OILS, INC., v. Blankenship
| Decision Date | 29 January 1945 |
| Docket Number | No. 2920.,2920. |
| Citation | 145 F.2d 354 |
| Parties | OILS, Inc. v. BLANKENSHIP et al. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Hal Whitten, of Oklahoma City, Okl. (Whitten & Whitten, of Oklahoma City, Okl., on the brief), for appellant.
J. B. Dudley and Ram Morrison, both of Oklahoma City, Okl. (Dudley, Duvall & Dudley, of Oklahoma City, Okl., on the briefs), for appellees.
Before PHILLIPS, BRATTON, and MURRAH, Circuit Judges.
Writ of Certiorari Denied January 29, 1945. See 65 S.Ct. 562.
On May 23, 1940, A. P. Hopler and seven other minority stockholders of the Farmers Mutual Royalty Syndicate, Inc.,1 a corporation organized under the laws of Arizona, brought a stockholders' action against Farmers Mutual and its subsidiary, Oils, Inc.,2 and National Bond & Mortgage Co., corporations organized under the laws of Oklahoma, Farmers Royalty Holding Company, a corporation organized under the laws of Delaware, and certain individual defendants in the United States District Court for the Western District of Oklahoma. It was numbered 461 Civil on the docket of that court. The action was brought for the benefit of Farmers Mutual and Oils. It sought the removal of the officers of Farmers Mutual and Oils, an accounting by such officers, and the recovery of money and properties obtained through fraud perpetrated by such officers upon Farmers Mutual and Oils. On January 24, 1942, the court appointed F. M. Petree receiver of Farmers Mutual and Oils. On February 18, 1942, a judgment was entered in No. 461. It awarded money judgments in favor of Oils against four individual defendants and in favor of Farmers Mutual against eight individual defendants. It recited that it appeared from the evidence that there were certain instances where persons, not parties to the action, might be liable for the improper administration of the affairs of Farmers Mutual and Oils, and stated that the court "suggests to the Receiver that an investigation be made * * * and where justified that application be made to this court for permission to institute suit for proper relief." It also ordered "that the Court retain jurisdiction of this cause for the purpose of enforcing this Decree and the administration of the property by the receiver of the Farmers Mutual * * * and * * * Oils * * *; and for such accounting as will be necessary between the parties hereto, * * *".
On January 14, 1943, the instant action was brought by Farmers Mutual and Oils by their receiver, F. M. Petree, against G. T. Blankenship, Daisy O. Blankenship, E. S. Hansberger, M. E. Trapp, Dean M. Stacy, Harold F. Young, Lou Shepherd, Trapp & Blankenship, a copartnership composed of M. E. Trapp and G. T. Blankenship, National Bond & Mortgage Co., and Oil Royalties, Inc., Oklahoma corporations, Royalty Holding Co., Royalty Service Corp., Ltd., and Equal Royalty Co., Delaware corporations.
Only one of the defendants in the instant action, National Bond & Mortgage Co., was a defendant in No. 461.
Farmers Mutual and Oils were defendants in No. 461 and are plaintiffs in the instant action.
On January 18, 1943, an application was filed in No. 461 to terminate the receivership. On March 15, 1943, an order was entered in No. 461 which recited that the receiver was appointed for Farmers Mutual and Oils for the purpose of reorganizing the corporations and to operate and retain the properties of the corporations, pending reorganization; that the receiver had submitted his final report, which had been approved, and had been discharged. It ordered that the court retain jurisdiction in No. 461 and proceedings ancillary thereto for the purpose of enforcing and carrying into effect the orders, judgments, and decrees theretofore issued and filed in No. 461. It further ordered that all properties, assets, accounts, records, and equipment, of every kind and description, should be delivered to the respective boards of directors of Farmers Mutual and Oils, to be managed, operated, and controlled in accordance with the by-laws governing such corporations, with full powers of every kind and description of operation and management. It further ordered that the respective boards of directors of Farmers Mutual and Oils should make semiannual reports to the court.
On July 26, 1943, on application of the plaintiffs in the instant action, an order was entered permitting the action to be continued by Farmers Mutual and Oils, as plaintiffs, and eliminating the receiver as a party.
It was alleged in the complaint in the instant action that the purpose of the receivership was not to wind up the affairs of such corporations because of insolvency, but to take charge of the properties, assets, books and records of such corporations, to remove the officers and directors from control of such corporations, and to avoid mismanagement and wrongful dissipation of their assets.
In the instant case, Farmers Mutual and Oils alleged fraud on the part of the defendants and misappropriation by the defendants of funds and properties of Farmers Mutual and Oils. Farmers Mutual and Oils sought a judgment for an accounting and requiring the transfer and delivery to them of funds, properties, and assets belonging to them, and now in the possession of the defendants. Farmers Mutual prayed for money judgments against certain named individual defendants. Oils also prayed for money judgments against certain named individual defendants.
The trial court dismissed the instant action, without prejudice, for want of jurisdiction. Oils has appealed.
In the instant action, diversity of citizenship is not present, nor is any other ground of federal jurisdiction. If it is an independent action, the judgment of the trial court was correct. The trial court had jurisdiction of No. 461 and, if the instant action is ancillary to that suit, it had jurisdiction of the instant action, because jurisdiction of an ancillary suit or proceeding is referable to or dependent on the jurisdiction of the court...
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