American Oil Company v. McMullin, 73-70.
| Decision Date | 13 November 1970 |
| Docket Number | No. 73-70.,73-70. |
| Parties | AMERICAN OIL COMPANY, a Corporation, Appellant, v. Lawrence S. McMULLIN and Flora B. McMullin, his wife, Lawrence McMullin, his father, Margaret Savage McMullin, aka Margaret Savage, Lee Brooks, et al., Appellees. AMERICAN OIL COMPANY, Appellant, v. Lawrence S. McMULLIN, fdba Slim Olsen Service Station & Cafe, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Joseph G. Hodges, Denver, Colo. (Hodges, Harrington, Kerwin & Otten, and Joseph G. Hodges, Jr., Denver, Colo., and Durham & Swan, and Wayne C. Durham, Salt Lake City, Utah, with him on the brief), for appellant.
Arthur H. Nielsen, Salt Lake City, Utah (Nielsen, Conder, Hansen & Henriod, and David S. Cook, Salt Lake City, Utah, with him on the brief), for appellees.
Before LEWIS, Chief Judge, JOHN R. BROWN, Chief Judge*, and SETH, Circuit Judge.
This is an appeal in two consolidated removed cases, one from Nevada and one from Utah. The removals and the transfer are challenged on this appeal as well as the action of the trial court in quashing writs of attachment and garnishment in both cases, and in enjoining plaintiff from proceeding under certain liens acquired from others on the attached items.
The actions were commenced by American Oil Company against individual defendants seeking money damages, for money advanced for defendants' benefit for withholding taxes, for goods furnished some defendants, and for property alleged to have been wrongfully converted. The two actions are based upon essentially the same facts and causes arising from a lease and operation of a service station and cafe. The Nevada suit was against Lawrence S. McMullin and his wife. The Utah action was against the same defendants and also the father of Lawrence S. McMullin and against other individuals.
The first issue to be considered concerns the effectiveness of the removal of the proceedings from the Utah State court to the United States District Court. This suit was filed by American Oil Company for the recovery of money and goods advanced and for damages. Writs of garnishment and attachment under Utah practice had issued. The named defendants are individuals, two are residents and citizens of Nevada, and the other three of Utah. The plaintiff is a Maryland corporation, and its principal place of business is not in Utah. A petition for removal was filed by all the named defendants, that is, other than John Doe defendants, in which the residence and citizenship of these removing defendants are recited as above indicated. The petition asserts a diversity of citizenship and that the amount in controversy exceeds ten thousand dollars. The case was thereupon removed to the United States District Court for Utah. Motions to quash the writs were then filed by the defendants and granted by the district court. On this appeal the plaintiff challenges the orders to quash, an injunction against it from proceeding as a security holder, and also challenges the removal.
It is apparent that the diversity removal was accomplished although the requirements of 28 U.S.C. § 1441(a) and (b) were not met. These subsections provide:
This provision relates to a citizenship or residence requirement which could have been asserted by the defendants, but they instead procured the removal to the Utah federal court although two of them were residents of Nevada. As to the plaintiff, it did not object to the removal at the time, and participated in the removed case as follows:
Thus the issue is whether the improper removal may be waived by the parties, especially here by the plaintiff, and if so was it waived. We hold that under Lee v. Chesapeake & Ohio Ry., 260 U.S. 653, 43 S.Ct. 230, 67 L.Ed. 443, and under our decisions hereinafter discussed, this defect in removal could be waived, and it was so waived or acquiesced in.
In Lee v. Chesapeake & Ohio Ry., 260 U.S. 653, 43 S.Ct. 230, 67 L.Ed. 443, the Court held in effect that a case could be removed to a district court under section 28 of the then Judicial Code, in the face of the predecessor of 28 U.S.C. § 1391 (c), although the venue elements would not have permitted the case to have been brought in such district originally. The Court had before it a case started in the Kentucky State court by a plaintiff who was a citizen and resident of Texas against the Virginia corporation defendant. The plaintiff sought remand in the trial court and was refused. The Supreme Court noted the diversity, referred to the general constitutional jurisdiction of the United States District Courts, quoted what it referred to as the "venue" provisions of the then Code, providing that for suits originally brought in the district courts, they "* * * shall be brought only in the district of the residence of either the plaintiff or the defendant," and concluded that this was a privilege which the defendant could waive. The Court proceeded to hold in effect that the plaintiff could not object generally because the removal was a right given to the defendant, and in any event the case would be heard in the federal district which encompassed the place where it was filed in the State court.
We have held in several cases that defects in removal proceedings and improper removals may be waived. These include Lopata v. Handler, 121 F.2d 938 (10th Cir.); Parks v. Montgomery Ward & Co., 198 F.2d 772 (10th Cir.), and Donahue v. Warner Bros. Pictures, 194 F.2d 6 (10th Cir.). See also, Craig v. Champlin Petroleum Co., 421 F.2d 236 (10th Cir.), for a related issue. In Donahue a petition for removal was filed by two corporate defendants on the ground that separate causes were asserted against them which if brought separately could have been removed. The cause was removed from the Utah State court and the removal was not challenged by the plaintiffs. The defendants seeking removal were alleged in the complaint to be New York and Delaware corporations. There were also named several individual defendants who were residents and citizens of Utah. The court found that there were not separate causes alleged under 28 U.S.C. § 1441(c), but that there was complete diversity between the plaintiffs and the defendants, and the requisite amount was in controversy. "Therefore the action was one falling within the original jurisdiction of the United States Court for Utah, and plaintiffs could have instituted it in that court in the first instance." The court also found that the plaintiffs after removal filed an amended complaint and proceeded with the action. We held that the case was within the general jurisdiction of the court and even though removal "is wholly unauthorized, and plaintiff acquiesces in such removal * * *, that court acquires jurisdiction of the subject matter." In Parks v. Montgomery Ward & Co., 198 F.2d 772 (10th Cir.), we considered a removal action brought in Kansas against the store, an Illinois corporation, by a Kansas citizen and resident for an amount exceeding three thousand dollars. The defendant in the removal proceeding apparently did not file notice as required in the State court. We there held the defect could be waived and said:
"But where a suit of which the United States Court may entertain original jurisdiction is instituted in the state court and the defendant obtains its removal, even though the removal is irregular, defective, or unauthorized, and plaintiff acquiesces in such removal by seeking relief from the United States Court, that court acquires jurisdiction of the subject matter."
The defect we held could be waived in Lopata v. Handler, 121 F.2d 938 (10th Cir.), arose in a case removed from the Oklahoma State court where the plaintiffs were citizens of Iowa, a corporate defendant a Delaware corporation, and the other defendants were individual citizens and residents of Oklahoma. The individual defendants sought and secured the removal. General jurisdiction otherwise existed and it was held that the case would not be remanded. Reference is made to the place of trial as being defined but is for the convenience of the parties and "subject to their disposition."
Thus under these authorities, we hold that the defective removal here considered may be waived by acquiescence of the parties and was so waived by the defendants, of course, by seeking the removal, and by the plaintiff by not objecting and by proceeding with the suit as described above.
The disposition of the defective removal issue is in accordance with established authorities as described above. It does however present a sharp contrast to the disposition of the somewhat similar problem relating to the transfer...
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