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CITY OF BUFFALO v. SPANN REALTY CORP.

September 10, 1948

CITY OF BUFFALO
v.
SPANN REALTY CORPORATION et al.



The opinion of the court was delivered by: KNIGHT

Defendant Plainfield Hotel Corporation has petitioned for removal of said cause from County Court of Erie County, New York, to this District Court 'on the grounds of diversity of citizenship, prejudice and local influence, a constitutional question, and a separable controversy.'

The petition of F. Dudley Kohler, Petitioner's treasurer, verified August 2, 1948, recites in substance that the amount in dispute exceeds $ 3,000; that petitioner was and is a citizen of New Jersey and a non-resident of New York; that, on February 24, 1947, plaintiff commenced a civil action in Erie County Court against petitioner, who appeared specially to object to jurisdiction on ground it was not doing business in New York State but court ruled that service was binding and petitioner appealed from this ruling to the Appellate Division, City of Buffalo v. Plainfield Hotel, Corp., -- App. Div. -- , 76 N.Y.S.2d 360, which affirmed; that, on April 30, 1948, plaintiff without notice or trial entered judgment; that petitioner has not had its day in court; that the suit involves a separable controversy between citizens of different states; that the suit is in equity 'to foreclose on alleged liens for taxes for which your petitioner has offered payment in full, regardless of claims against the other defendants'; that petitioner disputes the claim against it.

 It is further alleged that a constitutional question is involved, viz. 'whether the petitioner is being deprived of its real property without due process of law;' that petitioner denies that plaintiff is entitled to the relief claimed; that the time has not elapsed within which petitioner is required to answer or plead to complaint; that petitioner has not pleaded or answered and has a good and sufficient defense.

 Petitioner then alleges that it desires removal because 'on account of prejudice and local influence in favor of plaintiff and adverse to your petitioner, (it) will be unable to obtain justice in said County Court of the State of New York, or in any Court of said State * * * . That said prejudice or local influence arises (because) plaintiff is represented by persons of local political influence, and the persons comprising the said Court and its constituents are prejudiced against petitioner because it is a corporation of another state, and local people desire to buy in the property sought to be foreclosed at a very low price on a so-called tax sale.'

 Petitioner offers a $ 500 surety bond and prayes that it be accepted and on an order of removal be issued.

 Deponent, in a supplemental affidavit verified August 9, 1948, alleges that none of the defendants have answered and are all in default, except petitioner which appeared specially; that there is therefore no controversy between plaintiff and other defendants; that 'there has not been any trial or hearing in the said action.'

 In an opposing affidavit of Edward H. Murphy, plaintiff's assistant corporation counsel, verified August 26, 1948, it is alleged that plaintiff on October 10, 1946, brought an action against defendants in County Court of Erie County to foreclose city taxes and tax sales against premises described in the complaint, pursuant to Article 32 of Buffalo City charter; that taxes had not been paid 'from the years 1931 to 1945 both inclusive'; that the summons and complaint was duly served upon petitioner; that on March 31, 1947, a motion was made by petitioner's attorneys in said County Court for an order vacating service of summons and complaint on ground that service was illegal; that an order was made by the county judge denying said motion; that petitioner appealed from said order to the Appellate Division, which affirmed.

 It is further alleged that petitioner never filed a general notice of appearance; that on February 10, 1948, 'this action was referred by said County Court to Mr. Donald Case to hear, try and determine the issues * * * to compute the several amounts due to the plaintiff and to the defendants, County of Erie and Buffalo Sewer Authority on the liens alleged in the complaint * * * to take proof of the facts and circumstances * * * and to make his report'; that a hearing was duly held before said referee and he made his report, dated April 22, 1948 and filed April 30, 1948, on which said County Court granted judgment of foreclosure and sale, duly entered April 30, 1948; that said property was duly advertised for sale by the referee to sell and, on May 26, 1948, was offered for sale at public auction and sold to plaintiff for $ 15,000, the highest bid; that said sale was attended by petitioner's treasurer, F. Dudley Kohler, who bid $ 14,100.

 It is further alleged that on day prior to sale, plaintiff's corporation counsel received an order, signed by Hon. Leslie F. Robinson, Erie County Judge, directing plaintiff to show cause why an order should not be made opening the default and judgment and vacating and setting it aside and why petitioner should not be granted leave to answer and why all proceedings should not be stayed; that said motion was made by petitioner upon the affidavit of said F. Dudley Kohler, verified May 24, 1948, was argued before said Judge Robinson and resulted in an order vacating the order to show cause and denying petitioner's motion to open its default and for permission to answer the complaint.

 It is then alleged that petitioner on June 22, 1948, appealed from said order to the Appellate Division and 'that such appeal has not been heard and is now pending.'

 The petition in this case was filed August 16, 1948.

 At that time section 29 of the Judicial Code, 28 U.S.C.A. § 72, was in effect, which provided in part as follows: 'Whenever any party entitled to remove any suit mentioned in section 71 of this title, except suits removable on the ground of prejudice or local influence, may desire to remove such suit from a State court to the district court of the United States, he may make and file a petition, duly verified, in such suit in such State court at the time, or any time before the defendant is required by the laws of the State or the rule of the State court in which such suit is brought to answer or plead to the declaration or complaint of the plaintiff, for the removal of such suit into the district court * * * .'

 Said section 71 of U.S.C.A. Judicial Code, sec. 28, specifically mentions diversity of citizenship, constitutional question and separable controversy. Under said section 72 the petition for removal on any of these grounds must be made in the state court. 'The method of removal so prescribed is exclusive, and a removal on such ground cannot be granted on a petition to the federal court to which the cause is sought to be removed.' 54 Corpus Juris,p. 317.

 These two sections have been superseded by the recent Title 28, United States Code, which became effective September 1, 1948. Apparently under the new Code, sec. 1446(a), all petitions for removal may not be filed in the district court. The Reviser's Notes state, page 1857: 'Subsection (a), providing for the filing of the removal petition in the district court, is substituted for the requirement of sections 72 and 74 of title 28, U.S.C., 1940 Ed., that the petition be filed in the State court. This conforms to the method prescribed by section 76 of title 28, U.S.C., 1940 Ed., and to the recommendation of United ...


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