are again presented to the committee. Schedules I, II, and III, annexed hereto, summarize the figures collected and show the relative number and percentage of litigated cases involving diversity of citizenship as an element of Federal jurisdic

tion.

These figures clearly show that the use of Federal courts by legal reserve life insurance companies is moderate and reasonable and remains almost constant without appreciable variation from year to year.

The schedules show that in round numbers, out of 18,000 litigated cases which the 42 life-insurance companies had in all courts, State and Federal, during the 5-year period, only 530, or about 3 percent, were removed by the companies from State to Federal courts. In addition to these removals there were during the 5-year period 490 cases, or 2.7 percent of these companies' total litigated cases which were commenced by the companies in the Federal courts, as distinguished from cases removed thereto. Some of these 490 cases constituted cases in which the companies were not, in the usual sense, parties, being cases in which there was payment of insurance proceeds into court pursuant to Federal interpleader proceedings. Approximately 100 further cases during the 5-year period were commenced against the companies in Federal courts on the ground of diverse citizenship.

Totaling these cases of all kinds in the Federal courts it appears on the average (schedule I) that 6.3 percent of a life-insurance company's total of litigated cases was determined in the Federal courts and that Federal jurisdiction in some of these was invoked by the adverse party.

THE ASSOCIATION OF LIFE INSURANCE PRESIDENTS,

New York City

SCHEDULE I.-Extent to which Federal courts were made use of by and against legal reserve life insurance companies, 1927-31, inclusive

Includes a substantial number of cases commenced by company, in which company is not resisting liability but interpleading rival claimants to the insurance fund, as permitted by Federal statute.

SCHEDULE II.-Tabulation showing percentage of cases by and against legal reserve life insurance companies in Federal courts to total of such company's litigation in all courts, for each year, 1927-31, inclusive; variation in use of Federal courts from year to year indicated

SCHEDULE III.-Tabulation showing, separately, percentages of cases by and against legal reserve life insurance companies in Federal courts to total of such company's litigation in all courts, for each year 1927-31, inclusive; variation in use of Federal courts from year to year indicated

1. Percentage of cases against legal reserve life insurance companies removed to Federal courts to total cases by and against such companies in all courts, State and Federal...

3.8

2. Percentage of cases commenced by legal reserve life insurance companies originally in Federal courts to total cases by and against such companies in all courts, State and Federal...

3. Percentage of cases commenced againt legal reserve life insurance companies originally in Federal courts to total cases by and against such companies in all courts, State and Federal..

3.8

99485

9

Mr. VINCENT. Mr. Chairman, I think we have an arrangement where Major Tolman, Mr. Padway, and myself are to discuss the changes that were suggested yesterday, so I will not take any of your time today.

The CHAIRMAN. Yes. We are very much obliged to you gentlemen, and we appreciate the disposition you have shown to iron out those questions. This is one of the finest hearings we have ever had. As I understand it, after Major Tolman, Judge Padway, and you, and possibly others, have your conference, the committee will hear from you, and your conclusions will be placed in the record.

Hon. EDGAR B. TOLMAN,

NEW YORK, N. Y., March 7, 1938.

Advisory Committee on Rules for Civil Procedure,

Washington, D. C.

DEAR MAJOR: I have your letter of March 5 stating the suggestions made by Judge Padway, general counsel for the American Federation of Labor, and Mr. Vincent, general counsel for the International Garment Workers' Union, respecting rule 4 (d) (3) and rule 65 (e). Their suggestions involve some minor amendments to these rules. If these suggestions had come in before the rules were adopted by the Supreme Court, I think we would have had no difficulty at all in making such changes in phraseology as might have satisfied them. There might have been some room for argument as to whether any changes ought to be made in rule 4 (d) (3), but certainly none as to rule 65 (e), because in the latter case we think we have done precisely what the counsel for these labor organizations want, and would have been quick to alter the verbiage to satisfy them. Coming at this time, however, the suggestions are not so easy to deal with. The fundamental principle back of the new system is to have court-made rules and not legislative rules, and the moment that the legislative body commences to alter the rules promulgated by the Court, the whole situation is thrown into confusion and we have a mongrel system, and the making by the Congress of some slight amendments at the suggestion of some interested parties immediately opens the door to a general tinkering process. Under these conditions it seems to me that Judge Padway and Mr. Vincent ought not to press their suggestions unless they are convinced that they are really needed and that the matter is of somewhat vital importance. I have gone over the subject very carefully since the receipt of your letter, and have the following comments to make:

İ. Rule 4 (d) (3) provides for the manner of service upon a corporation or upon a partnership or upon any other unincorporated association, and calls for

delivery of the summons and complaint to "an officer, a managing or general agent. The suggestion made by counsel for the labor organizations is that, insofar as unincorporated associations are concerned, it is objectionable to provide for service upon "an officer, a managing or general agent," and that the rules should provide that service on an unincorporated association should be on the "president, vice president, treasurer, or member of the executive board." The purpose of defining the persons upon whom service is made is to make it reasonably certain that the summons and complaint will come to the hands of some responsible persons connected with the unincorporated association so that it may be given attention and that judgment may not be entered by default. It does seem to me that a requirement that in such case the summons and complaint be delivered to an officer, managing or general agent is calculated to bring the suit to the attention of the proper authorities in the association. As a prac tical matter, the complainant in such a suit would always prefer to serve an officer of the association if he could, but if he does not, can it reasonably be said that service on the managing or general agent might result in a default judgment? The words "general agent" and "managing agent" have been well defined in the law and they do not include an ordinary agent, but mean only some man who is a real manager of the affairs of the association. I have not known a case in all my experience where service on an agent or managing agent of any incorporated or unincorporated association failed to bring the suit to the attention of the responsible persons in the organization. Furthermore, if by any chance the person served failed or neglected to bring the service to the attention of the responsible officials of the association, is it not plain that a court would promptly open up any default and allow the responsible officers to appear and make a defense? In many State jurisdictions whose practice has heretofore been followed by the Federal district courts the law has provided that in suits against partnerships or unincorporated associations service on a member is sufficient, and judgment, after such service, binds the association's property as well as that of the individual served. Our rule is more strict than that, and even in the case of a partnership does not make service on a member sufficient unless he be an officer or general or managing agent.

I do hope that Judge Padway and Mr. Vincent will give this situation reconsideration and agree with me that the chances of any injury being done to an unincorporated association by the rule as drawn is really too remote and improbable to justify insisting that the Congress now pass a statute amending this rule. Doubtless the Supreme Court would promptly amend it if in practice a case ever develops where the service permitted by the rule is found to be inadequate, and even without such experience the Court might be persuaded to make an order amending the rule in due course and lay it before the next session of Congress, although I am frank to say I do not know what good reasons can be adduced to the Court, short of actual experience to the contrary, which would justify an amendment to the rule on the theory that the service made as provided may fail to come to the attention of the responsible officials of an unincorporated association.

2. The other suggestions relate to the first clause in rule 65 (e), which reads: "These rules do not modify the Act of October 15, 1914, c. 323, §§ 1 and 20 (38 Stat. 730), U. S. C., Title 29, §§ 52 and 53, or the Act of March 23, 1932, c. 90 (47 Stat. 70), title 29, c. 6, relating to temporary restraining orders and preliminary injunctions in actions affecting employer and employee”— And so forth.

The suggestion is made that the phrase "relating to temporary restraining orders and preliminary injunctions" raises the inference that the acts referred to may be changed by the rules in respect to other matters. I can see why some of the leaders of these labor organizations who are not lawyers might jump at the conclusion that there are many provisions in the acts referred to which establish valuable rights for labor organizations which might be affected by the rules, because the quoted provision of rule 65 (e) uses the phrase above set forth. I have today read over carefully the two statutes referred to in this rule having to do with labor disputes. The first thing that is obvious is that most of the provisions in the statutes relate, not to matters of procedure but to matters of substantive right, in that they state the facts and conditions which must exist before injunctions can be granted. These new rules of civil procedure have nothing to do with matters of substantive right. The statute under which they are issued expressly provides that "said rules shall neither abridge, enlarge, nor modify the substantive rights of any litigant," and any rule that was in conflict with this provision of the statute would be void. Furthermore, the rules have been drafted with meticulous

care to prevent any interference with substantive right, and to limit their scope to pleading, practice, and procedure.

Subdivision (e), above referred to, is a part of rule 65 entitled "Injunctions." So far as subdivisions (a), (b), and (c) are concerned, it is clear that the procedural provisions in them relate only to temporary restraining orders and preliminary injunctions, and it was quite natural, I think, for the committee to use the phrase that it did in subdivision (e). There is nothing in rule 65 relating to permanent injunctions, unless in subdivision (d) the phrase "every order granting an injunction and every restraining order" is construed to apply to permanent injunctions as well as to temporary injunctions, but, even if so, there is nothing in subdivision (d) which is in conflict with either of the statutes referred to, or is objectionable in itself to labor organizations.

I think it is worth while to consider in some detail the provisions of the two statutes in which the labor organizations are interested.

The first is the act of October 15, 1914, which is found as section 52 of title 29 of the United States Code. I have read that section over and every word in it relates to matters of substantive right except one. That one is the requirement at the end of the first paragraph that the complaint must be in writing and sworn to by the applicant or by his agent or attorney. Now our rules require that the complaint be in writing, and rule 11 expressly provides that the complaint must be verified when "specifically provided by rule or statute," so that the only procedural provision in section 52, title 29, being the act of October 15, 1914, has been expressly retained in our rules. If Judge Padway and Mr. Vincent would carefully read over the rest of that section, I am sure they will agree with me that there is nothing else which is procedural in it or has anything to do with pleading, practice, and procedure, and with the exception noted the section deals entirely with matters of substantive right, which the new procedural rules do not deal with and which they could not effectively deal with under the enabling act authorizing their promulgation.

The other statute in which they are interested is the act of March 23, 1932, known as the Norris-LaGuardia Act, which is found as sections 101 to 115 of title 29, United States Code. The greater part of that statute is given up to matters of substantive right, that is, to stating the conditions and facts which must exist in order to entitle the complainant to an injunction, a subject not dealt with by the rules of civil procedure. Section 102 contains a declaration of public policy in labor matters which bears only on the matter of substantive right or the legal right to injunctions, and not to any matter of procedure. Section 103 deals with the enforceability of yellow dog contracts and is likewise not touched by the rules, and could not be. Section 104 states what particular acts cannot be enjoined. That again deals with substantive rights and has nothing to do with procedure and is not covered by our rules and could not be under the enabling act. The same thing is true of section 105, section 106, and section 108. Section 110 merely provides that in case a temporary injunction is issued there shall be a right of appeal and that the record shall be certified up, as in ordinary cases, and that the case shall be heard promptly in the upper court. Our rules do not attempt to deal with the right of appeal, as that is not a procedural matter but a matter of substantive right. We have general provisions applicable to all cases prescribing how the record shall be made up for certification to the appellate court, so that in appeals from temporary injunctions in labor cases the records would have to be prepared and certified up as our rules prescribe, but section 110 now provides that the procedure for certifying the record shall be as in ordinary cases, so I see no reason why the labor organizations should object to a continuation of the practice that the records in labor injunction cases should be made up in the same way as in other cases. So far as precedence in the circuit court of appeals is concerned, our rules do not deal with that, and the matter is governed by the rules of the courts of appeals, which would have to conform with the statute. Section 111 provides that in contempt cases in injunction suits where there is a labor dispute, the person charged with contempt shall be entitled to the right to a speedy and public trial by jury. Our rules do not interfere with this, as rule 38 (a) expressly protects the right of trial by jury when given by statute, and there is nothing anywhere in the rules which would interfere with the statutory right of trial by jury in contempt cases. Neither have we anything in the rules that deals with or runs counter to the provisions of section 112 as to the eligibility of a judge to sit in a contempt case.

This leaves only section 107 and section 109 which contain any procedural provisions. The substance of section 109 is a requirement for findings of fact to be made by the court prior to the issuance of a restraining order or injunction. These provisions, insofar as they relate to restraining orders or temporary injunctions,

are expressly saved in any view of the case by the language of subdivision (e) of rule 65. Furthermore, rule 52 (a) requires that in every case where a final judgment is entered the court must find the facts specially and state his conclusions of law separately, and this provision includes, of course, suits for injunctions. Furthermore, in the same rule 52 (a) it is expressly provided that in granting or refusing interlocutory injunctions the court shall similarly set forth the findings of fact and conclusions of law.

This leaves only for consideration section 107. Much of that section again relates to substantive rights, that is to say, the conditions which must exist to entitle the complainant to an injunction, and matters of substantive right are not dealt with by the rules at all. In other words, the rules do not attempt to say what the conditions must be or what facts must be proved to entitle a party to an injunction, and the Supreme Court could not lawfully have made any rule on that subject under the terms of the enabling statute. So far as there are any procedural provisions in section 107, they are reiterated in our rule 65 (a), (b), and (c), and if they are reiterated they are certainly saved, so far as temporary orders and preliminary injunctions are concerned, by subdivision (e).

I am quite unable to find anything in our rules which attempts to deal with matters of substantive right, such as the validity of yellow-dog contracts and the right to restrain or interfere with picketing or to the right to an injunction where there is an adequate remedy at law or where public officers are able to furnish protection or anything of that kind. The procedural provisions in section 107, such as, that a temporary restraining order be effective for no longer than 5 days, and the requiring of the giving of security, etc., are all reiterated. It must further be borne in mind that even if we do not in the rules reiterate provisions in these labor-dispute acts, the provisions of the statute remain in effect unless there is something in the rules of procedure in conflict with them.

I hope Judge Padway and Mr. Vincent will carefully review this situation, and I feel confident that they will reach the conclusion that there is really nothing in these rules that diminishes in one iota the protection afforded labor unions in the statutes referred to.

In addition to what I have said, it will be noted that subdivision (e) states "these rules do not modify the act of October 15, 1914," etc. It does not say merely that the rules do not modify these provisions of the acts relating to temporary restraining orders and preliminary injunctions. In this respect it is in contrast with the following clause relating to interpleaders. The phrase "relating to temporary restraining orders and preliminary injunctions" is merely the description of the act and does not limit the saving clause. Doubtless the reason the advisory committee used the phrase "temporary restraining orders and preliminary injunctions" was that they understood that everything in rule 65 was limited to temporary restraining orders and preliminary injunctions.

I shall not be able to go down to Washington on Thursday as I have a case in the appellate division here, and that is the reason I have set forth at considerable length my views about the effect of these rules. I am sending you two extra copies of this letter so that Judge Padway and Mr. Vincent can be supplied with it and give it consideration at their leisure in advance of your conference. It must be remembered also that I have no authority to agree to the passage of any amendments to these rules. They were promulgated by the Court, and the functions of the advisory committee are ended for the time being, and certainly I cannot speak for the Court, and if there is any attempt by conference to reach any sort of agreement to be submitted to the Judiciary Committee of the House, I think certainly the representatives of the labor unions ought to confer with the Chief Justice and not with me. Here again, as in the case of the other rule to which objection is made, it is quite obvious that if anybody had asked us to do so in advance of the promulgation of these rules, the advisory committee would have stricken out entirely the phrase "relating to temporary restraining orders and preliminary injunctions in actions affecting employer and employee," and left in merely the provision that the rules do not modify the acts enumerated.

You will notice in rule 81 we have described various statutes precisely in the same way, first stating the section references, the date of passage, and then following with a brief sentence describing the general tenor of the act so as to enable lawyers to identify it readily and be informed of the subject matter of the statute referred to without looking it up in the code.

Notwithstanding that this amendment would have been promptly agreed to at the appropriate time, my point now is that it would again be exceedingly unfortunate if Congress attempted to make any amendments to these rules and thus muddle up the principle of having the procedure prescribed by the courts instead of by statute. Possibly if it were asked to do so, the Supreme Court, at the ap