State v. Neustadt

• Decision Date: 14 May 1945
• Docket Number: No. 3072.,3072.
• Citation: 149 F.2d 143
• Parties: STATE ex rel. WILLIAMS et al. v. NEUSTADT et al.
• Court: U.S. Court of Appeals — Tenth Circuit

149 F.2d 143 (1945)

STATE ex rel. WILLIAMS et al. v. NEUSTADT et al.

No. 3072.

Circuit Court of Appeals, Tenth Circuit.

April 16, 1945.

Rehearing Denied May 14, 1945.

Howell Williams, Co. Atty., of Ardmore, Okl., and Rutherford Brett, former Co. Atty. (Ernest W. Tate, Asst. Co. Atty., and Gerald S. Tebbe, former Asst. Co. Atty., all of Ardmore, Okl., on the brief), for appellants.

Ezra Dyer, of Ardmore, Okl., for appellee Walter Neustadt.

Geo. N. Otey, of Ardmore, Okl. (Walace Hawkins, of Dallas, Tex., and W. R. Wallace, of Oklahoma City, Okl., on the brief), for appellee Magnolia Petroleum Co.

Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.

BRATTON, Circuit Judge.

The State of Oklahoma, on the relation of the County Attorney of Carter County, the Board of County Commissioners of Carter County, and the Chairman of the Board of County Commissioners, as trustee for the county, brought this action in the state court against Walter Neustadt, Paul Frame, and Magnolia Petroleum Company. Oklahoma Natural Gas Company was subsequently made a party defendant. The purposes of the action were to cancel two deeds of the Board of County Commissioners conveying certain lands to named grantees, respectively; to eject the defendants; to quiet title; to recover damages sustained as the result of withholding possession from the county; to recover rents, issues, and profits, including oil and gas produced and removed; and to obtain the appointment of a receiver to operate the premises. The action was removed to the United States Court. The defendant Neustadt answered, denying the invalidity of the deeds executed by the county and pleading estoppel on the part of the plaintiffs; and by cross complaint, he sought to quiet his title to the lands. The defendant Magnolia Petroleum Company answered, pleading in general the defenses tendered by the defendant Neustadt, admitting that it had purchased from the defendants Neustadt and Frame oil produced from the premises, but alleging that at the time of the purchase the oil had been severed from the premises and was in the open, hostile, and adverse possession of the defendants Neustadt and Frame, and that the defendant Magnolia Petroleum Company had no notice of any defect in the right or title of the defendants Neustadt and Frame in the oil or of any right or claim of plaintiffs therein. A motion to remand was denied; the cause was tried on the admissions contained in the pleadings and an agreed statement of facts; and judgment was entered quieting title in the defendant Neustadt, and requiring the defendants Magnolia Petroleum Company and Oklahoma Natural Gas Company to account to the defendant Neustadt for oil and gas produced and taken from the premises. Plaintiffs appealed. For convenience reference will be made to the parties as they appeared in the trial court.

Error is assigned upon the denial of the motion to remand. The action was removed on the petition of the defendant Magnolia Petroleum Company, and the ground of removal was a separable controversy between citizens of different states. There was complete diversity of citizenship between plaintiffs and the removing defendant, but it is urged that the defendants were jointly and severally liable to plaintiffs and that no separable controversy was presented. The right of removal on the ground of a separable controversy has its source in section 28 of the Judicial Code, 28 U.S.C.A. § 71, which in presently material respect provides that "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." It is well settled that for the purpose of determining the nature of the controversy as to being joint or separable, the allegations of the complaint at the time of the removal are decisive, in the absence of a showing that one or more of the defendants were fraudulently joined for the purpose of preventing removal. Alabama Great Southern Railway Co. v. Thompson, 200 U.S. 206, 26 S.Ct. 161, 50 L.Ed. 441, 4 Ann.Cas. 1147; Chicago & Alton Railroad Co. v. McWhirt, 243 U.S. 422, 37 S.Ct. 392, 61 L.Ed. 826; Hay v. May Department Stores Co., 271 U.S. 318, 46 S.Ct. 498, 70 L.Ed. 965; Pullman Co. v. Jenkins, 305 U.S. 534, 59 S.Ct. 347, 83 L.Ed. 334; Preston v. Kaw Pipe Line Co., 10 Cir., 128 F.2d 162, certiorari denied, 317 U.S. 674, 63 S.Ct. 80, 87 L. Ed. 541.

The petition in this case contained six separate and distinct counts. It was recited at the beginning of each that plaintiffs "for their joint and several cause of action against the defendants, and each of them, allege and state * * *." But the nature of the action as to whether it presents a joint or separable controversy must be determined by reference to the substance of the pleading, not by general terminology of that kind. It was alleged in the fifth count that the defendants drilled a number of producing wells on the lands; that a large amount of crude oil was taken from them and was converted by the defendants; that the defendant Magnolia Petroleum Company purchased such oil with actual and constructive notice of the invalidity of the title of the defendants Neustadt and Frame; that the defendants Neustadt and Frame received the purchase price for such oil; that the defendants, and particularly the defendant Magnolia Petroleum Company, should be held to account to plaintiffs for the oil purchased; and that the defendant Magnolia Petroleum Company should be enjoined from making further payments to its codefendants and should be required to deposit future payments in the registry of the court to await the determination of the action. It is the law in Oklahoma that where one converts personal property and sells it to another who has knowledge of the conversion, the two may be joined in an action for conversion. Probst v. Bearman, 76 Okl. 71, 183 P. 886. But that is not the test for determining the question of removability. If, in respect of the non-resident defendant who seeks removal, the controversy is separable within the meaning of the statute, supra, the fact that the state practice permits its joinder in a suit with another controversy as against other defendants, does not preclude removal. Pullman Co. v. Jenkins, supra. The gravamen of the cause of action pleaded in the fifth count, as between plaintiffs and the defendant Magnolia Petroleum Company, was to recover damages for the purchase of crude oil belonging to plaintiffs which had been converted, with notice on the part of the purchaser of the conversion. That controversy was one which could be fully determined as between the parties immediately interested in it without the presence of the other defendants as parties to the action. And it did not cease to be a controversy wholly between such parties because plaintiffs, for their own convenience and with the sanction of state practice, chose to embody in their petition other distinct controversies between themselves and other defendants. As to the defendant Magnolia Petroleum Company, the cause of action pleaded in the fifth count was a separable controversy, the cause was removable, and therefore the motion to remand was properly denied. Preston v. Kaw Pipe Line Co., supra; Creek Indians National Council v. Sinclair Prairie Oil Co., 10 Cir., 142 F.2d 842, certiorari denied, 323 U.S. 781, 65 S.Ct. 269; Sewell v. J. E. Crosbie, Inc., 8 Cir., 127 F.2d 599, certiorari denied, 317 U.S. 643, 63 S.Ct. 36, 87 L.Ed. 518.

The lands involved are divided into two separate tracts. The county had acquired them at tax resale. Separate bids in writing were submitted for the purchase of the two tracts, and in each instance notice of sale was published. One notice was published on July 13, 20, and 27, 1939, of a sale to be held on July 28; the other notice was published on July 20 and 27, and August 3, 1939, of a sale to be held on August 4; the sales were had on those dates, respectively; and the deeds of the county to the purchasers were executed pursuant to them. Section 11, article 31, chapter 66, Laws of Oklahoma 1939, 68 O.S.1941 § 432j, provides among other things that any property acquired by the county at tax resale may be sold after notice published once a week for three consecutive weeks preceding the sale. It is the contention of plaintiffs that the sales were governed by this statute; that in each instance the notice was not published the required length of time; and that for such reason the sales were invalid. There can be no doubt that under the settled law of the state the statute requires publication of the notice for twenty-one days; and that if the statute has controlling application the sales were invalid. Cadman v. Smith, 15 Okl. 633, 85 P. 346; Smith v. Bostaph, 103 Okl. 258, 229 P. 1039; Foster v. Board of Commissioners of Marshall County, 144 Okl. 14, 289 P. 347; Sarkeys v. Lee, 149 Okl. 287, 300 P. 383; Welborn v. Whitney, 190 Okl. 630, 126 P.2d 263.

The Act of 1939 was approved on April 15, and it contains an...