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STATE PUB. SCH. BLDG. AUTH. v. MARYLAND CAS. CO.

January 19, 1955

STATE PUBLIC SCHOOL BUILDING AUTHORITY to the use of VALLAMONT PLANING MILL CO., Plaintiff,
v.
MARYLAND CASUALTY COMPANY, Defendant



The opinion of the court was delivered by: FOLLMER

The State Public School Building Authority is a corporation created by the State to perform certain State functions, 24 P.S.Pa. 791.1 et seq. Vallamont Planing Mill Co. is a Pennsylvania corporation with its principal place of business at Williamsport, Pennsylvania, in this district. The Maryland Casualty Company is a Maryland corporation licensed to do a general surety business in the Commonwealth of Pennsylvania with an office for the transaction of business in Harrisburg, Pennsylvania, in this district. The contractor, principal on the bond, has his residence and place of business in Warren County in the Western District of Pennsylvania. The Maryland Casualty Company is surety on a material and labor bond issued to the State Public School Building Authority for the benefit of those furnishing material or labor in the construction of a school building in Erie County in the Western District of Pennsylvania. Vallamont alleges it furnished materials for which it has not been paid.

The State Public School Building Authority Act provides, 24 P.S.Pa. § 791.10, that a construction contract shall be accompanied by a 'bond for the protection of those who furnish labor and material' and that all construction contracts shall provide 'that any person or corporation furnishing such materials or rendering such services may maintain an action to recover for the same against the obligor in the undertaking as though such person or corporation was named therein, * * *.'

 As to the venue in a suit of this nature instituted in the courts of the State, it is provided in a general statute, Act of March 22, 1911, P.L. 23, § 1, 8 P.S.Pa. § 156 as follows:

 'Suits on bond given by surety company; venue

 'When any corporation, whether of this or any other State, shall become surety in a bond given for the faithful performance of any duty or contract by any person, partnership, or corporation as principal, suit upon said bond, against such corporation as surety, may be brought in the county in which such duty or contract was to be performed, or in the county in which such principal resided or had his or its principal place of business at the time of the execution of such bond.' *fn1"

 Defendant's argument is based upon the premise announced in Guaranty Trust Co. v. York, 326 U.S. 99, 108, 65 S. Ct. 1464, 1469, 89 L. Ed. 2079, that for purposes of diversity jurisdiction a Federal Court is 'in effect, only another court of the State, * * *.'

 As pointed out in Woods v. Interstate Realty Co., 337 U.S. 535, 538, 69 S. Ct. 1235, 1237, 93 L. Ed. 1524,

 '* * * The York case was premised on the theory that a right which local law creates but which it does not supply with a remedy is no right at all for purposes of enforcement in a federal court in a diversity case; that where in such cases one is barred from recovery in the state court, he should likewise be barred in the federal court. The contrary result would create discriminations against citizens of the State in favor of those authorized to invoke the diversity jurisdiction of the federal courts. It was that element of discrimination that Erie R. Co. v. Tompkins (304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188) was designed to eliminate.'

 Venue requirements, however, must not be confused with jurisdictional issues. The principle is clearly stated in McCoy v. Siler, 3 Cir., 205 F.2d 498, 499, that 'A state cannot by legislation modify or repeal a Congressional statute on the venue of federal courts.' *fn2"

 Defendant concedes 'This action is by Vallamont Planing Mill Company, as plaintiff, although the name of the state authority is used in conjunction with the designation of the real plaintiff apparently incorrectly named as a use plaintiff.' *fn3"

 The venue is determined by 28 U.S.C. § 1391 which provides:

 '(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside.

 '(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the ...


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