Western Mut. Fire Ins. Co. v. Lamson Bros. & Co.

• Decision Date: 03 December 1941
• Docket Number: No. 150.,150.
• Citation: 42 F. Supp. 1007
• Parties: WESTERN MUT. FIRE INS. CO. v. LAMSON BROS. & CO. et al.
• Court: U.S. District Court — Southern District of Iowa

42 F. Supp. 1007

WESTERN MUT. FIRE INS. CO. v. LAMSON BROS. & CO. et al.

No. 150.

District Court, S. D. Iowa, Central Division.

December 3, 1941.

Stanton S. Faville (of Kern & Faville), of Des Moines, Iowa, for plaintiff.

Gamble, Read, Howland & Rosenfield, of Des Moines, Iowa, and Moses, Kennedy, Stein & Bachrach, of Chicago, Ill., for defendants.

DEWEY, District Judge.

The above entitled action came on for hearing in open court at Des Moines, Iowa, on the 27th day of October, 1941, on motions by Lamson Brothers & Company, a co-partnership, and the defendants other than the partnership, to quash the service of process and return on Lamson Brothers & Company, and a motion by the defendants Harry H. Lobdell, Edward F. Thompson, George E. Booth, James A. White and William C. Karlson to quash the service of process and return thereof as to them. The defendants appeared specially for the purpose of the motions. Evidence was introduced in the form of affidavits and, by permission of the court, certain documentary evidence was also received. The attorneys have filed exhaustive briefs on the questions submitted and the issues thus raised on these motions submitted to the court.

Plaintiff in its petition seeks to recover from the defendant and asks for a judgment in an amount of $33,164.82, with interest, on the ground that the defendants unlawfully received and converted trust funds in that amount belonging to it.

The first process directed the marshal to summon all the defendants and his return of date August 16, 1941, recites:

"I hereby certify and return, that on the 16th day of August, 1941, I received the within summons and on the 16th day of August, 1941, I duly served Lamson Bros. & Co. by reading the original writ to W. H. Sievert, Office Manager of said Lamson Bros. & Co. at 207 Equitable Bldg., Des Moines, Iowa, and delivering to him a true copy of said writ together with a copy of the bill of the complaint.

"Also, on August 16, 1941, at the office of Insurance Commissioner of the State of Iowa, Des Moines, Iowa, I delivered to Charles R. Fisher, Commissioner of Insurance of the State of Iowa, as the designated process agent for Lamson Bros. & Co. a true copy of this writ together with a copy of the bill of complaint. Reading of the original writ was waived.

"None of the other named defendants in this writ could be located within the Southern District of Iowa."

At the request of the plaintiffs, and on or about September 24, 1941, another summons was delivered to the marshal to be served on the five defendants above named and said marshal on the 24th day of September, 1941, made the following return thereof: "I hereby certify and return, that on the 24th day of September, 1941, I received the within summons and that on the 24th day of September, 1941, I duly served, Harry H. Lobdell, Edward F. Thompson, George E. Booth, James A. White and William C. Karlson, individually, by serving W. H. Sievert at 207 — Equitable Bldg., Des Moines, Iowa, as the agent for Harry H. Lobdell, Edward F. Thompson, George E. Booth, James A. White and William C. Karlson by offering to read to the said W. H. Sievert the original summons which he waived and by delivering to him a true copy of the said summons, together with a copy of the bill of complaint for each of the said defendants so served. None of the said defendants in the said summons could be located within the Southern District of Iowa."

Facts

In addition to the foregoing, the facts presented by the evidence on the issue as to the validity of the summonses issued is not greatly in dispute.

The defendant, Lamson Brothers & Company, is an Illinois partnership. Plaintiff's suit is in personam. The petition complains of transactions had with the defendant company during the years 1937, 1938, 1939 and 1940.

During these years several changes were made in the partnership by reason of the retirements, additions and deaths in the personnel thereof, the last change being on the 12th day of July, 1941, at which time one of the partners, Henry J. Rogers, died, and since that time the partnership consisted of Harry H. Lobdell, Edward F. Thompson, George E. Booth, James A. White, William C. Karlson, Warren M. Washburn, Frederic P. Barnes and Albert W. Lindeke.

Lamson Bros. & Company, the defendant, was and is engaged in the business of dealing in grain commodities and securities and they do business in the states of Illinois, Indiana and Missouri, as well as in Iowa. It is a member of the Chicago Board of Trade, Chicago Stock Exchange, the New York Curb Exchange and New York Stock Exchange. It has offices in eleven of the principal cities of the State of Iowa, including one at Des Moines. During all of the time in which the transactions occurred that are complained of in plaintiff's petition, it operated under the firm name of Lamson Bros. & Company and maintained an office at 207 Equitable Building, Des Moines. W. H. Sievert, named in the marshal's return, was the resident manager at Des Moines.

The affidavit in support of the motions to quash filed by the defendants recited, among other things, that — "Each of the partnership agreements of the several and successive firms of Lamson Bros. & Co. contained and contains a provision that the death or withdrawal of a partner shall not dissolve the firm but that the firm should be continued by the remaining or surviving partners."

At the hearing there was received in evidence copies of letters addressed to the Secretary of State at Des Moines written by Mr. Karlson and Mr. White, members of the partnership, and of date February 27, 1939, January 15, 1940, September 3, 1940, December 23, 1940, June 26, 1941, and July 12, 1941. These letters were written with reference to the registration and procuring of a license for Lamson Brothers & Company under the Iowa Securities Law. Code Iowa 1939, § 8581.01 et seq. Each of these letters contain the following or a similar statement: this (death or addition of a partner) does not dissolve the partnership, as it is a continuing one and the business will be carried on and continued as heretofore by the surviving partners.

In connection with its application for a license to do business in Iowa, and in conformity with the State statutes, said partnership consented "that suits and actions growing out of the violations of any provisions of * * * `Iowa Securities Law' may be commenced against it * * * in any county in the State of Iowa * * * by the service of any process or pleading authorized by the laws of the State of Iowa, on the Commissioner of Insurance of the State of Iowa."

Such consents to be sued were signed July 17, 1939, June 19, 1940 and June 18, 1941.

While the defendants argue that this court is without jurisdiction, there can be no question of the jurisdiction of the court or of the venue of the action.

Although the plaintiff did not in its petition set forth the grounds upon which the court's jurisdiction depends, as required by Rule 8(a) (1) of the Rules of Civil Procedure for the District Courts of the United States, 28 U.S.C.A. following section 723c, yet the facts set forth show that the jurisdiction is based upon diversity of citizenship. Plaintiff may amend its petition to comply with this rule and allege, if it can, the diversity of citizenship. Sec. 399, Title 28 U.S.C.A.

The plaintiff is a citizen of Iowa with its principal place of business in the City of Des Moines, Iowa, in the Southern District of Iowa, and all the members of the defendant partnership are non-residents of the State of Iowa and citizens of other states. The citizenship of the partnership, within the meaning of the statute regulating the jurisdiction of the federal courts, is governed by the citizenship of the individual partners. Sutherland v. United States, 8 Cir., 74 F.2d 89. The amount in controversy here exceeds $3,000. We thus have diversity of citizenship and the requisite jurisdictional amount, and this court therefore has jurisdiction. Lee v. Chesapeake & Ohio Ry., 260 U.S. 653, 655, 43 S.Ct. 230, 67 L.Ed. 443; Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437.

As the plaintiff is a citizen of Iowa with its principal place of business in Des Moines, the venue of the action is properly laid in the Southern District of Iowa. Section 112, Title 28 United States Code Annotated. That section provides: "* * * no person shall be arrested in one district for trial in another, in any civil action before a district court * * * but where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant."

This court therefore having jurisdiction and the proper venue being laid in the Southern District of Iowa, the only remaining question is whether the summons brings the defendants in this court.

Rule 4 of the Rules of Civil Procedure for the District Courts of the United States provide for summons as follows:

"Rule 4. Process. * * * (d) Summons: Personal Service. * * * Service shall be made as follows:

"(1) Upon an individual * * * by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service of process. * * *

"(3) Upon a * * * partnership * * * which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to * * * a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant. * * *

"(7) Upon a defendant of any class referred to in paragraph (1) or (3) of this subdivision of this rule, it is also sufficient if the summons and complaint are served in the manner prescribed * * * by the law of the state in which the...