Hon. GEORGE S. GRAHAM, DEPARTMENT OF JUSTICE, Washington, D. C., April 2, 1928. House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Responsive to a request from your committee, by telephone, concerning H. R. 11802, a bill establishing under the jurisdiction of the Department of Justice a division of the Bureau of Investigation to be known as the division of identification and information, I have the honor to advise that the identification division is in existence and operation, but that there is no legislative authority for it other than that which appears in the appropriation bill and it is desired, for this reason, that H. R. 11802 be enacted. Respectfully, JNO. G. Sargent, Attorney Generai. In his annual report to the Congress, Attorney General William D. Mitchell has again urged that this legislation be enacted. The legislation in its amended form is also urged by the International Association of Chiefs of Police. O 718T CONGRESS 2d Session } SENATE { REPORT No. 691 LIMITING THE JURISDICTION OF DISTRICT COURTS OF THE UNITED STATES MAY 20, 1930.-Ordered to be printed Mr. NORRIS, from the Committee on the Judiciary, submitted the following REPORT [To accompany S. 4357] The Committee on the Judiciary, to which was referred the bill (S. 4357) to limit the jurisdiction of district courts of the United States, having had the same under consideration, recommends the passage of the bill. OBJECT OF PROPOSED LEGISLATION The object of this bill is to take away from Federal district judges the jurisdiction which the law now gives them on account of diversity of citizenship. This jurisdiction is given them in paragraph 1, section 24, of the Judicial Code as amended (sec. 41 of the United States Code annotated). The first paragraph of this section reads as follows: First. Of all suits of a civil nature, at common law or in equity, brought by the United States, or by any officer thereof authorized by law to sue, or between citizens of the same State claiming lands under grants from different States; or, where the matter in controversy exceeds, exclusive of intere stand costs, the sum or value of $3,000, and (a) arises under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, or (b) is between citizens of different States, or (c) is between citizens of a State and foreign States, citizens, or subjects. No district court shall have cognizance of any suit (except upon foreign bills of exchange) to recover upon any promissory note or other chose in action in favor of any assignee, or of any subsequent holder if such instrument be payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover upon said note or other chose in action if no assignment had been made. The foregoing provision as to the sum or value of the matter in controversy shall not be construed to apply to any of the cases mentioned in the succeeding paragraphs of this section. The only change made by the bill is to strike from this section. the subsection (b) as follows: "is between citizens of different States." As the statute is above set out, the only words proposed to be eliminated are those printed in italics. The only change proposed to be made will be to take away the jurisdiction of district courts in cases where such jurisdiction rests entirely upon diversity of citizenship. No sound reason can be given why Federal district courts should have jurisdiction based solely upon a diversity of citizenship. In fact, under existing law, as will be seen from the statute above quoted, Federal courts do not have jurisdiction on account of diversity of citizenship unless the amount involved is $3,000 or more. is no reason, if the Federal court should have jurisdiction in such There cases, where $3,000 is involved, why it should not have a similar jurisdiction if the case involved only $2,500; and if the Federal court should be deprived of jurisdiction where the amount in dispute is $2,900, there is no logical reason why such jurisdiction should be given if the amount is increased to $3,000. PROPOSED LEGISLATION MAKES NO CHANGE WHERE FEDERAL QUESTION IS INVOLVED It must be remembered that the jurisdiction which is taken away by this bill does not deprive the Federal courts of any jurisdiction where any Federal question is involved, where any treaty is involved, where any public lands are involved, where any State is involved, or where any foreign citizen is a party to the suit. At the time of the adoption of the Constitution it was felt by the framers of that document that there existed jealousies between the citizens of the different original States, and that a citizen of one State would not be able always to get justice in the State courts of a different State. The first law of Congress on this subject was passed September 24, 1789, in which it was provided that Federal courts would have jurisdiction in diversity of citizenship cases where the amount involved was $500. This law was reenacted March 3, 1875. On March 3, 1887, it was reenacted and the amount giving jurisdiction was then fixed at $2,000; and on March 3, 1911, the statute was again reenacted fixing the amount that would give jurisdiction to the Federal courts in such cases at $3,000. It is perfectly evident that whatever jealousies might have existed at the time of the adoption of the Constitution which would deprive the citizen of one State from securing justice in the courts of another State, such conditions have long since disappeared. In fact, it is not seriously contended at the present time that any such condition exists. It must be remembered, also, that the controversies which give rise to this jurisdiction which the bill takes away from Federal courts arise entirely from State statutes, and there is no sound reason why an individual or a corporation doing business in a State, under the laws of that State, should not be compelled to settle his controversy before the tribunals of that State, the same as citizens of that State are required to do. Much of the time of Federal courts is now taken up by the trial of these cases where no Federal question is involved; where the controversy has arisen and a claim is made under a State law, and the controversy comes about entirely by reason of business transactions which nonresidents have with residents of a State. When the Constitution was adopted it is very likely that the framers of that document, when they gave authority to Congress to give jurisdiction to the Federal courts in diversity of citizenship cases, were not thinking of corporations; and if this jurisdiction were confined entirely between "citizens" as distinguished from "corporations," the evil now existing would not be nearly so great. But the Supreme Court passed upon the question and held that as a matter of law a corporation, within the meaning of the Constitution, was a citizen. The effect of this is to give to the nonresident corporation or the nonresident citizen an advantage over the resident citizen, inasmuch as the nonresident has the choice of two tribunals. He can sue in the State court, or he can sue in the Federal court, and if the citizen of a State sues him in the State court and he is a resident of another State, or if it is a corporation which has been organized under the laws of a different State, he has the right to have the case removed to the Federal court. This privilege is not extended to and does not exist in favor of the resident litigant. He is deprived of the right to go into the United States court and is compelled to go into the State court. The nonresident is therefore given an advantage that the resident does not have. He can permit the case to remain in the State court or he can ask for its removal and take the case into the Federal court. Since the Supreme Court has decided that a corporaton is a citizen, and since the doing of business under corporate names has greatly increased, it has become a common practice for corporations to be incorporated in one State while they do business in another. And there is no doubt but what that often occurs simply for the purpose of being able to have the advantage of two tribunals in case of litigation. A corporation is often organized under a State where it has no property, where none of the incorporators live, where they do no business and have no intention of doing business. The incorporators usually live in the State where they do business, where their property exists, and yet if they desire to commence an action against any citizen of the State where they do business, they can commence it in a Federal court and thus greatly increase the expense which the opposite party will be subjected to when, as a matter of fact, no Federal question is involved and when the action is based entirely upon State statute where both the plaintiff and the defendant live and actually do business. PROPOSED CHANGE WILL SAVE EXPENSE TO LITIGANTS It is common knowledge that is costs a great deal more to litigate in the Federal courts than in State courts. In most cases the parties to the suit and the witnesses must be taken a much greater distance to attend the sittings of the court. There are places now in some of the States where defendants who are brought into Federal court must travel as far as 500 miles in order to defend their rights; and when we consider that this is done when no Federal question is involved, when nothing but the construction of a State statute is at issue, it is quite apparent that it often results in great injustice. It often happens that litigants thus brought into Federal court will settle and compromise in matters where they would have no difficulty in winning their contention if they had the financial ability to follow their opponent into distant cities to try the issue. After the case is tried, if it is in Federal court, it then can be taken to the Court of Appeals, and from there to the Supreme Court of the United States, which often means, to the poor litigant, the denial of justice simply because he is not financially able to pay this increased expense incident to the litigation. A corporation doing business in one State may have all of its property in that State and do all of its business there; its stockholders may all reside there; and it may do business in no other State; but it is incorporated in another State. When it sues a resident of the State where it does business, it can do so in the Federal court. If it is sued in the State where it does business, by a resident of that State, it can have the case removed to a Federal court. Its competitors in business, doing the same kind of a business, in the same locality, are denied this privilege. The result often is, particularly with corporations, that they are able to make litigation so expensive that their antagonists in the suit frequently submit to unjust and unreasonable demands rather than go to the expense of litigating their rights in the United States courts. It means very frequently that the litigant must travel many miles and take his witnesses long distances to the place where the trial will be had. In addition to this the expense for the employment of attorneys is much greater in Federal courts than in State courts. In many other ways, litigants may be subjected to annoyance, delays, and expenses which often result in a denial of justice. If the litigant wins his case in the United States District Court, and the nonresident corporation so desires, it can take the case on appeal to the United States Circuit Court of Appeals. This means that his attorney must travel perhaps hundreds of miles to be in attendance upon that court. Every continuance means additional expense, and in many other ways his expenses are much larger than though the same appeal took place in the State court. There is no reason why an individual or a corporation doing business in a State should not submit himself or itself to the courts of that State. There is no reason why such nonresident litigant in a lawsuit should be allowed to drag his opponent into such expensive channels to secure justice or to litigate a disputed question. PRESENT LAW MAKES PROPERTY RIGHTS MORE VALUABLE THAN HUMAN RIGHTS Under existing law the nonresident is given an unfair advantage for his property, an advantage which does not accrue in favor of his personal liberty. His property rights, in other words, are given more consideration and are surrounded with more safeguards than are the rights of life itself. If his business is incorporated in a foreign State and he has a personal dispute or a controversy with his neighbor which leads to litigation and the amount involved is $3,000 or more, he is given the great advantage denied to his opponent of taking his controversy into the Federal courts. If, on the other hand, an inhabitant of one State crosses the State line and commits a crime, murder for instance, in another State, the law does not consider even his life as valuable as it |