1 F. 541 | U.S. Cir. Ct. | 1880
This cause having been removed from the state court on the petition of all the defendants, under the first clause of section 2 of the act of 1875, and by the defendants, Mackey and Fair, as to them, under the act of 1866, as carried into section 639 of the Revised Statutes, second subdivision, the complainant moved to remand it to the state court on the ground that this court has no jurisdiction, and that the ease is not removable under either act. Upon the principle adopted in the. Sewing Machine cases, (18 Wall. 553,) which arose under the act of 1867, and under the decision of the supreme court, made at the present term, in Meyer et al. v. The Delaware Railroad Construction Company, which arose under the first clause of section 2 of the act of 1875, and presented the point, I regard it as settled by that court that to remove a case under the latter provision it is necessary that all of the persons constituting the party on one side of the controversy must be citizens of different states from those on the other side. But for the purpose of removal the parties may be transposed and arranged in their proper positions, with reference to their interest in the controversy, without regard to their formal position as plaintiffs or defendants on the record. This is the rule, as I understand it,
Was the case properly removed as to defendants Mackey and Fair under the act of 1866, as carried into the Bevised Statutes in section 639? The complainant, Burke, a citizen of California, files his bill against the Consolidated Virginia Mining Company and the Pacific Wood, Lumber & Flume Company, both corporations organized under the laws of California, J. C. Flood, a citizen of California, and John W. Mackey and James Gr. Fair, citizens of Nevada. He alleges in substance, among other things, that he is a stockholder in the Consolidated Virginia Mining Company; that he has made a demand upon that corporation to bring the suit, 'which it declined to do; whereupon he brings it himself as a stockholder on his own behalf, and on behalf of all other stockholders who choose to come in and share in the expense of this prosecution, making the corporation a defendant. He further alleges that defendants Flood, Mackey and Fair, and W. S. O’Brien, were either directors, or controlled the directors of the defendant, the Consolidated Virginia Mining Company; that they fraudulently conspired together to injure the Consolidated Virginia Mining Company, and to that end organized the corporation defendant, the Pacific Wood, Lumber & Flume Company, of which they were the stockholders and officers, or controlled the officers; that through the dc
It will be seen that the remote parties are the complainant, Burke, as a stockholder of the Consolidated Virginia Mining Company; and Flood, Mackey and Fair, as stockholders of the Pacific Wood, Lumber & Flume Company — indeed, of both corporations. That the immediate parties to the contracts sought to be examined and set aside, and an account of whose profits is sought to be taken, are the Consolidated
The provision of the Revised Statutes under which the removal is had, so far as applicable, is, when a suit is by a citizen of the state wherein it is brought “against a citizen of the same and a citizen of another state, it may be so removed as against said citizen of another state upon the petition of such defendant * * ® if, so far as it relates to him, it * * * is a suit in which there can be a final determination of the controversy, so far as it concerns Mm, without the presence of the other defendants as parties in the case.”
Upon the allegations of this bill can there be a final determination of the controversy, so far as concerns Mackey and Fair, without the presence of the Pacific Wood, Lumber & Flume Company, or without the presence of Flood? In my judgment there cannot. I do not see how a final account can he taken between the Consolidated Virginia Mining Company and the Pacific Wood, Lumber & Flume Company as to the profits on the contracts between them set out, and then between the latter corporation as to the amount of said moneys paid by it to Flood, O’Brien, Mackey and Fair, as copartners, without the presence as a party of either said corporation, or said Flood or O’Brien. Certainly noiie could be taken that would bind said corporation, or Flood, or O’Brien, without their presence, and, therefore, none that could he final as to Mackey and Fair. If one suit can be successfully prosecuted against Mackey and Fair alono, and another against Flood and the Pacific Wood, Lumber & Flume Company alone,, then one can be prosecuted against each of said parties alone, and there might be in different
Again, it is alleged in the bill that Flood, O’Brien, Mackey and Fair, during all the time mentioned, were partners in business, and that all the transactions complained of as to them were on their joint account as such copartners. If so, all moneys received by them on the transactions as alleged were partnership funds — partnership assets — and must be accounted for as such. Under these allegations they are not merely joint, or joint and several tort-feasors. The act is a firm act — an act of a single indivisible commercial entity. The moneys received as dividends from the corporation and which are sought to be recovered were partnership funds. An account which shall be binding on the parties cannot be taken of partnership transactions without the presence of all the partners. Each member is individually liable, it is true, for all the obligations of the firm, but if he is compelled to pay the whole he is entitled to contribution. Whatever the rule as to contribution may boas between mere joint or joint and several tort-feasors — and there appears to be some con-.
Also in Brooks v. Martin, 2 Wall. 70, 81, it is held that “after a partnership contract, confessedly against public policy, has been carried but, and money contributed by one of the partners had passed into other forms — the results of the contemplated operation completed — a partner in whose hands the profits are cannot refuse to account for and divide them on the ground of the illegal character of the original contract.”
The principle stated in these eases covers this case. Upon the allegations of the bill these contracts set out between the two' corporations were fulfilled, the consideration paid over, and the original transactions closed. The profits accrued thereupon, according to the allegations of the bill, came to the firm of Flood, O’Brien, Mackey and Fair, as partners, and, however obtained, they were upon that hypothesis partnership assets, and as between them must be so treated.
But suppose it turns out that Flood, O’Brien, Mackey, and Fair were not partners; that their acts were not partnership acts, and that the dividends received were not partnership assets, ,1 do not perceive that it would affect the question as to the finality of the determination within the meaning of the statute. There is nothing necessarily or essentially fraudulent or morally wrong in the more fact that Flood, O’Brien, Mackey*and Fair owned stock, or even a controlling amount of stock, in, and are officers of, the two corporations; or that, being such stockholders and officers, one corporation through their agency sells wood and lumber to the other. It may well he for the best interest of both corporations to enter into such transactions. The Consolidated Virginia Mining Company is not the only party wanting wood and lumber, and the Pacific "Wood, Lumber & Flume Company is a corporation organized and competent to sell wood and lumber to all who desire to purchase. It may have facilities for furnishing these articles of large and general consumption which enables it to sell them at lower prices than they can he obtained for elsewhere. If that he the case, it would be to the advantage and interest of the other corporation to purchase from it, even though its officers and agents are also officers and agents of the other corporation. Should these parties, on the ground of the delicacy of their position, decline to purchase of the Pacific Wood, Lumber & Flume Company on better terms
The fact of a liability to further litigation as between the parties, to ultimately determine their rights as between themselves, upon reasonable ground, is itself sufficient to render the determination not final as to Mackey and Fair, without reference to the ultimate result of such renewed litigation. I think I see a reasonable liability to such further litigation in various passible aspects that may be presented, whether the acts of Flood, O’Brien, Mackey and Fair turn out to be partnership acts, and the moneys received by them from the corporation partnership assets or not. The court is not now called upon to detetmine the merits of this case, or the ultimate rights of these parties between themselves, but only to ascertain whether a decision of the branch of the suit between complainant and Mackey and Fair, without the presence of the other parties, is likely to be a final determination of the lohole controversy as to them, so that there shall be no further ground to litigate their rights as to these same transactions with the other parties to them. Looking at the case from any point of view, then, it seems clear to me that there cannot be a “final determination of the controversy” as to Mackey and Fair, or either of them, or as to anybody else, without the presence of the Pacific Wood, Lumber & Flume Company, Flood,and the representatives of O’Brien. Indeed, nothing would be finally determined as to any of the parties in a suit against a portion of the defendants.
I suppose the right of citizens of California to have their controversies among themselves adjudicated in the state courts is as absolute and indefeasible as that of a citizen of Nevada to have his controversy with a citizen of California adjudicated in the national courts. Indeed, in the state courts the jurisdidiction is general and universal, while that of the national courts is limited to the cases expressly provided
Upon the allegations of the bill,'with my views of the case, I should not hesitate to sustain a demurrer to it for want of necessary or indispensable parties, had the defendants Flood and the Pacific Wood, Lumber & Flume Company been omitted, thus presenting the case in the position it would be in after removal to this court, as to them, by Mackey and Fair.
In my judgment, therefore, this is not a case that is authorized to be removed under section 639 of the Revised Statutes, and the removal was improperly made.
tJpon the grounds stated, an order was made remanding the case to the state court, but the return’ of the record having been stayed for a limited time, to enable counsel to - determine what course they would pursue, a petition was filed on behalf of Mackey and Fair for rehearing of the motion to remand, as to them, under section 639 of the Revised Stat
The point which counsel desire to prosent is that the facts alleged in the bill do not prosent any ground for relief, and that upon the face of the bill there must be a final decree for the defendants Mackey and Fair, and this being so, they claim that a final decree should be made on the face of the bill itself, and that such decree would be a final determination of the controversy, as to them, and the case should be retained io be disposed of on that ground.
Whether the bill states a good cause of action has n,ot been argued; a rehearing being asked in order that it may he argued for the purpose of determining the jurisdictional question, and I shall therefore not express any opinion as to its sufficiency. But, assuming for the purposes of the petition for rehearing, that the court would hold, upon argument, the hill to he insufficient, and that there must bo a decree for Mackey and Fair on that ground, the objections pointed out in deciding the other points already considered and determined would not be obviated. It would only be a determination of that branch of the particular action. It would not finally determine the rights of Mackey and Fair in the other branch of the action still ponding against Flood and the Pacific Wood, Lumber & Flume Company. It would not finally determine their rights in the whole controversy. The effect of a determination of the branch of the case against Mackey and Fair in their favor, upon demurrer to the bill, would he no greater than if determined in their favor after a final hearing on the evidence. Upon a removal, as to Mackey and Fair only, under the act of 1866, tho other branch of the same controversy, as against Flood and the Pacific Wood, Lumber & Flume Company, would remain in the state court. Owing to differences of views, differences of proofs, or difference in the course of proceeding, different results may be reached in the different branches of the controversy ponding in the state and national courts, and thereby the whole controversy, as we have seen, would not be finally determined.
As the case appears to me, nothing affecting the question of jurisdiction would result from an argument of the demurrer, however it might be determined, and a rehearing for that purpose would be futile. It is therefore denied. If the views expressed are sound, and they seem clearly so to my mind,