Lesnik v. Public Industrials Corporation

• Decision Date: 29 May 1943
• Citation: 51 F. Supp. 994
• Parties: LESNIK v. PUBLIC INDUSTRIALS CORPORATION (DAVISON et al., Third-Party Defendants).
• Court: U.S. District Court — Southern District of New York

51 F. Supp. 994

LESNIK v. PUBLIC INDUSTRIALS CORPORATION (DAVISON et al., Third-Party Defendants).

District Court, S. D. New York.

May 29, 1943.

Satterlee & Warfield, of New York City (R. Randolph Hicks and John J. Dunne, both of New York City, of counsel), for defendant Public Industrials Corporation.

Guy George Gabrielson, of New York City, pro se (David Haar, of New York City, of counsel).

Albert L. Wolfe, of New York City, pro se (David Haar, of New York City, of counsel).

CONGER, District Judge.

The third-party defendants, Albert L. Wolfe and Guy George Gabrielson, have moved the court for an order vacating the service upon them of the summons and answer containing the third-party complaint, the counterclaims in the principal action.

The basis of the motion is that the service in question violates the venue requirements of § 51 of the Judicial Code, 28 U.S.C.A. § 112, in that both the third-party plaintiff (the counterclaiming defendant) and the third-party defendants, Gabrielson and Wolfe, are non-residents of the State of New York and this district.

The statute upon which the movants rely provides in part that "where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant."

The principal action is in this court by virtue of removal from the state court at the instance of the defendant, Public Industrials Corporation. That action is brought to recover a deficiency judgment on a secured note which the plaintiff has allegedly purchased from the original owner.

As part of its answer to plaintiff Lesnik's claim, the defendant Public Industrials Corporation has counterclaimed by alleging in several counts that the plaintiff and the third-party defendants have conspired to ruin a plan of reorganization of the defendant by wrongfully withholding dividends upon the receipt of which the success of defendant's plan depended, and to obtain the defendant's stock at an extremely low price. The details of the various claims have been set forth in a previous lengthy opinion written by Judge Leibell on April 30th 1943. 51 F.Supp. 994.

By his decision rendered upon the defendant's motion, Judge Leibell determined that the defendant should be granted leave to join C. Herbert Davison, Guy George Gabrielson and Albert L. Wolfe as third-party defendants under Rule 13(h), Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723c, because their presence "is required for the granting of complete relief in the determination of a counterclaim * * * if jurisdiction of them can be obtained and their joinder will not deprive the court of jurisdiction of the action." He established as the law of the case that service upon the proposed third-party defendants in this state, if so effected, would not deprive this court of jurisdiction. However, the question of venue was left open for the court said that it "is unnecessary for the court to pass upon that question in determining the question of jurisdiction under Rule 13(h) * * *". That must be so since the venue problem is personal to the defendants, to be asserted or waived by them. Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437. They were not parties to the motion which was before Judge Leibell.

Subsequently and pursuant to Judge Leibell's order, the service in question was made in this state upon two of the third-party defendants.

The moving parties are the parties so served and are residents of New Jersey.

The sole question to be decided is whether the third-party proceeding must satisfy the venue requirements above set forth — for if so, the present motion must of course be...