Updike v. West

• Decision Date: 07 March 1949
• Docket Number: No. 3690.,3690.
• Citation: 172 F.2d 663
• Parties: UPDIKE et al. v. WEST et al.
• Court: U.S. Court of Appeals — Tenth Circuit

172 F.2d 663 (1949)

UPDIKE et al. v. WEST et al.

No. 3690.

United States Court of Appeals Tenth Circuit.

February 7, 1949.

Rehearing Denied March 7, 1949.

Glenn O. Young, of Sapulpa, Okl. (Streeter Speakman, Jr., of Sapulpa, Okl., on the brief), for appellants.

Frank Settle, of Tulsa, Okl., and Dale Kidwell, of Wichita, Kan. (E. O. Monnet and Jack N. Hays, both of Tulsa, Okl., and John Jay Darrah, George W. Ball and Robert B. Morton, all of Wichita, Kan., on the brief), for appellees.

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

MURRAH, Circuit Judge.

The only question presented by this appeal is whether the trial court erroneously denied the appellants' motion to remand this case to the District Court of Creek County, Oklahoma, where it was originally filed.

The appellants, partners doing business under the firm name of Updike Awning Company, sued the appellees, West, Dunlap and Nacheff, and the National Bank of Tulsa, seeking damages for the alleged breach of agreements, under which West, Dunlap and Nacheff assumed control and management of appellants' business. It was alleged that the appellees "failed and refused to carry out, assume and discharge the duties and obligations imposed upon them under the said management agreements". In the petition for removal, the appellees alleged that the appellants were residents of Oklahoma, and that they and each of them were, at the commencement of the suit, residents of the State of Kansas; that the National Bank of Tulsa was organized under the laws of the United States of America; that the controversy was wholly between citizens of different states, since the National Bank of Tulsa was only a nominal party to the asserted cause of action. It was alleged that the National Bank of Tulsa was improperly and fraudulently made a party to the action for the single purpose of preventing a removal to the Federal court. It was also alleged that although the petition in general form asserted a joint cause of action against West, Dunlap and Nacheff, the very nature of the claim shows that the acts complained of against West are separate and distinct, hence constituted separate grounds of recovery, to which neither Dunlap nor Nacheff were indispensable or necessary parties, and that they were therefore improperly and fraudulently made parties to the same cause of action for the sole purpose of preventing removal to the Federal court.

To support this allegation, the movants attached as Exhibit A, the contract between the partners and West, to which Dunlap and Nacheff were not parties; they attached as Exhibit B, the separate contract between the partnership and Dunlap and Nacheff; and as Exhibit C, a letter from the partners to the Federal Reserve Bank, Kansas City, approving and confirming the two contracts as thus executed.

The motion to remand alleged in general terms that jurisdiction of the action was vested in the District Court of Creek County, Oklahoma, and was not one of which the Federal Court had original jurisdiction. Specifically, it was alleged that there was no requisite diversity of citizenship, and that the defendants had falsely and fraudulently averred diversity of citizenship for the sole purpose of vesting the Federal court with colorable jurisdiction. Other grounds not material here were alleged, but the petition in no wise traversed the allegations of fraudulent joinder.

The motion to remand was overruled on the 6th day of July, 1945, on the grounds that the court had jurisdiction, based upon diversity of citizenship. Thereafter, numerous motions were filed on behalf of both parties; the plaintiffs filed an amended petition; the Massachusetts Bonding Company was made party defendant; the National Bank of Tulsa was dismissed from the action; the case was set for trial and continued a number of times at the instance of the plaintiffs; and there were amendments to the amended petition. Finally, after the matter had pended in the trial court for approximately two years, the plaintiffs filed what they denominated an alias motion to remand, in which they again took issue with diversity of citizenship, alleging that since the court's order on removal, they had discovered that at the time of the institution of the suit, Nacheff had removed his residence from Wichita, Kansas, to Ponca City, Oklahoma, where he had been divorced and remarried. After an extended hearing on this motion, the trial court concluded that Nacheff was a resident of the State of Oklahoma at the time the suit was filed, and that jurisdiction therefore failed for want of diversity of citizenship. It, however, overruled the alias motion to remand on the grounds that the plaintiffs having failed to traverse the allegations of fraudulent joinder, they must be taken as true for the purpose of jurisdiction, and that the court therefore had jurisdiction of the subject...