Appendix — Schmutz Manufacturing Co. v. Atkins

APPENDIX

IN THE

Supreme Court of the United States

OCTOBER TERM, 1970

Nn. 1438

SCHMUTZ MANUFACTURING COMPANY, INC.,

Petitioner.

vs.

DONALD L. ATKINS,

Respondent.

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fourth Circuit

JOHN P. ARNESS

E. BARRETT PRETTYMAN, JR.

DAVID J. HENSLER

HoGAN & HARTSON

815 Connecticut Avenue

Washington, D.C. 20006

Attorneys for Petitioner

Of Counsel: ;

FRANK OQ. MEADE

Meade, Tate & Meade

516 Masonic Building

Danville, Virginia 24541

Dated: March 5, 1971

WILSON - EPES PRINTING Co. - RE 7-6002 - WASHINGTON. D. C. 20001

APPENDIX A.

APPENDIX B.

APPENDIX C.

APPENDIX D.

INDEX TO APPENDIX

Opinions of the Court of Appeals

upon the second rehearing en banc. -.

Opinions of the Court of Appeals

upon the first rehearing en bance. ....

Opinions of the Court of Appeals

upon the initial hearing by a three-

judge panel.

Opinion of the United States District

Court for the Western District of

Virgiiia. -....

Page

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1d

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11,566

DONALD L. ATKINS,

Appellant,

versus

SCHMUTZ MANUFACTURING COMPANY, INCORPORATED,

Appellee.

Appeal from the United States District Court for the

Western District of Virginia, at Danville.

Ted Dalton, District Judge.

(Decided December 10, 1970.)

Before Haynsworth, Chief Judge, Sobeloff, Boreman,

Bryan, Winter, Craven and Butzner, Circuit Judges

sitting en banc, on resubmission.

James A. Eichner (George E. Allen, Jr., and Allen,

Allen, Allen & Allen on Brief) for Appellant, and

Frank O. Meade (Meade, Tate and Meade on Brief)

for Appellee.

Filed Dec. 10, 1970. Samuel W. Phillips, Clerk

2a

HAYNSWORTH, Chief Judge:

When this troublesome case first came before this court,

a divided panel upheld its summary dismissal on the

ground that its maintenance was barred by Virginia’s

statute of limitation. Treating the law of Virginia as

controlling, a majority of the panel held that the running

of the statute was not tolled by the filing and pendency

of a previous action in the Western District of Kentucky.’

Subsequent reconsideration by the court en banc re-

sulted in a conclusion by a majority of a divided court

that equitable considerations partially foreclosed assertion

of the bar of the statute.* There followed a petition for

further reconsideration and a conclusion by the members

of the court that proper disposition of the anpeal required

treatment by the full court of the initial issue.

We conclude that the tolling effect of the pendency of

an identical suit in another federal court isyto be deter-

mined as a matter of federal, rather than state, law and

that the Virginia statute of limitations was tolled by the

action brought by Atkins in the Western District of Ken-

tucky. Our conclusion rests principally upon a considera-

tion of the unitary nature of the federal court system. It

draws strong support from the fact that in the analagous

situation of transfers from one district court to another,

after the period of limitation has run, we look to federal

law to reach the conclusion that the pendency of the ac-

tion in the transferor district tolls the running of the

statute. By whatever procedural means prosecution of

the claim is transferred from one district court to an-

other, the tolling effect of the action in the first district

should be determined under the same body of law.

The plaintiff, Atkins, a resident of Virginia, was se-

verely injured while working for his employer in Virginia

1 Atkins v. Schmutz Manufacturing Company, 4 Cir., 401 F.2d 731.

2 These opinions have not been published, and are withdrawn.

me,

when his feet were caught in a machine manufactured by

the defendant, Schmutz Manufacturing Company. He al-

leges that the accident was caused by design and con-

struction defects in the machine. Schmutz is a Kentucky

corporation with its sole place of business in that state.

At the time of the accident, Virginia had no long-arm

statute, and Atkins’ counsel reasonably concluded that

personal jurisdiction of Schmutz could not be obtained in

Virginia. Consequently, he filed a personal injury action

in the United States District Court for the Western Dis- .

trict of Kentucky, where Schmutz had its principal place

of business. That action was commenced within Vir-

ginia’s two-year period of limitations for tort actions, but

not within Kentucky’s one year period of limitation. Ex-

tensive discovery and other pre-trial proceedings followed,

for everyone reasonably assumed that the applicable limi-

tations period was that of Virginia (the state where the

cause of action arose) and not that of Kentucky (the

forum state).* That assumption was sharply upset, how-

ever, when the Kentucky Court of Appeals held that Ken-

tucky’s limitation period was applicable in actions brought

in the courts of that state if the limitation period of the

state where the cause of action arose was longer.‘

Applying Kentucky’s new rule, the District Court for

the Western District of Kentucky dismissed the action as

time-barred. The Sixth Circuit affirmed,® considering it-

self bound to follow Kentucky’s choice of law * and thus to

8In the Sixth Circuit this was the settled construction of Ken-

tucky law. Collins v, Clayton & Lambert Manufacturing Co., 6 Cir.,

299 F.2d 362, 364; Koeppe v. Great Atlantic & Pacific Tea Co., 6

Cir., 250 F.2d 270; Burton v. Miller, 6 Cir., 185 F.2d 817.

*Seat v. Eastern Greyhound Lines, Inc. ——- Ky, ——, 389

S.W.2d 908. The decision expressly overruled the earlier decisions

of the Kentucky Court of Appeals which had been the basis of the

Sixth Circuit’s reading of Kentucky law.

5 Atkins v. Schmutz Manufacturing Company, 6 Cir., 372 F.2d

762.

* Klaxon Co. v. Stentor Electric Manufacturing Co., 318 U.S. 487.

4a

apply Kentucky’s one year period of limitation,’ and to

do it even in cases previously filed in reliance upon Ken-

tucky’s earlier choice of law rule.* The Supreme Court

denied a writ of certiorari.°

In the meantime, Virginia had enacted a long-arm stat-

ute under which plaintiff believed personal jurisdiction of

the defendant could be obtained in Virginia.” Before the

Sixth Cireuit’s mandate became final, this action was

commenced in the Western District of Virginia. Dismissal

followed upon the ground that Virginia’s two year limi-

tation period had run before this action was filed and was

untolled by the proceedings in the federal courts in the

Sixth Circuit."

In this diversity case, Guaranty Trust Co. v. York, 326

U.S. 99, compels adoption of the requirement, applicable

in the state courts of Virginia, that actions for personal

injuries “be brought within two years next after the right

to bring the same shall have accrued.” ” Atkins’ action

against Schmutz accrued when he was injured, Caudill v.

Wise Rambler, Inc., 210 Va. 11, 168 S.E.2d 257, and he

brought an action within two years of that date. But that

action was terminated without any decision on the merits,

and Schmutz, relying on its interpretation of Virginia

law, asserts that its pendency had no tolling effect.

If, in determining the tolling effect of the pendency of

the action in the federal courts of Kentucky, we were

required, as we are in determining the applicable period

of limitation, to follow the state law of Virginia, it is pos-

7 Guaranty Trust Company v. York, 326 U.S. 99.

8 Wetherington v. Griggs, ——- Ky. ——, 392 S.W.2d 56.

389 U.S, 829.

10'Va. Code Ann. §§ 8-81.1 througl. 8-81.5. These provisions were

enacted in 1964.

11268 F.Supp. 406.

12°Va. Code Ann. § 8-24.

5a

sible, although not certain, that we would uphold the time-

bar. Few cases involving the tolling effect of prior actions

have been decided by the Virginia Supreme Court of Ap-

peals, but in a case decided in 1938, Jones v. Morris Plan

Bank of Portsmouth, 170 Va. 88, 195 S.E. 525, that

court dealt with a situation somewhat similar to the one

before us.

The plaintiff in Jones had filed an action against the

defendant in the Circuit Court of the City of Suffolk to

recover damages for alleged malicious abuse of civil

process. Fourteen months later, it was dismissed “for lack

of proper venue duly pleaded.” ** Later, Jones asserted

the same cause of action against the same defendant in

the Circuit Court of the City of Portsmouth. By then,

the two year period of limitation had run, unless its run-

ning was interrupted by the pendency of the action in the

Circuit Court of the City of Suffolk. Construing § 5826

of the Virginia Code (now § 8-34), the Virginia Supreme

Court of Appeals found no basis for granting relief to a

plaintiff whose prior suit was brought in the wrong forum

or was dismissed otherwise than upon the merits.”

We cannot be confident, however, that the result in

Jones would necessarily compel the Virginia Supreme

13195 S.E. 525.

14“An analysis of our statute (section 5826) shows that in only

four instances is there a suspension of the statute of limitations by

reason of the pendency of a former suit brought in due time. These

are: (1) Where such suit abates ‘by the return of no inhabitant,’

that is, where the writ is not served for that reason; (2) where

the suit abates by reason of the ‘death or marriage’ of a party;

(3) where, after the piaintiff has obtained a judgment or decree

in his favor, it is ‘arrested or reversed upon a ground which does

not preclude a new action or suit for the same cause’; and (4)

where ‘there be occasion to bring a new action or suit by reason

of the loss or destruction of any of the papers or records in a

former suit or action which was in due time.’ “None of these pro-

visions applies to the plaintiff’s case. There is no saving provision

where a suit, such as that of the plaintiff here, was brought in the

wrong forum or was dismissed otherwise than upon the merits.”

195 S.E. 526.

Co EN Ne Ee DOE SE AGL IIT

6a

Court of Appeals to reach the same result if it were called

upon to decide the case before us. Some indication that

it might not may be found in the more recent case of

Weinstein v. Glens Falls Insurance Co., 202 Va. 722, 119

S.E.2d 497. An action was brought within the one year

period of limitations to recover on a policy of insurance.

During its pendency it was discovered that recovery was

unavailable unless the policy were reformed. Reforma-

tion could be accomplished only by bringing a separate

suit in equity. The equity suit was brought in the same

court before dismissal of the law action but more than one

year after the loss occurred. The Virginia Supreme Court

of Appeals rejected the company’s contention that the

statute barred the institution of the reformation suit,

holding that, as a matter of judicial treatment, the newly

filed suit in equity was a continuation of the earlier action

at law. There was no reference to the tolling statute,

which would not have saved the case.

Virginia’s Supreme Court of Appeals has recently in-

dicated its reluctance in deciding statute of limitations

questions to reach results which are unjust and inequit-

able. Caudill v. Wise Rambler, Inc., supra. Clearly it

would be unjust and inequitable in the circumstances of

this case not to give a tolling effect to the prior action.

Enforcement of the time-bar here would serve none of the

underlying purposes of the statute of limiiations, and

equitable considerations, absent in the Jones case, cry for

mitigation of the statute’s harshness.

Atkins has been diligent and without fault in his ef-

forts to prosecute his claim against Schmutz. His belief

that the Western District of Kentucky was the correct

forum for litigating the merits of his claim and his belief

that he had two years in which to commence his action

were entirely reasonable and consistent with established

precedents in Kentucky and in the Sixth Circuit.

Nothing Atkins has done or failed to do has prejudiced

in any way Schmutz’s ability to defend this suit on the

ONT, SOLID IIL IERIE LIE GOOLE IO ALG MEF I PLOY, Sra Peery

Ta

merits. This is not a case where a time lapse between the

erd of one suit and the commencement of another might

cause the defendant to think that the litigation has come

to an end. From the initial filing of the complaint in the

District Court in Kentucky, these parties have been con-

tinual adversaries before one federal tribunal or another

pressing their respective claims. More importantly, At-

kins asserted his claim in a court of competent jurisdic-

tion within the period prescribed by Virginia and both

parties prepared for litigation on the merits.* Allow-

ing Atkins to litigate the merits of his claim would not

frustrate the oft-stated purpose of statutes of limitations

to compel the assertion of a right of action promptly while

the evidence is available and still relatively fresh.* Al-

15 Extensive discovery, resulting in the recording and preserva-

tion of evidence, was undertaken by both parties after Atkins filed

his suit in the Kentucky District Court. In addition, Atkins was

hospitalized for an extended period at the expense, and under

the general supervision, of the defendant’s liability insurance

carrier, which was als» the workmen’s compensation insurance

carrier for Atkins’ employer. The insurance carrier, which is

defending Schmutz, has had ar intimate acquaintance with the

claim and the nature and extent of the plaintiff’s injuries from a

date shortly after the accident.

16 “Statutes of limitation are statutes of repose, the object of

which is to compel the exercise of a right of action within a

reasonable time. They are designed to suppress fraudulent and

Stale claims from being asserted after a great lapse of time,

to the surprise of the parties, when the evidence may be lost, the

facts may have become obscure because of defective memory, or

the witnesses have died or disappeared.” Street v. Consumers

Mining Corp., 185 Va. 561, 575, 39 S.E.2d 271, 277.

“Statutes of limitation are primarily designed to assure fairness

to defendants. Such statutes ‘promote justice by preventing sur-

prises through the revival of claims that have been allowed to

slumber until evidence has been lost, memories have faded, and wit-

nesses disappeared. The theory is that even if one has a just claim

it is unjust not to put the adversary on notice to defend within

the period of limitation and that the right to be free of stale claims

in time comes to prevail over the right to prosecute them.’ Order

of Railroad Telegraphers v. Railway Express Agency, Inc., 321 U.S.

342, 348-349. Moreover, the courts ought to be relieved of the

burden of trying stale claims when a plaintiff has slept on his

rights.” Burnett v. New York Central R. Co., 380 U.S. 424, 428.

cies eee ag ee aE CE ST Ne

8a

lowing Atkins to litigate the merits of his claim at this

time would be consistent with the basic purpose reflected

in the tolling rule—saving the right of action for plain-

tiffs who, without fault, have been unable to obtain an

adjudication on the merits.

This, then, is a case where the parties have obtained

the full protection the statute of limitations was designed

to afford, and they have obtained it in the precise manner

required by the statute—institution of a suit within the

prescribed period. Given these considerations, one may

doubt whether the Virginia Supreme Court of Appeals

would mechanistically follow. Jones and deny Atkins his

day in court.

There is, however, a fundamental and, we think criti-

cal difference between the situation in Jones and this case

—the nature of the judicial systems involved. Jones, and

the statutory provision under which it was decided, may

be accepted as declarations of the law of Virginia with

regard to successive actions brought in different courts

of that state, but we deal with another, dissimilar judicial

system. By its nature this issue never has been and never

will be resolved, or even considered, by any court of the

Commonwealth of Virginia. Given the differences be-

tween the two judicial systems, no one can say with any

assurance what Virginia’s Supreme Court of Appeals

would do if confronted with the question now before us

in the context in which it arises.

Virginia’s is a highly decentralized, realtively autono-

mous, system of independent trial courts of sometimes

overlapping and duplicating jurisdiction with few admin-

istrative or procedural provisions for coordination of

their effort or the performance of cooperative or comple-

mentary functions. In stark contrast, the federal system

is “one great system for the administration of justice” *”

17 Internatio-Rotterdam, Inc. v. Thomsen, 4 Cir., 218 F.2d 514,

517.

al i li | ae eres eee

9a

with a singularity and a unity which encourages and re-

quires conformity in the functioning of each of the parts

to the purposes and objectives of a highly cohesive whole.

The resolution of an essentially procedural issue in

one judicial system will not necessarily apply with simi-

lar reason when the question comes up in the context of a

very different system. The nature, history and traditions

of a judicial system have an especially profound influence

on the recognition given by one court within that system

to earlier proceedings in another court within the sys-

tem. Occurrences in a highly autonomous court need not

always be noticed in another highly autonomous court;

but in a unitary system the workings of each part must

have their reflections in the whole.

The differences between the two systems would not be

so significant had not commencement of the action in the

Western District of Kentucky, the defendant’s response

and the conduct of pretrial proceedings there fully served

all of the purposes underlying Virginia’s adoption of its

two year statute of limitation. Since those purposes have .

been satisfied, the institutional basis of Virginia’s tolling

rule becomes critical to a consideration of the applica-

bility of that rule.

On an issue so closely procedural and so intimately

involved in the nature and functioning of the federal

judicial system, we believe that service of the integrity

and needs of that institution should prevail over random

guesses about essentially irrelevant state law stemming

from different institutional considerations. :

Sketches of the two judicial systems will disclose their

great differences.

Virginia has a melange of basic trial courts.

Circuit courts are the usual trial courts of general

jurisdiction. There is a circuit court for each county,

which is also the circuit court of any city of more than

10a

10,000 people within the boundaries of the county,** un-

less a separate circuit court for that city has been cre-

ated. Twenty-one such cities now have a separate cir-

cuit court.’

The original jurisdiction of the circuit courts, except

those of Richmond and Newport News, extends to all

civil and criminal matters, except those triable initially in

inferior courts, and except that they have no criminal

jurisdiction if the crime was committed within the terri-

torial limits of a city in which there is a corporation or

hustings court.”

Fourteen of the larger cities have corporation or hust-

ings courts.** The subject matter jurisdiction of these

courts is generally the.same as that exercised by circuit

courts. Some cities have a second corporation court of

more restricted jurisdiction than the first.**

Below the circuit and corporation or hustings courts

exist numerous inferior courts with limited, specialized

jurisdiction, including county courts, municipal courts,

courts of limited jurisdiction (“police courts”), and ju-

venile and domestic relations courts.™*

The cities of Richmond, Norfolk, Roanoke, and New-

port News have even a larger number of trial courts

18 Va. Code Ann. § 17-118.

19 Va. Code Ann. § 17-117.

20 Va. Code Ann. § 17-123. The jurisdiction of the circuit courts

of the larger cities is fixed by separate statutes. See, for example,

the references below to the trial courts sitting in Richmond whose

circuit court is one of very specialized jurisdiction.

21 The cities with corporation or hustings courts are set forth

in § 17-135, Va. Code Ann. Most, but not all of these cities also

have a separate circuit court. Corporation courts and hustings

courts appear to differ in name only.

22, Va. Code Ann. § 17-139.

28. Va. Code Ann. § 17-140.

24 See generaiiy Title 16.1, Va. Code Ann.

lla

with varied jurisdiction. An abbreviated summary of

the jurisdiction of the five basic trial courts sitting in

Richmond may be illustrative. These are:

1. The Law and Equity Court of Richmond which has

the same jurisdiction given to circuit and corporation

courts, except as to matters of criminal jurisdiction, the

probate and recordation of wills, and the appointment

and qualification of fiducaries; *

2. The Chancery Court which has jurisdiction of all

suits and proceedings in chancery except those specially

cognizable in the Circuit Court of Richmond, jurisdiction

of all other matters, except matters of common law and

criminal jurisdiction, within the jurisdiction of the Cir-

cuit courts, and exclusive jurisdiction, within that part

of the City of Richmond which lies north of the James

River, over probate and registration matters and the

appointment, qualification, and removal of fiduciaries; *°

3. The Circuit Court of Richmond which has juris-

diction of criminal matters against convicts, and civil

jurisdiction of claims against the state, of claims by the

stute for money owing, of claims by the state for fines

levied upon certain officials and general civil jurisdiction

over causes of actions arising within the Capitol Square; *

4. The Hustings Court of Richmond which has general

criminal jurisdiction, except of proceedings against con-

victs (see Circuit Court, above), and civil jurisdiction in

actions of forcible or unlawful entry or detainer, in

condemnation proceedings and in proceedings to ‘correct

erroneous assessments; * and

25 Va. Code Ann. § 17-164. Prior to 1954 there was also a Law

and Equity Court, Part II.

26. Va. Code Ann. § 17-161.

27 Va. Code Ann. § 17-163.

28 Va. Code Ann. § 17-153.

12a

5. The Hustings Court of Richmond, Part Two which

has jurisdiction concurrent with the Hustings Court, ex-

cept as to proceedings to correct assessments, jurisdiction

concurrent with the Law and Equity Court of all common

law cases, jurisdiction concurrent with the Chancery

Court of proceedings in equity, and jurisdiction, within

that part of Richmond which lies south of the James

River (see Chancery Court, above) over probate and reg-

istration matters.”

Essentially, the scheme of the Virginia court system is

one of multiple, separate trial courts with sometimes

overlapping territorial and subject matter jurisdiction.

While there are provisions for the assignment of judges

to equalize work loads and while some courts may have

more than one judge, there is a strong tendency to give

each trial judge his own court. Although the judgments

of the various courts are reviewable by the Supreme

Court of Appeals of Virginia, the system leaves each of

the individual trial courts a marked independence and a

special identity of its own.

The federal court system is more simply organized

and places greater emphasis on the functioning of the

system as a whole. There are some specialized courts,

such as the Court of Claims, the Court of Customs and

Patent Appeals and the Customs Court, having nation-

wide jurisdiction, but narrowly confined subject matter

jurisdiction. There are subordinate and specialized courts

in the District of Columbia and in the territories. The

great burden of judicial work of the system, however, is

conducted in the District Courts, courts of general juris-

diction encompassing almost the whole of federal jurisdic-

tion itself. In each district there is but one District

Court, and the boundaries of many districts coincide with

those of whole states. There are only two District Courts

in Virginia. Multiple judgeships are the rule, rather than

the exception, and every judge of a District is authorized

29'Va. Code Ann. § 17-154.

a ee ee

13a

to preside over any proceeding within the court’s juris-

diction.

For purposes of appellate review and administration,

the several district courts are grouped in eleven judicial

circuits. With the exception of the District of Columbia

Circuit, the Circuits are all multi-district and multi-state.

The judgments of the District Courts within each cir-

cuit are reviewable by a Court of Appeals of the Cir-

cuit, or, with respect to a limited number of proceedings

which are thought to require expedition, directly by the

Supreme Court of the United States. In addition, the

Circuit Councils exercise substantial administrative con-

trol over the District Courts within the Circuit and their

judges,” and the Chief Circuit Judge may assign judges

anywhere in the Circuit if the work requires. With the

consent of the Chief Justice and the Chief Circuit Judges

concerned, such assignments may be made to other cir-

cuits.

In a developing sense, the boundaries of a district are

not impenetrable walls strictly confining the power of a

District Court. Even if the district encompasses only a

part of a state, the process of the District Court reaches

throughout the state. When additional parties need be

brought in, its process may reach out a hundred miles,

across district and state boundaries.“ In interpleader

actions, its process reaches throughout the nation.”

Relatively liberal provisions for the transfer of cases

from district to district permit consolidations for- trial **

3028 U.S.C. § 332, 28 U.S.C. § 187. See the discussion by Mr.

Justice Harlan, concurring in Chandler v. Judicial Council, 398 U.S.

74, 89, of the important role played by the Circuit Judicial Councils

in the management of judicial work in the Federal Court System.

31 Federal Rules of Civil Procedure, Rule 4(f).

32 28 U.S.C. § 2361.

33 Rule 42(a) of the Federal Rules of Civil Procedure allows

consolidation and joint trial of actions involving a common question

14a

and evidence a cooperative functioning of the parts of

the system. Recent developments in the handling of mul-

ti-district litigation arising out of such things as airline

crashes and multitudinous anti-trust claims now permit

the consolidation for pretrial processing of all such cases

by one judge in one district under the general super-

vision of a special panel of judges.“ Duplications and

wasteful effort and expense are thus avoided in a system

capable of functioning in a unitary manner.

A judgment obtained in one district court may be en-

forced in another, without formal proof of judgment, by

filing a certified copy of the judgment in the district in

which enforcement is sought. 28 U.S.C.A. § 1963.

The capacity of the federal courts to function co-

operatively led Judge Parker, speaking for this court, to

describe the system as “unified” and to approve the

transfer of an action, timely filed in the Southern Dis-

trict of New York in the Second Circuit, but where the .

respondent ship had not been found, to the District of

Maryland, where the ship could be attached, though the

statute of limitations had run before the transfer. In

somewhat similar circumstances, the Supreme Court ap-

proved the transfer of a case from the Eastern District

of Pennsylvania, where it had been filed but where the

defendants could not be “found,” to the Southern District

of law or fact. Transfer of cases from one district to another for

purposes of consolidation is possible under 28 U.S.C. § 1404(a)

which permits transfer of any civil action for the convenience of the

parties and witnesses, in the interest of justice. Cf. Van Dusen v.

Barrack, 376 U.S. 612.

8428 U.S.C. § 1407. See Peterson and McDermott, Multi-district

Litigation: New Forms of Judicial Administration, 56 A.B.A.J. 737.

35 Internatio-Rotterdam, Inc. v. Thomsen, 4 Cir., 218 F.2d 514.

The transfer was held to be permitted under either 28 U.S.C.

§ 1404(a) or 28 U.S.C. § 1406(a).

15a

(f New York where the defendants could be “found.” *

That transfer was made pursuant to 28 U.S.C. § 1406

(a),°7 one of several procedural provisions affording fed-

eral court litigants protection against “justice-defeating

technicalities.” *

The problem which confronted the Virginia Supreme

Court of Appeals in Jones v. Morris Plan Bank of Ports-

mouth, supra, never should have arisen in the federal

system. If Virginia’s trial courts had been organized as

the federal district courts are, if Virginia, as an essen-

tial part of that organization, had a statute comparable

to 28 U.S.C. § 1406(a), the Circuit Court of the City of

Suffolk would never have dismissed the action “for lack

of proper venue duly pleaded,” unless the action was

patently frivolous or harrassing and provided the filing

of the action had served the basis purpose of the statute

of limitations. In a more unitary system, it would have

been transferred by the Circuit Court of the City of

Suffolk to the Circuit Court of the City of Portsmouth,

and there would not have been a plea of the statute’s bar.

If the circuit courts of the two cities had been as closely

related as are district courts, with all of the mechanical

means of promoting the closeness of that relationship,

Mr. Jones would not have been remembered in procedural

defeat.*

86 Goldlawr v. Heiman, 369 U.S. 463.

$728 U.S.C. § 1406(a): The district court of a district in which

is filed a case laying venue in the wrong division or district shall

dismiss, or if it be in the interest of justice, transfer such case to

any district or division in which it could have been brought.

38 Internatio-Rotterdam, Inc. v. Thomsen, 4 Cir., 218 F.2d 514,

517. See also, for example, 28 U.S.C. §1406(c) authorizing the

transfer from the District Court to the Court of Claims of cases

a in the former but within the exclusive jurisdiction of the

tter.

3° Although Virginia has a removal statute, Va. Code Ann. § 8-

157, which permits some transfers of cases from one court to

another, a plaintiff who lays venue in the wrong court will have

l6a

In the institutional context in which it arises, this

case appears more like Weinstein than Jones. The insti-

tutional considerations emanating from a system of auton-

omous trial courts which dictated the result in Jones

were absent in Weinstein, where both actions were

brought in the same court. It was unnecessary in Wein-

stein that a second action between the same parties deal-

ing with the same subject matter be treated as entirely

independent of the first. It is noteworthy, too, that

Weinstein does not rely on Virginia’s tolling statute for

its holding. The tolling statute was just as inapplicable

there as in Jones. The principal difference between the

two cases appears to be that in Jones, unlike Weinstein,

the second action was filed in a different and independent

court, which was not required to notice the pendency of

proceedings in the first court. In a system of integrally

related, cooperating trial courts the result in Weinstein

and its rationale appear naturally to encompass the Jones

situation, at least when the second action is filed during

the pendency of the first.

We do not attempt an appraisal of the comparative

merits of the systems. To say that they are different

implies no inferiority of either. Virginia’s system has

been developed in response to appraisals of her needs,

while the federal system has grown responsively to the

needs of the national system of courts. The federal

system may be no more adaptable to Virginia’s needs

than Virginia’s system would be to national needs. The

point is that the resolution of a problem arising out of

the nature of one system ought not to control, in a mech-

anistic way, the resolution of a somewhat similar prob-

his case dismissed and not transferred. Woodhouse v. Burke &

Herbert Bank, 166 Va. 706, 185 S.E. 876; see also Jones v. Morris

Plan Bank of Portsmouth, 170 Va, 88, 195 S.E. 525. Simiarly, a

case filed in a court which lacks subject matter jurisdiction over the

controversy cannot be transferred to the proper court. Valley Turn-

pike Co. v. Moore, 100 Va. 702, 42 S.E. 675. Compare 28 U.S.C.

§ 1406(c), cited in note 38, supra.

17a

lem when it comes up in the context of a very different

system.

In deciding that the question of the recognition to be

given by one federal court to proceedings in another fed-

eral court should be resolved as a matter of federal law,

we do no violence to the doctrine of Erie Railroad Co. v.

Tompkins, 304 U.S. 64, which requires that federal courts

in the diversity jurisdiction decide cases in accordance

with state law, whether decisional or statutory. The con-

tours of that requirement have been delineated with in-

creasing clarity by subsequent cases which have made it

plain that not every issue arising in a diversity case is

governed by state law. See, e.g., Guaranty Trust Co. v.

York, 326 U.S. 99; Byrd v. Blue Ridge Cooperative, 356

U.S. 525; Hanna v. Plumer, 380 U.S. 460; Szantay v.

Beech Aircraft Corp., 4 Cir., 349 F.2d 60.

The essence of our Federal system is the allocation of

law-making functions between state and national authori-

ties and the decision in Erie was, at least in part, a

recognition of the fact that this fundamental govern-

mental scheme is seriously undercut if the federal courts,

in serving as a forum for the enforcement of state-

created rights, formulate their own rules in areas which

are properly matters of state, not federal, concern.”

#0304 U.S. 64, 78-80; Bernhardt v. Polygraphic Co. of America,

Inc., 350 U.S. 198, 202. See also, Hanna v. Plumer, 380 U.S. 460,

471-472:

“We are reminded by the Erie opinion that neither Congress

nor the federal courts can, under the guise of formulating rules

of decision for federal courts, fashion rules which are not

supported by a grant of federal authority contained in Article

I or some other section of the Constitution; in such areas

state law must govern because there can be no other law.”

The extent to which the Erie doctrine is constitutionally com-

pelled has been a subject of considerable debate, see the discussion

and citations in Wright, Federal Courts, 2nd ed. § 56. Since we are

dealing with an issue relating to the operation of the federal

courts which the Constitution gives the federal government author-

ity to resolve, see Hanna v. Plumer, 380 U.S. 460, 472, that debate

is academic for purposes of our decision in this case.

APR SRR IEE BAN 7

18a

The problem facing the federal courts since Erie has

been to determine which questions arising in diversity

litigation are matters of state concern which ‘ould be

answered by reference to state law and which questions

are matters of federal concern which can be answered by

reference to federal law. Erie and its progeny may be

seen as an attempt to formulate a workable doctrine gov-

erning choice of law in diversity actions which would

prevent impermissible federal court interference with

state rules reflecting policy considerations lying within

the realm of state law-making competence. Guaranty

Trust Co. v. York, 326 U.S. 99, 109; Hanna v. Plumer,

380 U.S. 460, 474 (concurring opinion of Mr. Justice

Harlan).

The Erie doctrine clearly leaves for determination by

the states questions concerning the definition of the basic

state-created cause of action, with the federal courts be-

ing required to take a position of substantive neutrality.

But legal rights are not self-executing, and they can not

be viewed in total isolation from the rules governing their

judicial enforcement.

It is, of course, neither possible nor necessary for fed-

eral courts to be totally neutral in the adjudication of

state-created rights. It is not possible simply because

federal courts are not protean and are unable to trans-

form themselves into exact replicas of their state coun-

terparts.** That state and federal judicial systems are

not identic will inevitably mean that the choice of forum

will have some effect upon the course of litigation. Some

adoption of state court procedures by federal courts sit-

ting in diversity may be feasible, but it may also be in

conflict with fundamental interests of the federal courts

in the conduct of their own business and the maintenance

of the integrity of their own procedures, the legitimate

interests of a federal forum, qua forum.

*1 Guaranty Trust Co. v. York, 326 U.S. 99, 108-109; Cohen v.

Beneficial Loan Corp., 337 U.S. 541, 555-556.

eh ee ee Te ee eee ee eee

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BAM Se OAELIOD SESS SNR AN ie

= St ne

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19a

Literal application of some of the language in Guaranty

Trust Co. v. York, supra, might appear to compel the

conclusion that a federal court must apply state law in

every case where failure to do so might make a difference

in the outcome of the litigation. The language of that

opinion, however, has been moderated.** Now, in the

choice between state and federal law in the disposition of

procedural problems such as the one before us, we prop-

erly take account of federal interests and the effective

functioning of the federal courts as a cohesive, relatively

unitary, system for the administration of justice.

In Szantay v. Beech Aircraft Corp, supra, we described

the analysis to be undertaken by a federal court at-

tempting to resolve a federal-state conflict in a diversity

case as follows:

“1. If the state provision, whether legislatively

adopted or judicially declared, is the substantive

right or obligation at issue, it is constitutionally

controlling.

2. If the state provision in a procedure intimately —

bound up with the state right or obligation, it is

likewise constitutionally controlling.

3. If the state procedural provision is not intimately

bound up with the right being enforced but its ap-

plication would substantially affect the outcome of

the litigation, the federal diversity court must still

apply it unless there are affirmative countervailing

federal considerations. This is not deemed a con-

stitutional requirement but one dictated -by com-

-. >

In order to determine whether Virginia’s tolling rule

is “intimately bound up with the right being enforced,”

it would be helpful to know with certainty the state poli-

cies underlying the tolling rule. Unfortunately, as in

*? Byrd v. Blue Ridge Cooperative, 356 U.S. 525; Hanna v.

Plumer, 380 U.S. 460.

43 349 F.2d 60, 63-64.

PEL PLEO SEI AE RENT OE GOS CE TY sty

20a

Szantay, there is an absence of evidence from state

sources shedding any light on the problem. As pointed

out above, however, we think it is clear that to the ex-

tent that the purposes of the statute of limitations have

been satisfied and the plaintiff has been without fault

in not prosecuting his claim to a final judgment, the

rule reflects essentially institutional considerations rele-

vant to the administration of justice within the Virginia

court system which are unrelated to the basic rights and

obligations of the parties. The presence of other con-

siderations is unapparent, while Weinstein, treating suc-

cessive actions in the same court as one, emphasizes the

institutional nature of the tolling rule of Jones, in which

no effect was attributed to the pendency of an earlier

action in a different Virginia trial court. In the context

of this case, where the only relevant considerations are

institutional, Virginia’s tolling rule cannot be said to be

“intimately bound up with the right being enforced.”

That there is a significant federal concern for the ap-

plication of rules of litigation in federal courts which are

consistent with the fundamental nature of that court sys-

tem is well established. See, e.g., Byrd v. Blue Ridge

Cooperative, supr; Herron v. Southern Pacific Co., 283

U.S. 91, 94.

Insofar as federal concerns are involved, this action is,

in effect, merely a continuation of the proceedings com-

menced in the Western District of Kentucky.“ This is

clear from the unitary nature of the federal court system

and the procedures it embodies for the expeditious ad-

judication of cases on their merits.

44 See Adams v. Collier, 122 U.S. 382, holding that a suit insti-

tuted in the Circuit Court [under the pre-1911 judicial system]

after withdrawal of a prior suit on the same cause of action in

the District Court was, for statute of limitations purposes, “in

effect, a continuation of the former” suit. That the second action

is a continuation of the first is precisely the rationale on which

the Supreme Court of Appeals of Virginia relied in holding the

reformation suit timely in Weinstein.

EO

21a

Whether the Kentucky action could have been trans-

ferred to the Western District of Virginia under 28

U.S.C, § 1404 is a matter of federal law.* If this action

had initially laid venue in the wrong district, its trans-

ferability under 28 U.S.C. § 1406(a), after the running

of any applicable statute of limitations, would be de-

termined as a matter of federal law.“ implicit in a de-

cision that there should be a transfer after the lapse of

two years following the injury is a determination that the

basic purpose of the applicable statutue of limitations

has been satisfied and that the interests of justice dictate

against dismissal.*’

Though here there was no transfer of the action in the

Western District of Kentucky and the question of its

transferability was not raised, the commencement of this

action in the Western District of Virginia during the

pendency of the Kentucky action has achieved the same

practical result. A determination of the tolling effect of

the commencement and prosecution of the federal action

in the Western District of Kentucky ought to be had

under the same body of law regardless of the procedural

means by which prosecution of the substantive cause of

action is discontinued in the district court sitting in

*® Compare Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509, a diversity

case in which the Supreme Court declined to decide whether a pre-

§.1404 forum non conveniens transfer was governed by state or

federal law, with Sullivan v. Behimer, 363 U.S. 335, a diversity

case in which the Supreme Court treated a transfer pursuant to

§ 1404 entirely as a matter of federal statutory interpretation. See

also, Van Dusen v. Barrack, 376 U.S. 612; Internatio-Rotterdam,

Inc. v. Thomsen, 4 Cir., 218 F.2d 514.

*6 Cf. Goldlawr v. Heiman, 369 U.S. 463.

** “When a lawsuit is filed, that filing shows a desire on the part

of the plaintiff to begin his case ana thereby toll whatever statutes

of limitation would otherwise apply. The filing itself shows the

proper diligence on t’2 part of the plaintiff which such statutes

of limitation were intended to insure.” Goldlawr v. Heiman, 369

U.S. 463, 467.

eee

22a

Kentucky and continued in a district court sitting in

Virginia.

Since Virginia’s tolling statute and state decisions con-

struing it have been so largely influenced by the nature

and the structure of Virginia’s system of trial courts,

since the question here arises out of a different system

and reasonable answers are dependent upon the nature

and the structure of that system and its effective func-

tioning, we conclude that we must seek the answer as a

matter of federal, not state, law. Since every purpose of

Virginia’s proscription against the commencement of tort

actions more than two years after the injury has been

served, we conclude that, as a matter of federal law, the

statute has been satisfied.“

The judgment is reversed and the case remanded with

instructions to overrule the plea of the statutory bar.

Reversed and remanded.

48 It is suggested in the concurring opinion that any consideration

favoring the application of a federal tolling rule would equally

favor the application of a federal statute of limitations. Whether

or not Congress could validly enact such a statute for diversity

cases, it has not done so. We need not resurrect the indefinite,

cumbersome doctrine of laches as the only limitation on the com-

mencement of actions in the diversity jurisdiction. State statutes

provide a convenient, predictable period of limitations for use in the

diversity jurisdiction, and resort to them minimizes the disparity

of results of litigation in state and federal courts. If Guaranty

Trust has no constitutional foundation, as long as there is no

federal statute of limitations, its result would be dictated by

institutional considerations.

In the federal system, the tolling effect of an earlier action in a

federal court is a very different question than the one resolved in

Guaranty Trust. Adoption of a state’s statutory period of limita-

tion is not inconsistent with our conclusion that recognition in a

federal courf of earlier proceedings in another federal court should

be determined as a matter of federal law.

We accept and apply Guaranty Trust, but we do not extend it

to require federal adoption of a state tolling rule, born of state

court institutional considerations which have no relevance in the

context of the federal system.

eer ee

28 a

WINTER, Circuit Judge, specially concurring :

I concur in the judgment of the Court because I think

that state law requires reversal and remand. We need

not and should not decide more.

Following plaintiff’s petition for further reconsidera-

tion, counsel have referred us to Weinstein v. Glens Falls

Insurance Co., 202 Va. 722, 119 S.E.2d 497 (1961), de-

cided after Jones v. Morris Plan Bank of Portsmouth,

170 Va. 88, 195 S.E. 525 (1938), on which we relied for

affirmance in our original decision. In Weinstein an ac-

tion at law on a policy of insurance was commenced

within the one year period of limitations for actions at

law or in equity specified in the policy. The contractual

period of limitations was required to be included in the

policy by Virginia statute. Neither tue statute nor the

contract contained any provision for its tolling. During

the course of the litigation, it became apparent that the

court in which the action had been instituted was not

competent to grant relief. To warrant recovery, reforma-

tion of the contract, an action cognizable solely in an

equity court in Virginia, would be required. An action

in equity was then instituted. It was filed before final

disposition of the action at law but more than one year

after the loss occurred. When the insurer contended that

the equitable action was barred by limitations, the Vir-

ginia Supreme Court of Appeals rejected the contention.

It ruled that “the chancery suit was but a continuation of

the claim asserted in the law action which was concededly

brought in time, and the statute having stopped running

upon the institution of the law action, the suit in chan-

cery was not barred.” 119 S.E.2d at 503.

To me, Weinstein is dispositive of this appeal. Plain-

tiff’s suit was instituted in Kentucky before the expira-

tion of two years prescribed by the applicable Virginia

statute. The Kentucky court, bound by Kentucky’s ex

post facto determination that Kentucky public policy pro-

24a

hibited giving effect to foreign statutes of limiations more

liberal than that of Kentucky, was not competent to con-

sider the merits of the suit. Plaintiff’s suit in Virginia

was instituted before the Kentucky action was termi-

nated. Indeed, suit was filed in the Western District of

Virginia before the mandate of the United States Court

of Appeals for the Sixth Circuit issued and more than

six months before the Supreme Court denied certiorari.

See Burnett v. New York Cent. R. Co., 380 U.S. 424, 435

(1965). I have no difficulty in concluding that the Vir-

ginia suit was “but a continuation” of the previously

filed Kentucky action, timely under Virginia law, and,

therefore, the Virginia statute of limitations interposed

no bar.

Inexplicably, the opinion in Weinstein made no refer-

ence to the earlier decision in Jones. We are told, also,

that no reference to Jones was made in the briefs filed in

Weinstein. Whatever our views with regard to conflict

between the two decisions, Weinstein, as the latest ex-

pression of Virginia law, is entitled to be followed. Re-

conciliation, if any is needed, is for the state courts in an

appropriate case, not us.

We ought not to decide more than that the present suit

is not barred by limitations under Virginia law. The par-

ties have agreed that, under Guaranty Trust Co. v. York,

326 U.S. 99 (1945), we must look to the law of Virginia

to decide this case. Guaranty Trust held that, in a diver-

sity action like that at bar, we must look to the state law

to determine the period of limitations. The court pur-

portedly accepts this proposition, but seeks to avoid its

logical consequences by finding that the tolling of limita-

tions is a matter of federal law. While Guaranty Trust

did not concern the tolling of limitations, tolling is so

clearly the obverse of the same coin that I think we are

bound to Virginia law and are foreclosed from fashion-

ing a federal rule.

25a

Certainly, Guaranty Trust has not been sufficiently

eroded in whole or in part that we should refuse to follow

it; nor, in my estimation, has a satisfactory way been

devised by the court to avoid it. The decisions of the

Supreme Court in Byrd v. Blue Ridge Cooperative, 356

U.S. 525 (1958), and Hanna v. Plumer, 380 U.S. 460

(1965), do provide a basis for applying a federal rule of

law in a diversity case une«r certain circumstances, but

the rationale of those two cases does not support a fur-

ther departure from the principles of Erie Railroad Co.

v. Tompkins, 304 U.S. 64 (1938), under the facts pre-

sented here. Byrd (factual issue must be decided by a

jury in a federal court) and Hanna (service of process

in federal actions must meet the standards of the Fed-

eral Rules of Civil Procedure) were dictated by strong

expressions of federal policy: the Seventh Amendment

and the Federal Rules of Civil Procedure, respectively. In

contrast to these Constitutional and Congressional man-

dates, here we have only a notion of an “institutional in-

terest” in the uniform management of the federal court

system. If this interest is sufficient to support a federal

rule of tolling, I suggest that it favors the application of

a federal statute of limitations just as strongly, so that

by implication Guaranty Trust is being overruled. I note,

also, that there is lacking in this case any discriminatory

state policy of the type intended to be prevented by the

creation of federal diversity jurisdiction so that there

would be justification for noncompliance with state law.

Szantay v. Beech Aircraft Corp., 349 F.2d 60 (4 Cir.

1965). ;

To me, it is, therefore, unwise to impugn the vitality

and scope of Guaranty Trust when the law of Virginia

alone provides the result.

Judge Sobeloff authorizes me to say that he joins in

this opinion.

oF

os,

1b

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11,566

DONALD L. ATKINS,

Appellant,

vs.

SCHMUTZ MANUFACTURING COMPANY, INCORPORATED,

Appellee.

Appeal from the United States District Court for the

Western District of Virginia, at Danville.

Ted Dalton, District Judge.

(Decided April 17, 1969).

Before Haynsworth, Chief Judge, Sobeloff, Boreman,

Bryan, Winter, Craven and Butzner, Circuit Judges

sitting en banc, on resubmission.

James A. Eichner (George E. Allen, Jr., and Allen,

Allen, Allen & Allen on brief) for Appellant, and

Frank O. Meade (Meade, Tate and Meade on brief)

for Appellee.

2b

Albert V. Bryan, Circuit Judge:

Whether a plea of limitations should be excluded in this

personal injury action is the point on appeal. Donald R.

Atkins, in the employ of the U. S. Plywood Company at

South Boston, Virginia, was injured on June 22, 1961

when using as intended a machine made by Schmuiz

Manufacturing Company, the defendant, from whom Ply-

wood had purchased it. It cost him both legs. Claiming

damages, Atkins put his tragedy upon the negligence of

Schmutz in the machine’s design and construction. Find-

ing the action came too late under the Virginia limita-

tion act, the District Court dismissed. We reverse. The

plea should have been enjoined or disallowed as inequit-

able.

Schmutz had no place of business or agent in Virginia

and Virginia’s long-arm statute was not enacted until

three years afterwards, in June 1964.1 Suit was first

begun in the United States District Court in Kentucky on

June 19, 1963, three days before the running of Virginia’s

two-year limitation. Kentucky’s period for such an ac-

tion was one year,’ but as long understood by the State

and Federal courts there, it yielded to the greater indul-

gence, if any, of the State of the injury. However, this

impression was disavowed by Kentucky’s courts while

Atkins’ case was pending® and the new order made

retroactive.*

? Code of Va., 1950, as amended, Section 8-81.2

2 Code of Va., 1950, as amended, Section 8-24.

> KRS § 413.140.

* Collins v. Clayton & Lambert Manufacturing Co., 299 F.2d 362,

364 (6 Cir. 1962) ; Koeppe v. Great Atlantic & Pacific Tea Co., 250

F2d 270 (6 Cir. 1957); Burton v. Miller, 185 F2d 817 (6 Cir.

1950).

* Seat v. Eastern Greyhound Lines, Inc., 389 SW2d 908 (Ky.

1965).

* Wethington v. Griggs, 392 SW2d 56 (Ky. 1965).

3b

This turnabout in precedent occurred with Atkins’

cause at the trial stage. The District Court in Kentucky

dismissed upon the one-year statute and was affirmed on

appeal. Atkins v. Schmutz Mfg. Co., 372 F2d 762 (6

Cir. 1967) cert. den. 8389 US 829 (October 9, 1967). Be-

fore the mandate of affirmance issued, Atkins commenced

this action in Virginia on March 13, 1967—almost six

years after the injury—laying summons on Schmutz un-

der the new long-arm law. The action fell on the plea

of the Virginia two-year limitation interposed for Schmutz

by its liability insurer.

Dismissal of Atkins’ suit shocks the conscience, as the

trial judge recognized but saw no escape. We think re-

jection of the plea is demanded by the attending equitable

considerations. The amputee is denied trial of his claim

despite his strenuous vigilance to get a hearing. His de-

feat is accomplished by resort to a statute of limitations.

Laws of this kind have always been merely to give as-

surance against stale or ancient claims, lest the defense

be impeded by disappearance of proof through lapse of

time. Here the statute defies plaintiff’s clacrity. True, he

waited two years, but never to the defendant’s prejudice.

At all times it was aware of Atkins’ hurt. Postponement

of the institution of personal injury actions is not uncom-

mon; it allows an opportunity both for compromise and

for further study of the permanence of the injury.

Utterly unforseeable to the plaintiff was the about-face

of the Kentucky State court. Of course this destruction

of his claim would have been avoided had he sued sooner,

but never was there an inkling of the necessity. Defend-

ant’s absence compelled him to sue in Kentucky.

I. Key to relief is that Atkins as plaintiff and Schmutz

as defendant had the same insurer, Liberty Mutual In-

surance Company. It carried the insurance of Plywood

required under the Virginia Workmen’s Compensation

4b

Act” and thus insured Atkins as an employee; it was,

too, the liability insurance carrier of Schmutz. Through-

out, it was both a co-plaintiff and a co-defendant. As a

plaintiff, it sought reimbursement of what it had ad-

vanced pursuant to the Plywood policy and a supplement :

thereto. In defense it sought to save itself as insurer of

Schmutz. The history of this case exposes the ensuing

prejudice to Atkins.

As just intimated, he applied for and accepted work-

men’s compensation. He could, also, sue the third-party

tort-feasor for his injury. However, under the Act when

demand is made by an employee upon his employer for

the statutory benefits it “shall operate as an assignment

to the employer of any right to recover damages which

the injured employee . . . may have against [the tort-

feasor] . . . and such employer shall be subrogated to

any such right and may enforce . . . the legal liability of

[the tortfeasor].... [But] any amount collected by the

employer . . . in excess of the amount paid by the em-

ployer . . . shall be held by the employer for the benefit

of the injured employee . . . less a proportionate share

of such amounts as are paid by the employer for reason-

able expenses and attorney’s fees.. .”®

If an insurer, as here, satisfies the benefactions of the

statute, then all the privileges of the employer are au-

tomatically assigned to the insurer, including the right

to reimbursement for the items enumerated in the fore-

going excerpt from the Act.° Insistence upon indemnifi-

cation of Liberty by Atkins is also found in the agree-

ment Liberty exacted of Atkins for payment of extra-

statutory benefits. The action may be brought by the in-

sured or the insurer in the name of either. Hence it is

™Va. Code 1950, 65-1 et seq., as revised 65.1-1 et seq. (1968).

® Va. Code 1950, 65-38, as redesignated, 65.1-41 (1968).

® Va. Code 1950, 65-108, as redesignated, 65.1-112 (1968).

’ FAAS AME PIE PO pea

SES I ORIG 5 ee i aan Pear SEN

5b

a suit for the use of both the employee and the insurer,

but primarily for the latter and secondarily for Atkins.

The insurer, thus, is a co-plaintiff, whether named or not.

In the instant facts, Liberty is defending Schmutz and

so is in reality a defendant.

II. In remarkably like circumstances Czaplicki v. The

Hoegh Silvercloud, 351 US 525, 531 (1956), held that the

equities in favor of the apparently prejudiced insured

should be looked to as well as the rigid literality of a

pertinent statute. In consequence, he was permitted to

maintain a suit despite the express statutory transfer of

the right of action to his insurer.

Recalling that Liberty holds title to Atkins’ claim, the

following excerpt from Czaplicki indicates its resemblance

to our case: “. .. an action by Travelers [the insurer |

would, in effect, be an action against itself, .. .” 851 US

531. Czaplicki is cited only to authenticate the duty and

power of a court to exert an equitable discretion to fos-

ter the interests of the injured insured. The opinion re-

frained from declaring, as unnecessary, the relation be-

tween the insurer and insured, when the tortfeasor is

sued for their several benefits, to be a trust, but in join-

ing, Justice Frankfurter conceived of it that way. Other

decisions enunciate this concept. It was the view of the

concurring judge in Potomac Electric Power Company

v. Wynn, 343 F2d 295, 299 (D.C. Cir. 1965). Earlier,

this had been the concept of Learned Hand, C.J., United

States Fidelity & Guaranty Co. v. United States, 152 Fed

46, 48 (2 Cir. 1945).

Advertently or inadvertently, Liberty has put itself

into a fiduciary category, a realm historically dominated

by equity. It would discountenances resort to the statute

of limitations wherever seen to be inequitable or uncon-

scionable. Marine Insurance Co. v. Hodgson, 11 US

(Cranch) 881, 336 (1812); La Porte v. United States

Radium Corp., 18 FSupp. 263, 273 (D.N.J. 1935) ; Bruns-

6b

wick Land Corp. v. Perkinson, 153 Va. 608, 151 SE 138

(1930).

The insurer’s duty to avoid prejudice to the employee’s

recovery goes back to Liberty’s policy insuring Plywood

under the Virginia Workmen’s Compensation Act.’® While

this document is not in the record, necessarily it is avail-

able to Atkins as a beneficiary. It must be read, too, as

forbidding interference with Atkins’ enforcement of his

- claim. Just as the employee cannot debase the insurer’s

rights of subrogation and indemnity against the wrong-

doer,"' so neither the employer nor the insurer can preju-

dice the employee’s rights.** It is incumbent upon the

employer and insurer to observe this commandment faith-

fully.

III. Notwithstanding, Liberty through its dualism has

thwarted Atkins’ recovery in Kentucky and in Virginia,

and to the advantage of Liberty. Liberty is so postured

that if Atkins loses, Liberty is saved the possibility of

paying any more than the expenditures it has already

made for Atkins. It is an encouragement for Liberty to

oppose Atkins, just as it has. Obviously, this is in vio-

lent contravention of Liberty’s duty under the Virginia

law not to hinder Atkins, certainly not to its own ad-

vantage.

Justification urged for Liberty’s position is that in

pleading the statute, it is doing no more than Schmutz

could have done. The answer is that the real defendant,

of course, is Liberty and it is bound to Atkins as Schmutz

is not. Liberty cannot recast its actual part by acting in

the shadow of Schmutz. Equity must correct the in-

justice.

1°'Va. Code 1950, 65-109, as redesignated 65.1-113 (1968).

11 Stone v. Heline Co., 184 Va. 1051, 37 SE2d 70 (1946).

*C. & O. Ry. Co. v. Palmer, 149 Va. 560, 140 SE 831 (1927).

7b

IV. Our decision to strike the limitation plea does not

rest on estoppel. It is placed on the jurisdiction of equity,

noted in Czaplicki. supra, 351 US 525, and elsewhere :.

cited, to prevent imposition upon the insured when, as

here, there are breaches by the insurer of its ties to the

insured. Especially is this the aim when the abandon-

ment of the insured is due to a conflict of the company’s

interests with the individual’s.

V. At once arises the query of why did not Atkins

raise the present contention in the Federal court in Ken-

tucky. Explanation is immediately at hand. From the

day of his injury, June 22, 1961, until October 1963, he

was not informed of Liberty’s interest in Schmutz, and

then only by chance. The limitations of both Kentucky

and Virginia had by that time matured, although the

plea was not filed until November 19638.

Naturally, the next inquiry is why Atkins did not, after

learning that Liberty was also Schmutz’ insurer, dispute

the limitation defense. The answer is quite adequate. At-

kins’ attorneys in opposing Liberty as Schmutz’ champion

were cautious not to jeopardize Liberty’s obligatory re-

habilitative care of Atkins. It was owing him by virtue

of the Virginia statute and the supplemental agreement.

A consideration in this regard was whether if in the Ken-

tucky trial Atkins resisted Liberty’s medical evidence on ©

damagés, he might be charged with hampering and not

cooperating with his insurer. On that ground, his entitle-

ments to restorative treatments might be denied. Tn this

connection, it is notable that the supplemental agreement

stipulates that the benefits it provides are those “which

in the opinion of the Company are reasonably necessary.”

Incidentally, Liberty gained complete medical evidence

upon Atkins through its care of him. The Schmutz-Lib-

erty defense was profited by Liberty’s relationship to

Atkins,

Termination of the required reparative measures would

have meant a serious and severe loss to Atkins. Atkins

8b

had been receiving medical and hospital attention from

Liberty ever since the day of his accident. From time to

time for that purpose he was taken by Liberty to its

center in Boston, Massachusetts. This solicitude ceased

just after Atkins filed his suit in Virginia in March 1967

—whether as a consequence of this step or as “in the

opinion of the Company” was no longer necessary, does

not appear in the record.

The same fear possibly accounts for the absence of any

fight on the limitation plea. Intended or not, Liberty’s

Janus-capacity put a “squeeze” on Atkins, either to forego

a replication with an assault on the plea or lose the

medical attention.

VI. Res judicata or estoppel by judgment is not a

defense here. The Kentucky Federal court’s judgment

dealt only with the Kentucky statute. Concededly, the

statute has no extraterritorial force and is not a con-

sideration in applying the Virginia laws. Furthermore,

a decision on a statute of limitations of this kind is not

a resolution on the merits of the controversy. For these

reasons the dismissal on that ground is not effective be-

yond Kentucky.

Rule 41(b) F.R.Civ. P."* has been cited as requiring,

in some situations, that a dismissal on the statute of

limitations by a Federal court in one State be given res

judicata-effect in a subsequent case in a Federal court

in another State as a dismissal on the merits. See Bertha

Building Corp. v. National Theatres Corp., 248 F2d 833,

840 (2 Cir. 1957) disapproving Warner v. Buffalo Dry-

dock Co., 67 F2d 540 (2 Cir. 1933) cert. den. 291 US

678 (1934); Murphy v. A/S Sobral, 187 FSupp 163, 164

13 (b) Involuntary Dismissal: Effect Thereof .... Unless the

court in its order of dismissal otherwise specifies, a dismissal

under this subdivision and any dismissal not provided for in this

rule, other than a dismissal for lack of jurisdiction, for improper

venue, or for failure to join a party under Rule 19, operates as an

adjudication upon the merits.

9b

(S.D.N.Y. 1960). But this is not the prevalent view.

Moore’s Federal Practice, 2d Ed., p. 1033; cf. Costello v.

United States, 365 US 265, 285 (1961). The insignifi-

cance of the point presently is obvious when it is re-

called that Atkins could have sued the second time in a

Virginia State court without this obstruction.

VII. Equity powers aside, intervention in the utiliza-

tion of the Virginia act of limitations does not affront

her precedents. While it was said, in Brunswick Land

Corp. v. Perkinson, supra, 153 Va. 603, 151 SE 188, 140

(1930), that the act provides its only exceptions, the

decision recognizes the possibility of other exceptions un-

der “certain extraordinary circumstances, wherein the

positive and plain requirements of an equitable estoppel

preclude its application”. Wilson v. Butt, 168 Va. 259,

190 SE 260 (1937).

VIII. Exoneration from the predicament in which

Liberty now finds itself is not suggested by the question

of how far Liberty’s duality withdraws the defenses of

Schmutz-Liberty. The ready response is that equity has

a discretion in lending its aid. It is justified at this time

only with respect to the employment of the limitations

act, which is quite different from a stand taken on the

merits; it is only a means of escape.

IX. The contention is pressed that Liberty would be

damaged in the sale of insurance if it is to be restricted

in its defenses when a contest develops between two of

its insureds. Automobile liability and collision_ policies

are mentioned as examples. Frequently it may develop,

it is said, that the same insurer has written these con-

tracts for the plaintiff as well as for the defendant,

and under our decision difficulties for the insurer are to

be anticipated, particularly in the event of counterclaims.

This is quite true, but it is a possibility arising from the

generality of the insurance business, not from the fault

of the insured. It is Liberty’s concern alone. 18 ALR

10b

8rd 482. Certainly the problem is not solved to the

prejudice of the insured."

Liberty is not accused or thought of by the court as

purposely resorting to a bifold position to advantage it-

self or Schmutz. There is not the slightest basis for such

an imputation. Undoubtedly overlooked by Liberty was

the prejudice to Atkins reflected by its twin character.

The point is, however, that we must look to the result,

and not to the intendment, of the insurer’s twoness.

X. The record does not disclose the terms or limits of

Liberty’s insurance of Schmutz, but to the extent that

Schmutz is not protected, our decision presently shall not

preclude Schmutz from interposing the plea of limita-

tions in respect to the amount of any judgment obtained

by Atkins which is not covered by Liberty’s policy.

Schmutz did nothing to prejudice Atkins in the prosecu-

tion of his claim and there is no equitable ground for

denying it this defense.

It appears that in regard to the running of the statute

there is no jury issue. If that is true, then at the trial the

Court will apply our decision to Liberty and Schmutz to

the extent of Liberty’s obligation to indemnify Schmutz,

and apply it to Schmutz separately as to any unindemni-

fied liability. The point would not go to the jury in any

manner.

The District Court’s order of dismissal will be vacated

and the previous opinion of the majority of this court

1‘ It has been suggested, too that the present situation has existed

for years, without disapproval, when a longshoreman claims work-

men’s compensation from his employing stevedore for injury

aboard ship. The analogy dra‘.n is this: under the stevedore’s

policy the insurer pays the claim; neither the longshoreman, nor

the insurer in his name, can sue the stevedore, but they can and

do sue the ship; thereupon the ship impleads the stevedore; and

the insurer defends the stevedore. No conflict is present in the

position of the insurer. Throughout, the insurer claims with the

longshoreman and the stevedore against the ship, and defends the

stevedore on the ship’s claim. The insurer never takes the side

of the ship against the longshoreman.

11b

will be withdrawn. On remand Liberty should be made a

party defendant, as recommended in Czaplicki, supra,

351 US 525." The plaintiff will be permitted to amend

his complaint to effectuate our determinations and Liberty

given leave to answer. |

The District Court will suspend or enjoin the inter-

vention of Schmutz-Liberty’s plea of the statute of limi-

tations insofar as it may relieve Schmutz and Liberty of

liability for the indemnity provided Schmutz under Lib-

erty’s insurance policy. But the statute may be pleaded

by Schmutz against recovery by Atkins of any amount

for which it is not covered by Liberty’s policy. The ac-

tion will then go to trial without this defense.

Vacated and Trial Ordered.

CRAVEN, Circuit Judge, concurring:

With Chief Judge Haynsworth, I regret the refusal

of the court to reconsider en banc the merits of the Erie

question. I would prefer to reverse on Erie grounds as

stated in my dissent from the panel decision, 401 F.2d

734, but have no hesitation in joining in Judge Bryan’s

opinion.

WINTER, Circuit Judge, with whom HAYNSWORTH,

Chief Judge, joins, dissenting :

By a tour de force the majority achieves what may

be considered a just result on the particular facts of an

1* Liberty was initially a party defendant in a Separate count in

the Kentucky case, but not to the cause of action pleaded against

Schmutz. Recovery was sought on the allegation that Liberty

“either gratuitously or by virtue of the provisions of a policy of

insurance” with Plywood had undertaken, but failed, to maintain

a safety inspection of Plywood’s plant machinery. Liberty was

voluntarily dropped from the suit by Atkins under this count.

12b

appealing case. It does so by ignoring the shackles of

state law which attach to our diversity jurisdiction and

by embroidering on the basic fact that Liberty Mutual

Insurance Company was the insurer for both plaintiff

and defendant. However commendable the result in the

instant case, it is unsupported by any authority, and the

precedent which the opinion establishes has a disturbing

and far-reaching adverse effect on well-established prin-

ciples of insurance law. en

True, Liberty Mutual was workmen’s compensation

insurer for plaintiff’s employer and by paying workmen’s

compensation benefits to plaintiff succeeded to plaintiff’s

cause of action, if any, against the defendant, its other

insured. But this duality, standing alone, serves as no

basis to provide equitable relief. Czaplicki v. The Hoegh

Silvercloud, 351 U.S. 525 (1956), is no authority for

the result reached here. It held only that in the circum-

stances where the same insurer was subrogee of plaintiff

and liability insurer of the marine contractor whose fault

was alleged to have caused plaintiff’s injuries, plaintiff

could maintain his own action against the third-party tort-

feasor notwithstanding subrogation. In the instant case,

this is the very thing that plaintiff has done, and de-

fendant has never challenged plaintiff’s right to sue, if

suit were timely. Significantly, Czaplicki was remanded

for an evidentiary hearing as to whether the insurer by

action or inaction justified plaintiff’s delay in bringing

suit so as to excuse plaintiff from the defense of laches,

or whether the insurer suffered prejudice by the delay, a

significant factor in regard to laches but not in regard

to limitations. In the instant case, the majority is un-

able toe point to any action or nonaction on the part of

Liberty Mutual which would provide 2 shadow of a claim

that Liberty Mutua! waived or should be estopped from

pleading limitations.

Even if the “fiduciary” or “trustee” relationship stated

by Mr. Justice Frankfurter in concurring in Czaplicki,

13b

or Judge Wright, in his concurrence in Potomac Electric

Power Company v. Wyman, 348 F.2d 295, 299 (D.C. Cir.

1965), or Judge Learned Hand in United States Fidelity

& Guaranty Co. v. United States, 152 F.2d 46 (2 Cir.

. 1945), is invoked, the result reached by the majority

should not stem therefrom, absent a showing of something

more than the mere fact of the relationship. While Lib-

erty Mutual arguably has a fiduciary relationship to

3 plaintiff, it has-a fiduciary relationship to defendant also.

Undoubtedly it covenanted to defend defendant and it may

well be that the covenant to defend exists in the context

of a policy limitation of liability well below the substan-

tial damages that plaintiff may be expected to prove if lia-

‘bility is established. The record does not disclose the

limits of defendant’s policy, but Liberty Mutual’s obliga-

tion to defendant should not be lightly subordinated to

its obligation to plaintiff. The only satisfactory basis on

which Liberty Mutual’s obligation to plaintiff should be

held to prevail over its obligation to defendant is where,

unlike here, Liberty Mutual or defendant has done or

failed to do some act from which it can be concluded that

the obligation to plaintiff has acquired a superior equity.

No decided case of which we are aware, except that of the

majority’s decision today, would predicate a similar re-

sult on any other basis. The absence of estoppel or waiver

? The majority insists that today’s decision does no violence to the

policy considerations underlying Virginia’s statute of limitations

and cites in this connection Brunswick Land Corp. v. Perkinson,

153 Va. 603, 151 S. E. 188 (1980). Aside from some doubt con-

cerning the authoritativeness of Brunswick in light of the fact that

it was a trial court opinion adopted by the Virginia Supreme Court,

and in light of more recent pronouncements by that Court upon

the issue of exceptions to the statute of limitations—most notably

Jones Vv. Morris Plan Bank of Portsmouth, 170 Va. 88, 195 S. E. 525

(1938)—it must be noted that Brunswick did no more than to

acknowledge the generally recognized equitable estoppel exception

to the defense of limitations. Yet the majority specifically dis-

avows reliance upon the doctrine of equitable estoppel. In short,

in spite of the fact that this is a diversity case, the majority can

point to no colorable Virginia authority which suggests the result

that the majority reaches today.

14b

renders irrelevant the speculations of the majority as to

why plaintiff may have concluded not to assert the exist-

ence of the fiduciary relationship when he learned of it

in October, 1963; properly, knowledge of the mere exist-

ence of the relationship is without significance.’

The scope of the majority’s decision is uncertain; its

possible consequences are horrendous. Does the fact of a

fiduciary relationship mean that as well as precluding

the plea of limitations, defendant may not assert non-

liability on the merits? The majority suggests not, but

its ipse dixit that the defense of limitations may be dis-

tinguished is unsupported by authority or logic. No less

convincing nor better supported is the distinction drawn

between Liberty Mutual’s right to plead limitations with

regard to the portion of plaintiff’s ad damnum, or recov-

ery, which exceeds Schmutz’s policy limits and that less

than the policy limits. Liberty Mutual defends Schmutz

under a covenant to defend which provides no basis for

such fragmentation; Liberty Mutual is not a party de-

fendant and its liability is strictly secondary. Thus, initial

error is compounded by further error. Even with regard

to the portion of plaintiff’s alleged cause of action to which

limitations may not be pleaded, one may wonder is Lib-

erty Mutual precluded from contesting the extent of

plaintiff’s recovery even if it is allowed to contest liability?

These are not idle inquiries having relevance only to

tiuis particular case. In the field of maritime litigation it

2 Even if the reasons why Atkins has never alleged that Liberty

was bound to him by a fiduciary relationship and has never com-

plained of the dual aspect of Liberty’s position were relevant, we

note that the majority’s speculations do not supply a satisfactory

explanation. The majority theorizes that the issue was never raised

by Atkins because he feared that to do so would antagonize Liberty

and thereby place in jeopardy the medical attention which Atkins

was receiving from Liberty. Yet the majority says that this

attention ceased in March, 1967. The majority suggests no reason

why the duality issue was not raised after this date, particularly if

Liberty was attempting to bring unconscionable pressure to bear

upon Atkins.

15b

is not unusual for the same insurer to provide the work-

men’s compensation coverage for injured longshoremen

and the liability coverage for their employer who is im-

pleaded when a longshoreman sues the ship. Ballwanz v.

Jarka Corporation of Baltimore, 382 F.2d 433 (4 Cir.

1967), is one example. With growing liberality in the

obtention of verdicts over on the theory of breach of im-

plied warranty of good workmanship, the realities of such

litigation are that the insurer is in a position antago-

nistic to itself, as Ballwanz demonstrated. As every ex-

perienced admiralty trial judge has observed, the steve-

dore’s insurance carrier’s first ground of defense is the

non-liability of the ship. Indeed, where the seaman’s

claim is that the unseaworthiness of the ship was the re-

sult of the negligent act of the stevedore’s fellow-em-

ployee, the identity of interest is inevitable. In_ these

and other cases, the active cooperation between counsei

for the stevedore and the ship, heretofore not thought im-

proper, legally or ethically, in establishing that defense

is manifest. Until today no one dared suggest that Lib-

erty Mutual on behalf of Jarka, or any carrier on behalf

of its stevedore-insured, could not defend vigorously and

successfully with regard to the entire claim. Their right

to do so in the future is now in question.

In the field of motor vehicle tort liability, it is not un-

usual that defendant’s insurer has also provided collision

coverage to the plaintiff, or even that the same insurer

insures both parties for public liability in a suit in which

a counterclaim or cross-claim is asserted. How an insurer

in such circumstances may avoid the dilemma the ma-

jority’s decision poses, or how it should conduct itself

with respect to the rights of its various insureds when

it finds itself in this dilemma, is likewise highly proble-

matical in the light of today’s decision. Much more is at

stake than the individual concern of the insurer. No

feasible basis to provide reasonable protection to the in-

surer is apparent; the only assumable alternative is

16 b

greatly increased costs of providing insurance coverage

with the resulting deleterious effect of discouraging the

socially desirable result of ready and certain response to

judgments for liability which insurance provides.

To paraphrase Mr. Justice Frankfurter in Czaplicki,

the disposition of a case is of prime importance to the

parties, but how a result is reached concerns the rational

development of the law. We deem today’s decision ir-

rational, and respectfully dissent.

HAYNSWORTH, Chief Judge, dissenting:

I associate myself without reservation with Judge

Winter’s dissenting opinion. It is not enough, as Judge

Winter demonstrates, to point to the fact that there was

a fiduciary relationship between Liberty Mutual and

Atkins. To warrant judicial limitation upon Liberty

Mutual’s performance of its fiduciary obligations to

Schmutz and its defense of its own financial interest as

the liability insurer of Schmutz, it is essential that there

appear some neglect of Liberty’s fiduciary duty to Atkins

or conduct which would create the basis of an estoppel.

Had Liberty lulled Atkins into delay, beyond Kentucky’s

one-year statute of limitations, in filing his action in the

Western District of Kentucky, there would be a basis for

the remedy the majority evokes, but no such thing oc-

curred. Liberty fully discharged its fiduciary obligations

to Atkins. With respect to them, it has done all of those

things it ought to have done; it has done none of those

things it ought not to have done. To impose disabilities

upon it under those circumstances, seems to me to be

without foundation either in law or morality.

I think it most regrettable, however, that the resub-

mission of the case to the en banc court has resulted in

17b

such a radical change in the dialogue and the production

of a majority opinion with a high potential for untoward

consequences upon liability insurers and their businesses

and upon the effectiveness and cost of their contracts.

Liability insurance has become a necessity for every busi-

ness, which is not so large as to be able to afford the risk

of self-insurance, and to every responsible individual.

Limitations upon the effectievness of such protection and

unreasonable inflation of its cost, for in the end it is

the assureds, not the insurance companies, which must

bear the financial burden, are matters of no small public

concern.

The earlier dialogue in the original panel was more

rational and more useful. See Atkins v. Schmutz Manu-

facturing Company, 4 Cir., 401 F.2d 781. It is quite pos-

sible, I think, to reach the result to which the majority

comes on the ground that the question of the tolling of

Virginia’s statute of limitations is to be resclved as a

matter of federal law. The federal courts provide a single

unified system for the administration of justice, see In-

ternatio-Rotterdam, Inc. v. Thomsen, 4 Cir., 218 F.2d

514, and, aside from matters of convenience and prac-

ticality, its subdivisions need not conform to state boun-

daries. Surely the question of the transferability of the

first action from the Western District of Kentucky to the

Western District of Virginia, more than two years after

the injury, would have been determinable solely as a

question of federal procedure. That provides a logical

analogy to support the conclusion that the effect of the

pendency of the first action in the Western District of

Kentucky should be resolved as a matter of federal law

when the filing of the first action met the fundamental

purpose of Virginia’s two-year statute of limitations fore-

closing stale claims of longer duration and the second

action was filed in the Western District of Virginia dur-

ing the pendency of the first.

18b

Guaranty Trust Company v. York, 326 U.S. 99, and

Ragan v. Merchants Transfer & Warehouse Co., 387 U.S.

530, are major obstacles in the way of that conclusion,

of course, but if a majority of this court is not now pre-

pared to join Judge Craven in the position he earlier took

in dissent from the panel’s decision,’ expansion of that

dialogue would at least have afforded the Supreme Court

an opportunity for further consideration of the continu-

ing vitality of Guaranty Trust and Ragan after Byrd v.

Blue Ridge Electric Cooperative, 356 U.S. 525, and Hanna

v. Plumer, 380 U.S. 460.. Abandonment of that dialogue

destroys an opportunity to achieve elucidation and a

healthy evolution of the law in this area and substitutes

a declaration, in a wholly unrelated area of the law, of

a legal principle which has as its apparent * support only

the wish to achieve a particular result in a particular

ease and which carries with it much potential mischief

in litigation yet to come.

1 See 401 F.2d 734, et seq.

2I do not intimate that greater support for their conclusion

is not apparent to my brothers of the majority than to me.

ve

o

le

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11,566

DONALD L. ATKINS, Appellant,

Versus

SCHMUTZ MANUFACTURING COMPANY, INCORPORATED,

Appellee.

Appeal from the United States District Court for the

Western District of Virginia, at Danville.

Ted Dalton, Chief Judge.

(Argued Jan. 12, 1968. Decided Sept. 10, 1968.)

Before WINTER and CRAVEN, Circuit Judges, and

KELLAM, District Judge.

James A. Eichner (George E. Allen, Jr., and Allen, Allen,

Allen & Allen on brief) for Appellant, and Frank O.

Meade (Meade, Tate and Meade on brief) for Appellee.

WINTER, Circuit Judge:

Plaintiff appeals from a summary judgment entered

for defendant on the ground that plaintiff’s action was

barred by the Virginia statute of limitations. In the

limited role that we occupy in the exercise of diversity

Det ee A cae

2¢

jurisdiction, we are constrained to agree, and we affirm

the judgment.

Plaintiff was injured on June 22, 1961, at South Boston,

Virginia, when he became entangled in a machine manu-

factured and sold by the defendant. His injury neces-

sitated amputation of both of his feet and he spent a long

period of time in various hospitals and rehabilitation

centers. Because he believed that the defendant was neg-

ligent in the design and construction of the machine which

so severely and permanently injured him, he concluded

to pursue his rights against the defendant.

The defendant’s only place of business was and is in

Louisville, Kentucky. Virginia had no “long-arm statute”

until 1964.1 Thus, plaintiff, at the time he initially sought

to institute suit, reasonably concluded that the defendant

could not be sued in Virginia. Suit was brought in the

United States District Court for the Western District of

Kentucky on June 19, 1963. The suit in Kentucky was

brought more than one year, but three days less than two

years, after the date of injury. The Virginia statute ap-

plicable to the plaintiff’s alleged cause of action prescribes

two years as the period of limitations, 2 Code of Virginia

(1957 Repl. Vol.) § 8-24; the comparable period under

Kentucky law is one year, K.R.S. § 413-140.

At the time plaintiff brought suit in Kentucky, Ken-

tucky decisions were understood in the federal courts to

hold that in a suit filed in Kentucky, based upon a cause

of action arising in another state, “the statute of limita-

tions of another state, if longer, is applicable.” Collins

v. Clayton & Lambert Manufacturing Co., 299 F.2d 362,

364 (6 Cir. 1962); Koeppe v. Great Atlantic & Pacific

Tea Co., 250 F.2d 270 (6 Cir. 1957); Burton v. Miller,

185 F.2d 817 (6 Cir. 1950). However, while plaintiff’s

suit was pending in the Kentucky district court, the

1 Such a statute is now in effect. 2 Code of Virginia (1966 Cum.

Supp.) § 8-81.2.

a

3¢

Kentucky Court of Appeals held that in such cases the

Kentucky one-year statute of limitations would prevail

over a longer period of another state. Seat v. Eastern

Greyhound Lines, Inc., —— Ky. ——; 389 S.W.2d 908

(1965). And it also decided that this rule should be ap-

plied retrospectively. Wethington v. Griggs, —— Ky.

——, 392 S.W.2d 56 (1965).

Thereafter, defendant filed a motion for summary judg-

ment on the ground that suit was barred in Kentucky.

The motion was granted by the district court and affirmed

on appeal. Atkins v. Schmutz Mfg. Co., 372 F.2d 762 (6

Cir. 1967). Certiorari to the Supreme Court has been

denied. Atkins v. Schmutz Manufacturing Co., Inc., 389

U.S. 829 (1967).

The instant case was filed in the United States District

Court for the Western District of Virginia, on March 18,

1967, almost six years after the injury occurred, but

before the mandate of the United States Court of Appeals

for the Sixth Circuit had issued. By motion for summary

judgment, defendant asserted that the Virginia two-year

statute of limitations barred plaintiff's suit. Finding that

plaintiff could not fit himself into any of the instances in

which Virginia suspends the running of the statute, the

district judge granted the motion. We agree that plain-

tiff may not maintain the action.

Virginia suspends the running of the statute for vary-

ing periods when the plaintiff is under the disability of

infancy or insanity, when the plaintiff has died, when

there is delayed qualification of plaintiff’s personal repre-

sentative and when suit is prevented by the defendant.

2 Code of Virginia (1957 Repl. Vol.) §§ 8-30; 8-31; 8-32;

8-33. None of these instances of Suspension is applicable.

Section 8-34 is the only remaining suspension statute, and

its text is set forth in the margin.’

*Ҥ 8-34. Further time given when suit abates or is defeated on

ground not affecting the right to recover.—If an action or suit

4e

Section 8-84 (known as § 5826 in the Code of 1919)

was judicially construed in Jones v. Morris Plan Bank of

Portsmouth, 170 Va. 88, 195 S. E. 525 (1938). There,

the plaintiff to avoid the bar of limitations argued that

there should be excluded from the limitation period the

fourteen months during which there was pending in the

Circuit Court of the City of Suffolk a suit by him against

the same defendants for the same alleged cause of action

for malicious abuse of civil process which had been finally

dismissed for lack of venue properly pleaded. In reject-

ing the contention, the Supreme Court of Appeals said

this about the statute:

“An analysis of our statute (section 5826) shows

that in only four instances is there a suspension of

the statute of limitations by reason of the pendency

of a former suit brought in due time. These are:

(1) Where such suit abates ‘by the return of no in-

habitant,’ that is, where the writ is not served for

that reason; (2) where the suit abates by reason of

the ‘death or marriage’ of a party; (3) where, after

the plaintiff has obtained a judgment or decree in his

favor, it is ‘arrested or reversed upon a ground

which does not preclude a new action or suit for the

same cause’; and (4) where ‘there be occasion to

bring a new action or suit by reason of the loss or

destruction of any of the papers or records in a

former suit or action which was in due time.’

commenced within due time in the name of or against one or more

plaintiffs or defendants abate as to one of them by the return of no

inhabitant or by his or her death or marriage, or if in an action

or suit commenced within due time judgment or decree for the

plaintiff shall be arrested or reversed upon a ground which does

not preclude a new action or suit for the same cause, or if there be

occasion to bring a new action or suit by reason of the loss or

destruction of any of the papers or records in a former suit or

action which was in due time; in every such case, notwithstanding

the expiration of the time within which a new action or suit must

otherwise have been brought, the same may be brought within one

year after such abatement, or such arrest, or reversal of judg-

ment or decree, or such loss or destruction, but not after.”

5e

None of these provisions applies to the plaintiff’s

case. There is no saving provision where a suit, such

as that of the plaintiff here, was brought in the wrong

forum or was dismissed otherwise than upon the

merits.” 195 S.E. 526-527.

See also Manuel v. Norfolk & Western Ry. Co., 99 Va.

188, 37 S.E. 957 (1901).

As significant as the holding and what was said was

the approach of the Court in that case. The Court treated

as absolute the bar contained in § 8-24 unless and until

plaintiff could bring himself specifically into one of the

instances of suspension of the bar elsewhere provided in

the statute. In that case, the plaintiff could not, any more

than can the plaintiff in the instant case, and hence his

suit was held barred. In this connection, the Court in the

Morris Plan Bank case deemed significant, as do we, that

when a suit is for wrongful death (as distinguished from

personal injuries), Virginia law suspends the period of

limitations during the pendency of any action subse-

quently abated or dismissed without a determination of

its merits. 2 Code of Virginia (1957 Repl. Vol.) § 8-634.

The presence of this provision in suits for wrongful death

makes its absence in suits for personal injuries strong

evidence that Virginia would not permit suspension of

the limitation period in the instant case.?

Citing Burnett v. New York Cent. R. Co., 380 U.S. 424

(1965), plaintiff argues that pendency of the action in

Kentucky tolled the Virginia statute. Burnett held that a

”

’ The parties call to our attention House Bill 744, introduced into

the 1966 session of the Virginia General Assembly, which would

have tolled the statute for action timely instituted “within or with-

out the State”, but “dismissed otherwise than upon the merits of

the cause of action.” The bill passed the House, but died in the

Senate Committee. Because of the paucity of legislative materials

we cannot determine if the bill was permitted to die because it

was thought unnecessary, or because it was thought undesirable.

If for no other reason, the history of the bill is thus of minimal aid.

*The Kentucky suit was filed three days before the expiration of

two years from the date of the accident. The Virginia suit was

6c

timely state action under the Federal Employers’ Liability

Act dismissed for lack of proper venue tolled the Act’s

three-year period limitations until the state court order

dismissing the action became final by expiration of the

- time for appeal or the entry of final judgment on ap-

peal; hence, a federal suit, filed eight days after dis-

missal of the state action, was not barred. Although the

Burnett case concerned limitations under the Act and

presented a question different from that presented here,

plaintiff stresses its broad statements that statutes of

limitations are intended to promote justice by preventing

the revival of claims which have been allowed to slumber

until evidence has been lost, and that the policy of re-

pose is frequently outweighed where the interests of

justice require vindication of a plaintiff’s rights. The

Burnett case did contain such language and we are in

full accord with it. Indeed, we are in full accord with

the observations of the Sixth Circuit that the equities

of this case “strongly favor appellant” (372 F.2d 764)

and of the district judge below that the argument that

plaintiff should prevail on the point in issue “is appealing

to this court.” In the instant case, the pendency of the

Kentucky litigation would certainly satisfy any legislative

purpose to guard against slumbering claims and would

have provided ample opportunity for discovery and preser-

vation of relevant evidence.

But the short answer is that we do not have before us

a federal statute of limitations on which we are free to

apply the holding or the rationale of the Burnett decision.

We have a state statute to which we must apply state de-

cisional law to the end that “the outcome of the litigation

in the federal court should be substantially the same, so

far as legal rules determine the outcome of a litigation, as

it would be if tried in a State court.” Guaranty Trust Co.

v. York, 326 U. S. 99, 109 (1945); Erie R. Co. v. Tomp-

filed within three days after the issuance of the mandate by the

United States Court of Appeals for the Sixth Circuit.

Te

kins, 304 U. S. 64 (1938).> We cannot read the Virginia

statutes or the Morris Plan Bank case as permitting

plaintiff an opportunity to show if his claim of negligence

on the part of defendent is meritorious.

We find no merit in plaintiff’s argument that we are

free to reexamine § 8-34 under federal law because this

case presents a federal question—whether plaintiff has

been denied due process of law because of the deprivation

of a trial on the merits. If plaintiff has been denied due

process of law, that deprivation occurred when the Ken-

tucky district court under the Erie doctrine applied Ken-

tucky’s retroactive state construction of state law. Al-

though not explicitly, that issue was decided implicitly

against plaintiff in his appeal to the Sixth Circuit. We

would be unwarranted in entertaining a collateral attack

on the judgment of the Sixth Circuit.

AFFIRMED.

CRAVEN, Circuit Judge, dissenting:

I regret that I am unable to persuade the court that we

may faithfully follow the Erie-Guaranty-Byrd-Hanna !

doctrine without necessarily denying this plaintiff a trial

on the merits. If we were deciding this case after Erie

and Guaranty but before Byrd and Hanna, I would agree,

albeit reluctantly, that the result is compelled. It would

be difficult, indeed, to distinguish Guaranty, involving as

it did a state statute of limitations, without ‘the light

5 It should be noted that the Guaranty Trust case decided that the

now familiar Erie rule was applicable to state statutes of limitations

in diversity cases.

1 Erie v. Tompkins, 304 U.S. 64 (1938) ; Guaranty Trust Co. of

N.Y. v. York, 326 U.S. 99 (1945); Byrd v. Blue Ridge Elec. Co-

operative, 356 U.S. 525 (1958); Hanna v. Plumer, 380 U.S. 460

(1965). Hereafter, these state-law-in-the-federal-courts cases will

be referred to simply as Erie, except as indicated.

8c

shed by Byrd and Hanna. The ‘simplistic test of Erie

(substance-procedure) and the mechanistic test of Guar-

anty (outcome) have undoubtedly survived Byrd and

Hanna, but have been so altered that Mr. Justice Harlan,

concurring in Hanna, concludes that the Supreme Court

has “not succeeded in articulating a workable doctrine

governing choice of law in diversity actions.” More spe-

cifically with respect to the problem before us—the appli-

eation of a state statute of limitatioas—Professor Charles

Alan Wright concluded, even before Hanna, that under

the Constitution (1) only the state can say what local

tort duties are to be imposed within the state; (2) that

only the federal government can say how the federal

courts are to administer their proceedings; and (3) that

it is a difficult and doubtful question whether state or

federal law should control how promptly a suit must be

brought in a federal court to vindicate a state-created

right.2 What seemed so clear after Guaranty *—that a

federal court must mechanistically apply a state stutute of

limitations—is now, as Professor Wright suggests, in the

shadow zone. If there is room for doubt that the federal

court must apply the Virginia state statute of limitations,

it would seem to me an a fortiori proposition that there

ought to be considerable doubt about the very narrow is-

sue before us: whether, assuming the application of the

two-year Virginia statute of limitations, it may have been

tolled by the commencement of the Kentucky diversity ac-

tion. Finally, if I am wrong on both counts, and it be

assumed that we must not only apply the two-year Vir-

ginia statute but also apply the law of Virginia with

2 Wright, Federal Courts § 56 at 198. Professor Wright assumes

that Erie rests on its avowed constitutional basis despite much

commentary to the contrary. See id. § 56.

’ The mechanical test of Guaranty (from which the Court sharply

retreated in Hanna) may be partially explained by the author’s

aversion to diversity jurisdiction. See Mr. Justice Frankfurter’s

dissent in Burford v. Sun Oil Co., 319 U.S. 815 (1948), where

he said, “I speak as one who has long favored the entire abolition

of diversity jurisdiction.” Id. at 387.

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respect to the tolling of it, I am strongly of the opinion

that we need not assume the rule of ventriloquist’s

dummy * but are, instead, free to function as Virginia

state judges would when faced with a fact situation not

previously considered by Virginia’s highest court.

Although I think the question is not free of doubt, I

am willing to assume for purposes of this decision that

Guaranty Trust forecloses consideration by an inferior

federal court of the possibility that a statute of limitations

not bound up with the creation of the cause of action

is “procedural” rather than “substantive” and thus clear-

ly outside the Erie rule as originally promulgated in Erie

itself.®

To go so far, and no further, will, in my opinion, serve we

federalism better than will a mechanistic resort to Vir-

ginia tolling statutes and imprecise Virginia state court

decisions interpreting them. “The purpose of the Erie

doctrine, even as extended by York and Ragan, was never

to bottle up federal courts with ‘outcome-determinative’

and ‘integral-relations’ stoppers—when there are affirma-

tive countervailing [federal] considerations ... .” Hanna

v. Plumer, 380 U.S. 460, 473 (1965) (brackets in origi-

nal).

It is important to remember how this particular plain-

tiff became enmeshed in this particular procedural booby

trap. He is a Virginia resident who reasonably thought

he could not bring his suit in Virginia because it lacked

a long-arm statute and was thus driven out of his own

* Fidelity Union Trust Co. v. Field, 311 U.S. 169 (1940), is the

high water mark of ritualistic application of state law in a federal

court. Before the water began to noticeably recede, Judge Jerome

Frank expressed his dismay in this colorful phrase. Richardson v.

CIR, 126 F.2d 562,-567 (2d Cir. 1942). Annot., 140 ALR 705

(19—).

5It has often been suggested that Congress possess the power to

enact a general statute of limitations governing diversity cases.

E.g., Friendly, In Praise of Erie—And of the New England Com-

mon Law, 89 N.Y.U.L. Rev. 388, 402 n. 90 (1964).

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state to litigate. Even so, he brought it within the two-

year period allowed by his state of residence and the place

of the tort, ie, Virginia. He reasonably relied on Ken-

tucky decisions as interpreted in United States courts

that Kentucky would permit the maintenance of the

suit if brought within the period of limitation of the place

of the tort. Pendente lite the decisional law of Kentucky

is changed retrospectively so as to make applicable to his

case the shorter one-year statute of limitation of Ken-

tucky.°

The majority decision rests heavily upon the premise

that the “outcome” must be the same in the federal court

as it would have been in the state court, citing Guaranty.

For reasons developed later. I am not sure what the out-

come would have been in a Virginia court. But presently

assuming that Atkins would have been barred in the state

court, I think it fairly demonstrable that the opposite re-

sult—trial on the merits—could have been obtained in a

federal court unhampered by either Erie or Guaranty.

If this is so, then the problem becomes a purely procedural

one involving the method of operation of the federal courts.

In at least two ways Atkins might have avoided the Erie

problem.

‘When the Kentucky Supreme Court switched its inter-

pretation of the period of limitation, Atkins could then

have sought a transfer of the proceedings to Virginia un-

der $1406(a) of the Judicial Code. Section 1406(a)

provides:

“The district court of a district in which is filed

a case laying venue in the wrong division or district

shall dismiss, or if it be in the interest of justice,

6 The issue on this appeal is completely different from the issue

before the Sixth Circuit in the original Schmutz action. The

original action was controlled entirely by Klazon Co. v. Stentor

Mfg. Co., 313 U.S. 487 (1941), which holds foursquare that a fed-

eral court in a diversity action must apply the forum state’s conflict

of laws rule.

lle

transfer such case to any district or division in which

it could have been brought.”

A district is “wrong” within the meaning of § 1406

whenever there exists an obstacle to an expeditious and

orderly adjudication on the merits.’ Thus where the ob-

stacles to reaching the merits in the original district were

both improper venue and a lack of personal jurisdiction

over the defendant, the Supreme Court of the United

States has approved a transfer of the proceedings to an-

other district, rather than permit a dismissai to result in

having the statute of limitations bar a new proceeding in

another district. Goldlawr v. Heiman, 369 U.S. 463

(1962).

But obstacles other thax. improper venue or lack of per-

sonal jurisdiction have been held to warrant a transfer

under § 1406. Thus a libellant who filed a libel in the

Southern District of New York, thinking he could find a

vessel there, was permitted to transfer the proceeding to

the Maryland district where the vessel was, thereby avoid-

ing a dismissal in New York and the bar of the statute of

limitations that would have confronted a new proceeding

in Maryland. Internatio-Rotterdam, Inc. v. Thomsen, 218

F.2d 514 (4th Cir. 1955). In ordering the Maryland

district court to accept the transfer from the New York

district, the late Judge John Parker of this court added:

“Certainly such transfer is in accord with the mod-

ern standards of procedure, the purpose of which is

to get away from time-consuming and justice-defeat-

ing technicalities and secure an adjudication of the

rights of the parties by as direct and expeditious a

route as possible. The courts of the United States

*“The statute does not refer to ‘wrong’ venue, but rather to

venue laid in a ‘wrong division or district.’ We conclude that a

district is ‘wrong’ within the meaning of § 1406 whenever there

exists an ‘obstacle [to] . . . an expeditious and orderly adjudication’

on the merits.” Dublin v. United States, 380 F.2d 818, 815 (5th

Cir. 1967). Accord, Mayo Clinic v. Kaiser, 888 F.2d 658 (8th Cir.

1967).

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comprise one great system for the administration of

justice... [There is no reason why the proceedings

should not have been transferred instead of being

dismissed, with the necessity of starting all over

again,] where, as here, the new proceeding would be

barred by the statute of limivations.” Internatio-

Rotterdam, Inc. v. Thomsen, 218 F.2d 514, 517 (4th

Cir. 1955).

Had the Atkins’ Kentucky proceeding been transferred to

the Western District of Virginia while the present action

was awaiting trial there, the two proceedings could have

been consolidated and tried there as one case. See Abbott

Laboratories v. Gardner, 387 U.S. 186 at 154-155 (1967).

The obstacle to an orderly and expeditious adjudica-

tion on the merits of Atkins’ claim in Kentucky was the

novel and unanticipated application of that state’s one-

vear statute of limitation. When Atkins commenced the

Kentucky action the existing decisions caused him justi-

fiably to believe he could rely on the longer Virginia pro-

vision. What made the Kentucky district “wrong” as a

place to reach the merits of Atkins’ claim was the unex-

pected obstacle created by the changed rulings of the

Kentucky state courts after his action was commenced.

After the Supreme Court of the United States denied

certiorari to the Court of Appeals for the Sixth Circuit,

Atkins v. Schmutz Mfg. Co., Inc., 389 U.S. 829 (1967),

it was finally settled that the one-year Kentucky sta‘ute

of limitation was an insurmountable obstacle to reaching

the merits of Atkins’ claim in the Kentucky district.’

Atkins was then in a “wrong” district within the mean-

ing of § 1406 and a transfer of the action to the Western

8 For a discussion of Kentucky law as it was understood in the

federal courts when Atkins commenced his action in Kentucky, see

poeag v. Schmutz Mfg. Co., Inc., 872 F.2d 762, 763 (6th Cir.

1967).

‘9 There is no suggestion that the judgment of the Kentucky dis-

trict court adjudicates the merits of Atkins’ complaint.

13 ¢

District of Virginia would have preserved the tolling ef-

fect on the Virginia statute that began with the com-

-Mencement of the federal court action in Kentucky. By

commencing this action within two years of his injury,

Atkins had shown that diligence required by the Virginia

statute and the delays that resulted thereafter came out

of moves by the defendant to avoid trial of Atkins’ claim

on the merits.

That Atkins’ situation at this point came within the

protection of § 1406 seems transparently clear from what

the Supreme Court of the United (.ates has said of that

section :

“The problem which gave rise to the enactment of

the section was that of avoiding the injustice which

had often resulted to plaintiffs from dismissal of

their actions merely because they had made an er-

roneous guess with regard to the existence of some

elusive fact of the kind upon which venue provisions

often turn. Indeed, this case it itself a typical ex-

ample of the problem sought to be avoided, for dis-

missal here would have resulted in plaintiff’s losing a

substantial part of its cause of action under the stat-

ute of limitations merely because it made a mistake

in thinking that the respondent corporations could

be ‘found’ or that they ‘transact . . . business’ in the

Eastern District of Pennsylvania. The language and

history of § 1406(a), both as originally enacted and

as amended in 1949, shows a congressional purpose

to provide as effective a remedy as possible to avoid

precisely this sort of injustice.

“The language of § 1406(a) is amply broad enough

to authorize the transfer of cases, however wrong

the plaintiff may have been in filing his case as to

venue, whether the court in which it was filed had

personal jurisdiction over the defendant or not. The

section is thus in accord with the general purpose

which has prompted many of the procedural changes

of the past few years—that of removing whatever

obstacles may impede an expeditious and orderly ad-

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‘udication of cases and controversies on their merits.

When a lawsuit is filed, that filing shows a desire on

the part of the plaintiff to begin his case and thereby

toll whatever statutes would otherwise apply. The

filing itself shows the proper diligence on the part of

the plaintiff which such statutes of limitation were

intended to insure. If by reason of the uncertainties

of proper venue a mistake is made, Congress, by the

enactment of § 1406(a), recognized that the ‘inter-

est of justice’ may require that the complaint not be

dismissed but rather that it be transferred in order

that the plaintiff not be penalized by what the late

Judge Parker aptly characterized as ‘time-consuming

and justice-defeating technicalities.’ It would at least

partially frustrate this enlightened congressional ob-

jective to import ambiguities inte § 1406 (a) which

do not exist in the language Congress used to achieve

the procedural reform it desired.” Goldlawr v. Hei-

man, 369 U.S. 468, 466-467 (1962). (Emphasis

added. )

The Goldlawr language just quoted also strongly sug-

gests that the commencement of the Kentucky proceedings

tolled “whatever statutes of limitation would otherwise

apply.” In Atkins’ case this could only refer to the two-

year Virginia statute of limitations since the one-year.

Kentucky statute had already run when the Kentucky

proceeding commenced. Indeed it was the application of

the Kentucky statute which deprived Atkins of a remedy

in that state and brought his claim within the protective

policy oi § 1406. It has been held, where lack of personal

jurisdiction in the transferor district provided the basis

for a venue transfer under § 1406, that the statute of

limitation of the transferor state transferred with the

action. Mayo Clinic v. Kaiser, 388 F.2d 653 (8th Cir.

1967). Whatever may be the applicable rule where the

obstacle to reaching the merits is either defective venue

or personal jurisdiction,” it would both defeat the general

10In Van Dusen Vv. Barrack, 876 U.S. 612 ( 1964), it was held that

the law of the transferor district followed a case transferred on

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protective policy of § 1406 and the particular justification

for a venue transfer if the statute of limitations of Ken-

tucky were to follow a transfer of Atkins’ action to Vir-

ginia.

Thus, as I see the matter, the commencement of Atkins’

action in Kentucky tolled the running of the Virgini

statute of limitations. When it became clear he was

barred from a remedy in Kentucky, he could have trans-

ferred the action te the Virginia district court under

§ 1406 and have proceeded to the merit; of his claims

without having the Virginia statute of limitations bar his

claim. Moreover, the Virginia district by this time was

one in which the case “could hive been brought” within

the meaning of § 1406 since the Virginia long-arm statute

motion of the defendant under § 1404(a). The Court reserved the

question whether a §1404(a) transfer sought by the plaintiff

would be governed by the same rule, id., at 639-640, and there seem

to be good reasons for not taking along the law of the transferor

district where the plaintiff seeks a transfer from a district “wrong”

under § 1406.

In Les Schwimley Motors, Inc. v. Chrysler Motors Corp., 270 F.

Supp. 418, Judge Halbert expressed the viewpoint that transferring

a diversity case to a district in another state, on motion of the

plaintiff, does not necessarily carry with it the statute of limita-

tions of the state in which the suit was commenced, citing the pro-

posal of the American Law Institute in its Study of the Division of

Jurisdiction. Between State and Federal Courts. Judge Halbert finds

himself in accord with the viewpoint of the late Professor Brainerd

Currie as indicated in the following quotation from the opinion of

the district court:

“Viewing the federal courts as independent forums for the

invocation of legal rights created by state law, the essence of

the decision in Erie R. Co. v. Tompkins, supra, militates against

the unthinking adoption of one forum’s statute of limitation:

in a case which no longer has any substantial connection with

that forum. If such a course does not violate the due process

clause (See: Home Insurance Co. v. Dick, 281 U.S. 397, 50 S.Ct.

338, 74 L.Ed. 926) it certainly violates the sense of ‘juster

justice’ that hopefully prevails in the federal system (See:

Hart and Wechsler, The Federal Courts and the Federal System

(1953) at pp. 652, 892-900; Hart, The Relations between State

and Federal Law, 54 Column.L.Rev. 489).” Id. at 420-421.

16¢

had been enacted in 1964, long before the Supreme Court

of the United States denied certiorari to the Court of

Appeals for the Sixth Circuit.

I concede, of course, that the path to a trial on the

merits envisioned above is not a broad, inviting one. I

suggest only that it may have been negotiable. But

there is another and easier way that Atkins might have

obtained a trial on the merits.

Despite the lack of a Virginia long-arm statute at the

time, Atk'ns could have originally filed suit in the dis-

trict court in Virginia. When the defendant predictably

moved to dismiss for lack of jurisdiction, Atkins could

have so... ‘ht a transfer of venue under 28 U.S.C. § 1406

and would have brought himself squarely within Gold-

lawr v. Heiman, supra. Pursuant to Goldlawr, presum-

ably the district judge in Virginia would have transferred

_the case to the District Court of Kentucky and under the

doctrine of Mayo Clinic v. Kaiser, 383 F.2d 653 (8th Cir.

1967), the Virginia statute of limitations would have

“followed” the case to the District Court of Kentucky and

the shorter Kentucky statute of limitations would have

had no effect."

Thus it seems that there are at least two ways by which

specialists in federal jurisdiction, if there are any outside

of the faculties of law schools, might have been able to

obtain for the plaintiff a trial on the merits in a federal

court. If this be so, the outcome-determinative test of

Guaranty is not invoked, or if invoked, is simply avoid-

ed by the method of operation of the federal courts which

is surely not a matter of state regulation. Summarizing,

it is apparent that the Erie decision alone does not require

the court’s result. “In view of Brandeis’ careful lin,ita-

tion of his statement of unconstitutionality to ‘substan-

tive rules of common law,’ it is strange that Hrie has

11 See note 10 supra; accord, Headrick v. Atchison Topeka and

Santa Fe Ry. Co., 182 F.2d 305 (10th Cir. 1950).

17¢

sometimes been claimed to have handcuffed federal pro- |

cedure to that of the state where the court sits—although

in this instance most critics have had the grace to admit

that their fears spring not from Erie itself but from some

overly enthusiastic expressions in Guaranty Trust Co.

v. York ....”** Whether the conduct of the plaintiff in

instituting suit in Kentucky amounts to a tolling of the

statute certainly relates as much to “procedure” as it

does to “substance.” For conflicts of law purposes, ques-

tions of application of statutes of limitations have tradi-

tionally been classified with procedure. The conflicts of

laws rule in most jurisdictions is that lex fori controls.

Michigan Insurance Bank v. Eldred, 180 U.S. 693 (1889) ;

McElnoyle v. Cohen, 38 U.S. 311 (1839) ; Goodrich, Con-

flict of Laws § 85 (4th ed. 1964). In Guaranty Trust,

supra, the Supreme Court declined to categorize statutes

of limitations as either “substantive” or “procedural” for

Erie purposes.

Similarly, the “outcome-determinative test” of Guar-

anty is not violated for the result of triai on the merits

would have occurred in the state court of Virginia had

it been possible at the time for Virginia process to run

outside the state.* “Forum shopping” within the State

of Virginia is not involved for presumably the plaintiff

would have been well content in a Virginia state court if

its process could have reached to Kentucky."* Finally, since

Byrd, it is not at all clear that the substantive right in

tort is in this case “bound up” either with the statute of

limitations or with the question of the tolling of that

statute, for this statute of limitations is simply a gen-

eral one and not a condition precedent to the exercise of

12H, Friendly, Benchmarks 175 (1967). (Footnotes omitted.)

18 Whether “outcome” would have been different if the present

act.on had been begun in the Virginia State court is discussed

below.

14 Whether forum shopping was involved in starting the present

action in a federal court in Virginia is also discussed below.

ETL

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a special right created by statute, e.g., wrongful death.

The statute in this case is not prescriptive and the run-

ning of the period does not destroy the underlying right.

See Comment, Developments—Statute of Limitations, 63

Harv. L. Rev. 1177, 1186 (1950); Page v. Cameron Iron

Works, 155 F.Supp. 288, 286 (S.D. Texas 1957).

Mr. Justice Harlan, concurring in Hanna, gave us good

advice when he said, “To my mind the proper line of ap-

proach in determining whether to apply a state or fed-

eral rule, whether ‘substantive’ or ‘procedural’ is to stay

close to basic principles by inquiring if the choice of rule

would substantially affect those primary decisions respect-

ing human conduct which our constitutional system leaves

for state regulation.” The primary decision here was

whether to sue the defendant. That decision remains gov-

erned by state regulation creating a tort action against

the defendant. Application of Mr. Justice Harlan’s test

plainly leaves us free to permit this plaintiff a trial on

the merits. Doing so will divert no stream of cases into

the federal courts in Virginia or elsewhere. Doing so does

not dishonor the Virginia statute of limitations for the

reason that the action was commenced in Kentucky within

the Virginia two-year period. To now permit this plain-

tiff a trial on the merits is not in derogation of Virginia

policy but is plainly in accord with it. The enactznent of

the Virginia long-arm statute is a plain enunciation of a

policy that its citizens be accorded the right of a trial on

the merits against out-of-state tortfeasors.

The court recognizes that the state policy embodied in

§ 8-24 (the two-year statute of limitations) was effectu-

ated by the filing of the Kentucky diversity action. The

docket entries (reproduced in appellant’s Appendix) in

the Kentucky district court indicate that extensive dis-

covery was taken. For some months the plaintiff was a

patient in an institution maintained by the defendant’s

insiirer for hospitalization and treatment. Thus it is clear

that the policy embodied in § 8-24, as interpreted by the

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Virginia Supreme Court of Appeals, has been served.

See Hawks v. Dehari, 206 Va. 810, 813, 146 S.E. 2d 187

(1966). There is no danger here of the assertion of a

fraudulent and stale claim to the surprise of the defend-

ant after evidence may have been lost and the facts may

have become obscure or after witnesses have died or dis-

appeared.

Despite the warning in Hanna," the majority feels duty

bound by Guaranty ritualistically to apply Jones v. Mor-

ris Plan Bank of Portsmouth, 170 Va. 99, 195 S.E. 525

(1938). As they read it as foreclosing a federal district

court sitting in Virginia from holding that the filing of

the diversity action in Kentucky tolled the running of the

Virginia statute of limitations. All that Jones holds, as I

read it, is that the statute of limitations of Virginia was

not tolled by the commencing of an action in the wrong

state forum. Atkins did not file his suit in the

forum. It was the right forum and, indeed, the only

forum, for the reason that he could obtain service of

process nowhere else. Nor do I read the Jones decision as

a statement or an analysis of state policy. It is simply

an interpretation of the statute on the familiar premise

of statutory construction that the enumeration of some

things implies the exclusion of others. Unlike the ma-

jority, I am not at all certain that the Supreme Court of

Appeals of Virginia would now hold, on the peculiar facts

of our case, that Atkins has not successfully tolled the

statute of limitations. Whether I am right about that or

not, I am quite certain that neither the Jones case nor

§§ 8-24 and 8-34 enunciates a state policy that a Virginia

resident who is injured in Virginia shall not be entitled

to a trial on the merits against a non-resident tortfeasor.

There is no such Virginia interest and Virginia has, in

my opinion, expressed no such policy. either by statute or

by decision of its highest court. Byrd teaches that when

15 “TO]utcome determination analysis was never intended to serve

as a talisman.” 380 U.S. at 466.

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there is no strong state interest in one result but there

is a strong federal interest in the opposite result, the fed-

eral interest prevails. It seems to me, a fortiori, that

where there is a strong state policy (as indicated by the

state created tort action and the recent Virginia long-arm

statute) and a strong federal policy both of which favor

trial on the merits, it does not serve federalism mechan-

ically to apply a readily distinguishable state decision

that may be read, but does not have to be read, to require

the opposite result.

Jones is distinguishable on yet another ground. In

Jones, the plaintiff began a second action after the dis-

missal of a prior, timely proceeding and sought to exclude

from the statutory period the time during which the

earlier action was pending. The Supreme Court of Ap-

peals of Virginia held that this period could not he ex-

cluded and barred the later-commenced action. It is

clear, however, that a timely commenced action tolls the

running of the Virginia statute of limitations. Jones,

supra. Atkins, in fact, commenced the present Virginia

action while the Kentucky proceedings were still pending

and during the period in which those proceedings con-

tinued to toll the running of the Virginia statute. For

this reason alone the Virginia proceeding may be re-

garded as timely commenced, and I do not think it un-

reasonable to suppose that the Supreme Court of Appeals

of Virginia would reach this conclusuion.

I concede that if the position I hold had been known in

advance as the rule of the Fourth Circuit, Atkins would

undoubtedly have been influenced to choose a federal

forum. But it did not happen that way. Atkins chose the

federal forum certainly without knowing what the fed-

eral court would do,* and I suggest, without knowing

how the state courts would view his problem. And it is not

impossible he was influenced by other factors—including

the possibility that if he began in the state court the de-

16 His fears, not his hopes, are now realized.

21e

fendant would remove to the federal court.’ Plainly one

of the twin aims of Erie*—to discourage forum shop-

ping—is simply not involved here. Moreover, the precise

problem confronting us will not likely arise again because

of the new Virginia long-arm statute. Thus, even if we

forecast badly how Virginia’s highest court might view

this tolling problem, no great injury will have been done

to federalism.

What of the other twin aim of Erie: “avoidance of in-

equitable administration of the laws?” In Szantay v.

Beech Aircraft Corp., 349 F.2d 60 (1965), J udge Sobeloff

clearly perceived the impact of Byrd and Hanna on Guar-

anty. In a helpful analysis of the modern Erie rule, he

concluded :

“If the state procedural provision is not intimately

bound up with the right being enforced but its ap-

plication would substantially affect the outcome of

the litigation, the federal diversity court must still

apply it unless there are affirmative countervailing

federal considerations. This is not deemed a consti-

tutional requirement but one dictated by comity

“At the heart of Erie was the intention to prevent

different legal treatment of parties merely because of

a variation in the residence of their opponent.” 349

F.2d at 64.

The perceived evil of Swift v. Tyson was discrimina-

tion against residents in favor of non-residents. The same

evil is present in the majority result. The non-resident

citizen of Kentucky committing a tort within Virginia is

17 See Hanna v. Plumer, 380 U.S. 460, 475 (1965) (Harian, J.,

concurring).

8In Hanna, the Supreme Court said: “The outcome determina-

tion test (of Guaranty Trust) therefore cannot be read without

reference to the twin aims of the Erie rule: discouragement of

forum shopping and avoidance of inequitable adm‘nistration of the

laws.” 380 U.S. at 468.

22¢

afforded the benefit of a shorter statute of limitations

than permitted a citizen of Virginia. Thus the spirit of

Erie and the cause of federalism would be advanced by

ignoring the Kentucky short statute of limitations which

becomes operative by the pure accident of defendant’s

residence in Kentucky and the lack of a long-arm statute

in Virginia. The second of the twin aims of Erie, “avoid-

ance of inequitable administration of the laws,” would be

served by permitting this plaintiff a trial on the merits.

If we remember that we are applying the Virginia stat-

ute of limitations and that the question confronting us is

simply whether, on the facts of this case, it has been

tolled by the commencement of an action within its two-

year period, the problem will yield, in my opinion, to the

application of well recognized federal equitable prin-

ciples. There is ample authority that the equitable reme-

dies doctrine survived Erie.® Indeed, even in Guaranty

Trust Co. v. York, it was said by Mr. Justice Frank-

furter that: “[the decision] does not mean... that a

federal court may not afford an equitable remedy not

available in a state court.” 326 U.S. at 105. “State law

cannot define the remedies which a federal court must

give simply because a federal court in diversity jurisdic-

tion is available as an alternative tribunal to the State’s

courts. Contrawise, a federal court may afford an equit-

able remedy for a substantive right recognized by a State

even though a State Court cannot give it.” Jd. at 106.

19 Sprague Vv. Ticonic Bank, 307 U.S. 161, 164 (1939); General

Electric Co. v. American Wholesale Co., 235 F.2d 606, 608 (7th Cir.

1956) ; Anheuser-Bush v. Du Bois Brewing Co., 175 F.2d 370, 373

(3rd Cir. 1949); Purcell v. Summers, 145 F.2d 979, 990 (4th Cir.

1944) ; Martin v. Reynolds Metals Co., 224 F. Supp. 978, 982 (D.

Ore. 1963), aff’d 337 F.2d 780 (9th Cir. 1964) ; Hertzbergs, Inc. Vv.

Ocean Acc. & Guar. Corp. 42 F. Supp. 52 (D. Neb. 1941), aff’d

135 F.2d 488 (8th Cir. 1943); Wall & Beaver Street Corp. v. Mun-

son Line, 58 F. Supp. 101 (D. Md. 1943). See Black & Yates

Mahogany Ass’n, 129 F.2d 227, 233 (3rd Cir. 1942), cert. denied,

317 U.S. 672 (1942), and cases there cited.

23 ¢

It is clear that in the federal courts the equitable doc-

trine of tolling is favored. Honda y. Clark, 386 U.S. 484

(1967). And it is equally clear, I think, that there is

emerging a clearly expressed federal interest in the dispo-

sition of litigation on the merits. As Mr. Justice Black

said in Surowitz v. Hilton Hotels Corp., 383 U.S. 363,

373 (1966), “If rules of procedure work as they should

in an honest and fair judicial system, they not only per-

mit, but should as nearly as possible guarantee that bona

fide complaints be carried to an adjudication on the mer-

its.”

In Burnett v. New York Central R.R. Co., 380 U.S.

424, 426-27 (1965), it was said that classification of a

statute of limitations as “substantive” rather than “pro-

cedural” does not determine whether or under what cir-

cumstances the limitation period may be extended.

The Court went on to say (with reference to a federal

statute of limitations) that “the basic inquiry is whether

congressional purpose is effectuated by tolling the statute

of limitations in given circumstances.” Id. at 427.

For the reasons indicated by Mr. Justice Black for the

Supreme Court in Goldlawr, I believe that Atkins, by

commencing his Kentucky proceedings within the time

period allowed under the Virginia statute of limitations,

has shown that “proper diligence on the part of plaintiff

which such statutes of limitations were intended to in-

sure.” 369 U.S. at 467.

Atkins’ alleged injuries are severe, his claimed damages

great. Five years have elapsed since commencement of

the Kentucky proceedings, and trial on the merits still

eludes him. I believe this court is not straitjacketed by

Guaranty but is, instead, left free by the EHrie-Guaranty-

Byrd-Hanna doctrine to accord this plaintiff what all

agree he ought to have in an honest and fair judicial

system: adjudication on the merits.

I would reverse.

1d

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

FOR THE

WESTERN DISTRICT OF VIRGINIA

DANVILLE DIVISION

Civil Action Number 67-C-13-D

DONALD T. ATKINS, Plaintiff

v8.

SCHMUTZ MANUFACTURING COMPANY, INC.,

Defendant

By: Ted Dalton U. S. District Judge

OPINION and JUDGMENT

This personal injury suit is brought to the court upon

a jurisdictional basis of diversity of citizenship, and

amount in controversy in excess of $10,000. The clearest

way to present the issue before this court, is to begin with

an examination of the facts.

Plaintiff, Donald T. Atkins, was injured on June 22,

1961, at South Boston, Virginia when he was caught in

a machine manufactured and sold by defendant, Schmutz

Manufacturing Company, Inc. The injury necessitated

amputation of both of plaintiff’s feet and the plaintiff

spent a long period of time in various hospitals and re-

habilitation centers. Plaintiff alleges that defendant was

negligent in the design and construction of the machine

which severly and pernianently injured him, and plain-

tiff prays for judgment in the sum of $470,000.

At the time of the injury, defendant had, and appar-

ently still has, its only place of business in Louisville,

Kentucky. All of defendant’s sales are made from Ken-

tucky, and defendant employs no salesmen in Virginia.

Pie il

2d

The events in this case took place before the Virginia

“long arm statute” was enacted in 1964, thus plaintiff

concluded that the defendant would not be subject to suit

in Virginia. Plaintiff brought suit against the defendant

in the U.S. District Court for the Western District of

Kentucky on June 19, 1968. The suit in Kentucky was

brought more than one, but less than two years after

the date of the injury. The statute of limitations appli-

cable to plaintiff’s cause of action is two years in Vir-

ginia (§ 8-24 Code of Virginia) and one year in Kentucky

(KRS §$ 418.140). However, at the time plaintiff brought

suit in Kentucky, prior cases held that the longer statute

of limitations would govern in a suit filed in Kentucky,

but based on a cause of action arising in a state whose

statute of limitations was longer than the one year Ken-

tucky statute of limitations. Collins v. Clayton & Lam-

bert Mfg. Co., 299 F.2d 362 (6th Cir. 1962). Thus, when

plaintiff brought suit in Kentucky, the existing rule was

to apply the longer statute of limitations, and plaintiff ex-

pected the Virginia two year statute of limitations to be

applicable in his case.

While plaintiff’s suit was pending in the U.S. District

Court for the Western District of Kentucky, the Kentucky

Court of Appeals held that if the statute of limitations in

the foreign state is for a longer period of time than the

one year Kentucky statute of limitations, the law of Ken-

tucky would prevail. Seat v. Eastern Greyhound Lines,

Inc., 389 S.W.2d 908 (1965). Thereafter, defendant filed

a motion for summary judgment, asserting the plea of

the Kentucky statute of limitations. The U.S. District

Court for the Western District of Kentucky stated that in

diversity cases, it was bound to apply the state law as

interpreted by the highest court of the state, and sus-

tained defendant’s motion for summary judgment. The

judgment was affirmed by the U.S. Court of Appeals for

the Sixth Circuit, and plaintiff is appealing the decision

to the United States Supreme Court.

8d

Plaintiff now brings his suit in this court on the juris-

dictional basis of diversity of citizenship and amount in

controversy in excess of $10,000. This suit is brought

more than two years after the injury occurred, and de-

fendant filed a motion for summary judgment, asserting

the plea that the Virginia two year statute of limitations

bars plaintiff’s suit. Plaintiff answers that the running

of the Virginia statute of limitations was tolled while .

his suit was pending in Kentucky. The merits of the pro-

ceedings in Kentucky are not before this court, and the

sole issue of this case is whether plaintiff’s abortive

Kentucky action tolled the running of the Virginia statute

of limitations.

Plaintiff cites Burnett v. New York Central RR, 380

U.S. 424 (1965), to support his contention that the Ken-

tucky suit tolled the running of the Virginia statute of

limitations. In Burnett, the United States Supreme

Court held that the running of the F.E.L.A. statute of

limitations was suspended when the plaintiff filed timely

suit, even though the suit was later dismissed for improper

venue. Burnett is not controlling in this case, because it

was concerned solely with interpretation of a federal

statute. Even though the F.E.L.A. provision and the Vir-

ginia statute be worded similarly, the construction placed

on the federal statute is not necessarily the construction

that must be placed on the state statute. This case is

founded on diversity of citizenship, not federal statute,

and the construction placed upon a state statute by the

highest court of the state is controlling. Whether Vir-

ginia’s statute of limitations be labeled substance or pro-

cedure, it clearly affects the outcome of this case and

must be applied. Guaranty Trust Co. v. York, 326 U.S.

99 (1945).

The applicable statute of limitations covering plain-

tiff’s cause of action is § 8-24 Code of Virginia (1950)

which states: “Every action for personal injuries shall be

brought within two years after the right to bring the

same shall have accured.” The right to bring suit accrues

4d

at the time of injury. Hawks v. DeHart, 206 Va. 810,

146 S.E.2d 187 (1966). Those instances in which the

statute of limitations is suspended are controlled by § 8-

34 Code of Virginia (1950). § 8-34 is identical to older

$ 5826 Code of Virginia (1919), which was constructed

by the Supreme Court of Appeals of Virginia in Jones v.

Morris Plan Bank, 170 Va. 88, 195 S.E. 525 (19388).

The plaintiff in Morris Plan Bank had filed a timely

suit which was later dismissed for lack of proper venue.

When the plaintiff later brought suit in the proper forum,

the defendant pleaded the statute of limitations as a bar.

Plaintiff in Morris Plan Bank answered as the plaintiff

here does, that the Virginia statute of limitations was

suspended while his suit was pending in another forum.

The Supreme Court of Appeals of Virginia rejected the

plaintiff’s contention, and held that the statute of limi-

tations had run.

An analysis of our statute (section 5826) shows that

in only four instances is there a suspension of the

statute of limitations by reasons of the pendency of

a former suit brought in due time. These are (1)

Where such suit abates “by return of no inhabitant,”

that is, where the writ is not served for that reason;

(2) where the suit abates by reason of the “death

or marriage” of a party; (3) where, after the plain-

tiff nas obtained a judgment or decree in his favor,

it is “arrested or reversed upon a ground which does

not preclude a new action or suit for the same cause;”

and (4) where “there be occasion to bring a new ac-

tion or suit by reason of the loss or destruction of

any of the papers or records in a former suit or ac-

tion which was in due time.”

None of those provisions applies to the plaintiff’s

case. There is no saving provision where a suit, such

as that of the plaintiff here, was brought in the wrong

forum or was dismissed otherwise than upon the

merits. Jones v. Morris Plan Bank, Supra.

5d

Plaintiff contends that Morris Plan Bank is not con-

trolling here because it was based on a legislative intent

to insure that the statute of limitations would not toll

when a plaintiff sues in the “wrong” forum. Thus plain-

tiff here contends that the rule in Morris Plan Bank

should not apply to him because he uid not sue in the

“wrong” forum. Rather, he sued in a proper forum,

which became improper only after a retroactive change in

the applicable law. Even assuming that Morris Plan

Bank should not be controlling here, the plaintiff has still

failed to show a ground which would toll the running of

the statute of limitations. There are no exceptions to a

statute of limitations except those made by the statute

itself. Johnson v. Merritt, 125 Va. 162, 99 S.E. 785, 789

(1919) ; Clark v. Nave’s Creditors, 116 Va. 838, 83 S.E.

547 (1914); Bickle v. Chrisman’s Adm’x, 76 Va. 678

(1882). “In the absence of statute, a party cannot de-

duct from the period of the statute of limitations appli-

cable to his case, the time consumed by the pendency of

an action in which he sought to have the matter adjudi-

cated, but which was dismissed without prejudice to

him... .” Norwood v. Suffey, 196 Va. 1051, 86 S.E.2d

809 (1955). Plaintiff has not brought himself within any

of the four exceptions set out in § 8-34 Code of Virginia

(1950). We do not agree with plaintiff that Brunswick

Land Corp. v. Perkinson, 1538 Va. 603, 151 S.E. 138

(1930), is helpful argument for plaintiff’s position. The

case held that the pending of the first suit did not toll

the statute of limitations with regard to the second suit.

The provision of § 8-34 dealing with an arrested or re-

versed judgment, clearly refers to a final judgment on the

merits, and not to the tenuous ground put forth by the

plaintiff that the Kentucky court made a tacit judgment

on the Kentucky statvte of limitations when it allowed

plaintiff to use discovery methods to prepare his case on

the merits.

Plaintiff contends that the equities are with him (which

argument is appealing to this court) and that the only

6d

court open to him was the Kentucky court which retro-

actively closed its doors to him. The sympathy of this

court is with the plaintiff, “but neither mere difficulty

nor inconvenience in seeking a legal remedy .. .” will toll

the statute of limitations. “The peace of society demands

that there should be, at some time, an end put to liti-

gation . . . It is better than an individual should, in ex-

ceptional cases, suffer wrong, than a community should be

kept in turmoil.” Johnson v. Merritt, 125 Va. 162, 99

S.E. 785, 789 (1919). If the plaintiff has truly been done

an injustice, his recourse is not in this court, but in ap-

pealing the decision of the Kentucky courts.

It is clear that under the Law of Virginia, the plain-

tiff here has not met any of the four provisions of section

8-34, which suspend the running of the statute of limita-

tions. When jurisdiction is based on diversity of citizen-

ship, this court must follow the law of the state where

it sits, and hereby finds that the Virginia statute of limi-

tations bars plaintiff’s suit.

For the reasons stated in this opinion and upon ma-

ture consideration of the facts relied upon by plaintiff in

the case at bar, this court feels that the plaintiff’s suit

is barred by the Virginia statute of limitations.

Therefore, it is hereby ADJUDGED and ORDERED

that defendant’s motion for summary judgment be, and

hereby is granted. A certified copy of this opinion and

judgment is directed to be sent to counsel of record.

ENTER THIS ORDER:

/s/ Ted Dalton

U.S. Chief District Judge

May 26, 1967

A TRUE COPY, TESTE:

Leigh B. Hanes, Jr., Clerk

By: Oda F. Haynes

Deputy Clerk