Anderson v. Yungkau/Opinion of the Court

These are seven cases in which petitioner sued to recover stock assessments from shareholders of the Banco Kentucky Co. They were started in 1936 in the Eastern District of Kentucky and were stayed by agreement while the principal case upon which these depended, Anderson v. Abbott, 321 U.S. 349, 64 S.Ct. 531, 88 L.Ed. 793, 151 A.L.R. 1146, wended its way through the courts. In the latter case we sustained the liability of the shareholders of Banco for the stock assessment. That was in 1944. During the time Anderson v. Abbott was being litigated, the shareholders involved in the present litigation died and respondents became executors of their estates. Through no lack of diligence, petitioner failed to learn of these facts until more than two years later. Upon learning of them he promptly moved to revive the actions against the representatives of the decedents. The District Court, following Anderson v. Brady, D.C., 1 F.R.D. 589, denied the motions for revivor and granted motions of the executors to dismiss. The Circuit Court of Appeals affirmed by a divided vote. Anderson v. Yungkau, 6 Cir., 153 F.2d 685. The case is here on a petition for a writ of certiorari which we granted because the case presented an important problem in the construction of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c.

The case involves a reconciliation of Rule 25(a) and Rule 6(b). So far as material here, Rule 25(a) provides:

'If a party dies and the claim is not thereby extinguished, the court within 2 years after the death may order substitution of the proper parties. If substitution is not so made, the action shall be dismissed as to the deceased party.'

'When by these rules or by a notice given thereunder or by order of court an act is required or allowed o be done at or within a specified time, the court for cause shown may, at any time in its discretion *  *  * (2) upon motion permit the act to be done after the expiration of the specified period where the failure to act was the result of excusable neglect; but it may not enlarge the period for taking any action under Rule 59, except as stated in subdivision (c) thereof, or the period for taking an appeal as provided by law.'

It is said that since by Rule 25(a) substitution may be made within two years after the death of a party, substitution is, within the meaning of Rule 6(b), an act 'allowed' to be done 'within a specified time' which the court may on a showing of 'excusable neglect' permit to be done after the two year period. That argument is reinforced by reliance on the provision in Rule 6(b) which grants but two exceptions to the power of enlargement of time. Since Rule 25(a) is not included in the exceptions, it is argued that the time allowed by that rule may be enlarged under Rule 6(b). And it is pointed out that the facts of the present cases establish that the failure of the receiver to act within the two year period was the result of 'excusable neglect', thus giving the District Court discretion to allow the substitution under Rule 6(b).

We agree, however, with the Circuit Court of Appeals. Rule 25(a) is based in part on 42 Stat. 352, 28 U.S.C.A. § 778, which limited the power of substitution to two years from the death of a party. And even within that two year period substitution could not be made unless the executor or administrator was served 'Before final settlement and distribution of the estate.' That statute, like other statutes of limitations, was a statute of repose. It was designed to keep short the time within which actions might be revived so that the closing and distribution of estates might not be interminably delayed. That policy is reflected in Rule 25(a). Even within the two year period substitution is not a matter of right; the court 'may' order substitution but it is under no duty to do so. Under the Rule, as under the statute, the settlement and distribution of the estate might be so far advanced as to warrant a denial of the motion for substitution within the two year period. In contrast to the discretion of the court to order substitution within the two year period is the provisions of Rule 25(a) that if substitution is not made within that time the action 'Shall be dismissed' as to the deceased. The word 'shall' is ordinarily 'The language of command'. Escoe v. Zerbst, 295 U.S. 490, 493, 55 S.Ct. 818, 819, 820, 79 L.Ed. 1566. And when the same Rule uses both 'may' and 'shall', the normal inference is that each is used in its usual sense-the one act being permissive, the other mandatory. See United States ex rel. Siegel v. Thoman, 156 U.S. 353, 360, 15 S.Ct. 378, 380, 39 L.Ed. 450.

Thus, as stated by the Circuit Court of Appeals, Rule 25(a) operates both as a statute of limitations upon revivor and as a mandate to the court to dismiss an action not revived within the two year period. Rule 6(b) relates to acts required or allowed to be done by parties to an action and permits the court to afford relief to a party for his failure to act within the prescribed time limits. There would be more force in petitioner's argument if Rule 25(a) had, without more, set a two year period within which substitution might be made. But Rule 25(a) does not stop there. It directs the court to dismiss the action if substitution has not been made within that time. That is action required of the court, not of a party. And Rule 6(b) should not be construed to override an express direction of action to be taken by the court. See Wallace v. United States, 2 Cir., 142 F.2d 240, 244.

Reaso § of policy support this construction. It is, to be sure, stipulated that in five of the present cases the estate is 'still open and undistributed'; in one it is 'still open'; in another it has been distributed. At least where an estate is ready to be closed or where there has already been a distribution, revivor may work unfairness and be disruptive of orderly and expeditious administration of estates. But it is not enough to say that if Rule 6(b) and Rule 25(a) are construed to permit substitution after the two year period, the court need not allow it where unfairness or prejudice would result. For the normal policy of a statute of limitations is to close the door-finally, not qualifiedly or conditionally. The federal law embodied in Rule 25(a) has a direct impact on the probate of estates in the state courts. It should not be construed to be more disruptive of prompt and orderly probate administration in those courts than its language makes necessary.

Affirmed.

The CHIEF JUSTICE and Mr. Justice REED took no part in the consideration or decision of this case.

Mr. Justice RUTLEDGE, dissenting.

'If a party dies and the claim is not thereby extinguished, the court within 2 years after the death may order substitution of the proper parties. If substitution is not so made, the action shall be dismissed as to the deceased party. * *  * .'

I agree that the rule confers discretion to order substitution of parties, hence in appropriate circumstances to refuse to do so and thereupon to dismiss the action. But I do not think the discretion ends with the two-year period. The rule is not worded to require this and ascribing such a construction to it brings it into collision with the express terms and the policy of Rule 6(b). The difference made by expiration of the period is not to convert the rule's command for dismissal from a discretionary to a mandatory one. It is merely to narrow the conditions under which the discretionary power shall be exercised.

I find no basis for thinking that the time limitation prescribed by the first sentence of Rule 25(a) was intended to be treated differently than any other prescribed by the Rules, except those concerning which they expressly forbid enlargement. The committee which drafted the Rules was highly competent, spent years in exacting preparation, and was thoroughly cognizant of what it intended to propose concerning time limitations. Meticulous attention was given to them. By count the index shows 134 references to provisions relating to time for taking various actions.

The committee knew their volume and variety. It was conscious also of the many difficulties and injustices which had arisen by virtue of rigid time limitations, whether laid by statute, rule of court, or judicial decision. The deliberately chosen policy was to do away with those rigidities and to substitute sound discretionary limitations, except as otherwise expressly directed. This policy was stated clearly, fully and I think accurately in the Rules themselves by the addition of Rule 6, of which subdivision (b) is expressly applicable here.

By this unambiguous declaration it was provided that 'the court for cause shown may, at any time in its discretion * *  * (2) upon motion permit the act to be done after the expiration of the specified period where the failure to act was the result of excusable neglect.' This was applicable in any situation 'when by these rules or by a notice given thereunder or by order of court an act is required or allowed to be done at or within a specified period,' with two and only two exceptions. These were to forbid enlarging the time for taking any action under Rule 59, except as stated in subdivision (c) thereof, and the period for taking appeal. Rule 73. The forbidden enlargements under Rule 59 involve matters concerning the granting of new trials.

In those two respects and in them alone the time limitation was made, and was intended to be, 'jurisdictional.' For the rest the courts were to exercise discretion. It is to be emphasized that the limits of discretion fixed for enlarging time after the prescribed periods were narrowed by requiring that enlargement be made, if at all, only upon motion and only upon showing that the failure to act within time was due to excusable neglect. Those limitations were applicable here, in my opinion, and admittedly they were satisfied.

Rule 6, including subdivisions (b) and (c), was thus a general and a carefully drawn declaration of paramount policy for the application of limitations of time. It made no distinction between rules governing ctions to be taken by the parties and actions to be taken by the courts. It made no exceptions other than the two expressly set forth. This Court approved the rule as drawn and Congress allowed it to become law without modification. To assume or to rule that additional exceptions were intended is to assume that the committee, the Court and Congress overlooked others which should have been stated in Rule 6(b) or did not intend the declared policy of that section to be effective fully according to its terms. I am unable to accept either conclusion. If we may make an additional exception forbidding enlargement of time in cases covered by Rule 25(a) in the face of the express provision of Rule 6(b), there is no reason why others may not also be made, and thus the salutary policy of Rule 6(b) be defeated.

The considerations of policy said to support the decision would be grounds either for the district court's consideration in determining whether to deny enlargement in the exercise of its discretion or for amendment of Rule 6(b) so as to exclude such cases as this. They are not a basis in my opinion for changing that rule by interpretation or for opening the door to further restrictive amendments of Rule 6(b) in this respect by that process. If this is to be done, it should be by the prescribed rule-making procedure. Indeed the Advisory Committee, in the recently proposed amendments to the rule, has recommended that Rule 25(a) be rephrased so as to eliminate any question that the rule has the meaning ascribed to it in this opinion. And its note appended to the recommendation states that the purpose is to guard against injustices likely to result from a flat two-year limitation. In my opinion the committee's action and the reasons given for it confirm, rather than disavow, the section's originally intended meaning.

This case is an illustration of the kinds of injustice the committee sought to avoid. And the considerations of policy are not altogether one-sided. The effect of the decision in such a case as this is not only to throw an admittedly impossible burden upon the party seeking without neglect to enforce his cause of action. It is also to throw upon other parties, equally helpless, a heavier burden of financial loss, whether by depriving them of rightful recovery or by forcing them, in some instances at least, to bear a larger share of the common responsibility.

In my opinion the judgment should be reversed and the cause remanded to the District Court for the exercise of the discretion given by the Rules.

Mr. Justice BURTON joins in this dissent.