Gilardi v. Atchison, Topeka and Santa Fe Railway Co., 60 C 554.

• Decision Date: 26 August 1960
• Docket Number: No. 60 C 554.,60 C 554.
• Citation: 189 F. Supp. 82
• Parties: Leo Jack GILARDI, Plaintiff, v. ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, a corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

189 F. Supp. 82

Leo Jack GILARDI, Plaintiff, v. ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, a corporation, Defendant.

No. 60 C 554.

United States District Court N. D. Illinois, E. D.

August 26, 1960.

Edward J. Kelley and J. Michael Madda, Chicago, Ill., for plaintiff.

William F. Bunn, Lawrence Lawless and William J. O'Brien, Jr., Chicago, Ill., for defendant.

IGOE, District Judge.

This personal-injury action, based on common law negligence, was commenced in the Town Court of Cicero. It was removed to this court on defendant's petition alleging diversity of citizenship between itself and plaintiff. The case is presently before this court on plaintiff's motion to remand the action to the Town Court on the grounds that: First, the removal was not filed within twenty days after the service of summons and is, therefore, untimely; second, that there is no diversity jurisdiction within the meaning of 28 U.S.C. § 1441, inasmuch as plaintiff, a citizen of Illinois, contends that defendant Santa Fe's principal place of business is Chicago, Illinois.

Briefly stated, the facts are: Plaintiff filed his complaint in the Town Court of Cicero on February 5, 1960. Neither the complaint nor the summons served on defendant on February 15 indicated plaintiff's citizenship or residence. On March 15, defendant served notice to take the plaintiff's discovery deposition. On March 23, plaintiff's discovery deposition was taken and for the first time, defendant ascertained that plaintiff was a citizen of Illinois. The deposition was not filed in the Town Court.¹ On April 11, nineteen days after first ascertaining the citizenship of plaintiff, defendant filed its removal papers stating that it was a citizen of the State of Kansas, where it is incorporated and where it has its principal place of business, and that plaintiff was a citizen of Illinois. Plaintiff subsequently filed his motion to remand.

We turn first to the question of whether defendant's removal was timely under 28 U.S.C. § 1446(b). Plaintiff, in his motion to remand, initially ignored the second paragraph of this section and contended that the petition for removal was filed too late since it was filed more than twenty days after the service of summons. Plaintiff has now abandoned this position and presently contends that defendant's removal is premature.

28 U.S.C. § 1446(b) provides in the second paragraph:

"If the case stated by the initial pleading is not removable, a petition for removal may be filed within twenty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." (Emphasis supplied.)

Defendant's removal was timely under § 1446(b) inasmuch as it was effected within twenty days after defendant first ascertained that the case was removable. Since the initial pleading failed to state facts indicating whether the case was removable, defendant was entitled to remove twenty days after receipt by it of some pleading or other paper from which it was first ascertained that the case was removable. The right to remove dates from the receipt of the amended pleading, motion or other paper from which it may first be ascertained that the case is removable. Remington v. Central Pacific R. Co., 1905, 198 U.S. 95, 98, 25 S.Ct. 577, 49 L.Ed. 959; Powers v. Chesapeake & Ohio R. Co., 1898, 169 U.S. 92, 101, 18 S.Ct. 264, 42 L.Ed. 673; Stack v. Strang, 2 Cir., 1951, 191 F.2d 106, 107; Higgins v. Yellow Cab Co., D.C.Ill.1946, 68 F.Supp. 453; Morschauser v. American News Co., D.C.N.Y.1958, 158 F.Supp. 517, 519; Cobleigh v. Epping Brick Co., D.C.N.H.1949, 85 F.Supp. 862, 863; Hamilton v. Hayes Freight Lines, D.C. Ky.1952, 102 F.Supp. 594, 596.

Plaintiff's discovery deposition taken pursuant to Illinois Supreme Court Rule 19, even though not required to be filed, was a sufficient "other paper" within the meaning of Section 1446(b) from which defendant first ascertained that the cause was removable and defendant had twenty days after so learning to remove the case. Stack v. Strang, 2 Cir., 1951, 191 F.2d 106, 107; Morschauser v. American News Co., D.C. N.Y.1958, 158 F.Supp. 517, 519; Cobleigh v. Epping Brick Co., D.C.N.H. 1949, 85 F.Supp. 862, 863; Hamilton v. Hayes Freight Lines, D.C.Ky.1952, 102 F.Supp. 594, 596.

Plaintiff mistakenly contends that the case may be ascertained to be removable only as a result of some voluntary act on his part. He apparently has confused the situation—where the case stated initially is not removable but later becomes removable because of some voluntary act on the part of the plaintiff—with cases like the one at bar where the case stated always was removable but is not ascertained to be removable until a later time. Cases cited on this point have been misinterpreted by plaintiff, are not in point, and need not be discussed here.

Nor does the Court agree with plaintiff's contention that the case may be ascertained to be removable only from some paper filed of record in the State Court. Plaintiff's discovery deposition was part of the judicial discovery process of the State Court. "Other paper" refers to such court processes even though not required to be filed, so long as these papers are part and parcel of the State Court proceedings having their origin and existence by virtue of the State Court processes.

This holding is consistent with the policy and purpose of Congress to effect removals as early as possible and avoid unnecessary delay. The filing of such a deposition does not make the fact of diversity of citizenship ascertainable, but the revelation under oath and recording of such diversity does. To hold that the time for removal does not commence to run until such a paper as the deposition is filed in court would be to require an unnecessary action.

The removal having been timely, we now consider whether federal jurisdiction based on diversity of citizenship exists.

Since the Santa Fe is incorporated under the laws of Kansas, whether diversity of citizenship exists depends upon whether it has its principal place of business in that State or in Illinois. 28 U.S.C. § 1332, augmenting § 1441, provides that for the purposes of diversity jurisdiction, a corporation:

"* * * shall be deemed a citizen of any state by which it has been incorporated and of the State where it has its principal place of business."

Plaintiff contends that the location of the Santa Fe's executive offices at Chicago is determinative of the question, and supports his position with a list of the railroad's executive officers located in Chicago, as indicated in defendant's Annual Report for 1959. Defendant contends that it has its principal place of business in Topeka, Kansas, as determined by an analysis of the totality of its corporate activity. Defendant supported its position with a twenty-two page affidavit of facts sworn to, among others, by its Auditor, Assistant Secretary, General Manager and General Storekeeper, all located at Topeka. It attached to this affidavit a map of its railway system.

As is not uncommon in these cases, one side emphasizes while the other obscures significant factors. Both cite decisions wherein the courts appear to have emphasized factors which each side contends should control the decision here.

In determining the place of a corporation's principal place of business, the issue is a question of fact to be determined in each particular case largely upon the character of the corporation, its purposes, the kind of business it is engaged in, and the situs of its operations. No single factor is determinative of the question. In re Tygarts River Coal Co., D.C.W.Va.1913, 203 F. 178, 180; In re Tennessee Construction Co., D.C.N.Y.1913, 207 F. 203, affirmed 2 Cir., 213 F. 33; Scot Typewriter Co. v. Underwood Corp., D.C.N.Y.1959, 170 F. Supp. 862, 864.

The legislative purpose of Sections 1332 and 1441 is discussed in the Congressional Record of June 30, 1958, at pages 11, 502-11, 509 and is set out in U. S. Congressional & Administrative News, 1958, at pages 3099-3166. By amending Sections 1332 and 1441, Congress was attempting to ease the workload of the Federal Courts and prevent frauds on and abuses of federal jurisdiction, but was not attempting to eliminate:

"* * * those corporations which do business over a large number of States, such as the railroads, insurance companies, and other corporations whose businesses are not localized in one particular State. Even such a corporation, however, would be regarded as a citizen of that one of the States in which was located its principal place of business." Senate Report 1830, U. S. Congressional & Administrative News, p. 3102.

Congress did not define the phrase "principal place of business", but did suggest that the courts were to be guided by decisional law construing the same language used in the Bankruptcy Act, 11 U.S.C.A. § 11. Senate Report 1830, 1958 U. S. Congressional & Administrative News, pp. 3099, 3102; Scot Typewriter Co. v. Underwood Corp., D.C., 170 F.Supp. 862, 863.

Increased importance is placed on decisions construing the Bankruptcy Act to determine the factors to be considered in deciding a corporation's principal place of business. Most of the cases construing this phrase, "principal place of business" under the Bankruptcy Act and Sections 1332 and 1441 are in accord that this finding always has been determined by an analysis of the totality of corporate activity rather than the mere determination of the location of executive offices. Dryden v. Ranger Refining & Pipe Line Co., 5 Cir., 1922, 280 F. 257, 259-260; In re Tygarts River Coal Co., D.C.W.Va.1913, 203 F. 178-180; In re Hudson River Nav. Corp., 2 Cir., 1932, 59 F.2d 971, 974; 8 C.J.S. Bankruptcy § 24 note 75, p. 434.

Some of the Federal Courts have found the principal place of business to be the place where executive officers reside and...