Wallach v. Cannon

• Decision Date: 11 March 1966
• Docket Number: No. 17636.,17636.
• Parties: Richard WALLACH, Appellant, v. Norman CANNON, Oklahoma Tax Commission, et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

357 F.2d 557 (1966)

Richard WALLACH, Appellant, v. Norman CANNON, Oklahoma Tax Commission, et al., Appellees.

No. 17636.

United States Court of Appeals Eighth Circuit.

March 11, 1966.

John J. Cole, of Heneghan, Roberts & Cole, St. Louis, Mo., filed motion to dismiss appeal on behalf of appellees Leslie Conner, Herman Merson and A. D. Howell.

Robert J. Koster, Asst. U. S. Atty., St. Louis, Mo., filed motion to dismiss appeal on behalf of appellees U. S. Dept. Office of Dallas, Tex., and/or Labor Dept. Attys., Earl Street, Truett E. Bean, Dallas, Tex., and Harry Campbell, Jr., and the U. S. Internal Revenue Service and/or its Directors in Oklahoma City, Okl., and Earl Wiseman.

Jerome W. Sidel, of Sidel & Sandweiss, St. Louis, Mo., filed motion to dismiss appeal on behalf of appellee Jacob Finke and/or United Investment Co.

Leo F. Laughren, St. Louis, Mo., filed motion to dismiss appeal pro se.

John J. Cole, of Heneghan, Roberts & Cole, St. Louis, Mo., also filed motion to dismiss appeal on behalf of Alma Zell Akers, R. M. Akers and H. J. Vanhook.

William G. Guerri, St. Louis, Mo., filed motion to dismiss appeal on behalf of appellee Mercantile Trust Co.

Richard Wallach, St. Louis, Mo., filed motions in answer to appellees.

Before JOHNSEN and MATTHES, Circuit Judges.

PER CURIAM.

The appeal is dismissed for want of a substantial question as basis for a regular review.

The order appealed from is one making dismissal of appellant's complaint as to each of appellees severally and resultingly of the complaint in its whole. Our disposition is for the reason that in such claim as the complaint could be regarded as stating the District Court for the Eastern District of Missouri was without jurisdiction to deal with the merits against any of appellees.

Appellees are some 27 in number.¹ Most of them are citizens of the State of Oklahoma, upon whom service of summons had been made beyond the territorial limits of effective service under Rule 4(f), Fed.Rules Civ.Proced., 28 U.S.C.A. Two of appellees are the U. S. Department of Labor and the U. S. Internal Revenue Service, upon which the service of process attempted had not been in accordance with the requirements of Rule 4(d) (5).² Two others consist of the State of Oklahoma and the Oklahoma Tax Commission, a govermental agency of the State, which under the Eleventh Amendment are not subject to suit in the federal district courts on a claim such as that asserted, and as to which the service of summons engaged in under Rule 4(d) (6) was therefore incapable of effecting jurisdiction over them.³ The rest of appellees, 5 in number, are citizens of the State of Missouri, the same as appellant.

Without need to go further here than the element of capturing process, the want of jurisdiction over the governmental appellees referred to, both federal and state, is plain and no additional comment is called for. As to all of the other appellees, both the Oklahoma citizens and the Missouri citizens, the capturing process involved equally would be unable to provide the court with jurisdiction to deal with or grant relief against them, unless the claim was of a nature as to which there existed jurisdictional basis other than diversity, and which had provision for service of process comprehending that here engaged in — which question will be later considered.

Appellant, in layman's reading and interpretation, had made denomination and predication of the complaint as an "interpleader civil action and constitutional case and controversy". Specifically, he regarded the interpleader statutes, 28 U. S.C.A. §§ 1335, 1397 and 2361, with their broad venue and process provisions, as affording him means for instituting the suit in the Eastern District of Missouri and effecting processive capture of appellees there on that basis.

But appellant's claim was not one that came within the interpleader statutes or that variantly was capable of constituting a bill in the nature of interpleader. See 30 Am.Jur., Interpleader, § 16. Appellant was seeking to recover damages from all of appellees for conspiracy and collusion to cause him pecuniary injury through fraud in commercial transaction and alleged legal malpractice in the representation of him in relation thereto. Thus there was involved no fund, pecuniary obligation, or other property as to which he was in the position of a stakeholder. § 1335. Obviously, also, within "nature of interpleader", there was no way to view the relationship of appellees and appellant, or of appellees among themselves, as being one of adverse claimants to the benefits of any recovery that might be obtained in the action. And it should hardly need saying that the interpleader provision of Rule 22, Fed.Rules Civ.Proced., 28 U.S.C.A., as to "(p)ersons having claims against the plaintiff * * * when these claims are such that the plaintiff is or may be exposed to double or multiple liability", was utterly without any application to the situation. Hence appellant's attempted predication on interpleader or nature of interpleader afforded no possible basis for the issuance of process made and a saving of his complaint from dismissal in relation thereto.

Nor does appellant's added labeling of the complaint as "a constitutional case and controversy" afford basis for saving it from dismissal on the inability of the court to engage in any action against appellees in the situation. Fundamentally, what appellant was making reach at was recovery for the investment which he had lost, the liability to which he had been exposed, and the injury to reputation and business which he had allegedly sustained from having bought his way into and having become involved in the affairs of an insolvent Oklahoma corporation which was shortly thereafter thrown into involuntary bankruptcy.⁴ Liability was asserted against appellees as having been collusively responsible for the incidents and consequences which had thus occurred to him.

Appellant characterized the course of his involvement and attempted extrication as a matter of being "swindled". He claimed to have put up $45,000 for the purchase of stock at par value in Central Iron & Metal Co., Inc., the Oklahoma corporation. An audit was to be made of the corporation's condition. When the audit showed an insolvency of approximately $200,000, he was improperly induced, he says, to agreeing to a non-judicial reorganization, under which he was to become owner of all the capital stock by payment to the previous stockholders of fifteen cents on the dollar of original par value.

According to the complaint, a loan of $183,000 was to be arranged for by the previous officers as working capital for the reorganized corporation, with a promissory note being drawn, in which appellant joined as maker or guarantor, and with a chattel mortgage being executed on the assets of the corporation, for the effectuation of this purpose. He alleges that this $183,000 of represented working capital was never provided by the previous officers, but that instead the former president used the chattel mortgage and the property covered thereby for his own purposes and benefit. It is further asserted that the former president had also agreed to provide the reorganized corporation with a "letter of credit", in a face amount of $250,000, covering a five-year period, for use in purchasing government surplus and salvage materials, and that such letter of credit was never furnished. Instead, according to appellant, approximately six months after the reorganization, the previous officers as claimed creditors designedly threw the reorganized corporation into involuntary bankruptcy. The business was resultingly liquidated, with appellant being required to make further payments and being compelled to sign releases in the bankruptcy proceedings in extricating himself from the financial web in which he had become involved.

If there was improper inducement or deception involved in appellant's buying his way into the insolvent corporation, assuming obligations, putting up money, and ultimately having to make releases in relation thereto, so as tortiously to have caused him to suffer loss, he would of course, conventionally have a claim for fraud against all or any of those who had thus wrongfully gotten him to so act. But neither such wrong nor the remedy...