Baker v. Keebler

• Decision Date: 11 October 1939
• Docket Number: No. 48.,48.
• Citation: 29 F. Supp. 555
• Parties: BAKER et al. v. KEEBLER et al.
• Court: U.S. District Court — Eastern District of Tennessee

29 F. Supp. 555

BAKER et al. v. KEEBLER et al.

No. 48.

District Court, E. D. Tennessee, N. D.

September 26, 1939.

On Rehearing October 11, 1939.

M. W. Egerton and R. R. Kramer, both of Knoxville, Tenn., for plaintiff.

W. T. Kennerly, W. M. Cox, John Jennings, Jr., and Harley Fowler, all of Knoxville, Tenn., for defendant.

DARR, District Judge.

The controverted question is whether there is a right of removal of this cause from a state court to this court.

The plaintiffs, who later became defendants in a cross action, are trustees in the trust agreement set up under authority of the Bank Conservation Act, U.S.C.A. Title 12, Section 207, and approved by the Comptroller of the Currency, for the purpose of reorganizing the East Tennessee National Bank.

On February 8, 1938, the plaintiffs filed their original bill in the Chancery Court of Knox County, Tennessee, in which they sought to have the trust agreement construed in certain particulars, suggesting what they desired to do and seeking authority to so act. In this bill the plaintiffs made certain parties of interest in said trust defendants.

On April 5, 1938, William Baxter Lee et al. filed an intervening petition seeking to be made defendants to said original bill, and, also, filed a cross bill. In this cross bill the intervenors made an attack upon the management of these trustees of the trust estate and sought a full accounting from them.

Thereafter, and from time to time, there were certain dilatory matters disposed of on up to September 22, 1938, at which time the plaintiffs, as defendants in the cross bill, filed a full and complete answer to said cross bill.

The cause kept pending until the spring of 1939, at which time the trial was begun by oral proof upon the issues made up in the original bill and answer thereto and the cross bill and answer thereto.

While said trial was pending, and on May 8, 1939, the intervenors sought leave to and secured permission to amend their cross bill. This amendment charged in stronger language mismanagement of the trust by the trustees and sought to have a receiver appointed to act in the place of the trustees to carry out the trust agreement. Thus, the cross bill, as amended, sought a full accounting of the trusteeship by the trustees, asked their removal, and in their place and stead prayed for the appointment of a receiver to carry out said trust.

On the filing of the amendment the defendants to the cross action asked for time to make answer thereto. The Chancellor granted until 9 o'clock A. M. on May 9, 1939. At 8:47 A. M. on May 9, 1939, the plaintiffs, as defendants in the cross action, filed a petition seeking the removal of the cause to the United States District Court. The Chancellor declined to grant the removal. Thereupon the plaintiffs, as defendants as aforesaid, took appropriate action to remove the cause by filing the record in this court, etc.

Then came the intervenors, as plaintiffs in the cross action, and for certain alleged reasons, moved to strike the certified copies of the record, and, in the alternative, for certain other alleged reasons, moved that the cause be remanded to the Chancery Court of Knox County.

It might here be stated that the plaintiffs, as defendants in the cross action, filed a petition in this court seeking an order to stay further proceedings in the Chancery Court. It is not necessary to pass directly upon this question as a decision on the question of the right to remove will also determine this.

The plaintiffs, as defendants in the cross action, contend that this cause arises under a law of the United States and is a case for winding up the affairs of a national bank. For these reasons, one or both, it is contended that this court has jurisdiction and that the case should be heard here on the removal already had.

The contention is made by the intervenors that the plaintiffs, who became defendants in the cross action, were plaintiffs originally and as such they cannot be heard to ask for a removal of the case. It is true that a plaintiff cannot remove a cause from a state court to a federal court. There is quite a diversity of authority on the question of the right of an original plaintiff who becomes a defendant in a counter action, to remove a cause as such defendant. But I am of the opinion that the weight of the authority now is that ordinarily the defendant in a cross action has the right to ask and obtain the removal of a cause from a state court to a national court. Pierce v. Desmond, D.C., 11 F.2d 327; San Antonio Suburban Irrigated Farms v. Shandy, D.C., 29 F.2d 579; Bankers Securities Corp. v. Insurance, Equities, 3 Cir., 85 F.2d 856, 108 A.L.R. 960; Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140, 141, 55 S.Ct. 6, 79 L. Ed. 244; Mason City & Ft. D. R. Co. v. Boynton, 204 U.S. 570, 27 S.Ct. 321, 51 L. Ed. 629; Zumbrunn v. Schwartz, D.C., 17 F.2d 609; American Fruit Growers v. La Roche, D.C., 39 F.2d 243; Guarantee Co. of N. D. v. Hanway, 8 Cir., 104 F. 369; Wyman v. Wallace, 201 U.S. 230, 26 S.Ct. 495, 50 L.Ed. 738.

But these plaintiffs became defendants at the time of the filing of the cross bill on April 5, 1938. At the time of the filing of the cross bill the record disclosed the same jurisdictional facts as were disclosed at the time of the filing of the amendment to the cross bill. That is, if the execution of this trust was the winding up of the affairs of a national bank, it was such at the time of the filing of the original cross bill the same as it was as of the time of the filing of the amendment to the cross bill. If suits affecting this trust arise under the Bank Conservation Act, 12 U.S.C.A. § 201 et seq., a law of the United States, then the original cross bill was such suit at its beginning, just the same as when the amendment was filed. In other words, all the jurisdictional facts appeared at the time of the filing of the original cross bill, the same as they did at the time of the filing of the amendment to the cross bill.

As I understand, the cross bill sets out premises, in general, charging mismanagement by the trustees and seeking, through a number of different prayers, a full disclosure by the trustees of their trusteeship and an accounting therefor. The amendment sets out more in detail, or in stronger language, allegations of mismanagement by the trustees of the trust estate and prays for a receiver to take the place of the trustees and administer the trust estate under the trust agreement. Thus, the amendment is not a new suit but is supplementary to the original bill.

This is not one of those cases where when commenced is not removable from a state court to a federal court but by subsequent amendment becomes removable. In this kind of case it must be that the amendment is such as to point out that in reality the case was removable to begin with but did not appear upon the face of the record, or charge facts that make the case removable. A mere supplement to the original pleading by amendment does not make the case removable. If a case, or a cross action, is removable at its commencement, whatever may happen thereafter will not increase the right to remove. That is, whatever may happen by way of amendment under the rules of the court in which the case is being tried. The defendants will be charged from the outset with knowledge of the rules of the court which...