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McSparran v. Weist

decided: October 2, 1968.

STELLA MCSPARRAN, GUARDIAN OF THE ESTATE OF RICHARD R. RIEGNER, A MINOR, AND MARTHA M. FRITZINGER, PARENT AND NATURAL GUARDIAN OF RICHARD R. RIEGNER, A MINOR, IN HER OWN RIGHT
v.
JEFFREY R. WEIST, JOSEPH R. WEIST AND RUSSELL MILLARD, MARTHA M. FRITZINGER, PARENT AND NATURAL GUARDIAN OF RICHARD R. RIEGNER, A MINOR, IN HER OWN RIGHT, APPELLANT



Reargued April 16, 1968.

Hastie, Chief Judge, McLaughlin, Kalodner, Freedman, Seitz and Van Dusen, Circuit Judges. McLaughlin, Circuit Judge, dissenting. Kalodner, Circuit Judge, dissenting.

Author: Freedman

Opinion OF THE COURT

FREEDMAN, Circuit Judge

This appeal was argued before a panel and we ordered it to be reargued before the court en banc with Esposito v. Emery, 3 Cir., 402 F.2d 878 so that we could review the troublesome question of the jurisdiction of a federal court where diversity of citizenship is created or "manufactured" by the appointment of a nonresident guardian of a minor, selected solely for the purpose of creating diversity. Here federal jurisdiction over the parent's consequential claim is asserted as pendent to the "manufactured" diversity claim of the child for damages.

Richard R. Riegner, a minor, was injured in an automobile accident on November 27, 1966, in Berks County, Pennsylvania, where he lived with his mother, Martha M. Fritzinger. In January 1967, being then just under twenty years of age, he petitioned the Orphans' Court of Berks County with his mother's consent and joinder for the appointment of a guardian of his estate, setting out that the only funds which might come into the guardian's hands were "monies which may be obtained by suit or settlement in an action which the proposed guardian will institute in the * * * [United States District Court for the Eastern District of Pennsylvania sitting] at Philadelphia to recover for injuries sustained by said minor" as a result of the accident. On February 6, 1967, the Orphans' Court appointed Stella McSparran as "guardian". In view of the prayer of the petition we shall assume that it intended her to act as guardian of Riegner's estate.

A few weeks later Stella McSparran, as guardian of Riegner's estate, instituted the present action in which she was joined as plaintiff by Mrs. Fritzinger, who designated herself as "Parent and Natural Guardian of Richard R. Riegner, a Minor, in Her Own Right."*fn1 Mrs. Fritzinger claimed damages in the amount of $17,500 for loss of the minor's services and earning power until he attained majority and for medical expenses which she had been compelled to expend and would be required to expend until he attained majority.*fn2

One of the defendants moved to dismiss Mrs. Fritzinger's claim on the ground that she was not of diverse citizenship from the defendants and that her claim could not be sustained on a theory of pendent jurisdiction. The district court granted dismissal, and in doing so expressed the hope that the question, on which the judges of that court had already expressed differing views, would be resolved by an immediate appeal. 270 F. Supp. 421 (E.D.Pa.1967).*fn3 The judgment, however, was not a final judgment under 28 U.S.C. ยง 1291, and we therefore remanded the record to the district court to afford the parties an opportunity to obtain compliance with the requirements of Rule 54(b) of the Federal Rules of Civil Procedure for the entry of a final judgment as to Mrs. Fritzinger's claim in her own right. We directed that if such a final judgment should be entered within thirty days the record should forthwith be returned to us, and thereupon, having meanwhile retained jurisdiction, we would determine the appeal which would be deemed filed nunc pro tunc as of the date of the return of the record to this court, without the necessity of filing any additional briefs or appendices. We also directed that if such a judgment was not entered within the time fixed the appeal would be quashed. The district court entered a final judgment against Mrs. Fritzinger within the prescribed time and the appeal is now properly before us for decision.

It is conceded in the record as well as in the briefs and arguments of counsel that the guardian here is a straw party, chosen solely to create diversity jurisdiction. Before we reach the contention that the mother may maintain her pendent claim in her own right, we are therefore required to determine first whether such artificially created diversity is an adequate foundation for federal jurisdiction.

As early as 1808 Chief Justice Marshall stopped counsel in the course of an argument on the question of jurisdiction to say: "The present impression of the court is, that the case is clearly within the jurisdiction of the Courts of the United States. The plaintiffs are aliens, and although they sue as trustees, yet they are entitled to sue in the circuit court [on the ground of diversity of citizenship]." Chappedelaine v. Dechenaux, 8 U.S. (4 Cranch) 306, 308, 2 L. Ed. 629 (1808). A series of Supreme Court cases since that time has held that the citizenship of the fiduciary rather than the beneficiary is controlling in the determination of diversity of citizenship. These cases have involved the citizenship of executors and administrators,*fn4 trustees*fn5 and general guardians.*fn6

The adoption of the Federal Rules of Civil Procedure has created some controversy on whether the representative must be the real party in interest under Rule 17(a) or need merely have capacity to sue under Rules 17(b) and (c). Rule 17(a) authorizes a personal representative such as a guardian, executor or administrator, to sue in his own name without joining the beneficiary; Rule 17(b) in effect provides that the capacity to sue or be sued of one acting in a representative capacity shall be determined by the law of the state in which the district court is held; and Rule 17(c) provides that whenever an infant or incompetent person has a representative such as a general guardian, committee or conservator, the representative may sue or defend on behalf of the infant or incompetent, and if the infant or incompetent does not have a duly appointed representative he may sue or be sued by his next friend or by a guardian ad litem. The focus of the rule is on capacity to sue, and it does not purport to establish standards for the determination of diversity of citizenship. Indeed, as Rule 82 expressly states, the rules do not affect the jurisdiction of district courts. Even though Rule 17(c) authorizes an infant or incompetent to sue or be sued by his next friend or by a guardian ad litem, it has been held that the citizenship of one acting in such a limited representative capacity, although clothed with capacity to sue, is not determinative of diversity of citizenship.*fn7

The substantive status of the various kinds of representatives is not, of course, uniform, and their authority and duties differ widely. In general, executors, although acting by virtue of court appointment, owe their position to their designation by the testator,*fn8 and administrators to their relationship to the deceased intestate.*fn9 While an executor or administrator takes title to the property of the decedent,*fn10 a guardian of the person of a minor or other incompetent has no interest in his ward's property and a guardian of his estate does not take legal title to the property, which remains in the ward, but merely acts as its custodian or manager. A trustee, on the other hand, is of course vested with the legal title to the property of the trust. See Provident Trust Company of Phila. Case, 346 Pa. 37, 39, 29 A.2d 524, 526 (1943), Stern, C. J. While a guardian of the estate of a minor, does not have title to the property of his ward and may in a certain sense not appear to be the real party in interest, nevertheless, he is expressly authorized by Rule 17(c) to sue on behalf of his ward.

We are not here concerned, however, with capacity to sue under Rule 17, nor with the question whether the fiduciary is the real party in interest. Our problem is whether for purposes of diversity jurisdiction we should look to the citizenship of the representative, here the guardian of the estate of a minor, or to the person on whose behalf he acts. In Mexican Central Railway Co. v. Eckman, 187 U.S. 429, 23 S. Ct. 211, 47 L. Ed. 245 (1903), the Court held that the citizenship of the guardian of the person and estate of a minor governed in the determination of diversity of citizenship, because the guardian "had the right to bring suit in his own name" under the law of the state of his appointment. But in referring to the Eckman case with approval in Lumbermen's Mutual Casualty Co. v. Elbert, 348 U.S. 48, 51, 75 S. Ct. 151, 99 L. Ed. 59 (1954), the Court characterized the guardian as the real party in interest. In Fallat v. Gouran, 220 F.2d 325 (3 Cir. 1955), we followed the Eckman case and held that diversity of citizenship existed on the basis of the citizenship of the guardian of the estate of a mental incompetent and that the citizenship of the incompetent himself was not the test. In that case residents of Pennsylvania were involved in an automobile accident in Pennsylvania and the married daughter of the incompetent, who was a New Jersey citizen, brought suit in her own name as his guardian. We sustained federal jurisdiction because of the diversity of the daughter's citizenship from that of the defendants although no diversity existed between the defendants and the incompetent himself. We declined to follow the decision to the contrary in Martineau v. City of St. Paul, 172 F.2d 777 (8 Cir. 1949).

These decisions deal with the party whose citizenship is to be the test in the determination of the existence of diversity. They do not decide the problem now before us -- the effect of the artificial creation or "manufacture" of diversity. As recently as 1954 the Orphans' Court of Philadelphia hesitated to appoint a nonresident guardian because its general rule limited appointment to those who were within its jurisdiction and therefore amenable to its process and to its supervisory authority and control. After a factual determination that larger verdicts were generally obtained in the United States District Court for the Eastern District of Pennsylvania than in the Common Plea Courts of the state the Orphans' Court concluded that, since the only asset of the minor's estate was the personal injury claim, it would yield to the request that it appoint an out-of-state guardian because its primary concern was the financial benefit of its ward. The court had some doubt whether diversity jurisdiction would be found to exist by the federal courts but considered this a question for the federal courts themselves. See Kaufmann's Estate, 87 Pa.Dist. & Co. R. 401 (1954).*fn11 Since the publication of that opinion the rivulet of "manufactured" diversity cases has swollen to a stream of wide dimensions. The American Law Institute's detailed study of a sample of the diversity cases filed in ...


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