§ 1359. — Parties collusively joined or made.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 28USC1359]
TITLE 28--JUDICIARY AND JUDICIAL PROCEDURE
PART IV--JURISDICTION AND VENUE
CHAPTER 85--DISTRICT COURTS; JURISDICTION
Sec. 1359. Parties collusively joined or made
A district court shall not have jurisdiction of a civil action in
which any party, by assignment or otherwise, has been improperly or
collusively made or joined to invoke the jurisdiction of such court.
(June 25, 1948, ch. 646, 62 Stat. 935.)
Historical and Revision Notes
Based on title 28, U.S.C., 1940 ed. Secs. 41(1) and 80 (Mar. 3,
1911, ch. 231, Secs. 24(1), 37, 36 Stat. 1091, 1098; May 14, 1934, ch.
283, Sec. 1, 48 Stat. 775; Aug. 21, 1937, ch. 726, Sec. 1, 50 Stat. 738;
Apr. 20, 1940, ch. 117, 54 Stat. 143).
Other provisions of section 41(1) of title 28, U.S.C., 1940 ed., are
incorporated in sections 1331, 1332, 1341, 1342, 1345, and 1354 of this
title.
Provisions of section 80 of title 28, U.S.C., 1940 ed., for payment
of costs upon dismissal of an action for lack of jurisdiction are
incorporated in section 1919 of this title. Other provisions of said
section 80 appear in section 1447 of this title.
Provisions of section 80 of title 28, U.S.C., 1940 ed., for
dismissal of an action not really and substantially involving a dispute
or controversy within the jurisdiction of a district court, were omitted
as unnecessary. Any court will dismiss a case not within its
jurisdiction when its attention is drawn to the fact, or even on its own
motion.
The assignee clause in section 41(1) of title 28, U.S.C., 1940 ed.,
``is a jumble of legislative jargon.'' (For further references to the
consequences of ``its obscure phraseology,'' see, 35 Ill. Law Rev.,
January 1941, pp. 569-571.)
The revised section changes this clause by confining its application
to cases wherein the assignment is improperly or collusively made to
invoke jurisdiction. Furthermore, the difficulty of applying the
original clause is overcome and the original purpose of such clause is
better served by substantially following section 80 of title 28, U.S.C.,
1940 ed.
The assignee clause was incorporated in the original Judiciary Act
of 1789. Such section 80 was enacted in 1875. The history of the
assignee clause ``shows clearly that its purpose and effect, at the time
of its enactment were to prevent the conferring of jurisdiction on the
Federal courts, on grounds of diversity of citizenship, by assignment,
in cases where it would not otherwise exist.'' (Sowell v. Federal
Reserve Bank, 1925, 45 S.Ct. 528, 529, 268 U.S. 449, 453, 69 L.Ed. 1041,
1048.) Thus the purpose of the assignee clause was to prevent the
manufacture of Federal jurisdiction by the device of assignment. It
achieves this purpose only partially. For example, the assignee clause
excepts two types of choses in action from its coverage: (1) Foreign
bill of exchange; and (2) corporate bearer paper. But this does not
prevent the use of assignment of these choses in action to create the
necessary diversity or alienage for jurisdictional purposes. Such
section 80 does, however, prevent that. (See Bullard v. City of Cisco,
1933, 54 S.Ct. 177, 290 U.S. 179, 78 L.Ed. 254, 93 A.L.R. 141.) Its
coverage against collusive jurisdiction is unlimited, and its approach
is direct. The assignee clause, on the other hand, prevents the bona
fide assignee of a chose in action within its terms from resorting to
the Federal courts unless there is jurisdiction to support the assignee-
plaintiff's case and a showing that there would have been jurisdiction
if the assignor had brought the action in lieu of the assignee-
plaintiff. Since the assignee clause deals with the bona fide assignee,
there has been much litigation to determine the assignments which should
or should not be within the purview of the clause. Thus the courts have
thought it advisable to limit the term ``chose in action'' and exclude
from its scope (1) an implied in law duty or promise, and (2) a transfer
of a property interest; and to exclude an assignment by operation of law
from the coverage of the clause. Intermediate assignments and
reassignment also give difficulty.
