Louis Lobato v. Pay Less Drug Stores, Inc., a Corporation Abe B. Cohen, James L. Grady, Charles Finke, and Burt Rosenburg

BRATTON, Chief Judge.

Louis Lobato instituted this action in the District Court of Valencia County, New Mexico, against Pay Less Drug Stores, Inc., a corporation, Abe B. Cohen, James L. Grady, Charles Finke, and Burt Rosenburg, to recover damages for personal injury. The complaint was in two causes of action. Negligence was pleaded in the first cause of action and breach of implied warranty in the second. It was alleged in the first cause of action that plaintiff was a resident of Valencia County; that the corporate defendant owned and operated a drug store in Albuquerque, New Mexico; and that the remaining defendants resided in Bernalillo County, New Mexico. It was further alleged that the defendant Cohen was president of the corporate defendant; that the defendant Grady was manager of the drug store; that the defendant Finke was manager of the department in the drug store where bicycles were sold; and that the defendant Rosenburg was an employee in such department. It was further alleged that the defendants sold and delivered to plaintiff a certain bicy-ele; that the defendants and their agents and employees assembled the bicycle in a negligent manner; that they negligently failed to examine, inspect, and test the bicycle before it was sold to plaintiff; that they negligently represented to plaintiff that the bicycle was safe and suitable for ordinary use; that while plaintiff was riding the bicycle, it vibrated suddenly and violently, the front wheel disengaged from the frame, and plaintiff fell to the pavement and sustained personal injury; and that the breakdown of the bicycle was due to the negligent manner in which it was assembled. The allegations contained in the first cause of action in the complaint were expressly incorporated by reference into the second cause of action. In addition, it was alleged in such second cause of action that plaintiff expressly or by implication made known to the defendants that he wanted the bicycle for ordinary use in riding it; that plaintiff relied upon the skill and judgment of the defendants that the bicycle was fit for such use; that by virtue of such facts, the defendants warranted the bicycle to be reasonably fit for such purpose when in fact it was unfit therefor; that the bicycle was purchased by description; that the defendants dealt in bicycles of such description; and that by virtue of the facts, defendants warranted the bicycle to be of merchantable quality.

On the petition of the corporate defendant and the defendant Rosenburg, the cause was removed to the United States Court for the District of New Mexico. The ground of removal was diversity of citizenship between the plaintiff and the removing defendants, with the requisite amount in controversy. It was pleaded in the petition for removal that the plaintiff was a citizen of New Mexico; that the defendant Pay Less Drug Stores, Inc., was a corporation organized under the laws of Colorado; that the defendant Rosenburg was a citizen of California; and that the amount in controversy was in excess of $3,000, exclusive of interest and costs. It was further pleaded that the defendant Cohen, president of the corporate defendant, the defendant Grady, manager of the corporate defendant, and the defendant Finke, manager of the corporate defendant, had been joined as parties; that the complaint failed to connect such defendants with any act of negligence, except a general allegation; that the complaint failed to show how the defendants Cohen, Grady, and Finke could be liable to plaintiff for any amount, and that such defendants were joined as parties defendant fraudulently, as a sham, and in bad faith, in an attempt to prevent the removal of the action to the United States Court. Separate affidavits of the defendants Cohen, Grady, and Finke were attached to the petition and made parts thereof. It was expressly stated in each of such affidavits that the affiant did not personally have anything whatever to do with the assembly or sale of the bicycle to plaintiff. An unverified response to the petition for removal and a motion to remand the action to the state court were filed. The defendants Cohen, Grady, and Finke filed a motion to dismiss the action as to them. The court denied the motion to remand and dismissed the action as against the defendants Cohen, Grady, and Finke. The cause came on for trial before a jury. The court directed a verdict in favor of the defendant Rosenburg; the jury returned a verdict in favor of the corporate defendant; judgment was entered upon the verdicts; and this appeal followed.

Error is predicated upon the action of the court in dismissing the cause as to the defendants Cohen, Grady, and Finke. The order of dismissal made final disposition of the cause as between plaintiff and such defendants and therefore was a final judgment from which an appeal would lie. Rule of Civil Procedure 73(a), 28 U.S.C.A., provides in presently pertinent part that when an appeal is permitted by law from the district court to the court of appeals, it shall be taken within thirty days from the entry of the judgment appealed from; and that a party may appeal by filing with the district court a notice of appeal. The filing of the notice of appeal within the time prescribed by law is essential to the jurisdiction of the circuit court of appeals. Spengler v. Hughes Tool Co., 10 Cir., 169 F.2d 166; Le-jeune v. Midwestern Insurance Company of Oklahoma City, 5 Cir., 197 F.2d 149; Kahler-Ellis Co. v. Ohio Turnpike Commission, 6 Cir., 225 F.2d 922. The judgment dismissing the action as to the defendants Cohen, Grady, and Finke was entered on September 25, 1957, and the notice of appeal was filed on March 19, 1958. Since the notice of appeal was not filed within the time fixed by the rule, this court is without jurisdiction to review the judgment of dismissal.

Further asserted error is predicated upon the action of the court in denying the motion to remand the cause to the state court. The grounds of the motion to remand were that the controversy involved a plaintiff and defendants who were citizens of New Mexico and that only part of the defendants joined in the petition for removal. The essence of the argument is that the plaintiff and the defendants Cohen, Grady, and Finke were citizens of New Mexico and therefore the cause was not removable upon the ground of diversity of citizenship. While it was alleged in general language in the complaint that the “defendants” sold and delivered the bicycle to plaintiff, it was purchased from the corporate defendant. That was fairly apparent or implied from the face of the complaint, considered in its entirety, and it is expressly admitted in the brief of appellant. In other words, the corporate defendant was the seller and plaintiff was the purchaser. The defendant Cohen was an officer and the other individual defendants were agents of the corporate defendant. It is the general rule that if an officer or agent of a corporation directs or participates actively in the commission of a tortious act or an act from which a tort¹ necessarily follows or may reasonably be expected to follow, he is personally liable to a third person for injuries proximately resulting therefrom. But merely being an officer or agent of a corporation does not render one personally liable for a tortious act of the corporation. Specific direction or sanction of, or active participation or cooperation in, a positively wrongful act of commission or omission which operates to the injury or prejudice of the complaining party is necessary to generate individual liability in damages of an officer or agent of a corporation for the tort of the corporation. Phelps Dodge Refining Corp. v. Federal Trade Commission, 2 Cir., 139 F.2d 393; Sen-sale v. Applikon Dyeing & Printing Corp., 12 N.J.Super. 171, 79 A.2d 316; Levi v. Schwartz, 201 Md. 575, 95 A.2d 322, 36 A.L.R.2d 1241; Refrigeration Discount Corp. v. Catino, 330 Mass. 230, 112 N.E.2d 790; Young v. Featherstone Motors, 97 Ohio App. 158, 124 N.E.2d 158; Cato v. Silling, 137 W.Va. 694, 73 S.E.2d 731; Darling & Co. v. Fry, Mo. App., 24 S.W.2d 722; 3 Fletcher, Cyclopedia on Corporations (Permanent Edition) § 1137; 13 Am.Jur. on Corporations § 1087.

The complaint failed to charge in specific terms any specific acts on the part of the individual defendants which constituted affirmative direction, sanction, participation, or cooperation in the alleged tortious act of the corporate defendant in selling to plaintiff a defective bicycle which collapsed and caused his injury. Moreover, it affirmatively appeared from the affidavits of the defendants Cohen, Grady, and Finke that such defendants did not personally have anything to do with the assembly and sale of the bicycle. And the facts stated in the affidavits were not challenged by counter affidavits or other evidence. At the time of the denial of the motion to remand, it was fairly apparent that plaintiff had an alleged cause of action against the corporate defendant but not against the individual defendants. And in view of the apparent want of basis for the allegations in the complaint concerning the relation of the defendants Cohen, Grady, and Finke to the transaction between the plaintiff and the corporate defendant, and the uncontradicted evidence in the affidavits of such defendants that they had nothing to do with the assembly and sale of the bicycle, the court was warranted in reaching the conclusion that such defendants were joined as parties to the action for the purpose of defeating the right of removal. Wecker v. National Enameling & Stamping Co., 204 U.S. 176, 27 S.Ct. 184, 51 L.Ed. 430.

Even though failing to state a cause of action against the individual defendants, the complaint did state a cause of action against the corporate defendant for which relief could be granted. There was diversity of citizenship between plaintiff and the corporate defendant, and the requisite sum was in controversy. There was also diversity of citizenship between plaintiff and the defendant Rosenburg. The corporate defendant and the defendant Rosenburg joined in the petition for removal. The cause was effectively removed upon the petition of such defendants, and the court did not err in declining to remand it. Knight v. Atlantic Coast Line Railroad Co., 5 Cir., 73 F.2d 76, 99 A.L.R. 405.

The appeal from the judgment dismissing the action as to the defendants Cohen, Grady, and Finke is dismissed; and the judgment denying recovery against the corporate defendant and the defendant Rosenburg is affirmed.

1 . Davis v. Commissioner, 10 Cir., 184 F. 2d 86, 22 A.L.R.2d 967.