BL Schrader, Inc. v. Anderson Lumber Company

• Decision Date: 30 August 1966
• Docket Number: Civ. No. 16014.
• Citation: 257 F. Supp. 794
• Parties: B. L. SCHRADER, INC., a corporation of the State of Washington v. The ANDERSON LUMBER COMPANY, Incorporated, a corporation of the State of Maryland, Defendant and Third-Party Plaintiff, v. Thomas A. CHARSHEE, t/a Arthur V. Charshee and Son, Third-Party Defendant. The ANDERSON LUMBER COMPANY, Incorporated, Counter-Plaintiff, v. B. L. SCHRADER, INC., Counter-Defendant.
• Court: U.S. District Court — District of Maryland

257 F. Supp. 794

B. L. SCHRADER, INC., a corporation of the State of Washington v. The ANDERSON LUMBER COMPANY, Incorporated, a corporation of the State of Maryland, Defendant and Third-Party Plaintiff, v. Thomas A. CHARSHEE, t/a Arthur V. Charshee and Son, Third-Party Defendant.

The ANDERSON LUMBER COMPANY, Incorporated, Counter-Plaintiff, v. B. L. SCHRADER, INC., Counter-Defendant.

Civ. No. 16014.

United States District Court D. Maryland.

August 30, 1966.

Charles Yumkas and Jacob Blum, Baltimore, Md., for plaintiff, third-party defendant and counter-defendant.

George J. Goldsborough, Jr., Easton, Md., for defendant, third-party plaintiff and counter-plaintiff.

THOMSEN, Chief Judge.

At a pretrial conference in this case, which was held before the amendments to the Civil Rules which became effective on July 1, 1966, defendant (Anderson) contended that third-party defendant (Charshee) was a partner of plaintiff (Schrader) or a joint venturer with plaintiff, and, in either event, should be treated as an indispensable party plaintiff and realigned as such. Since both Anderson and Charshee are citizens of Maryland, this would destroy the diversity jurisdiction, which would otherwise exist because Schrader is a citizen of the State of Washington. The parties wished to have the question of jurisdiction tried first as a separate issue, to avoid the expense of bringing experts to a trial which might result in a dismissal of the case for lack of jurisdiction. The matter has been submitted on affidavits, depositions and exhibits filed by the respective parties, and has been fully briefed.

The complaint alleges that plaintiff Schrader, of Oroville, Washington, is engaged in the business of selling lumber at the wholesale level; that in 1964 defendant Anderson placed through Charshee several orders to purchase large quantities of lumber from plaintiff, which were accepted and confirmed by plaintiff mailing to defendant documents entitled "Acknowledgment of Order"; that plaintiff shipped part of the lumber to defendant by vessel c. i. f. Baltimore, but while the shipment was in transit defendant notified plaintiff through Charshee that it would refuse to accept the shipment upon its arrival; nevertheless defendant did accept and pay for a part of the lumber shipped, but continued to refuse to pay for the balance, which was resold by plaintiff at a loss. Plaintiff seeks to recover that loss and additional expenses and commissions.

The answer asserts as a defense that the action "has not been brought in the name of the real party in interest", without further specification, but goes on to admit that defendant placed through Charshee the orders to purchase the lumber from plaintiff, but denied that "said orders were accepted and confirmed by the plaintiff on the same terms offered by the defendant and there was, therefore, a failure of acceptance."

Along with its answer Anderson filed a counterclaim against Schrader in three counts, said to arise "out of the transaction or occurrence that is the subject matter of the Complaint filed herein, the adjudication of which does not require the presence of third parties over whom the Court herein cannot acquire jurisdiction." Each count contains the allegation that Anderson placed through Charshee orders to purchase lumber from Schrader, and refers to Charshee as Schrader's agent. The several counts of the counterclaim allege various breaches of contract by Schrader, for which Anderson demands damages from Schrader alone.

On the same day Anderson filed a third-party complaint against Charshee in two counts, each of which alleges that Charshee was and is doing business as a commission merchant or broker in the wholesale lumber trade, and that Anderson placed through Charshee the orders to purchase lumber from Schrader. The first count asserts that if Anderson is compelled to pay damages to Schrader on the claim asserted in the complaint, it has a right of indemnity against Charshee because Charshee inspected the lumber and advised Anderson that it did not meet the specifications, was not merchantable, and was not fit for the use intended by Anderson. The second count of the third-party complaint alleges that Charshee, acting as Schrader's commission agent, made certain warranties to Anderson "for himself and for his principal," by reason of which Anderson demands judgment from Charshee for any amount that may be adjudged against Anderson in favor of Schrader.

Despite the pleadings, Anderson argues that Schrader and Charshee were partners or joint venturers who should be treated as partners; that Charshee should therefore be realigned as a party plaintiff; and that this would destroy the diversity jurisdiction in this case.

If a plaintiff is a partnership, there is no diversity unless the citizenship of each partner is different from that of the defendant. Eastern Metals Corp. v. Martin, S.D.N.Y., 191 F.Supp. 245. See also Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 20 S.Ct. 690, 44 L.Ed. 842 (1900); Levering & Garrigues Co. v. Morrin, 2 Cir., 61 F.2d 115 (1932), affirmed 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062 (1933); Hobdey v. Wilkinson, 201 Md. 517, 526, 94 A.2d 625 (1953). And, for diversity purposes, a joint venture should be treated as a partnership. Archer-Daniels-Midland Co. v. Paull, W.D.Ark., 188 F. Supp. 277 (1960), reversed on other grounds, 8 Cir., 293 F.2d 389 (1961). This is in accord with the general law of joint ventures. Hobdey v. Wilkinson, supra; Taylor v. Brindley, 10 Cir., 164 F.2d 235 (1947). It is also true that in a proper case a federal court should not hesitate to realign the parties. State Farm Mut. Automobile Ins. Co. v. Hugee, 4 Cir., 115 F.2d 298, 132 A.L.R. 188 (1940).

The evidence which has been submitted to the Court shows that Charshee acts sometimes as a wholesale lumber merchant, buying and selling for his own account, and sometimes as a commission broker, selling lumber for various mills or shippers, which invoice the customer direct. The evidence with respect to the transactions in issue is contradictory, and conflicting inferences can be drawn from the several documents, especially if they are considered out of context. The Court finds that when Anderson placed the first two orders with Charshee, Anderson did not know the name of the shipper with whom Charshee intended to place the order, but that Anderson's orders were accepted by Schrader, and the contracts of sale were contracts between Anderson and Schrader. When the last two orders were placed, Anderson did know from the start that they would be forwarded for acceptance to Schrader. The agreement between Schrader and Charshee was that Schrader was to receive as his compensation for finding the customer and other services...