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August 8, 1950


The opinion of the court was delivered by: MCGOHEY

This is a motion under Rule 25(a)(1) *fn1" of the Federal Rules of Civil Procedure, 28 U.S.C.A., for an order substituting as parties defendant Gertrude Jasspon and Security-First National Bank of Los Angeles, Executrix and Executor, respectively (hereinafter referred to as Executors), of the Last Will and Testament of Moses Bernard Jasspon, the deceased defendant.

The action was commenced December 2, 1948. Jasspon died in California on November 25, 1949. The Executors appear here 'specially and only for the purpose of opposing plaintiff's motion.'

 Letters Testamentary were issued to the Executors in the Superior Court of the State of California in and for the County of Los Angeles on January 11, 1950. It appears that no inventory has yet been filed and that there has been no final distribution and settlement of the estate. There is nothing in the papers submitted on this motion to indicate that there are any assets within this District, and there are no Surrogate's Court proceedings pending in New York State.

 The notice of motion was served on the Executor and the Executrix in Los Angeles, California, by a Deputy United States Marshal on February 16, 1950, and February 27, 1950, respectively. They are both California residents and the Security-First National Bank is not qualified to do business in New York. The attorneys for defendant were served in New York on March 1, 1950.

 Jurisdiction rests on diversity of citizenship, the amended complaint alleging that plaintiff is a Maryland corporation duly qualified to do business in New York and that defendant was a New York citizen. The action is for an accounting and damages for Jasspon's alleged breaches of his fiduciary duty as plaintiff's vice president in charge of beverage spirits sales. He is asserted to have realized undisclosed profits from transactions he caused plaintiff to enter into; to have appropriated corporate opportunities for his own profit; and to have accepted bribes and other compensation from plaintiff's customers.

 Defendant went to California shortly after service of the complaint, and on January 24, 1949, moved for a change of venue to the Southern District of California claiming that he was a resident of that district then and at the time the action was commenced. A Special Master was appointed to take testimony and report on that issue, but the proceedings have not been completed and the issue of defendant's residence remains undetermined. For the purposes of this motion I have assumed that the venue is proper.

 Since the commencement of the action there have been several motions relating to attempted examination of Jasspon, whose health was apparently too poor to permit the examination to be completed. A suggestion by Judge Leibell that a stipulation of facts be entered into failed of fruition when Jasspon died. Issue was not then joined, Jasspon's time to answer having been adjourned prior to his death to December 15, 1949.

 Rule 25 of the Federal Rules of Civil Procedure, which applies only if the death of the defendant does not extinguish the claim, does not undertake to designate the claims which survive. Under New York Law, by which that question must be determined, *fn2" the instant claim survives since it is one for injury to property. *fn3"

 It would seem therefore that, as the plaintiff has complied with the plain requirements of Rule 25(a)(1), the motion should be granted. The Executors argue, however, that this case is not covered by the Rule -- that the Rule does not mean what it says when it authorizes service 'in any judicial district' -- and that, assuming it does apply, its use here to permit substitution would be in violation of the doctrine of Erie R. Co. v. Tompkins, supra. Neither contention is sound.

 According to the Note of the Advisory Committee on Rules, Rule 25(a)(1) is based upon old Equity Rule 45 *fn4" and old 28 U.S.C.A. § 778 *fn5" The 1921 amendment, adding to Sec. 778 the last two paragraphs quoted in the margin, made it quite clear that Congress intended the section to provide for the substitution of personal representatives appointed in a state other than the one in which the federal court was sitting by service upon them in any state or territory of the United States. *fn6"

 The Executors, while citing no authority in support of their narrow interpretation of Sec. 778, attempt to nullify the effect of the Luster and Plimpton cases. In Luster v. Martin an action was begun in the Wisconsin court against one Hermann to recover funds he was alleged to have obtained as a result of his breach of a reorganization agreement. Hermann was personally served in Wisconsin and had the action removed to the federal court. Upon his death as a resident of Missouri shortly thereafter, plaintiffs, by service of a scire facias pursuant to Sec. 778, substituted his executors who were appointed in Missouri and were residents of that state. The executors, as here, appeared specially and moved to quash the writ. The motion was denied as was their motion to dismiss. On appeal the Circuit Court held that: 'section 778 authorized the revival of the suit against Hermann's executors no matter in what state they were appointed.' 58 F.2d at page 540.

 The Executors here say, however, that the Luster case is distinguishable because the complaint in that case alleged that large sums belonging to Hermann were on deposit in Wisconsin banks and that the Circuit Court said, 58 F.2d at page 539: 'The numerous reasons which appellants assign for dismissal of the complaint will be considered on the assumption that the facts stated in the complaint are true.' The theory being that in the Luster case there was a res subject to the court's jurisdiction -- a fact not present in the instant case.

 It seems extremely doubtful to me that the court in deciding the case attributed any weight to this factor; certainly, the discussion of Sec. 778 quoted above does not advert to it. Indeed there is strong ground to believe that the Court did not give it any weight because, continuing the quotation in the preceding paragraph, the Court said, 58 F.2d at page 539: 'We have examined the supporting and opposing affidavits and find in the statements of Mr. Catlin and Mr. Skamser, two disinterested parties, persuasive support of all of the allegations of the complaint, save the statement therein appearing that large sums of money made up of said trust funds were on deposit in banks in Eau Claire, Wis., and Chicago, Ill.'

 Accordingly, I am unable to accept the asserted distinction. The Connecticut District Court in Plimpton v. Mattakeunk Cabin Colony, supra -- a case indistinguishable from this one -- regarded the Luster case as controlling and held that Sec. 778 authorized revival against executors ...

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