337 F.2d 24 (8th Cir. 1964), 17352, Rock Island Millwork Co. v. Hedges-Gough Lumber Co.
|Docket Nº:||17352, 17353, 17640.|
|Citation:||337 F.2d 24|
|Party Name:||ROCK ISLAND MILLWORK COMPANY and Wholesale Distributing Co., Appellants, v. HEDGES-GOUGH LUMBER COMPANY, V. R. Gough, Margaret H. Gough, June E. Current, Charles E. Hedges, Charles E. Hedges and The Merchants National Bank, Executorsof the Estate of Helen L. Hedges, Deceased, and W. D. Willer, Appellees. HEDGES-GOUGH LUMBER COMPANY, Appellant, v. V|
|Case Date:||October 14, 1964|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
John D. Randall, Cedar Rapids, Iowa, made argument for appellants and cross-appellant Hedges-Gough Lumber Co., and filed brief.
William R. Crary, Cedar Rapids, Iowa, made argument for appellees V. R. Gough and Margaret H. Gough and filed brief with William O. Gray, Cedar Rapids, Iowa.
C. J. Lynch, Cedar Rapids, Iowa, made argument for appellees June E. Current, Charles E. Hedges, Charles E. Hedges, and Merchants Nat. Bank, executors of estate of Helen L. Hedges, deceased, and filed brief with William M. Dallas, Cedar Rapids, Iowa.
Before MATTHES, BLACKMUN and RIDGE, Circuit Judges.
MATTHES, Circuit Judge.
These are appeals from a money judgment in favor of plaintiffs, Rock Island Millwork Company (Rock Island) and Wholesale Distributing Company (Wholesale), against the corporate defendant Hedges-Gough Lumber Company, 1 and in favor of the individual defendants on plaintiffs' causes of action and in favor of the individual defendants on the corporate defendant's cross-claim.
A chronological recitation of the proceedings in the trial court will be beneficial in understanding the basis for our ultimate conclusion that diversity jurisdiction is lacking and that the judgment must be vacated.
Rock Island and Wholesale, Illinois corporations which also have their principal offices in that state, instituted this action in the United States District Court for the Northern District of Iowa. Named as defendants were Hedges-Gough, an Iowa corporation having its principal office in that state, and certain individuals, all citizens of Iowa, who were alleged to be officers and directors of Hedges-Gough.
Counts 1 and 2 of the original complaint, in identical language, averred that the defendants were indebted to plaintiff Rock Island in the amount of $12,367.12 (Count 1) and to plaintiff Wholesale in the amount of.$14,834.91 (Count 2) 'on account of goods sold and delivered'. The complaint did not state whether the goods were sold and delivered either to the defendant corporation, the individual defendants, or to both. Upon motions of the individual defendants, the Court directed plaintiffs to allege to whom the goods were sold and delivered. Thereafter, plaintiffs amended their complaint alleging that the goods were sold and delivered either to the individual defendants as partners of Hedges-Gough Lumber Company, a co-partnership, or to Hedges-Gough, a corporation. In both the original complaint and amendments thereto, plaintiffs alleged that the individual defendants had failed to comply with the law in regard to the incorporation of Hedges-Gough; that the net worth of the corporation as shown by corporation papers was 'entirely fictitious', and that as a consequence of such conduct, the individual defendants were personally liable to plaintiffs.
The attorney who filed the complaint for plaintiffs, who represented them in all proceedings in the trial court, and who represents them in this court, also appeared for defendant Hedges-Gough in the trial court and represents it in these appeals. This attorney filed an answer on behalf of Hedges-Gough admitting all of the allegations of the complaint which, of course, included the averment that the individual defendants were liable to plaintiffs for the stated amounts. The answer also alleged that by agreement of certain creditors, the corporate defendant was to be given time 'within which to pay off the claims, and that it believes that the court should examine and determine whether such action is premature'.
The answer prayed that the 'action be delayed pending the determination of the cross-claim filed herein by this defendant against the individual defendants'.
On the day of the filing of its answer to the complaint, the corporate defendant filed a cross-claim against the individual defendants, seeking among other relief a judgment: (1) requiring...
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