Smoke Mount Industries, Inc. v. Eureka Security Fire & Marine Insurance

Denny, J. The petition for removal, in addition to the allegations as to jurisdictional amount, and diverse citizenship, further alleges (1) no-subsisting cause of action against the resident defendant, the Bank of Asheville; (2) fraudulent joinder; and (3) the cause of action alleged in the complaint can be fully and completely determined between the petitioner and the plaintiff; and that said cause of action or controversy is *95 ■entirely separate and distinct from any controversy involving petitioner’s codefendant. In considering a petition for removal, tbe allegations of tbe complaint are admitted to be true and tbe rights of tbe parties must be determined upon tbe allegations contained therein. Plaintiff alleges that it executed certain chattel mortgages to tbe Bank of Asheville to secure its indebtedness to said bank, that tbe bank required tbe plaintiff to have the property, on which it executed tbe chattel mortgages, insured against loss by fire and to have tbe proceeds of tbe policy, in tbe event of loss or damage, payable to tbe Bank of Asheville, as its interest may appear. Thereafter a loss occurred and before instituting this action, plaintiff paid all its indebtedness to tbe Bank of Asheville which was secured by tbe aforesaid chattel mortgages and tbe fire insurance policy now in controversy. It is not necessary to have tbe bank as a party to tbe action in order to prove tbe payment of plaintiff’s indebtedness to the bank; and if this indebtedness has been paid, as alleged, tbe Bank of Asheville bad no interest in tbe proceeds of tbe fire insurance policy, which may be recovered by plaintiff from tbe nonresident defendant. Therefore, we bold that tbe Bank of Asheville is not a necessary party. Simmons v. Ins. Co., 196 N. C., 667, 146 S. E., 567; Timber Co. v. Ins. Co., 190 N. C., 801, 130 S. E., 864; Christiansen v. Bankers’ & Shippers’ Ins. Co., 207 N. W., 108. In tbe last case tbe facts are similar to those in tbe instant case. There tbe Supreme Court of South Dakota held: “As to tbe contention that tbe policy was issued to tbe National Bond & Investment Company, and tbe corporation was a necessary party plaintiff, tbe admissions of tbe answer show that tbe policy was issued to respondent on a car owned by her, and tbe policy held by tbe corporation to protect its mortgage lien. There is no merit in tbe contention that tbe corporation was a necessary party, and proof that its claim was fully paid at tbe time shows that there is no merit in tbe contention.” A purely nominal party, or technical arrangement of parties, will not oust tbe jurisdiction of tbe Federal Court. Brown v. R. R., 204 N. C., 25, 167 S. E., 479; Allred v. Lumber Co., 194 N. C., 547, 140 S. E., 157; Calloway v. The Ore Knob Copper Co., 74 N. C., 200. In Niccum v. Northern Assur. Co., 17 F. (2d), 160 (Ind.), tbe Court said: “Actual interest, and not technical arrangement of tbe parties to a suit, is decisive. Evers v. Watson, 156 U. S., 527, 15 S. Ct., 430, 39 L. Ed., 520; Removal Cases, 100 U. S., 457, 25 L. Ed., 593; Pacific Ry. Co. v. Ketchum, 101 U. S., 289, 25 L. Ed., 932. Under these decisions, and many others not necessary to cite, it seems to be tbe settled law that tbe courts, in determining tbe question of removability, will not be bound by any arrangement or alignment fixed in tbe pleadings, but will look to tbe real contest between tbe parties for a determination of tbe question.” *96 Tbe appellee insists tbat tbe ease of Proctor v. Ins. Co., 124 N. C., 265, 32 S. E., 716, is controlling and supports its contention tbat tbe defendant bank is a necessary party. We do not so bold. In tbe Proctor case, supra, McOullers, tbe mortgagor, procured tbe insurance and bad tbe loss payable clause made to tbe assured and tbe mortgagee “as tbeir interests may appear.” Tbe mortgagee undertook to collect tbe insurance without making tbe assured a party. There was no allegation tbat tbe insured bad no interest in tbe proceeds of tbe policy. Furthermore, tbe Court pointed out tbat tbe assured should be a party plaintiff, and upon failure to come in and make himself coplaintiff, tbe statute (Code, 185 j C. S., 457, now G. S., 1-70) provides tbat be may be made a defendant. There was error in refusing to grant tbe motion for removal of this cause to tbe Federal Court. Reversed.