Hennock v. Silver

• Citation: 34 F. Supp. 894
• Parties: HENNOCK v. SILVER et al.
• Decision Date: 27 May 1940
• Court: U.S. District Court — Southern District of New York

34 F. Supp. 894

HENNOCK v. SILVER et al.

District Court, S. D. New York.

May 27, 1940.

Isidor J. Kresel, of New York City (Wm. Peyton Marin, of New York City, of counsel), for plaintiff.

Jacob Meadow, of New York City (Roscoe H. Hupper, of New York City, of counsel), for defendant Edwin H. Land.

LEIBELL, District Judge.

Plaintiff, a citizen of New York, brought this suit against four defendants, one of whom, Julius Silver, is also a citizen of New York and the other three are citizens of Massachusetts. The suit was originally brought in the New York Supreme Court, New York County, but on the petition of the defendant, Edwin H. Land, who alleged that there was set forth in the complaint a separate controversy, involving more than $3,000, between plaintiff, a citizen of New York, on the one hand (or plaintiff and defendant Silver on the one hand) and the three Massachusetts defendants on the other, the case was removed to this court. Land argues that the defendant Silver, a citizen of New York, is not a necessary party to the alleged separate controversy and that it can be wholly determined without his presence.

Section 71 of Title 28 of the United States Code, 28 U.S.C.A. § 71, provides: "And when in any suit mentioned in this section there shall be a controversy which is wholly between citizens of different States, and which can be fully determined as between them, then either one or more of the defendants actually interested in such controversy may remove said suit into the district court of the United States for the proper district."

By notice of motion, dated April 12th plaintiff has moved this court "for an order remanding the above entitled cause to the State Court from whence it was removed as aforesaid, upon the ground that one of the defendants, namely Julius Silver, is a resident and citizen of the State of New York, of which state plaintiff is likewise a resident and citizen, and that there is involved in this suit no separable controversy which is wholly between the plaintiff on one hand and the defendants Edwin H. Land (who obtained such removal), Helen M. Land and George W. Wheelwright, 3rd., who are residents and citizens of the State of Massachusetts on the other hand, nor between plaintiff and the defendant Silver, both residents and citizens of the State of New York on one side and the defendants, Edwin H. Land, George W. Wheelwright, 3rd. and Helen M. Land, all residents and citizens of the State of Massachusetts, on the other side, all of which facts are apparent from said complaint, and that accordingly this Court is without jurisdiction to try and determine this cause".

The complaint alleges that until on or about April 27th, 1934, the plaintiff and defendant Silver were copartners in the practice of law in the City of New York under the firm name of Silver and Hennock (paragraph second); that Edwin H. Land was their client and was interested in various inventions and processes which he was then perfecting, including the process of polarizing light, which had a commercial value; that he was anxious to arrange for proper representation by a law firm and accordingly in September, 1928, he entered into an agreement with the firm of Silver and Hennock by which he retained them to represent him generally in connection with his inventions and to represent such corporations as he might cause to be organized in connection with his said inventions and to render such other related services as Land might request and to advance the necessary disbursements entailed in connection with this representation, "the arrangement to continue until such time as proper financial backing was arranged for exploiting said processes, inventions and said polarizer"; that Land in payment for said services agreed to "allow the firm to participate with him to the extent of, twenty percent (20%) in any and all proceeds, benefits, profits or interest, in any form or manner that the same might be, which Land should receive for said inventions, processes and said polarizer, if, as and when and as soon as proper financial backing was arranged for the exploitation thereof, and also that he would repay, at the same time, all the disbursements advanced for his account by the firm" (paragraph third).

The complaint further alleges that the firm of Silver and Hennock performed the agreement on its part, between September, 1928, and down to and inclusive of April 27, 1934, and that between April, 1934, and August, 1937, "such services and advances of disbursements were continued and completed by defendant Silver on behalf of said firm, pursuant to an arrangement between him and plaintiff" (paragraph fourth); that some time prior to August, 1937, the defendants Wheelwright and Helen M. Land became associated with defendant, Edwin H. Land "in the ownership and exploitation of said polarizer and the inventions and processes in which defendant Land was then interested; and at the same time defendants Wheelwright and Helen M. Land ratified, adopted as to themselves, and agreed to perform, together with Land, all of the terms and conditions of Land's aforesaid agreement with the firm of Silver and Hennock, upon the part of Land to be performed" (paragraph fifth).

The complaint then goes on to allege that about April 27, 1934, the partnership of Silver and Hennock was dissolved and that it was agreed between the plaintiff and defendant Silver that he, Silver, should complete the said agreement with Land on behalf of the firm and that the "plaintiff was entitled to receive 40% of all disbursements and of all compensation received pursuant to said agreement between Land and the firm", except that for rendering legal services after May 1st, 1935, Silver should be allowed such a fair and reasonable fee as certain arbitrators might determine (paragraph sixth); and that in accordance with said agreement between the plaintiff and defendant Silver he, Silver, on behalf of Silver and Hennock, completed the various Land and Wheelwright matters allocated to him as aforesaid (paragraph seventh).

It is further alleged in the complaint that about August 10, 1937, proper financial backing was arranged for exploiting said processes, inventions and said polarizer, and that at that time the three Massachusetts defendants through the efforts of Silver "acting on behalf of said firm of Silver and Hennock", arranged with two banking firms for suitable financial backing for the exploitation of said patents, processes and of said polarizer; that the said three Massachusetts defendants received for their interest in said patents, processes and polarizer "among other things, substantially all of the authorized common stock of Polaroid Corp., a Delaware corporation, consisting of 100,000 shares having a stated or par value of $1 per share, and all of the cumulative Class B preferred stock of said company of the par value of $5 per share, consisting of 2,500 shares" (paragraph eighth); and that by reason of the agreement between Land and the firm of Silver and Hennock, and as soon as the arrangements were made with the bankers, plaintiff and defendant Silver as former members of the firm of Silver and Hennock became entitled to receive from the Massachusetts defendants 20% of all the common stock and of all of the Class B preferred stock of said Polaroid Corporation "and of all other proceeds, benefits and considerations received by defendants Land, Helen M. Land and Wheelwright as aforesaid, together with all disbursements advanced by said firm", and that plaintiff became entitled to receive 40% thereof, less such special compensation as might be allowed to the defendant Silver by the arbitrators for the services he...