

Circuit was entered on August 8, 1979. A timely Petition

for Rehearing En Banc was denied on September 20,

1979 (App. 15a), and this Petition for Certiorari is

filed within 90 days of that date. This Court’s jurisdic-

tion is invoked under 28 U.S.C. § 1254(1).

a

QUESTIONS PRESENTED

1. Is this Court’s holding in Mecom v. Fitzsimmons

Drilling Co., 284 U.S. 188 (1981)—that diversity

jurisdiction is determined by the citizenship of plaintiff

administrator charged with the responsibility for bring-

ing a wrongful death action (284 U.S. at 186)—still the

law?

2. Should the provisions of 28 U.S.C. § 1359,

precluding collusive attempts “to invoke” federal

jurisdiction, be applied to remand a case where the ad-

ministrator’s appointment was concededly not made for

purposes of invoking federal jurisdiction?

STATUTORY PROVISIONS INVOLVED

United States Code, Title 28;

§ 13882. Diversity of citizenship; amount in con-

troversy; costs

(a) The district courts shall have original

jurisdiction of all civil actions where the matter in

controversy exceeds the sum or value of $10,000,

exclusive of interest and costs, and is between—

(1) citizens of different States;

(2) citizens of a State and citizens or sub-

jects of a foreign state;

(3) citizens of different States and in which

citizens or subjects of a foreign state are ad-

ditional parties; and

icndlibiin

(4) a foreign state, defined in section 160%a)

of this title, as plaintiff and citizens of a State

or of different States.

§ 1359 Parties collusively joined or made

A district court shall not have jurisdiction of a

civil action in which any party, by assignment or

otherwise, has been improperly or collusively made

or joined to invoke the ‘urisdiction of such court.

Illinois Revised Statutes, Chapter 70:

§ 2 Plaintiffs in action—Beneficiaries—Amount of

damages— Distribution—Limitation of actions—

Next of Kin—Contributory negligence

Every such action shall be brought by and in the

names of the personal representatives of such

deceased person, and, except as otherwise

hereinafter provided, the amount recovered and in

every such action shall be for the exclusive benefit

of the surviving spouse and next of kin of such

deceased person and in every such action the jury

— give such damages as they shall deem a fair

and just compensation with reference to the

pecuniary injuries resulting from such death, to the

surviving spouse and next of kin of such deceased

person... .

Illinois Revised Statutes, Chapter 3:

§ 164 Bond

Before entering upon the duties of his office,

every public administrator shall enter into a bond

payable to the People of the State of Illinois in a

sum not less than Five Thousand Dollars with sure-

ty as provided by this Act and approved by the

Court of the county in which he is appointed and

conditioned that he will faithfully discharge all the

duties of his office... .

——

§ 166 Protection of Estates by Public Administrator

. . . When letters of administration are issued to

the public administrator, he shall have the same

powers and duties as other administrators ap-

pointed under this Act until he is discharged or his

authority is sooner terminated by order of Court.

Illinois Revised Statutes, Chapter 110%;

§ 18-2 Bond and Oath

Before entering upon the performance of his

duties, every public administrator and every public

guardian and conservator shall take and file in the

Court an oath or affirmation that he will support

the Constitution of the United States and the Con-

stitution of the State of Illinois and will faithfully

discharge the duties of his office and shall enter

into a bond payable to the People of the State of II-

linois in a sum of not less than $5,000 with security

as provided by this Act and approved by the Court

of the county in which he is appointed, conditioned

—_ he will faithfully discharge the duties of his of-

ice,

§ 22-3 Right to sue

If no letters are issued in this State upon the Es-

tate of a nonresident decedent or ward, a represen-

tative to whom letters are issued on the Estate of

competent jurisdiction of any other state, territory,

country or the District of Columbia may sue in this

State in any case in which a resident representative

may sue. The Court in which the suit is filed may

order the nonresident representative to give bond

for costs as in the case of the nonresident.

~~

STATEMENT OF THE CASE

Aircraft Accident In Africa—Indian Citizen Killed

This case arises out of an airplane crash in Zambia,

Central Africa resulting in the death of Raghubir Dutt

Law, a citizen of New Delhi, India. Law’s surviving

widow, Urmila Law, and his four children are likewise

Indian nationals.

The airplane involved in the crash, a Twin Otter, was

manufactured in Canada by the petitioner, DeHavilland

Aircraft of Canada, Ltd., a Canadian corporation. The

plane had allegedly been transported to Lusaka, Zambia

by an agent of petitioner for a demonstration to the

Zambian Air Force of which decedent was a member. It

is further alleged that during a demonstration flight,

the plane crashed causing decedent’s fatal injuries.

There was no allegation or contention that either the

decedent, his widow or children, or the airplane were

ever in Illinois for any purpose.

Appointment Of Illinois Administrator—

Suit Filed In Illinois

On April 27, 1977, an Order was entered by the Cir-

cuit Court of Cook County (Illinois), Probate Division,

appointing Samuel J. Betar, Public Administrator of

Cook County, as the duly appointed administrator for

the Estate of Raghubir Dutt Law, deceased. On April

28, 1977, Samuel J. Betar, as administrator of the Es-

tate of Raghubir Dutt Law, filed an action in the Circuit

Court of Cook County against petitioner and

DeHavilland Canada, Inc., an Illinois corporation and a

subsidiary of petitioner.

ean

Removal To District Court— Dismissal Order

On May 27, 1977, defendants removed the case to the

United States District Court for the Northern District of

Illinois, Eastern Division. Jurisdiction was asserted under

28 U.S.C. § 1832(a)(2) conferring original federal juris-

diction on district courts in actions between citizens of a

state and citizens of a foreign state. Defendants also

moved to dismiss DeHavilland Canada, Inc. as a “sham”

defendant and further moved io dismiss the entire case

for lack of personal jurisdiction over DeHavilland

Canada, Ltd. Thereafter, the [Illinois corporation,

DeHavilland Canada, Inc., was voluntarily dismissed

from the case and plaintiff administrator filed a motion

to remand.

On Octeber 20, 1977, the District Court denied respon-

dent Betar’s motion to remand and granted petitioner’s

motion to dismiss for lack of personal jurisdiction.

Thereafter, on January 30, 1978, the District Court

denied respondent’s motion to reconsider, but stayed its

order of dismissal pending further discovery on the

jurisdiction issue. Finally, on March 20, 1978, all dis-

covery having been completed, the District Court

entered its final order denying respondent’s motion to

remand and granting petitioner’s motion to dismiss the

action for lack of personal jurisdiction (App. 1la-4a).

Appeal

Respondent administrator appealed the District

Court’s dismissal order to the Court of Appeals for the

Seventh Circuit. However, the Court of Appeals did not

reach the merits of the dismissal order for lack of per-

sonal jurisdiction over DeHavilland Aircraft of Canada,

Ltd. Instead, the Court of Appeals ruled that this action

~$~

between an Illinois administrator and a foreign corpora-

tion should not be in federal court, despite the language

of 28 U.S.C. § 1332(a)(2), but should be remanded to state

court. Specifically, the Court of Appeals ruled that the

Illinois citizenship of plaintiff administrator was to be

ignored in favor of the foreign citizenship of the

beneficiaries of decedent’s estate, thereby rendering the

action one between foreign plaintiffs and foreign defend-

ants and destroying federal jurisdiction. The District

Court had ruled to the contrary that the Illinois citizen-

ship of plaintiff-administrator was not to be ignored,

stating that “the decision in Mecom v. Fitzsimmons

Drilling Co., 284 U.S. 183 (1963) controls” (80 F.R.D. at

401) (App. 2a). The Court of Appeals reversed (603 F.

2d at 30) impliedly holding that Mecom, although never

overruled or even criticized by this Court, is no longer

the law (App. 5a-14a).

~~

REASONS FOR GRANTING THE WRIT

I.

THE COURT OF APPEALS DECISION DIRECTLY

CONFLICTS WITH THE DECISION OF THIS COURT

IN MECOM JV. FITZSIMMONS DRILLING CO.

The Court of Appeals decision herein is in patent and

direct conflict with this Court’s holding in Mecom v.

Fitzsimmons Drilling Co., 284 U.S. 183 (1931).

In Mecom, a wrongful death action was filed :n the state

court of Oklahoma by a Louisiana administrator (the

Oklahoma statute like Illinois allowed the appointment

of foreign administrators). The defendant, a Louisiana

corporation, removed the case to federal court. Plaintiff

moved to remand on the ground that diversity of

citizenship was lacking, but the District Court denied

the motion on the ground that the appointment of the

Louisiana administrator had been done for the sole pur-

pose of avoiding federal jurisdiction. The Court of

Appeals affirmed, but the U.S. Supreme Court reversed

and held that, regardless of motive, the administrator’s

citizenship was controlling in determining diversity

jurisdiction. In the language of the Court (284 U.S. at

186): ;

“.. where an administrator is required to bring

suit under a statute giving a right to recover for

death by wrongful act and is, as here, charged with

the responsibility for the conduct for settlement of

such suit and the distribution of its proceeds to the

persons entitled under statute, and is liable upon his

official bond for failure to act with diligence and

fidelity, he is the real party in interest and his

citizenship, rather than that of the beneficiaries, is

determinative of Federal jurisdiction. This we think

is the correct view.” (Emphasis added)

=

The Mecom Court stated further (at 189):

“(I]t is clear that the motive or purpose that ac-

tuated any or all of these parties in procuring a

lawful and valid appointment is immaterial upon

the question of identity or diversity of citizenship.”

(Emphasis added)

The facts found determinative in Mecom are all pres-

ent in the ease at bar. Illinois law gives plaintiff ad-

ministrator the exclusive “right to recover for death by

wrongful act” (Ill. Rev. Stats., Ch. 70, § 2); charges

plaintiff administrator “with the responsibility for the

conduct or settlement of such suit and the distribution of

its proceeds” (Ill. Rev. Stats., Ch. 70, § 2); and requires a

bond upon which plaintiff administrator is liable “for

failure to act with diligence and fidelity” (Ill. Rev.

Stats., Ch. 3, § 164, Ch. 110%, § 13-2). See Harnetiauz’

Estate v. Hartzell, 91 Ill. App. 2d 222, 284 N.E. 2d 81

(1968), stating (at 227):

“Under the terms of the wrongful death act [of II-

linois] it is clearly provided that every action for

wrongful death should be run in the name of the

personal representative of the deceased person

.... The right to institute a wrongful death action

and to settle the same is with the personal represen-

tative of the deceased and not with an heir.”

(Emphasis added)

There is no factual distinction between Mecom and the

case at bar. All the rights, obligations and duties

possessed by the Louisiana administrator in Mecom (and

more) are possessed by the Illinois administrator in the

instant case. Nor did the Mecom administrator have any

more “actual stake in the outcome of the litigation” (603

F. 2d at 35) than the instant plaintiff. Indeed, the

Mecom administrator was a Louisiana attorney who did

not even know the decedent or his heirs (284 U.S. at

188).

nil

II.

“SUBSEQUENT DEVELOPMENTS” IN THE LAW DO

NOT SUPPORT THE COURT OF APPEALS’ DISCARD-

ING OF MECOM; IN ANY EVENT, THIS COURT'S

GUIDANCE IS NEEDED ON THE RELATIONSHIP

OF 28 U.S.C. §1359 TO ADMINISTRATOR AP-

POINTMENTS.

Ironically, another panel of the Seventh Circuit Court

of Appeals endorsed the Mecom rule in First National

Bank of Chicago v. Mottola, 302 F. Supp. 785, 791 (N.D.

Ill. 1969), affd. sub nom., First National Bank of

Chicago v. Ettlinger, 465 F. 2d 348 (7th Cir. 1972).

Nevertheless, the instant Court of Appeals acknowledg-

~ ed Mecom, but found it unpersuasive when considered “in

its proper statutory context and in light of subsequent

developments in the law” (603 F. 2d at 33). The

“statutory context” referred to by the Court of Appeals

is 28 U.S.C. § 1859 enacted in 1948 and providing:

§ 1359 Parties collusively joined or made

A district court shall not have jurisdiction of a

civil action in which any party, by assignment or

otherwise, has been improperly or collusively made

or joined to invoke the jurisdiction of such court.

In Kramer v. Caribbean Mills, 394 U.S. 23 (1969), this

Court held that § 1359 applied (as did its statutory

predecessors) to voluntary assignments of causes of ac-

tion in an attempt to “manufacture federal jurisdiction”

(394 U.S. at 829). However, this Court expressly left

open the question of whether § 1359 has any application

to the appointment of personal administrators and listed

several reasons why it might not. The Kramer Court

stated (394 U.S. at 828, fn. 9):

“Nor is it necessary to consider whether, in cases

in which suit is required to be brought by an ad-

ministrator or guardian, a motive to create diversi-

ty jurisdiction renders the appointment of an out-of-

state representative “improper” or “collusive” See,

e.g., McSparran v. Weist, 402 F. 2d 867 (1968); Lang

v. Elm City Constr. Co., 324 F. 2d 235 (1963); Coun-

ty of Todd v. Loegering, 297 F. 2d 470 (1961); cf.

Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183

(1931). Cases involving representatives vary in

several respects from those in which jurisdiction is

based on assignments: (1) in the former situation,

some representative must be appointed before suit

can be brought, while in the latter the assignor nor-

mally is himself capable of suing in the state court;

(2) under state law, different kinds of guardians

and administrators may possess discrete sorts of

powers; and (3) all such representatives owe their

appointment to the decree of a state court, rather

than solely to an action of the parties. It is not

necessary to decide whether these distinctions

amount to a difference for purposes of § 1359.”

Despite the Kramer Court’s failure to approve the

applicability of § 1359 to administrator appointments,

some subsequent Court of Appeals decisions have

applied § 1359 to administrator cases where the ad-

ministrator was appointed for the sole purpose of

manufacturing federal jurisdiction that would otherwise

be lacking. See e.g., McSparran v. Weist, 402 F. 2d 867

(3d Cir. 1968); Bishop v. Hendrix, 495 F. 2d 289 (4th Cir.

1974); Rogers v. Bates, 431 F. 2d 16 (8th Cir. 1970); Bass

v. Texas Power & Light Co., 482 F. 2d 763 (5th Cir.

1970); Lester v. McFaddon, 415 F. 2d 1101 (4th Cir.

1969); O’Brien v. AVCO Corporation, 425 F. 2d 1030 (2d

Cir. 1969).

Whether or not these cases are correct interpretations

of § 1359 and a proper limitation of Mecom (an issue

that in itself merits this Court’s review), the instant case

clearly deprives Mecom of any remaining vitality since

here it is undisputed that there was absolutely no

attempt (collusive or otherwise) to manufacture federal

jurisdiction by means of the Illinois administrator’s ap-

pointment. Indeed, just the opposite is true. In the

language of the Court of Appeals (603 F. 2d at 35):

“It is quite clear, however, that the beneficiaries

did not appoint the personal representative for the

purpose of creating diversity of citizenship. Ap-

parently Illinois offers the most convenient forum

and the plaintiff was the most convenient ad-

ministrator available. The motives for the appoint-

ment do not appear clearly in the record, but most

conspicuous is the lack of an apparent motive to

manufacture jurisdiction.” (Emphasis added)

In this context, it is clear that if Mecom does not apply

to this case then it does not apply to any case. It is

equally clear that the interplay between the Mecom deci-

sion and 28 U.S.C. § 1359 has generated confusing and

conflicting results which, unless clarified by this Court,

will undermine the “goal of uniformity of federal

procedure”, Hanna v. Plumer, 380 U.S. 460, 463 (1965)

in diversity cases brought by administrators or other

personal representatives.

= a

CONCLUSION

To decide an important and recurring question of

federal diversity jurisdiction challenging the vitality of a

well-reasoned decision of this Court plainly applicable to

the instant case, DeHavilland Aircraft Corporation

respectfully requests that a writ of certiorari issue to

review the judgment and opinion of the Court of

Appeals for the Seventh Circuit herein.

Respectfully submitted,

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0342

Attorneys for Petitioner

Hvex C. Grirrin

Tomas J. STRUEBER

Of Counsel

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

SamvuEu J. Berar,

Plaintiff,

No. 77 C 1912 vs.

De Haviitanp Arrcrart Or Canapa, Lp., and

De Havitianp Canapa, Inc.,

Defendants.

DECISION ON PLAINTIFF’S

MOTION TO REMAND

Plaintiff has moved to remand this case to the Circuit

Court of Cook County, Illinois from which it was removed

by defendants. The plaintiff has joined in the motion of

defendant De Havilland Canada, Inc., an Illinois corpora-

tion to dismiss, leaving the sole defendant as De Havil-

land Aircraft of Canada, Ltd., a Canadian corporation with

its principal place of business in Downsview, Ontario.

Plaintiff contends that although Betar as Public Ad-

ministrator is a citizen of Illinois, citizenship should be

determined by the beneficiaries of the estate. This is based

principally upon a statement in Miller v. Perry, 456 F.2d

63 at p. 68 (4th Cir. 1972). Miller was decided on the

ground. that an administrator under the law of North

Carolina is a ministerial officer. His role is purely nomi-

—2a—

nal and his presence in the case was primarily a device

to avoid diversity jurisdiction.

The role of an administrator under Tllinois law, how-

ever, is quite different. JIl. Rev. Stat. (1975) Ch. 3. Fur-

thermore, under Ch. 70, $2, he is a necessary party to a

death action in the absence of an executor.

We believe the decision in Mecom v. FitzSimmons Drill-

tng Co., 284 U.S. 183 (1931) controls. This suit is there-

fore one between an [Illinois citizen and a foreign corpo-

ration. For that reason we have jurisdiction and should

not remand this case to the Circuit Court of Cook County,

Tilinois.

Since we have diversity jurisdiction in this case, we now

turn to the motion of defendant De Havilland Aircraft of

Canada, Ltd. to dismiss for lack of jurisdiction over its

person. Service on this defendant was attempted by serv-

ing an employee of De Havilland Canada, Inc., a Delaware

corporation with its principal place of business in Rose-

mont, Illinois. The parent corporation is the sole stock-

holder of this subsidiary, and the subsidiary does nothing

except sell the parent’s products. Thus plaintiff contends

that the subsidiary which has been served is nothing more

than a branch office of the parent.

However, we think that the law is reasonably clear that

a parent and its subsidiary often maintain their separate

identities and, if they do, they must be individually served

with process. In Cannon Manufacturing Co. v. Cudahy

Packing Co., 267 U.S. 333 (1925), the Supreme Court up-

held dismissal for lack of jurisdiction over the defendant

where service was made on a wholly owned subsidiary

of the parent. The court found that so long as the two

corporate identities were ‘‘not pure fiction,’’ service on a

—3a—

subsidiary did not constitute service on the parent which

owned all of the stock. id. at 337. The maintenance of sepa-

rate records, separate offices and a bona fide business pur-

pose controlled.

Plaintiff has failed to show that these two separate cor-

porations have failed to retain their separate identities. It

has merely shown that they have common officers and a

parent-subsidiary relationship. The local corporation, how-

ever, performs a different function from the parent, as

is evidenced by the case at bar in which plaintiff has con-

ceded that the parent has no responsibility for the crash

which is the subject matter of this litigation.

Defendant cites Lindley v. St. Louts-San Francisco Ry.

Co., 407 F.2d 639 (7th Cir. 1968). However, that case in-

volves §13.3 of the Illinois statute governing service on

eorporations (Ill. Rev. Stat. (1975) Ch. 110, $13.3), spe-

cifically the issue of transacting business in Illinois. This

issue is not reached in the case at bar, since the sub-

sidiary is admittedly doing business in [Illinois but is not

necessarily the alter-ego of the parent. Likewise in Rymal

v. Ulbeco, Inc., 33 Til. App. 3d 799 (2d Dist. 1975) service

was quashed under $13.3, although the court also indicated

that substantial identity between the parent and subsidiary

would justify service of process on one for the other. In

that case, there was clearly separate identity between the

two corporations, but the facts of the case illustrate the

potential complexity which can be found in corporate struc-

tures. Service was made upon the subsidiary of a subsi-

diary in that case in an unsuccessful attempt to reach the

parent. Certainly no general rule exists that service upon

a wholly owned subsidiary can constitute service upon the

parent.

—4g—

In any event, so long as Cannon remains the law con-

trolling this court, plaintiff has failed to show substantial

identity between the two corporations in this case. There-

fore, motion of defendant De Havilland Aircraft of Canada,

Ltd. to dismiss for insufficiency of process is granted.

F.R.C.P. 12(b) (4).

Enter:

/8/ Thomas R. McMillen

Judge, U. S. District Court

Dated: Oct. 20, 1977

lies

APPENDIX B

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

No. 78-1911

SAMUEL J. BETAR, Public Administrator of Cook County,

and Administrator of the Estate of Raghubir Dutt

Law, deceased,

Plaintiff-A ppellant,

v.

DE HAVILLAND AIRCRAFT OF CANADA, LTD., a Canadian

Corporation,

Defendant-A ppellee.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 77 C 1912—Thomas R. McMillen, Judge.

ARGUED APRIL 5, 1979—DECcIDED AUGUST 38, 1979

Before PELL and BAUER, Circuit Judges, and HOFF-

MAN, Senior District Judge.*

PELL, Circuit Judge. The plaintiff, Samuel J. Betar,

Public Administrator of Cook County and administrator

of the estate of Raghubir Dutt Law, appeals from final

orders in the district court denying his motion to re-

mand this cause to the Circuit Court of Cook County, II-

linois, and granting the motion of the defendant, De

Havilland Aircraft of Canada, Ltd., (Ltd.), to dismiss for

* Senior District Judge Walter E. Hoffman of the Eastern

District of Virginia is sitting by designation.

—bha—

lack of personal jurisdiction. The plaintiff argues that

the removal of this cause was improper because it is not

within the — jurisdiction of the district court, as

required by the removal statute, 28 U.S.C. § 1441(a).

Specifically, the plaintiff argues that the district court

improperly looked to the citizenship of the named

fiduciary plaintiff instead of that of the ere |

beneficiaries under the Illinois Wrongful Death Act, Ill.

Rev. Stat. ch. 70, § 1 et seq., in determining that it had

diversity jurisdiction. The plaintiff also challenges the

district court’s decision that it did not have personal

jurisdiction over the defendant, but, in light of our dis-

a 20 of the plaintiff’s first argument, we do not reach

this issue.

The decedent, Raghubir Dutt Law, an Indian national,

was killed in 1976 when an airplane manufactured by

the defendant crashed in Zambia, Central Africa. On

April 27, 1977, the plaintiff was appointed ad-

ministrator of the estate of the decedent. The record

shows no assets in the estate other than the cause of ac-

tion for wrongful death. On April 28, 1977, the plaintiff

filed an action under the Illinois Wrongful Death Act in

the Circuit Court of Cook age against the defendant,

Ltd., and its subsidiary, De Havilland Canada, Inc.,

(Inc.), a Delaware corporation with offices in Rosemont,

Illinois. On the same day, Crispin Maunder, a British

subject injured in the same crash, filed an action in the

same court against the same defendants. Ltd. petitioned

for removal of both actions to the federal district court

for the Northern District of Illinois. Removal was based

on diversity of citizenship, Ltd. asserting that Inc. was a

“sham” defendant. The plaintiffs joined in the motion to

dismiss Inc., leaving Ltd. as the only defendant. Both

eng em moved to remand the action to the state court.

he Maunder action was remanded on the ground that

the court was without jurisdiction, the suit being

between aliens: Maunder, a British subject, and Ltd., a

Canadian corporation. Basing its determination on the

citizenship of the personal representative in the Betar

action, the district court concluded that there was diver-

sity between the plaintiff, an Illinois citizen, and the

defendant, and denied Betar’s motion to remand. The

eT!

—Ja—

laintiff, arguing for remand, contends that 28 U.S.C.

1359 requires that the citizenship of the personal

representative be disregarded and that the determina-

tion of jurisdiction be based on the citizenship of the

Wrongful Death Act beneficiaries, the widow and

children of Raghubir Dutt Law, all Indian nationals.

The general rule is that the citizenship of the real par-

ty in interest is determinative in deciding whether the

istrict court has diversity jurisdiction.

The citizenship rule testing diversity in terms of

the real party in interest is grounded in notions of

federalism. It is based upon the principie that a

primarily local controversy should be tried in the

appropriate state forum and that nominai or formal

parties, who do not have a significant interest in the

outcome of the litigation, should not be able to use

the federal courts.

C. Wright & A. Miller, Federal Practice & Procedure

§ 1556 at 711. Under Fed. R. Civ. P. 17(a) the plaintiff per-

sonal representative would be defined as the “real party

in interest” in the sense that the action is properly main-

tained in his name, without need to join. the

beneficiaries. This rule, however, is merely procedural

and does not extend or limit the subject matter jurisdic-

tion of the district court. Fed. R. Civ. P. 82; Lester v. Mc-

Faddon, 415 F.2d 1101, 1105 & n.10 (4th Cir. 1969).

According to the defendant, however, the substantive

rule for determining jurisdiction is identical, citing the

decision of the Supreme Court in Mecom v. Fitzsimmons

Drilling Co., 284 U.S. 183 (1931). In Mecom the plaintiff

was an administrator appointed by a state court under

the state ha, ee death act. The plaintiff-administrator

and the defendant were citizens of the same state. The

defendant nevertheless attempted to remove the action

to federal court on the basis of diversity between the

defendant and the statutory beneficiaries under the

wrongful death act, arguing that the survivors ap-

pointed the administrator for the sole purpose of

defeating federal jurisdiction. Noting that state law

designated the administrator as named plaintiff in a

wrongful death action, the Supreme Court held that the

—8a—

federal court had no jurisdiction because the ad-

ministrator and the defendant were citizens of the same

state. According to the Court, it was “immaterial that

the motive for obtaining his appointment and qualifica-

tion was that he might thus ... institute an action

which could not be . . . removed on the ground of diver-

sity of citizenship.” 284 U.S. at 190. The defendant in

the present action argues that Mecom establishes a

universal rule directing that the citizenship of an ad-

ministrator, lawfully appointed by the state court for

bringing a wrongful death action, be considered in

determining diversity of citizenship jurisdiction. Apply-

ing this rule, Betar, the Illinois personal representative,

‘vould be considered the real party in interest.

The defendant’s reliance on Mecom, however, fails to

consider the decision in its proper statutory context and

in light of subsequent developments in the law. The

effect of the appointment of the personal representative

in this case, at least on a prima facie basis, was to create

diversity jurisdiction. The effect of the device in Mecom

was to defeat jurisdiction. Devices to create federal

jurisdiction have historically been limited by statute;

devices to defeat jurisdiction have not. See Kramer v.

Caribbean Mills, Inc., 394 U.S. 828, 825-26 (1969). See

ally Hart & Wechsler’s The Federal Courts and the

ederal System at 1100-01 (2d ed. 1973); 3A Moore’s

Federal Practice 117.05[2] at 17-40; C. Wright & A.

Miller, Federal Practice & Procedure § 1 (1971).

Thus, the plaintiff's argument against the creation of

jurisdiction in this case is aided by 28 U.S.C. § 1359,

which says:

A district court shall not have jurisdiction of a

civil action in which any party, by assignment or

otherwise, has been improperly or collusively made

or joined to invoke the jurisdiction of such court.

The early treatment of court-appointed wrongful

death fiduciaries under section 1359 is typified by the

literal reading of the statute in Corabi v. Auto Racing,

Inc., 264 F.2d 784 (38d Cir. 1959). According to the

Corabi rule, a device used to create jurisdiction fell

within the prohibition of section 1359 only if the court

—IJa—

found an illegal agreement or understanding between

opponents. The court interpreted Mecom as making a

motive to secure jurisdiction immaterial and not subject

to inguiry by the court in the absence of collusion. See

also MeCoy v. Blakely, 217 F.2d 227 (8th Cir. 1954) (ap-

pointment of meg violates statute only if it

rpetrates a fraud). See pore C. Wright & A.

Mil er, Federal Practice & Procedure § 1557 (1971). The

Third Circuit, sitting en banc, overruled Corabi in 1968,

however, holding that an appointment of a represen-

tative with only nominal duties, motivated by a desire to

create federal jurisdiction, violated section 1359.

McSparren v. Weist, 402 F.2d 867 (3d Cir. 1968), cert.

denied, 395 U.S. 903.

The decision of the Supreme Court in Kramer v.

Caribbean Mills, Inc., 394 U.S. 823 (1969), decided

shortly after McSparren, buttresses the ruling in that

case. In Kramer the Supreme Court ruled that an

assignment of a claim for the sole purpose of creating

diversity jurisdiction, although legal under state law,

was insufficient under section 1359 to create diversity

jurisdiction. According to the Court in Kramer, section

1359 must be read consistently with its broad purpose:

If federal jurisdiction could be created by

assignments of this kind, which are easy to arrange

and involve few disadvantages for the assignor,

then a vast quantity of ordinary contract and tort

litigation could be channeled into the federal courts

at the will of one of the parties.

394 U.S. at 828-29.1 The Court in Kramer expressly

reserved decision, however, as to the effect of section

' Although the defendant apparently has not made this argu-

ment, we do note that the type of diversity jurisdiction was

not a factor in the Kramer decision. The diversity involved in

Kramer was the same as the diversity involved here, b on

the ohenage of one of the parties. 28 U.S.C. § 1332(a)2). The

Court said:

[Bly its terms, § 1359 applied equally to both types of

iversity jurisdiction and there is no indication Congress

intended to treat*them differently.

394 U.S. at 829-30. °

=

1359 on the appointment of representatives. The Court

noted that the appointment of representatives varied in

certain respects from assignments without deciding

whether the variations were significant to the jurisdic-

tional question. Briefly summarized, the suggested

differences were: 1) state wrongful death laws typically

require that a representative bring the suit; 2) the

powers of representatives vary from state to state; and

3) the appointment of a representative is the result of a

state court decree, not merely a private agreement.

Since the decision in Kramer, however, the Courts of

Appeals have accorded little weight to these suggested

distinctions and have followed the Third Circuit decision

in McSparren. E.g., Bass v. Texas Power & Light Cc.,

432 F.2d 763 (5th Cir. 1970), cert. denied, 401 U.S. 975

(1971), Rogers v. Bates, 431 F.2d 16 (8th Cir. 1963

O’Brien v. AVCO Corp., 425 F.2d 1030 (2d Cir. 1969

These decisions have applied section 1359 to defeat

diversity jurisdiction based on the appointment of

representatives with only nominal duties for the purpose

of creating diversity of citizenship.”

2 At least one decision applying Kramer has gone as far as to

reject the Mecom rule when the effect of the citizenship of the

representative is to defeat jurisdiction. Miller v. Perry, 456

F.2d 63 (4th Cir. 1972). In Miller the state wrongful death

statute required appointment of a resident administrator as

plaintiff. If the Mecom rule were read as a universal require-

ment, the effect of this state residency requirement would be

to deny nonresidents a federal wrongful death forum against

resident tortfeasors. The Fourth Circuit declined to hold the

state residency requirement an unconstitutional state limita-

tion of federal jurisdiction, reasoning instead that the Mecom

rule was based on the assumption that the personal represen-

tative was clothed with such responsibilities and authority

that he was the real party in interest in the action. Because

the Kramer decision “injected a new note of realism into the

determination of diversity jurisdiction . . .,” the Fourth Cir-

cuit declined to use the citizenship of a nominal representative

to defeat federal jurisdiction. The citizenship of the statutory

beneficiaries was held to control.

Miller indicates that a state residency requirement is

material when the effect of the requirement is improperly to

defeat federal jurisdiction. The attempt by the defendant to

(Footnote continued on following page)

nt seta taal ase eee

—lla—

In Lester v. McFaddon, 415 F.2d 1101 (4th Cir. 1969),

for example, the Fourth Circuit minimized the

differences alluded to in Kramer between assignment of

a claim and appointment of a nominal representative. In

Lester the beneficiaries under the state wrongful death

statute, residents of South Carolina, appointed a Georgia

representative to be named plaintiff for the sole purpose

of creating diversity between the plaintiff and the defen-

dant, a South Carolina citizen like the beneficiaries. The

only duties of the representative were to lend his name

to the suit and to disburse the proceeds to the statutory

beneficiaries in the event of recovery. The court held

that the citizenship of the beneficiaries controlled the

jurisdictional issue. Comparing the case before it to

Kramer, the court said that procuring the services of an

out-of-state administrator for the purpose of creating

diversity was as voluntary as the assignment in Kramer,

regardless of the requirement of state law that some

representative be appointed. Furthermore, disregarding

the representative’s citizenship for the purpose of deter-

mining jurisdiction did not constitute an attack on the

state court appointment because the representative was

still able to bring the action in his name pursuant to the

state court order. The court finally examined the

relationship of the parties to the action, concluding that

the beneficiaries held the primary stake in the litigation,

not the appointed representative, who was little more

than a strawman. On this basis the court reasoned that

the position of the parties was indistinguishable from

that of the assignor and assignee in Kramer and held

that jurisdiction was lacking under section 1359. See

also O’Brien v. AVCO Corporation, 425 F.2d 1030, 1033-

34 (2d Cir. 1969) (disregarding suggested differences

2 continued rae

distinguish the present case because Illinois law has no such

residency requirement is not persuasive, because at issue is a

device to manufacture, not defeat, jurisdiction. Indeed, the

potential for manipulation of ee is greater when the

choice of representative is unlimited. Mecom was applicable to

the situation in Miller, and the issue was the extent to which

the Mecom rule survived Kramer. The plaintiff here argues,

however, and we agree, that Mecom is not even applicable.

—12a—

between assignments and appointments for similar

reasons).

There is virtually no difference between the duties of

the personal representative appointed here and the

duties of those whose appointment has been held inade-

uate by other Courts of Appeals to invoke jurisdiction.

he Illinois Wrongful Death Act gives neither the per- °

sonal representative nor the decedent’s estate the right

to share in the proceeds of the recovery. The represen-

tative’s sole duty under the Act is to distribute the

proceeds to the statutory beneficiaries in the event of

recovery. Of course, the personal representative has a

fiduciary duty requiring a bond to insure his acting

with diligence and fidelity. See Ill. Rev. Stat. ch. 70, § 2,

ch. 110%, § 13-2; Harnetiaux’ Estate v. Hartzell, 91 Ill.

App. 2d 222, 234 N.E.2d 81 (1968). Performance of this |

fiduciary duty of diligence is hardly a sufficient stake in |

the action to make the representative the real party in }

interest. We see no grounds for aay iy Sm tween

the personal representative under the Illinois Wrongful

Death Act and the representative in Lester v. McFad-

don, supra. See also Bishop v. Hendricks, 495 F.2d 289

(4th Cir. 1974), cert. denied, 419 U.S. 1056. Miller v.

Perry, 456 F.2d 63 (4th Cir. 1972); O’Brien v. AVCO

Corp., 425 F.2d 1030 (2d Cir. 1969). Cf. First National

Bank of Chicago v. Ettlinger, 465 F.2d 343 (7th Cir. 1972)

(executor appointed in will with active duties, including

gathering assets in estate, paying debts and taxes of es-

tate, collecting debts to estate, defending will and dis-

tributing property to beneficiaries); Sadler v. New

Hanover Memorial Hospital, Inc., 588 F.2d 914 (4th Cir.

1978) (executrix of active estate named in will). The

statutory beneficiaries of this action are the widow and

children of Raghubir Dutt Law, and they are the only

arties that have an actual stake in the outcome of the

itigation. Thus, in substance, this action is a suit

between aliens.

It is quite clear, however, that the beneficiaries did

not appoint the personal representative for the purpose

of creating diversity of citizenship. Apparently Illinois

offers the most convenient forum and the plaintiff was

the most convenient administrator available. The

—138a—

motives for the appointment do not appear clearly in the

record, but most conspicuous is the lack of an apparent

motive to manufacture jurisdiction. Although this

motivation typically has been a factor in the decisions

applying section 1359, see, eg., Bass v. Texas Power &

Light Co., 432 F.2d 763 (5th Cir. 1970); O’Brien, supra;

McSparren, supra, we do not consider it indispensable to

a holding of improper party making or joinder under

section 13 tion 1359. The purpose of section 1359 is to limit con-

sideration to cases that “really and substantially” involve

a dispute within the jurisdiction of the federal courts.

See Bishop, ~~ * 495 F.2d at 294; O’Brien, supra, 425

F.2d at 1032. Because the named plaintiff here has no

stake in the outcome of the lawsuit, the use of his

citizenship transforms an action between aliens to an ac-

tion within the diversity jurisdiction. The purpose of

diversity jurisdiction to prevent local prejudice, and the

salutary purposes of section 1359 are not served by

assuming jurisdiction of this action, just as they would

not be served by assuming jurisdiction in the more com-

mon situation involving a motive to manufacture

jurisdiction by the appointment. The reason for appoin-

ting the representative here is insufficient to establish

more than a nominal relationship between the represen-

tative and the cause. Bishop, supra (remanding under

§ 1359 although administrator appointed for experience

in business affairs); Vaughan v. Southern Ry., 542 F.2d

641 (4th Cir. 1976) (remanding under § 1359 although

purpose of bringing suit in North Carolina with required

resident representative was to locate litigation close to

witnesses and scene of accident).

Thus it is clear that the beneficiaries could not have

used the citizenship of this administrator to invoke

federal diversity jurisdiction. It is equally clear that the

defendants, motivated by a desire to invoke diversity

jurisdiction, cannot base removal on the citizenship of

the representative. In the absence of a specific statutory

exception, removal is proper only if the federal court

would have had jurisdiction over the action as it was

originally filed by the plaintiff. 28 U.S.C. § 1441(a); In

re Dunn, 212 U.S. 374, 384 (1909); Snow v. Ford Motor

Co., 561 F.2d 787, 789 (9th Cir. 1977). See Mullins v.

—l4a—

Seals, 562 F.2d 326 (4th Cir. 1977) (remanding a

death action to state court after removal by defendant

based on diversity between personal representative and

defendant).

Accordingly, the judgment of the district court is

reversed and the cause is remanded to the district court

with directions to remand the cause to the state court.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

—15a—

APPENDIX C

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

September 20, 1979.

Before

Hon. Witspur F. Pet, Jr., Circuit Judge

Hon. Wriu1am J. Bauer, Circuit Judge

Hon. Water E. Horrman, Senior District Judge*

Samveu J. Berar, Public Administrator of Cook County,

and Administrator of the Estate of Raghubir Dutt Law,

deceased

Plaintif}-Appellant,

No. 78-1911 vs.

De Havitzanp Arrcrart Or Canapa, Lt.,

a Canadian Corporation,

Defendant-A ppellee.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 77 C1912

Tuomas R. McMrten, Judge

On consideration of the petition for rehearing and sug-

gestion for rehearing en banc filed in the above-entitled

eause by De Havilland Aircraft of Canada, Ltd., a Canadian

Corporation, defendant-appellee, no judge in active service

has requested a vote thereon, and all of the judges on the

original panel have voted to deny a rehearing. Accordingly,

IT IS ORDERED that the aforesaid petition for rehear-

ing be, and the same is hereby, DENIED.

* The Honorable Walter E. Hoffman, Senior District Judge

from the Eastern District of Virginia, is sitting by designation.