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WILLING v. PENNSYLVANIA CO. FOR INSURANCES ON LIVE

September 10, 1937

WILLING
v.
PENNSYLVANIA CO. FOR INSURANCES ON LIVES AND GRANTING ANNUITIES et al.



The opinion of the court was delivered by: KIRKPATRICK

This is one of four suits at law which were brought by the receiver of the insolvent Sixth National Bank of Philadelphia, to recover assessments against stockholders. Trials were to the court; jury trials having been waived. The four cases were tried together, and are now before the court for findings and final disposition.

This particular suit (No. 18828) involves 20 shares, originally held by the Pennsylvania Company as trustee for McGrath, represented by certificate No. 927.

 The receiver brought suit against the Pennsylvania Company, alleging that it was a stockholder within 60 days next before the date of the failure of the bank to meet its obligations, specifying February 28, 1933, as that date. The Pennsylvania Company filed an affidavit of defense, denying that the bank failed to meet its obligations on the date in question, and averring that it was not a stockholder within 60 days next before the date (which it placed much later) when the failure to meet obligations actually occurred. It also brought in Clark & Co., brokers, as additional defendants, under the Pennsylvania Scire Facias Act of April 10, 1929, P.L. 479, as amended by the Act of June 22, 1931, P.L. 663, 12 P.S.Pa. ยง 141, on the ground that it had sold the shares in question to Clark & Co., and that Clark & Co. were, therefore, liable over to it for any amount that it might have to pay by reason of the assessment against it.

 Clark & Co. filed an affidavit of defense denying that they had ever owned the shares, and averring that they had acted only as brokers or agents in transferring them to Belzer & Co., whom they also brought in, by scire facias, as second additional defendants, averring that Belzer & Co. were liable over to them for any amount which they might have to pay to the Pennsylvania Company. Neither the Pennsylvania Company nor Clark & Co., in their scire facias proceedings, suggested any direct liability on the part of the respective succeeding defendants to the plaintiff.

 Belzer & Co. filed an affidavit of defense to the second scire facias (a) as to five shares, denying ownership and averring that they had purchased the stock only as agents or brokers for their principal, Greenfield; and (b) as to 15 shares, averring that they purchased the stock and sold it on February 1, 1933, to Henry W. Balka. Belzer & Co. also brought in by scire facias, Greenfield, as the real owner of the five shares in question (alleging that, although they had been registered in the name of Daniels, Daniels was the mere nominee of Greenfield, holding the title for the latter's benefit), and Balka as the real owner of the remaining 15 shares.

 As to jurisdiction:

 (1) Additional defendants Clark & Co. and Belzer & Co.:

 I think it is clear that the court has no jurisdiction of these additional defendants, for two reasons.

 First, there is no diversity of citizenship. Jurisdiction of the original suit of the receiver against the Pennsylvania Company is conferred by statute, giving the federal courts jurisdiction of suits brought by officers of the United States. However, the writs of scire facias by which it was attempted to bring Clark and Belzer into the case do not aver that they are liable to the plaintiff, either alone or jointly, and severally liable with the first defendant, but merely that each is liable over to the preceding defendant. The issue created by the pleadings on these writs is thus entirely between citizens of the same state. The cause of action from which it arises has nothing to do with the direct liability of either of the defendants to the receiver. Hence, they cannot be said to be in any sense suits brought by officers of the United States or suits brought for the winding up of the affairs of national banks.No other possible ground of jurisdiction appears.

 Second, even were the Pennsylvania Scire Facias Act capable of conferring jurisdiction over these additional defendants, the writs against them in this case would not come within its terms. The Scire Facias Act provides that an additional defendant may be brought in "for the cause of action declared on." See Jones v. Wohlgemuth, 313 Pa. 388, 390, 169 A. 758. The cause of action declared on in the original suit against the Pennsylvania Company was the quasi contractual obligation imposed by the banking statutes upon the stockholders of national banks. The cause of action involved in the issue between the defendants arises from the common-law right of the transferor to indemnification from the transferee. It may be that this is also a quasi contractual obligation, but it has an entirely different source. It is not imposed by statute as an incident of ownership, but is implied from the act of purchase, and runs not to the creditors of the bank, but to the stockholder's immediate vendor. See Lessassier v. Kennedy, 123 U.S. 521, 8 S. Ct. 244, 31 L. Ed. 262.

 The voluntary appearance of the additional defendants cannot, of course, confer jurisdiction, where the federal court, as such, has no jurisdiction of the subject-matter. Nor does the fact that a federal question is involved in the suit between the original parties give jurisdiction under the general principle that a federal court, having acquired jurisdiction by reason of federal questions involved, has the right to decide all the questions in the case. That was decided in Hurn v. Ourseler, 289 U.S. 745, 53 S. Ct. 586, 589, 77 L. Ed. 1148, where the court said: "But the rule does not go so far as to permit a federal court to assume jurisdiction of a separate and distinct nonfederal cause of action because it is joined in the same complaint with a federal cause of action. The distinction to be observed is between a case where two distinct grounds in support of a single cause of action are alleged, one only of which presents a federal question, and a case where two separate and distinct causes of action are alleged, one only of ...


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