The opinion of the court was delivered by: FOLLMER
The plaintiff, Joseph M. Shverha, a citizen of Pennsylvania, instituted an action in the Court of Common Pleas of Berks County, Pennsylvania, against the defendant Maryland Casualty Company, a Maryland corporation, on a performance bond covering a construction contract of one William B. Albright, also a citizen of Pennsylvania. The suit was removed to this Court on the ground of diversity of citizenship. Maryland Casualty Company as Third-party plaintiff thereafter brought in William B. Albright, the contractor, as a third-party defendant, alleging an indemnity agreement. Albright in his answer seeks to include a counterclaim against plaintiff Shverha on an alleged balance due on 'extras' in connection with the contract.
Plaintiff's action against Maryland Casualty Company has been dismissed by the parties. Plaintiff's motion to dismiss the counterclaim is pending.
The difference between compulsory counterclaims under Rule 13 of the Federal Rules of Civil Procedure, 28 U.S.C.A., and permissive counterclaims under Rule 14, as well as the question whether those involved are or are not 'opposing' parties, must be kept in mind. Professor Moore
gives a clear and concise illustration as follows:
'(1) A.B. brings suit against C.D., who impleads E.F. E.F. must counterclaim against C.D. in the situations governed by RULE 13(a), since C.D. and E.F. are 'opposing' parties within the meaning of Rule 13.
'(2) E.F. may counterclaim against C.D. pursuant to Rule 13(b).
'(3) E.F. may not counterclaim against A.B. under Rule 13, since they are not 'opposing' parties. Under Rule 14(a) he may, however, 'assert' a claim against A.B. arising out of the same transaction or occurrence that is the subject matter of the plaintiff's claim against C.D., but this is not a true counterclaim since the parties are not 'opposing parties' prior to its service. If E.F. asserts such a claim against A.B., however, they become opposing parties and A.B. must counterclaim against E.F. in the situations covered by Rule 13(a) and may counterclaim under Rule 13(b).
'(4) If A.B. asserts a claim against E.F. arising out of the same subject matter as his original claim against C.D., E.F. must counterclaim against A.B. in the situations covered by Rule 13(a), and may counterclaim pursuant to Rule 13(b).
As to a claim by plaintiff against a third-party defendant he points out:
'In the first edition of this Treatise the view was taken that if, as permitted under the Rule, plaintiff A.B. amended his complaint to state a claim against the third-party defendant E.F., independent grounds of jurisdiction would be required to support plaintiff's claim against E.F. The concept of ancillary jurisdiction was not regarded as extending so far as to permit a plaintiff, by this roundabout method, to recover a judgment against a citizen of the same state on a non-federal cause of action. The courts, with almost complete unanimity, have taken this view. * * *'
And as to a claim by the third-party defendant against the plaintiff, he states:
This reasoning is sound and it follows that Albright's counterclaim was without jurisdictional basis and cannot be allowed to stand. Whether, had the original action not been dismissed, the claim could have been considered in the nature of a defense without a demand for affirmative relief becomes moot with such dismissal of the original action.
Albright, subsequent to the attempted institution of the counterclaim, was adjudicated a bankrupt and the Trustee has sought leave to be substituted. For whatever advantage it may have for the Trustee, such as conducting any appellate procedure, if contemplated, such substitution is being allowed.
It does not, however, change the situation as to the counterclaim. At the time the counterclaim was filed by Albright there was no jurisdiction, and jurisdiction is determined on the basis of conditions existing at the time the action is instituted.
Moreover, the counterclaim was filed by Albright prior to bankruptcy, the ...