Bon v. Midwest Refining Co.

• Citation: 30 F.2d 410
• Decision Date: 23 January 1929
• Docket Number: No. 1865.,1865.
• Parties: BON et al. v. MIDWEST REFINING CO.
• Court: United States District Courts. 10th Circuit. District of Wyoming

30 F.2d 410 (1929)

BON et al. v. MIDWEST REFINING CO.

No. 1865.

District Court, D. Wyoming.

January 23, 1929.

John T. Bottom, of Denver, Colo., and R. S. Mentzer and W. L. Walls, both of Cheyenne, Wyo., for plaintiffs.

A. C. Campbell, John W. Lacey, and Herbert V. Lacey, all of Cheyenne, Wyo., A. K. Barnes, of Denver, Colo., and Wilfred O'Leary, of Cheyenne, Wyo., for defendant.

KENNEDY, District Judge.

The above-entitled cause is before the court upon motion to remand. The grounds of the motion are, in substance, that the petition for removal was not filed in time, and that there was no authority on the part of the court commissioner of the state court to issue the order of removal. Upon the argument the latter ground was virtually abandoned, as well it might have been, for the reason that a removal is accomplished by filing a proper proceeding in the state court with jurisdictional facts alleged, even should the state court judge fail to sign the order.

Upon the first ground, counsel for defendant raised the point that, the petition to remand not having controverted the allegations of the petition for removal, the later petition should be taken as true. While this is undoubtedly the rule where questions of fact relating to the jurisdiction of the court and the right of removal are alleged, as, for example, in cases where there is an allegation of a fraudulent joinder of parties for the purpose of defeating the federal court of jurisdiction in the case, yet in the case at bar I believe that the question is one of law raised by and to be determined upon the record in the case, and that therefore the ground first laid in the motion to remand is sufficient to present the question for determination by this court.

Briefly, the facts are that in 1926 the plaintiffs instituted a suit in the state court against the defendant by the filing of a petition, to which the defendant interposed a general demurrer upon the ground that the petition did not state facts sufficient to constitute a cause of action. A hearing was had in the state court upon said demurrer, which resulted in the demurrer being sustained; but the court permitting the plaintiff within 20 days to file an amended petition and giving the defendant 20 days thereafter in which to plead to the same. The action of the state court was taken after the time when by the statutes of Wyoming the defendant was required to answer or plead to plaintiffs' petition. Within the 20 days allowed by the order of the court, the plaintiff filed an amended petition, and after such filing, and within the 20 days thereafter, as fixed by the order of the court, the defendant filed in the state court its motion to remove the case to this court, which petition was accompanied by an appropriate bond and notice. In addition to the statutory grounds of removal setting forth the requisite diversity of citizenship and amount in controversy, the defendant alleged that in its amended petition the plaintiff had set up a new and distinct cause of action from the cause of action set forth in its original petition, and around this point revolves the success or failure of the plaintiffs' motion to remand.

The first question for consideration would therefore appear to be as to whether or not the record before the court upon its face shows that the amended petition was such a new cause of action as contended by counsel for defendant; and, if so, second, whether or not under such circumstances the right of removal by the defendant existed after the filing of such amended petition, such petition for removal being filed within the time fixed by the state court for the defendant to plead.

It would serve no useful purpose here to review at length the original and amended petitions, but suffice it to say that an examination of both leads the court to the conclusion that the first cause of action was one sounding in equity, in which equitable rights were asserted, and relief sought upon the theory that through the performance of certain acts by the defendant, and by others of which the defendant had knowledge, the defendant became a trustee ex maleficio of certain property secured by lease from the state of Wyoming, for which the defendant should be required to account for profits and turn the same over to the plaintiffs. As before stated, the general demurrer to this cause of action was sustained by the state court. There are in the original petition, however, certain allegations which by conclusion would seem to set up an action for legal damages, but upon examination of these allegations I am convinced that they could in no sense, standing alone, nor with other allegations of the petition set forth as the basis for equitable relief, sustain any legal action for damages.

In the amended petition the pleader has set up solely and purely a legal action seeking to recover damages alleged to have been sustained by the plaintiff. It is needless to say that, if the court's analysis of these two petitions is correct, it then appears that the first petition was strictly an equitable action, and the amended petition one at law, for which damages are sought to be recovered; the first authorizing a trial to the court, and the second a trial with the intervention of a jury. In this connection it is well to bear in mind that, while the state statutes seek to largely merge law and equity, the federal courts have jealously preserved the distinction, together with the diverging methods of procedure.

In the case of Union Pacific Railway Co. v. Wyler, 158 U. S. 285, 15 S. Ct. 877, 39 L. Ed. 983, the Supreme Court held that, where a suit for the recovery of damages on account of negligence was based upon the common law, and was subsequently amended so as to become based upon a particular statute, there was a departure in the pleadings. The gist of the decision may be found stated in the language of the court at page 295 of 158 U. S. (15 S. Ct. 881), as follows:

"A suit based upon a cause of action alleged to result from the general law of master and servant was not a suit to enforce an exceptional right given by the law of Kansas."

Many cases are reviewed in this opinion, which was pronounced by Mr. Justice White, a fair example of which may be found on page 292 of 158 U. S. (15 S. Ct. 880), where the court cites with approval the following:

"A party filed a bill in equity against a corporation without alleging its dissolution, etc., and that he was without remedy at law; after he amended, so as to insert all the necessary allegations to give equity jurisdiction, held that this also was a new cause of action. Dudley v. Price's Adm'r, 10 B. Mon. Ky. 84."

While it is contended by counsel for plaintiff that all of the transactions upon which plaintiff relies for relief are the same in the original and amended petitions, it would seem from this decision of the Supreme Court that such a situation does not control the controversy as to whether or not there is a departure and a new cause of action stated and relied upon.

The second question, as above suggested, is, then, as to whether or not the statute of the United States, providing for removal as to the time when a petition must be filed, should be applied to a time when it is required of the defendant to plead to an amended petition, which sets up a new cause of action, or whether it should be held that the time for removal is that fixed by the state statute, when the defendant is required to answer or plead to the original petition.

The matter of allowing amendments by a state court under liberal statutory provisions can of course not be accepted in the federal courts as decisive of the point as to whether a new or different cause of action might be or has been set up. Very frequently courts have permitted amendments which virtually substituted new causes of action simply for the purpose of saving expense in starting over to litigants, thereby...