Atlantic Refining Co. v. Port Lobos Petroleum Corporation

• Decision Date: 30 March 1922
• Docket Number: 433.
• Citation: 280 F. 934
• Parties: ATLANTIC REFINING CO. v. PORT LOBOS PETROLEUM CORPORATION et al.
• Court: U.S. District Court — District of Delaware

280 F. 934

ATLANTIC REFINING CO. v. PORT LOBOS PETROLEUM CORPORATION et al.

No. 433.

United States District Court, D. Delaware.

March 30, 1922

[Copyrighted Material Omitted]

Ira Jewell Williams, of Philadelphia, Pa., and Charles F. Curley of Wilmington, Del., for plaintiff.

William G. Mahaffy, of Wilmington, Del., and Winthrop Dwight, of New York City, for defendants.

Andrew C. Gray and Herbert H. Ward, both of Wilmington, Del., and Alexander B. Siegel, of New York City, for petitioner.

MORRIS District Judge.

The Atlantic Refining Company filed its bill of complaint against Port Lobos Petroleum Corporation and Atlantic Lobos Oil Company (hereinafter called the Oil Company), asserting that under a contract of October 5, 1916, and supplements thereto, the plaintiff is possessed of certain rights with respect to the transportation and delivery of fixed quantities of oil through the pipe lines of the defendants at a specified price, charging that the defendants threaten, unless restrained, to exclude from their pipe lines oil that plaintiff is entitled to have transported and delivered, and praying injunctive relief. The defendants appeared and filed an answer, alleging that the contracts in question do not confer upon the plaintiff a right to the transportation and delivery of the full amount of oil to which plaintiff asserts it is entitled. Thereupon Marcel Denis presented to the court his verified petition, praying that he be permitted to intervene as a defendant on behalf of himself and others similarly situated, that he be permitted to file an answer on behalf of the Oil Company, and that he have general relief. The allegations of the petition upon which its prayers are based are that the petitioner is a stockholder of the Oil Company, that in presenting the petition he acts on his own behalf and on behalf of a group of minority stockholders of the Oil Company, that the plaintiff and its officers are the owners of the majority of the shares of the capital stock of the Oil Company, and that a majority of the directors of the latter company are designated by the plaintiff from persons directly connected with or controlled by the plaintiff. A further allegation is that the petitioner--

'intends to present by answer facts calling for the entire abrogation of the contract of October 5, 1916, upon the continued existence of which the claim of plaintiff to relief depends, and also intends to show facts which, granted the continued existence of said contract, requires a different construction from that given it by the so-called agreement of December 27, 1920, coercively and improperly entered into as aforesaid, and the majority of votes for which were cast by directors who were directly interested in and some of whom were directors of the plaintiff.'

Leave to file the petition was granted and the petition filed. Thereafter, on motion of the petitioner, an order was entered setting the petition down for hearing on a specified day, and directing that the clerk of the court mail to the plaintiff and the defendants, or their solicitors of record, copies of the order and of the petition. An answer to the petition was filed by each of the parties to the cause. To the answers the petitioners sought to file an affidavit in the nature of a verified replication. This was objected to. That objection makes it necessary to ascertain the proper procedure upon a petition for intervention, and particularly what the record at the hearing to determine the right of a petitioner to be made a party to a cause may consist of.

While I find most helpful notes upon the general subject of intervention in Ann. Cas. 1913D, 1031, and 123 Am.St.Rep. 280, an instructive essay thereon by Mr. Edward C. Eliot in 31 Am.Law Rev. 377, and a discussion of the subject in Foster's Federal Practice, vol. 2, p. 1283 et seq., 21 C.J. 341, and 20 R.C.L. 682, I fail to find therein or in the reported cases a well-settled answer to the question here presented. Certain steps in the procedure are, however, reasonably well fixed. A petition of intervention may be filed only by leave of court. Stone v. Ingham, 105 Mich. 234, 63 N.W. 79. Bradley v. Trousdale, 15 La.Ann. 206; Equity Rule 37 (198 F. xxvii, 115 C.C.A. xxvii). Whether permission to file the petition should or should not be granted is to be determined, I take it, from the allegations of the petition itself considered in the light of the other pleadings and proceedings in the cause.

The mere filing of the petition pursuant to leave does not make the petitioner a party to the cause. The original parties are entitled to be heard on the question of his admission, and, upon filing his petition, he should obtain an order of notice to them and have the petition set down for a hearing. Doyle v. New York & N.E.R. Co., 14 R.I. 55; Perrine v. Perrine, 63 N.J.Eq. 483, 52 A. 627. The hearing upon the petition should be followed by an order denying or granting leave to the petitioner to intervene and become a party. A form of an order granting such leave is set out in Ex parte Jordan, 94 U.S. 248, 24 L.Ed. 123. After a petitioner becomes a party, he stands to all intents and purposes as if he had been an original party to the suit. Eastmore v. Bunkley, 113 Ga. 637, 39 S.E. 105; Rice v. Durham Water Co. (C.C.) 91 F. 433; French v. Gapen, 105 U.S. 509, 525, 26 L.Ed. 951.

There still remains, however, the question as to what issues may be raised at the hearing to determine whether the petitioner may be made a party. It is clear that the petition must show affirmatively that the petitioner has an interest in the litigation and that his intervention in the cause is reasonably necessary to the protection of his interest (equity rule, 37 (198 F. xxvii, 115 C.C.A. xxvii); Blossom v. Railroad Co., 1 Wall. 655, 17 L.Ed. 673; Sage v. Railroad Co., 96 U.S. 712, 24 L.Ed. 641; Hovey v. McDonald, 109 U.S. 150, 3 Sup.Ct. 136, 27 L.Ed. 888; Williams v. Morgan, 111 U.S. 684, 699, 4 Sup.Ct. 638, 28 L.Ed. 559; 11 Enc.of Pl. & Pr. 506), and that defects in this regard may there be taken advantage of.

Consequently the crucial question is whether upon the hearing the well-pleaded averments of the petition must be taken as true, or whether their accuracy and truthfulness may be determined upon opposing and supporting affidavits. In Ex parte Gray, 157 Ala. 358, 47 So. 286, 131 Am.St.Rep. 62, 65, in considering the proper practice in cases of intervention, the court said:

' * * * The petition for intervention is then filed, on which the court examines the petition and answer, and such testimony, by affidavit or otherwise, as may be produced, and determines the question as to whether the petitioner shall be allowed to intervene and become a party to the suit.'

This is the only case found authorizing the raising of an issue of fact at the hearing had upon the petitioner's right to be made a party. In Henry v. Travelers' Ins. Co., 16 Colo. 179, 26 P. 318, on the contrary, the court below had considered a petition of intervention in connection with the other pleadings in the action, and had denied the petitioner's right to intervene. Error was assigned. The Supreme Court said:

'The petition of intervention having been presented in due form and in apt time, the question for our consideration is: Does the petition set forth a state of facts in relation to the parties and the subject-matter of the litigation entitling Henry to be made a party to the action as an intervener? This question must be determined from a consideration of the matters set forth in the petition, taken in connection with the other pleadings and proceedings in the action. In determining this question, whether upon application to file the petition, or upon motion to strike out the petition, or upon demurrer to the petition for insufficiency, the averments of the petition, so far as

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