Mr. CELLER. I am not worried so much about raising the issue, but I take this view of it: This agent out in the small town may carry the process around in his pocket, or for some other reason they may not know anything about this process having been served on their agent. Under these rules the general organization might be put to a very great disadvantage. Service ought to be made on some duly authorized representative of that organization; some official.

Mr. TowEY. If he is managing agent; isn't he an official?

Mr. MORRIS. That is a question of fact; that is not a question of rule.

Mr. CELLER. While we are at it, it ought to be made clear.

Mr. MORRIS. The question involved is, Is this man, in fact, my agent? I have a right to go in and show that this man is, in fact, my agent, or that he is not my agent.

Mr. CELLER. I am curious to know how the labor organizations feel about this, the American Federation of Labor and the C. I. O. Mr. RAMSAY. The difficulty is if you make that kind of an appearance you are already in court.

Mr. MORRIS. I could make an appearance under a special provision of law allowing me to plead to the jurisdiction because my agent has not been served. Whether that man is my agent or is not my agent is a matter of fact, a question of fact to be decided. I would not say that the rule is at fault. I go along with you as to the ultimate difficulty involved in it.

Mr. CELLER. The legislature finally came to the conclusion that it ought to be on an officer of the corporation or one designated by the union or one by the statute to receive process.

Mr. WALTER. Is not that very situation made clear in 17 (B): Capacity to sue or be sued.-The capacity of an individual, other than one acting in a representative capacity, to sue or be sued shall be determined by the law of his domicile. The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized. In all other cases, capacity to sue or be sued shall be determined by the law of the State in which the court is held, except that a partnership or other unincorporated association, which has no such capacity by the law of such States, may sue or be sued in its common name for the purpose of enforce for or against it a substantive right existing under the constitution or laws of the United States.

Mr. MORRIS. Mr. Celler is talking about unincorporated organizations.

The CHAIRMAN. We have some people here who have gone into all of these rules detail by detail, and we ought to get to those gentlemen as soon as possible and find out what it is all about. Now, the witness has just made that suggestion, and it seems to me it is a pretty good suggestion, so that we may finally get down to the issue and see what there is in this whole controversy.

Mr. MCLAUGHLIN. I want to ask one fundamental question, Mr. Chairman.

The CHAIRMAN. Mr. McLaughlin.

Mr. MCLAUGHLIN. The act of June 19, 1934, authorized the Supreme Court of the United States to issue these rules, and it was provided in the law:

Such united rules shall not take effect until they shall have been reported to Congress by the Attorney General at the beginning of a regular session thereof and until after the close of such session.

Now, the rules have been promulgated by the Supreme Court according to law. It appears in House Document 460 that pro

mulgation took place December 20, 1937. In other words, by the passage of time, these rules will become effective?

Mr. MORRIS. So I understand; yes, sir.

Mr. MCLAUGHLIN. I was just going to ask this: On September 1, 1938, the rules that are contained in this House document are the rules of civil procedure in the district courts of the United States. Now, what, in your opinion, is the effect of these rules? Do they have the same effect as statutes? In other words, they can be amended by the Congress of the United States?

Mr. MORRIS. Yes, sir; they can be amended by Congress at any time, either by revoking the original legislation under which they were set up, or by specific provision as to any number of the rules.

Mr. MCLAUGHLIN. Of course, Congress can revoke all the rules by repeal of the act of June 19, 1934, because that is the law upon which their authorization is based. Now, in the event Congress does not desire to do that and is perfectly willing that the Supreme Court shall promulgate rules, but does not favor certain of the rules as promulgated, is it your opinion that the Congress can amend these rules as they would amend a statute?

Mr. MORRIS. They can go in and amend any definite rule they desire to amend.

Mr. ROBSION. Could not they reject all of them?

Mr. MORRIS. Yes; they could reject all of them, or change them. The CHAIRMAN. It seems much of this controversy is with reference to service on labor organizations. It seems to me, if I may be permitted to interrupt we should hear from them now that we may learn just what the issue is. I have a card advising that Mr. Padway is here representing the American Federation of Labor and Mr. Vincent is here representing the C. I. O. I think we better hear these gentlemen and let us see just what is in controversy or uncertainty.

Mr. MORRIS. Yes. In appearing here I am representing nobody but the American Bar Association. I am not representing any other organization outside of that association at this time, and I am speaking as a member of the bar when answering these questions and giving my personal opinion only.

The CHAIRMAN. Do not leave, we may want to recall you later.

Now, Mr. Padway, will you come up here and tell us about your understanding of this, so that we can get these issues joined.

STATEMENT OF JOSEPH A. PADWAY, ESQ., CHIEF COUNSEL, AMERICAN FEDERATION OF LABOR, WASHINGTON, D. C.

Mr. PADWAY. Mr. Chairman and gentlemen of the committee, may I direct attention to the powers set forth in the act of June 19, 1934, and if the act is to remain as it is I am forced to say that the American Federation of Labor is opposed to the adoption of these rules, not by virtue of the rules themselves, but because of the process by which they are brought into being. You will notice the first paragraph does not require that these rules be presented to this body or any body. They are promulgated by the Supreme Court, and within 6 months after their promulgation they become, in effect, law. We are here today only by virtue of the second paragraph which reads:

The Court may at any time unite the general rules prescribed by it for cases in equity with those in actions at law.

It is only because these rules bring about this unity that we are here. Otherwise we would not be here and there would be no tribunal to which we might go. We would have nothing to say about these rules, and they would be promulgated by the Court, and there it would rest. The full act is set forth here, and the Supreme Court may go on forever making rules and promulgate them.

In Wisconsin before a rule can be put into force they are published in the press and circulated among the members of the bar and you may appear before the supreme court stating your objections, if any, and anyone who is interested may come in and object to the rules.

The CHAIRMAN. In your State the supreme court makes rules, but before they go into effect they must promulgate them and before that give people an opportunity to come in and make objection to them? Mr. PADWAY. Yes; they give everybody the privilege and anyone who desires to come in and object to those rules may do so.

The CHAIRMAN. After the supreme court has heard the objections they may proceed to make the rules?

Mr. PADWAY. Yes, sir; after the supreme court has heard the objections to the proposed rule or rules they may proceed to make the rules. We are here today by virtue of that letter by the Chief Justice of the Supreme Court in which he says: "In accordance with section 2 of that act"-not section 1, but section 2.

The CHAIRMAN. Where is that letter?

Mr. PADWAY. It is by virtue of that letter next to the letter of the Attorney General, and the Attorney General came here

The CHAIRMAN. Exactly what page is that on?

Mr. PADWAY. It is not numbered. I call it page 3, it is called here the letter of submittal, signed by Charles E. Hughes, Chief Justice of the United States. It is only by virtue of section 2 that we are here today. Otherwise there would be no hearing on this anywhere at all. These rules would be promulgated by the Supreme Court, and 6 months thereafter we would find ourselves with these rules imposed upon us.

Mr. MCLAUGHLIN. Do you agree with Mr. Morris that these rules having been promulgated, and the required time having elapsed after their promulgation, as provided in the act of June 19, 1934, that they become effective and have the same force and effect as a statute, and that Congress thereafter may amend them?

Mr. PADWAY. Yes; Congress may amend them as far as amending is concerned. They can amend each rule promulgated, and then the Court may repromulgate a rule, and that would be the rule, and then Congress could amend it again, and it would just go back and forth like a game of checkers, and whoever has had the last say would have their rule in effect.

Mr. MCLAUGHLIN. How do you suggest that situation be changed? Mr. PADWAY. By putting some stop on it. On behalf of the American Federation of Labor I have a suggestion to make in that regard. The CHAIRMAN. Do you have that language prepared to submit to us?

Mr. WEAVER. You mean you are asking for an amendment to the original act of 1934?

Mr. PADWAY. No; I would say this: I would provide by act of Congress that if a rule is promulgated by the Supreme Court, and that rule is thereafter repealed, amended, or modified, or in any way

changed that the Supreme Court shall have no further power to change it, but Congress shall have the power to change it if it deems necessary.

The CHAIRMAN. Or we could provide for a submission to Congress of any proposed changes in the rules by the Supreme Court, and let it go through the same procedure that this has gone through.

Mr. PADWAY. Yes, sir; I was going to make that suggestion.

The CHAIRMAN. Your suggestion in the first place is these rules be worked out and promulgated by the Supreme Court, provided Congress does not act in a sufficient length of time

Mr. PADWAY. Yes.

The CHAIRMAN. And if we acquiesce then that saves a lot of trouble. Mr. PADWAY. Yes.

The CHAIRMAN. Then your suggestion is that if these rules are to be amended the Supreme Court will submit to the next session of Congress the amendments they propose to have go into effect, and if Congress does not act adversely within a certain length of time they become the rules?

Mr. PADWAY. Yes, sir.

In respect to public hearing, the mere fact that the rules are united in suits in equity and actions at law as is done here in section 2, is why we are here. But I fear as this goes on, 1 year, 2 years, or 10 years there will be very important amendments in the rules and we are not given the power to be heard. The American Federation of Labor wants a tribunal that it can come before and discuss these rules publicly. That is not provided for now.

The CHAIRMAN. If you took a long time to explain that you could not make it any clearer. I congratulate you. Now then, what have you to say with regard to the details of the rules?

Mr. PADWAY. First, let me direct your attention to rule 4.

The CHAIRMAN. What page?

Mr. PADWAY. Page 6 (B), the last line-"Service by mail is complete upon mailing."

Mr. CELLER. Where is that?

Mr. PADWAY. Page 6, the last line of paragraph (B)—"SAME: HOW MADE."

It pertains to service upon lawyers, and says, "Service by mail is complete upon mailing."

Mr. CELLER. What line?

Mr. PADWAY. Page 6, paragraph (B). The paragraph starts out with "Same, how made", and the last line is "service by mail is complete upon mailing." It might lead to trouble. If it were amended to provide it was made through registered mail it would improve it. There is another item that is important to us, and that is rule 17— "Capacity to sue or be sued."

Mr. MCLAUGHLIN. What page?

Mr. PADWAY. That is rule 17, page 23. That is one of the most important rules to us, and the one in which we are most concerned. There it says:

The capacity of an individual, other than one acting in a representative capacity, to sue or be sued, shall be determined by the law of his domicile. The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized.

The CHAIRMAN. Do you have any suggestion to make with reference to that first sentence?

Mr. PADWAY. That sentence, in my humble opinion would be all right.

The CHAIRMAN. All right.

Mr. PADWAY. The next sentence is

The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized.

I think that is wrong. I do not think that the capacity to sue or be sued on the part of a corporation should be determined by the law of its domicile. It may run or attempt to run to States where the laws are favorable, and that may give it an advantage.

The CHAIRMAN. What would you suggest?

Mr. PADWAY. I would suggest deleting it entirely. I do not think it is necessary at all. The next sentence says:

In all other cases capacity to sue or be sued shall be determined by the law of the State in which the district court is held.

The CHAIRMAN. Would you say in all cases there?

Mr. PADWAY. No; the preceding sentence might be some qualification or limitation on what follows, but you do not need that at all.

In all other cases capacity to sue or be sued shall be determined by the law of the State in which the court is held.

If this is applicable, as it is, to unincorporated associations and labor unions, and the capacity to sue or be sued, why should not the corporation be subject to the same rule and the determination to sue the corporation be had in compliance with this rule?

The CHAIRMAN. May I submit a question there?

Mr. PADWAY. Yes, sir.

The CHAIRMAN (reading):

In all other cases capacity to sue or be sued shall be determined by the law of the State in which the district court is held.

I am sorry. My question answered itself.

Mr. PADWAY. Yes, sir; I think that is clear. I would just delete that and give no advantage to corporations being able to incorporate any place where they would be offered some advantage in respect to capacity to sue or be sued, which the unincorporated associations do not have.

Mr. CHANDLER. Let me ask you this question to get the thought more clearly. If a corporation was sued in the Federal court in the State of Tennessee, the law of the State of Tennessee relating to the capacity of a corporation to be sued would be the governing law on that question?

Mr. PADWAY. But that is not it. This says the capacity of a corporation to sue or be sued

Mr. CHANDLER. I am speaking about your suggestion.

Mr. PADWAY. I am of the opinion that my proposal might cover that, and it would be governed by the law of the State of Tennessee. Mr. CHANDLER. We would have a separate rule of law applicable to the Federal courts touching the question of capacity in every State of the Union.

Mr. PADWAY. Yes.

Mr. CHANDLER. Therefore, we would not have uniformity in the matter of capacity to sue as these rules hope to accomplish?

Mr. PADWAY. You are correct, but you will have some lack of uniformity if you permit suits to be determined by the domicile in