Riggs v. Island Creek Coal Co.

• Decision Date: 28 September 1976
• Docket Number: No. 75-1699,75-1699
• Citation: 542 F.2d 339
• Parties: Blair RIGGS, Plaintiff-Appellee, v. ISLAND CREEK COAL COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 339

542 F.2d 339

Blair RIGGS, Plaintiff-Appellee, v. ISLAND CREEK COAL COMPANY, Defendant-Appellant.

No. 75-1699.

United States Court of Appeals Sixth Circuit.

Argued Dec. 18, 1975.

Decided Sept. 28, 1976.

Barton D. Whitman, Robert T. Keeler, Taft, Stettinius & Hollister, Cincinnati, Ohio, for defendant-appellant.

Thomas D. Beetham, Robt. B. Werren, Beetham & Beetham, Cadiz, Ohio, Philip E. Howes, Canton, Ohio, for plaintiff-appellee.

Before CELEBREZZE, LIVELY and ENGEL, Circuit Judges.

ENGEL, Circuit Judge.

The principal issue in this diversity case involves which of two conflicting descriptions in a warranty deed for coal is controlling under Ohio law.

On April 27, 1923 plaintiff Blair Riggs' predecessor in interest conveyed to defendant Island Creek Coal Company's predecessor in interest:

" . . . all the coal of the No. six vein or seam, being more particularly and definitely described as that certain vein or seam of coal which lies 170 feet below the surface of the southeast corner of the Healey Latham farm in said township, Drill Hole No. 5, and which vein or seam of coal lies 190 feet below the surface on the William Hoop farm in said township, Drill Hole No. 4, within and underlying the following described lands. Situated in the County of Harrison, State of Ohio, and in the Township of Freeport, and being the Northwest quarter of Section No. 22 in Township No. 11 of Range No. 7 in Steubenville Land District, containing 160 acres more or less."

The difficulty with the foregoing description is that the vein of coal which lies "170 feet below the surface of the southeast corner of the Healey Latham farm in said township Drill Hole No. 5, and which vein or seam of coal lies 190 feet below the surface on the William Hoop farm" is actually presently known as the No. 7 seam, and not the No. 6 seam as indicated in the deed. From 1968 until the end of 1972 Island Creek, purportedly relying upon its rights in the deed, mined the No. 7 seam. Plaintiff's suit for trespass was removed on petition of defendant from the Harrison County Common Pleas Court to the United States District Court for the Southern District of Ohio, Eastern Division, sitting at Steubenville.

In a bifurcated bench trial, the district judge on January 18, 1974 ruled in favor of Riggs on the issue of liability. ¹ Proceeding Defendant appeals. We reverse and remand for entry of judgment in favor of defendant.

"on the assumption that the defendant's taking of the coal was not an innocent mistake" the district judge in a subsequent opinion awarded damages of $1,279,793.70.

JURISDICTION

At the outset, this appeal presents an unusual jurisdictional question.

Defendant's petition for removal from the common pleas court was filed in the district court on August 10, 1970. After alleging that the plaintiff was a citizen and resident of the State of Ohio, the removal petition alleged that "the defendant, Island Creek Coal Company, was, and still is, a corporation, incorporated and existing under and by virtue of the laws of the State of Delaware, and a citizen and resident of that state, having principal place of business in the City of Cleveland, State of Ohio." We think it is clear to the district judge and to the parties now that upon its face the petition for removal affirmatively demonstrates an absence of diversity jurisdiction under "the principal place of business" test of 28 U.S.C. § 1332(c). However, no motion to remand was made by the defendant prior to the judgment on liability, nor did the court sua sponte question its jurisdiction.

On March 8, 1974, the defendant filed a "Suggestion of Lack of Jurisdiction", and attached in support an affidavit of the president of Island Creek Coal Company, Mr. Stonie Barker, Jr. As quoted in the district court opinion, ² Mr. Barker's affidavit in part stated:

"In 1970 we had one active mine field known as the Vail Mine in the State of Ohio and two active mines in the State of Pennsylvania. The bulk of our mining operations was conducted in the States of Virginia, West Virginia and Kentucky. In November 1972, the Vail Mine was placed on an inactive status; and Island Creek has not since that time conducted active mining operations in the State of Ohio."

Relying essentially upon the affidavit, the district judge made an express finding that at the time the case was removed in 1970, diversity of citizenship existed, notwithstanding the defendant's allegation that its principal place of business was at that time in Cleveland, Ohio. The basis for his holding was that the applicable case law is "virtually unanimous" in holding that the principal place of business of a mining company is not determined by the "home office" test, but rather by a "place of operations" test, citing Mattson v. Cuyuna Ore Co., 180 F.Supp. 743 (D.Minn.1960); Hodges v. Georgia Kaolin Co., 207 F.Supp. 374 (M.D.Ga.1962); Potocni v. Asco Mining Co., 186 F.Supp. 912 (W.D.Pa.1960), and our decision in Continental Coal Corp. v. Roszelle Bros., 242 F. 243 (6th Cir. 1917). ³ Although the question posed in Roszelle was the principal place of business of a mining corporation under the Bankruptcy Act, we see no essential difference in the statutory standard. ⁴

The district court thus concluded that the existence of the corporate headquarters in Cleveland was irrelevant because it was apparent that only a small portion of Island Creek's mining operations was conducted in the State of Ohio. Without determining in which state Island Creek's principal place of business was, the court thought it sufficient to find that in any event it was not Ohio. Beyond that, the district court held that even if its finding of defendant's principal place of business in 1970 was reversed,

" . . . the defendant's judicial admissions now of record show clearly that defendant's principal place of business now is in either Kentucky, Virginia, West Virginia, or even perhaps California: certainly not Ohio. Similarly, these admissions and the whole of the present record show that defendant's principal executive offices ("home office" if you will) are now in Lexington, Kentucky. But, plaintiff is still an Ohio citizen. Thus, even if this Court were found without jurisdiction and the present case dismissed, no reason appears why plaintiff could not now amend his complaint or even file a new action in this same Court to relitigate all of these same issues before the same judge because diversity certainly exists at the present time under any test and the Court can conceive of no statute of limitations which operation is not now suspended by this plaintiff's diligence in protecting his claim. Such a result would be clearly absurd." ⁵

We recognize that the determination of a corporation's principal place of business under 28 U.S.C. § 1332(c) is a question of fact and thus on review subject to the clearly erroneous rule. American Foundation, Inc. v. Mountain Lake Corp., 454 F.2d 200 (5th Cir. 1972); Brown v. Kingsport Publishing Corp., 321 F.Supp. 1352 (E.D.Tenn.1971).

While we agree with the cited cases that a mining corporation's headquarters may not invariably govern the location of its principal place of business, we think that the evidence submitted and the district court's negative finding were insufficient to establish the affirmative requirement of jurisdiction at the time of removal. The affidavit relied upon by the district court simply stated that the bulk of defendant's mining operations was conducted in three states other than Ohio. There is no recitation of tonnage produced, the number of people employed, or the physical assets owned in each state. If the "bulk of the mining operations" were shown to be located in one state, we could accept the district court's conclusion that that state constituted the corporation's principal place of business. However, here the " bulk" of the operations was divided in some unknown proportion among three states. In such a situation, the corporation's headquarters assumes more significance as the compelling factor in the principal place of business test. "Where a corporation has more than one mine . . . situated in different districts, its office from which supreme direction and control of the business generally is had, including the operations of the several plants, may, and perhaps must, be deemed the principal place of business." Continental Coal Corp. v. Roszelle Bros., 242 F. 243 (6th Cir. 1917). This conclusion, however, does not end the matter.

Recognizing that Island Creek had moved its corporate headquarters to Lexington, Kentucky in July 1973, the trial judge justifiably felt that dismissal of plaintiff's case would lead to an absurd result because diversity of citizenship existed at the time of trial and rendition of judgment in any event. His conclusion was sound. On the facts before him, he could properly have held that the defendant was estopped from asserting absence of diversity of citizenship where no objection to the court's jurisdiction was raised until after the date of judgment and where it is clear that at the time of judgment diversity of citizenship did in fact exist.

We recognize that the existence of federal jurisdiction may be questioned at any point in the course of litigation and that parties cannot waive the requirement of subject matter jurisdiction. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951). However, in the instant case the district court unquestionably possessed the power to render judgment where at the time of judgment diversity of citizenship existed.

The Supreme Court in Grubbs v. General Electric Credit Corp., 405 U.S. 699, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972), held that although the removal statute, 28 U.S.C. § 1444, was perhaps improperly invoked, jurisdiction in fact existed on the basis of diversity of citizenship between petitioner and respondent with the requisite amount in controversy.

"We have concluded that, whether...