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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. There is no reason, if the Federal court should have jurisdiction in such 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 QUES
TION 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 litiga
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
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 would $3,000 of his property. He is arrested after he has escaped to his own State. He is extradited and carried across the line, back into the State where the crime was committed. He is compelled to submit to a trial before a State judge—the tribunal trying him, perhaps for his life, is the same tribunal which tries citizens of that State in similar cases. He may be sent to prison; indeed, he may be sent to the scaffold or to the electric chair, all under the rules and regulations of State authorities. His life is not considered sufficiently valuable to give him the privilege which is given to his property. Where human life is at stake it is no sufficient reason to have the case transferred to the Federal courts. Such a blessed privilege and unfair advantage comes only to property.
RELIEF OF FEDERAL COURTS FROM CONGESTION
The congestion in our Federal district courts is acknowledged by all. That of itself is often a denial of justice. All classes of our citizens have recently become interested in various proposals for the relief of the congestion in our Federal district courts. The President of the United States has sent official messages to Congress on the subject. He has appointed a commission composed of eminent jurists and other able, patriotic scholars. The question has received the attention of the leading members of the bar throughout the entire country. Federal judges from the Surpeme Court down have lent their assistance in trying to devise some plan by which the Federal courts can be relieved from a large amount of the work now upon Federal judicial dockets.
Of all the suggestions which have been made from any source there is none which will bring as much relief as would the enactment of this proposed bill. It is estimated that the work of the Federal judiciary would be decreased from 25 to 40 per cent if this bill should be enacted into law. Not only would this relief for the Federal judiciary take place, but it would do it without any injustice of any kind coming to any person or corporation.
We are continually met with the demand for more judges, and if we provided for enough district judges to do all the work of the district courts and keep the dockets of those courts up to date, it would require a very large number of additional judges, prosecuting attorneys, United States marshals, and all other officials which necessarily go to the establishment and maintenance of courts of justice.
If all the cases involving diverse citizenship should be left for the State courts, where they fairly and honestly belong, this congestion in Federal courts would be relieved, the demand for more Federal judges would disappear, and all this would occur without any injustice to anyone. Every logical reason seems to point to the step which this bill proposes to take, and there is no reason now existing why the jurisdiction which this bill would take away from Federal courts should be retained. Many of the matters which the United States courts are trying, arising entirely within the jurisdiction of a State, and controversies coming up exactly the same as contro versies arise between citizens of the same State, would, if this bil. becomes a law, be left to the State courts for adjudication. There is no good or logical reason why this proposed bill should not become a law.