United Nuclear Corp. v. Moki Oil and Rare Metals Co., 8307.

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

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.

364 F.2d 569

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

364 F.2d 570

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

364 F.2d 571

between Nuclear and a limited partnership, Homestake-Sapin Partners, in which Homestake Mining Company is the general and managing...