Thompson v. MOBIL PRODUCING COMPANY, Civ. No. 158.

• Decision Date: 15 July 1958
• Docket Number: Civ. No. 158.
• Citation: 163 F. Supp. 402
• Parties: J. C. THOMPSON, Plaintiff, v. MOBIL PRODUCING COMPANY, a corporation, and C. E. Carlson, Defendants.
• Court: U.S. District Court — District of Montana

163 F. Supp. 402

J. C. THOMPSON, Plaintiff, v. MOBIL PRODUCING COMPANY, a corporation, and C. E. Carlson, Defendants.

Civ. No. 158.

United States District Court D. Montana, Billings Division.

July 15, 1958.

Sandall, Moses & Cavan, Billings, Mont., for plaintiff.

Robert H. Asher, Cooke, Moulton, Bellingham & Longo, Billings, Mont., for defendant Mobil Producing Co.

JAMESON, District Judge.

This is a diversity case, in which plaintiff has filed a motion to remand to the state court, which is resisted by defendant Mobil Producing Company. Plaintiff and the defendant Carlson are citizens and residents of Montana. The defendant Mobil is a citizen and resident of Delaware. The sole question for determination is whether the amended complaint states a cause of action against the defendant Carlson.

Title 28 U.S.C.A. § 1441(b) provides that diversity cases may be removed to federal courts "* * * only if none of the parties in interest properly joined and served as defendants is a citizen of the state in which such action is brought." 28 U.S.C.A. § 1447(c) provides that, "If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case * * *". If the amended complaint does not state a cause of action against Carlson, the motion for remand should be denied. Thiel v. Southern Pac. Co., 9 Cir., 1942, 126 F.2d 710, certiorari denied 316 U.S. 698, 62 S.Ct. 1295, 86 L.Ed. 1767; Smith v. Southern Pac. Co., 9 Cir., 1951, 187 F.2d 397. This question must be determined according to plaintiff's pleading at the time of removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537, 59 S.Ct. 347, 349, 83 L.Ed. 334; Thiel v. Southern Pac. Co., supra.

The amended complaint alleges that Carlson is employed by Mobil as district geologist, and in that capacity receives from independent geologists oil prospects for drilling and development; that plaintiff, an independent consulting geologist, submitted to defendant Mobil a confidential oil and gas prospect, seeking to have this defendant join in the drilling of a well upon certain terms and conditions set forth in the amended complaint, including the transfer by plaintiff to Mobil of certain options to lease and the payment to plaintiff by Mobil of $5 an acre, or a total of $13,000, plus a 2½% overriding royalty; that a complete geological report was submitted by plaintiff, giving to Mobil "a full, complete and confidential report of the prospects of this land for prospecting oil and gas"; that plaintiff conferred with Carlson concerning the prospect and the confidential oil information so submitted and was advised by Carlson that plaintiff's prospect was not good; that the prospect was rejected by Mobil; that "defendants" in bad faith "did cause its agents, representatives and employees" to complete extensive surface and sub-surface geology; that defendant Mobil, after the expiration of plaintiff's options, acquired leases to the lands covered by said options and commenced the drilling of a well; that the acts of the defendants were the result of the confidential oil information received from plaintiff; that the defendant Mobil, in acquiring the lands and drilling the prospect, used the confidential oil information owned by plaintiff without his authority or consent "and did convert such confidential oil information to their own use and benefit and unjust enrichment". Plaintiff prays judgment:

"1. That the defendants and each of them are holding title to the leases in question in accordance with the terms of the proposal of plaintiff * * *.

"2. That defendants pay to plaintiff damages in the sum of $13,000.00 together with a 2½% overriding royalty on the working interest of the defendants in the lands under lease."

Plaintiff's counsel state in their brief and in oral argument that the pleadings "are based in large measure upon the case of Ballard v. Claude Drilling Co., 1939, 149 Kan. 506, 88 P.2d 1021, 1024 where the court held that the petition stated a cause of action to establish and enforce a constructive trust. No employee of the defendant was there joined as a party. Counsel argue further that "in the creation of a constructive trust, it is in some respects a conversion". Does the amended complaint state a cause of action against Carlson in either (1) conversion or (2) as a constructive trustee?

It was held in Ballard v. Claude Drilling Co., supra, that the oil information respecting the leases constituted "business or trade secrets". It has been held that conversion does not lie for "trade secrets" and similar intangible property. Olschewski v. Hudson, 1927, 87 Cal.App. 282, 262 P. 43; Roystone v. John H. Woodbury Dermatological Inst., 67 Misc. 265, 122 N.Y.S. 444. Personal property is the subject of conversion "if of a tangible nature, or if it is tangible evidence of title to intangible or real property". See 89 C.J.S. Trover and Conversion §§ 11 and 12, p. 538, and cases there cited. In my opinion, "confidential oil information" is not property which is the subject of an action in conversion.

Assuming, arguendo, that an action in conversion will lie for "confidential oil information", has plaintiff alleged acts of the defendant Carlson sufficient to constitute a conversion on his part?

In an action of conversion the complaint must allege that the plaintiff owned the property, the value of the property, and the acts of the defendant which deprived the plaintiff of the property. Interstate Nat. Bank v. McCormick, 1923, 67 Mont. 80, 214 P. 949, 951, 34 A.L.R. 721. "The essence of conversion is not the acquisition of property by a wrongdoer, but a wrongful deprivation of it to the owner * * *" 89 C.J.S. Trover and Conversion § 3, p. 533.

With respect to Carlson the amended complaint simply alleges that plaintiff conferred with Carlson concerning his prospect and was advised by Carlson that the area in question was not a good prospect, together with the general allegations that the "defendants" did cause "its agents, representatives and employees" to conduct further geological work, and that "defendants" wrongfully excluded plaintiff from "any interest in the property and from the use and benefit of his geological report and his labor * * *".

Since the essence of conversion is wrongfully depriving the owner of his property the conversion in this case, if any, would seem to be the act of rejecting the prospect. But there could be no conversion at that time because the defendants had every right to reject the prospect. Nor does there seem to be any wrong in the actions of the defendants in conducting further surveys in the area. The cause of action in conversion, if any, must have arisen when Mobil...