Burke v. Flood

1 F. 541, 6 Sawy. 220, 1880 U.S. App. LEXIS 2387
CourtUnited States Circuit Court
DecidedJanuary 26, 1880
StatusPublished
Cited by7 cases

This text of 1 F. 541 (Burke v. Flood) is published on Counsel Stack Legal Research, covering United States Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burke v. Flood, 1 F. 541, 6 Sawy. 220, 1880 U.S. App. LEXIS 2387 (uscirct 1880).

Opinion

Sawyer, J.

This cause having been removed from the state court on the petition of all the defendants, under the first clause of section 2 of the act of 1875, and by the defendants, Mackey and Fair, as to them, under the act of 1866, as carried into section 639 of the Revised Statutes, second subdivision, the complainant moved to remand it to the state court on the ground that this court has no jurisdiction, and that the ease is not removable under either act. Upon the principle adopted in the. Sewing Machine cases, (18 Wall. 553,) which arose under the act of 1867, and under the decision of the supreme court, made at the present term, in Meyer et al. v. The Delaware Railroad Construction Company, which arose under the first clause of section 2 of the act of 1875, and presented the point, I regard it as settled by that court that to remove a case under the latter provision it is necessary that all of the persons constituting the party on one side of the controversy must be citizens of different states from those on the other side. But for the purpose of removal the parties may be transposed and arranged in their proper positions, with reference to their interest in the controversy, without regard to their formal position as plaintiffs or defendants on the record. This is the rule, as I understand it, [543]*543to be laid down in the latter case, upon mature consideration, after a re-argument, in which any attorney feeling an interest in the question, whether of counsel in the case or not, was invited to participate as amicus curim. In this court this will be regarded by me as the settled construction of the section until otherwise ruled by the supreme court. In this case, even after transposing the Consolidated Virginia Mining Company, defendant, to the side of the complainant, Burke, wo have still two citizens of California on one side of the controversy, and two citizens of the same state, California, and two citizens of Nevada on tlio other. The persons composing the party on one side of the controversy, therefore, not being all citizens of different states from the party on the other, the case was not removable under the construction established, and it must be remanded.

Was the case properly removed as to defendants Mackey and Fair under the act of 1866, as carried into the Bevised Statutes in section 639? The complainant, Burke, a citizen of California, files his bill against the Consolidated Virginia Mining Company and the Pacific Wood, Lumber & Flume Company, both corporations organized under the laws of California, J. C. Flood, a citizen of California, and John W. Mackey and James Gr. Fair, citizens of Nevada. He alleges in substance, among other things, that he is a stockholder in the Consolidated Virginia Mining Company; that he has made a demand upon that corporation to bring the suit, 'which it declined to do; whereupon he brings it himself as a stockholder on his own behalf, and on behalf of all other stockholders who choose to come in and share in the expense of this prosecution, making the corporation a defendant. He further alleges that defendants Flood, Mackey and Fair, and W. S. O’Brien, were either directors, or controlled the directors of the defendant, the Consolidated Virginia Mining Company; that they fraudulently conspired together to injure the Consolidated Virginia Mining Company, and to that end organized the corporation defendant, the Pacific Wood, Lumber & Flume Company, of which they were the stockholders and officers, or controlled the officers; that through the dc[544]*544fendants Flood, Mackey and Fair, and W. S. O’Brien, since deceased, acting as officers or agents of both corporations, or through officers controlled by them, the Consolidated Virginia Mining Company entered into large contracts with the Pacific Wood, Lumber & Flume Company, whereby the latter agreed to supply and did supply to the former large quantities of wood and lumber at prices, which were in fact paid, larger than the same supplies could have been purchased for from other parties, and that the said Pacific Wood, Lumber & Flume Company thereby received profits on said contracts to the amount of $4,000,000, in excess of what it should have received, which profits came to the possession of said O’Brien and defendants Flood, Mackey and Fair through said Pacific Wood, Lumber & Flume Company, as the stockholders of said corporation. He also alleges that during the whole period embracing the transactions set out said Flood, O’Brien, Mackey and Fair were partners in business, and that their acts complained of were the joint acts of said partners, and performed for their joint benefit as members of said copartnership. He then asks that said contracts be declared void, and that an account be taken between the said Consolidated Virginia Mining Company on one side, and the said Flood, Mackey and Fair, and the Pacific Wood, Lumber & Flume Company on the other, of the moneys paid by the Consolidated Virginia Mining Company to the Pacific Wood, Lumber & Flume Company, and received by the latter under said contracts, and of the profits resulting therefrom realized' by said defendants or either of them, or by said O’Brien, deceased, and that on said accounting the defendants be decreed to repay all said profits, moneys, etc., to the Consolidated Virginia Mining Company.

It will be seen that the remote parties are the complainant, Burke, as a stockholder of the Consolidated Virginia Mining Company; and Flood, Mackey and Fair, as stockholders of the Pacific Wood, Lumber & Flume Company — indeed, of both corporations. That the immediate parties to the contracts sought to be examined and set aside, and an account of whose profits is sought to be taken, are the Consolidated [545]*545Virginia Mining Company, and the Pacific Wood, Lumber & Flume Company, and that the moneys sought to be recovered are moneys paid by the first-named corporation to the latter upon the contracts set out, and paid by the latter in dividends to the said defendants Flood, Mackey and Fair, and to said O’Brien. The primary and immediate parties to the transaction alleged are the two corporations. The rights and liabilities of the complainant and the other defendants are secondary and derivative,

The provision of the Revised Statutes under which the removal is had, so far as applicable, is, when a suit is by a citizen of the state wherein it is brought “against a citizen of the same and a citizen of another state, it may be so removed as against said citizen of another state upon the petition of such defendant * * ® if, so far as it relates to him, it * * * is a suit in which there can be a final determination of the controversy, so far as it concerns Mm, without the presence of the other defendants as parties in the case.”

Upon the allegations of this bill can there be a final determination of the controversy, so far as concerns Mackey and Fair, without the presence of the Pacific Wood, Lumber & Flume Company, or without the presence of Flood? In my judgment there cannot. I do not see how a final account can he taken between the Consolidated Virginia Mining Company and the Pacific Wood, Lumber & Flume Company as to the profits on the contracts between them set out, and then between the latter corporation as to the amount of said moneys paid by it to Flood, O’Brien, Mackey and Fair, as copartners, without the presence as a party of either said corporation, or said Flood or O’Brien. Certainly noiie could be taken that would bind said corporation, or Flood, or O’Brien, without their presence, and, therefore, none that could he

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Bluebook (online)
1 F. 541, 6 Sawy. 220, 1880 U.S. App. LEXIS 2387, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burke-v-flood-uscirct-1880.