Philipbar v. Derby
| Decision Date | 13 July 1936 |
| Docket Number | No. 431.,431. |
| Citation | 85 F.2d 27 |
| Parties | PHILIPBAR et al. v. DERBY et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Samuel Zirn, of New York City, for appellants.
Strange, Myers, Hinds & Wight, of New York City (Frank C. Mebane, Jr., of New York City, and Roger Hinds, of New York City, of counsel), for appellee.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
This is an appeal from a decree dismissing a shareholders' bill in equity against the Derby Oil & Refining Corporation and six of its nine directors, for lack of jurisdiction over the corporation, an indispensable party; the plaintiffs also assign as error the denial of a motion to remand the suit to the state court. The suit was begun by the service of a summons upon the defendant Derby while he was temporarily within the state on April 23, 1935; no other defendant has ever been served. Before bill filed, Derby petitioned the state court to remove the cause, alleging that neither he nor any of the other five individual defendants were citizens of New York; that the corporation was organized under the laws of the state of New Jersey; and that both the plaintiffs were citizens of New York and residents of Brooklyn. The cause was removed, whereupon the plaintiffs moved to remand on the ground that the defendant Morgan was a citizen of New York, and that the controversy was not a separable one. The evidence of Morgan's residence in the moving petition was by information from one Bomanji, a very large shareholder in the company, that for ten years before suit had been brought Morgan had been a resident of New York City, except while he had been an official in Washington; that he had not during that time been a citizen of New Hampshire, as the petition for removal had alleged, though he had been there occasionally on vacation during the summer; and that up to March, 1933, he had lived at two given addresses in New York. In reply Morgan filed an affidavit denying that he was a citizen of New York. He swore that in April, 1933, he was appointed an official of the Farm Credit Administration and went to Washington, where he had since then had his home at two addresses which he gave; that in the spring of 1935 he had resigned this position, and become secretary to the Democratic National Committee in Washington; that his wife, whom he married in 1933, owned a part interest in a house in Concord, N. H., where he had spent the summers of 1933, 1934; that in 1934 he had decided to make New Hampshire his residence; that he filed an income tax return in March, 1935, in which he swore that his residence was at 111 Centre street, Concord; that it was his intention to vote in New Hampshire at the next election; that he "had not maintained an abode in New York since July of 1927," though he had stopped at times with his son there; that he had not even "sojourned" in New York State for more than a day during the last two years; and that Bomanji had no information as to his residence for many years, had not seen him for several years, and was in no position to furnish any recent information about him. It was alleged on argument before us, and is repeated in the brief, that the plaintiffs in their brief on the motion to remand asked for a hearing upon the issue of Morgan's citizenship, but nothing of the kind appears in the record. The court held that, as all the defendants were citizens of other states than the plaintiffs, the cause was removable; it being unnecessary to await the filing of the bill.
The plaintiff then filed the bill, which is long and confused, but the upshot of which is to charge the individual directors with misconduct as such, out of which they had made unlawful profits, and through which they had caused loss to the corporation; that, although requested to bring suit in the corporate name because of this misconduct, they had refused to do so; and that as they controlled the corporation, it was impossible for the plaintiffs to obtain any redress except by a shareholders' suit. The prayer was that the defendants account to the corporation for losses incurred by them, and that they repay any profits obtained by their misconduct. The defendant then moved to dismiss the suit because it was impossible to bring in the defendant corporation, which was an indispensable party, without which the suit could not proceed. By affidavit it appeared that it had no place of business in New York and could not be served there. The judge took this view and dismissed the bill.
Although the plaintiffs could not have appealed from the order denying the motion to remand the cause, the jurisdiction of the District Court over the subject-matter underlies every step it takes, and a decree dismissing a bill is open to attack, not only on the merits, but also if the cause be not properly in the district court. Powers v. Chesapeake & Ohio Ry. Co., 169 U.S. 92, 18 S.Ct. 264, 42 L.Ed. 673; McAllister v. Chesapeake & Ohio Ry. Co., 243 U.S. 302, 37 S.Ct. 274, 61 L.Ed. 735; Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144; Ex parte Roe, 234 U.S. 70, 73, 34 S.Ct. 722, 58 L.Ed. 1217. The removal was right if Morgan was a citizen of New Hampshire; and that depended upon a question of fact, tried on affidavits. The petition of removal, which alleged in general terms that New Hampshire was his domicile, was verified only by one of Derby's attorneys and counted for nothing as proof; it was no more than an allegation in a pleading, good only until challenged. But the plaintiffs' petition on motion to remand was no better. True, it went into some details about Morgan's whereabouts and his residence, which possibly might have served, if uncontroverted and made by one who knew the facts; but it was the starkest...
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Appendix A
...If an action maybe commenced by service alone, as under CR 3(a), the suit may be removed before the complaint is filed. Philipbar v. Derby, 85 F.2d 27, 30 (2d Cir. 1936). Important Note: In Expedia, the U.S. District Court for the Western District of Washington held that the enactment of CA......
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Table of Cases
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