United Nuclear Corp. v. Moki Oil and Rare Metals Co.

• Citation: 364 F.2d 568
• Decision Date: 25 July 1966
• Docket Number: No. 8307.,8307.
• Parties: UNITED NUCLEAR CORPORATION, a Delaware corporation, Appellant, v. MOKI OIL AND RARE METALS CO., a New Mexico corporation, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

364 F.2d 568 (1966)

UNITED NUCLEAR CORPORATION, a Delaware corporation, Appellant, v. MOKI OIL AND RARE METALS CO., a New Mexico corporation, Appellee.

No. 8307.

United States Court of Appeals Tenth Circuit.

July 25, 1966.

Harry L. Bigbee, Santa Fe, N. M. (Harl D. Byrd, G. Stanley Crout, Richard N. Carpenter, Arthur H. Coleman and Bigbee & Byrd, Santa Fe, N. M., on the brief), for appellant.

Robert L. Blumenthal, Dallas, Tex. (Lewis R. Sutin, Robert W. Botts, Sutin & Jones, Botts, Botts & Mauney, Albuquerque, N. M., and Carrington, Johnson & Stephens, Dallas, Tex., on the brief), for appellee.

Before MURRAH, Chief Judge, and PHILLIPS and LEWIS, Circuit Judges.

ORIE L. PHILLIPS, Circuit Judge.

This is a diversity action brought by Moki Oil & Rare Metals Company,¹ a New Mexico corporation, against Phillips Petroleum Company² and United Nuclear Corporation,³ both Delaware corporations.

28 U.S.C.A. § 1332 in part here material reads:

"§ 1332. Diversity of citizenship; amount in controversy; costs

"(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between —

"(1) citizens of different States;

* * * * * *

"(c) For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business: * * *."

The complaint alleged that Nuclear had its principal place of business at New York City, New York. Nuclear filed a motion to dismiss the action on the ground that it had its principal place of business in New Mexico. In order to give district courts original jurisdiction under § 1332, supra, the citizenship of all parties on one side of the case or controversy must be diverse to those on the other side.⁴

After the motion challenging the jurisdiction was filed by Nuclear, Moki filed an amended complaint in which it set up that Nuclear had its principal place of business in the State of Maryland or in the State of New York.⁵ Thereupon, Nuclear filed an amended motion to dismiss on the ground that it has its principal place of business in New Mexico.

The amended motion came on for hearing before the court upon affidavits filed by Nuclear and Moki, exhibits introduced in evidence, and portions of certain depositions taken in the cause. The court found that Nuclear had its principal place of business in a state other than the State of New Mexico, and therefore complete diversity of jurisdiction existed between Moki and Phillips and Nuclear.

Subsection (c) of § 1332, supra, was embraced in a proposed bill drafted by a committee of the Judicial Conference of the United States. The Judicial Conference approved the draft bill and forwarded copies thereof to appropriate officers of the House and Senate, with the recommendation that it be enacted by the Congress.⁶

The phrase "principal place of business" was taken from the jurisdictional section of the Bankruptcy Act (July 1, 1898, 30 Stat. 545, 11 U.S.C.A. § 11(a) (1)), because there existed a large body of bankruptcy decisions interpreting its meaning.⁷

The phrase also appears in the venue section of the Natural Gas Act (June 21, 1938, § 19(b), 52 Stat. 831, 15 U.S.C.A. § 717r(b)), providing for court review of orders of the Federal Power Commission.

Where the corporation has its principal place of business is a question of fact to be determined by "the character of the corporation, its purposes, the kind of business in which it is engaged, and the situs of its operations."⁸

Where a corporation carries on its business in a number of states, no one of which is clearly the state in which its business is principally conducted, the state where a substantial part of its business is transacted and from which centralized general supervision of all of its business is exercised, is the state in which it has its principal place of business.⁹

There is no substantial dispute in the facts. Nuclear is a vertically integrated nuclear company, the activities and interests of which cover the full spectrum of the nuclear industry, from mining, milling and fuel processing to reactor utilization and waste management.

It has five divisions, for the most part geographically separated and all reporting to the executive office of the corporation independently of each other, except the Chemicals Division, which reports to the Vice President of the Fuels Division.

The Mining and Milling Division operates the uranium mines owned by Nuclear, located in New Mexico, and manages the mineral properties of Nuclear in other states. It also handles dealings between Nuclear and a limited partnership, Homestake-Sapin Partners, in which Homestake Mining Company is the general and managing partner and Nuclear is the limited partner. The Vice President of the Mining and Milling Division has offices in Santa Fe, New Mexico. The operation of such division is under the direction of its Vice President and his staff at Santa Fe, New Mexico, but such operation is subject to the general direction and supervision of the superior executive officers of Nuclear, as is the operation of all the other divisions hereinafter mentioned.

The Fuels Division maintains a manufacturing facility in New Haven, Connecticut, an assembly plant in Montville, Connecticut, and supervises a cold scrap reprocessing plant in Rhode Island. It also supervises a Chemical Division, located in Missouri. The Fuels Division is active in every area of nuclear fuel preparation, fabricating and recovery. It is operated under the direction of its Vice President, who maintains an office at New Haven, Connecticut.

The Development Division is operated out of an office in White Plains, New York, and has a facility in White Plains and another in Pawling, New York. It is engaged in nuclear research and development for the United States Government, the development of commercial nuclear power plants for maritime use, for water desalting and small electric generating stations, and other projects involving advanced technology, and has classified contracts with space and defense agencies. It is operated under the direction of a Vice President in charge of Development.

The Chemical Division, located in Missouri, is operated under the direction of the Vice President in charge of the Fuels Division. It maintains a plant in Hematite, Missouri, which processes fuel for reactor cores out of enriched uranium, and for reprocessing scrapped uranium.

The Shielding Division is operated by a wholly-owned subsidiary, Ray Proof Corporation, the plant or office of which is located at Stamford, Connecticut, and is under the direction of the President of such subsidiary. It produces standard industrial products for shielding against X-ray and Gamma radiation, radio frequency vibration, and acoustic interference.

Up to the middle of 1963, Nuclear maintained its principal executive offices at White Plains, New York. In August, 1963, it moved its principal executive offices to Centreville, Maryland. The situs of the Maryland executive offices of Nuclear is a farm of approximately 1,700 acres,...