finding that officer or agent status in corporation will not expose one to personal liability but that such status will not shield corporate actors from personal liability for wrongful acts in which they participate
How later courts described this case
- finding that officer or agent status in corporation will not expose one to personal liability but that such status will not shield corporate actors from personal liability for wrongful acts in which they participate
- observing that as a general rule, “if an officer or agent of a corporation directs or participates actively in the commission of a tortious act ..., he is personally liable to a third person for injuries proximately resulting therefrom”
- applying New Mexico law; “[sjpecific 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”
- noting that “the facts stated in the affidavits were not challenged by counter affidavits or other evidence”
Written by the judges who cited it.
The opinion
HUXMAN, Circuit Judge
(dissenting).
The only question before the trial Court and before us on this appeal is whether the case was properly removed because of fraudulent joinder of resident defendants against whom the plaintiff had no cause of action, for the sole purpose of preventing removal. The mere fact that the plaintiff had no cause of action against the resident defendants would not constitute a fraudulent joinder unless he knew, or by the exercise of reasonable prudence should have known, that he had no cause of action against them, and knowing this nonetheless joined them for the purpose of preventing removal.
I am unable to join with my associates for two reasons: First, the petition for removal was legally insufficient, upon its face, to state a cause of fraudulent joinder; and second, there was no evidence before the trial Court sufficient to sustain a finding of fraudulent joinder.
Fraud means evil, bad faith. It implies intentional wrong-doing. 1 A pleading predicated upon fraud must state facts sufficient to support a finding of fraud. A mere allegation of fraud without setting out facts which, if uncontradicted, would warrant a finding of fraud, states a mere conclusion insufficient to state a cause of action entitling the pleader to any relief. 2 These rules of pleading apply with equal force to a removal petition on the ground of fraudulent joinder of resident defendants. The Supreme Court in Wilson v. Republic Iron & Steel Company, 257 U.S. 92, 97 , 42 S.Ct. 35 ,. 37, 66 L.Ed. 144 , said:
«* * * but the growing must consist of a statement of facts rightly leading to that conclusion apart from the pleader’s deductions.” 3
And in Chesapeake & Ohio R. Co. v.. Cockrell, 232 U.S. 146, 151 , 34 S.Ct. 278, 280 , 58 L.Ed. 544 , the Court said:
“As in other pleadings, there must be a statement of the facts relied upon, and not otherwise appearing, in order that the court may draw the proper conclusion from all the facts * * * ”
And again,
“So, when in such a case a resident defendant is joined with the nonresident, the joinder, even although fair upon its face, may be shown by a petition for removal to be only a fraudulent device to prevent a removal; but the showing must consist of a statement of facts rightly engendering that conclusion. Merely to traverse the allegations upon which the liability of the resident defendant is rested, or to apply the eqithet ‘fraudulent’ to the joinder, will not suffice: the showing must be such as compels the conclusion that the joinder is without right and made in bad faith * * * ” 4
The only reference in the petition for removal because of fraudulent joinder is. found in subparagraph (e) where it is-stated that A. B. Cohen, James L. Grady, and Charles L. Finke “were joined as-party defendants fraudulently, as a sham, and in bad faith, to prevent the removal of this action from the District Court of Valencia County, New Mexico, to this Court.”
These allegations are but the conclusions of the pleaders as to what mo *411 tivated the joinder and state not a single fact from which an inference of fraud could be found. It is my conclusion, under the authorities set out above, that the petition on its face is insufficient to state a single fact which could support a finding of bad faith, willful wrongdoing, or sinister motive in the mind of the plaintiff in joining the individual parties as defendants.
The second question remains — Were there facts brought out on the hearing on the petition to remove which would support a finding of fraud. Admittedly, the only additional facts before the court were the allegations of the affidavits of the three resident defendants who stated in identical language that, “at no time did he personally have anything whatsoever to do with the assembly or sale of the bicycle referred to in plaintiff’s complaint and that he is not and could not be personally liable for any damages claimed by the plaintiff.” While the Trial Court made no specific findings of fact, the entire record impels the conclusion that the only thing before the Court on the hearing on the motion to remand was these three affidavits.
The affidavits, taking them at face value, were in my opinion wholly insufficient to supply the failure of the petition to state facts from which evil intent, wrongful purpose, or bad faith on the part of the plaintiff in joining these defendants could be found. If it ultimately should be established that they related the true facts, without more, they would only show that the plaintiff was wrong in assuming that they were liable to him. The fact that there is an ultimate finding of non liability is of itself insufficient to establish fraudulent joinder. 5
Reference is made in the majority opinion to the fact that no counter affidavits were filed by the plaintiff. Until the removing defendants came forward with something from which an evil intent in joining these resident defendants could be found, there was no need for plaintiff to go forward. Some support for the Court’s opinion seems to be sought in the failure of the petition to charge in specific terms any specific acts of negligence on the part of the resident defendants which constituted active participation or cooperation in the alleged tortious acts of the corporate defendant.
The petition alleged in general terms that, “The defendants, their agents, and their employees assembled the bicycle in such a negligent manner as to cause a break down * * * ” If, as conceded by the majority, the allegations are sufficient to state a cause of action against the corporation, they are sufficient to state a cause of action against the individual employee defendants. A corporation can, of course, act only through its employees. If they committed these acts, they did it as the acts of the employees of the corporation and participation and cooperation would flow from what they did.
The case of Wecker v. National Enameling & Stamping Co., 204 U.S. 176 , 27 S.Ct. 184, 186 , 51 L.Ed. 430 , is in my opinion clearly distinguishable from this case. In the first place it contains a good example of what a petition for removal on the ground of fraudulent join-der must set out. The petition there alleged that “Wettengel had been improperly and fraudulently joined as a defendant for the purpose of fraudulently and improperly preventing, or attempting to prevent, the defendant from removing the cause to the United States circuit court, and that the plaintiff well knew, at the time of the beginning of the suit, that Wettengel was not charged with the duties aforesaid, and that he was joined as a party defendant to prevent the removal of the cause, and not in good faith.” 6
On the hearing in that case, there were affidavits and counter affidavits from which the finding was warranted that not only did the individual defendants have no connection with the acts on which the plaintiff’s cause of action *412 was predicated but also that the plaintiff knew this.
For the reasons above stated, I must respectfully dissent from that portion of the opinion refusing to reverse and remand the case to the State Court.
. This is a universal rule and needs no citation of authority, but see Fraud and Deceit, 24 Am.Jur. § 214.
. See also, Illinois Central R. Co. v. Sheegog, 215 U.S. 308, 316 , 30 S.Ct. 101 , 54 L.Ed. 208 .
. Emphasis supplied.
. Illinois Central R. Co. v. Sheegog, supra.
. Emphasis supplied.