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LANG v. COLONIAL PIPELINE CO.

April 5, 1967

Frederic A. LANG and Joan Goodrich Lang, his wife et al.
v.
COLONIAL PIPELINE COMPANY



The opinion of the court was delivered by: DAVIS

 The plaintiffs, all citizens of Pennsylvania, have brought this action against the defendant corporation which was incorporated in Delaware and has its principal place of business in a state other than Pennsylvania. They seek to eject the defendant from their land in Chester County, Pennsylvania and to obtain damages for trespass. In the present posture of the case, there is jurisdiction based on diversity of citizenship although the plaintiffs state that their action arises under the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment of the Constitution of the United States.

 The defendant moves to dismiss the complaint under Rule 12(b)(7) because of the plaintiffs' failure to join Colonial Pipeline Company of Pennsylvania, as a party. It is not disputed that its joinder would oust the court of diversity jurisdiction.

 It will be helpful to recite further the salient allegations made in the complaint. The defendant, wholly owned by nine large oil companies, entered upon the plaintiff's land without their permission or consent and constructed a 30 inch diameter petroleum pipeline in and under it. The pipeline does not comply with certain state safety requirements and was generally built and implanted in a manner highly dangerous to life and property. Moreover, the construction and operation of the pipeline involves no public use or necessity, is part of a "private financial enterprise for * * * private financial benefit," and "[constitutes] the unlawful and unjustified taking of private property for private use." The complaint states that the defendant's conduct violates the Fifth and Fourteenth Amendments to the United States Constitution as well as Article 16 § 8 of the Pennsylvania Constitution P.S. and the state safety requirements contained in Pa.Stat.Ann. tit. 35 § 1301 et seq.

 I.

 The threshold question before us is whether Colonial of Pennsylvania should be joined either as an indispensable party or as a party needed for a full and just adjudication under the recently amended Rule 19(b) of the Federal Rules of Civil Procedure.

 Colonial Pipeline Company of Pennsylvania ("Colonial of Pennsylvania") is a wholly owned subsidiary of the defendant ("Colonial of Delaware".) The records of the Pennsylvania Public Utility Commission indicate that the former was "organized for the purpose of the transportation and storage or distribution of oil or any petroleum product by means of pipelines, pumps and tanks or other equipment and appurtenances, for the public," in 1962. The Commission specifically authorized Colonial of Pennsylvania to acquire by eminent domain, if necessary, land and/or easements for the interstate pipeline which was to be built and operated by its parent, Colonial of Delaware. Colonial of Pennsylvania holds the title to the interest in plaintiffs' land, while Colonial of Delaware advances the money to pay for the realty, makes the improvements, provides the necessary personnel, and generally runs the pipeline business.

 It goes without saying that any action to eject the parent from the land would have a definite adverse effect on its subsidiary. The latter's estate in the land as well as its corporate existence is inextricably tied to the operation of the pipeline. If Colonial of Delaware is removed there is little doubt that the easement will be virtually worthless since it was originally condemned simply to facilitate the transportation of petroleum. We have no trouble in finding that Colonial of Pennsylvania is an indispensable party, for any adjudication of the present controversy in its absence would significantly affect its interests and would not be consistent with equity and good conscience. Shields v. Barrow, 58 U.S. (17 How.) 130, 139, 15 L. Ed. 158 (1884); Provident Tradesmens Bank and Trust Co. v. Lumbermens Mutual Casualty Co., 365 F.2d 802, 804-809 (3d Cir. 1966); McShan v. Sherrill, 283 F.2d 462 (9th Cir. 1960); State of Washington v. United States, 87 F.2d 421 (9th Cir. 1963); Amerada Petroleum Corp. v. Rio Oil Co., 225 F. Supp. 907, 910 (D.Wyo.1964). The fact that it is a wholly owned subsidiary of a party already before the court does not negate its indispensability. Baltimore & Ohio R. Co. v. City of Parkersburg, 268 U.S. 35, 45 S. Ct. 382, 69 L. Ed. 834 (1925); Minnis v. Southern Pacific Co., 98 F.2d 913 (9th Cir. 1938); Charles Keeshin, Inc. v. Farmers & Merchants Bank, 199 F. Supp. 478 (N.D.Ark.1961).

 Insofar as the matter here is one of procedure under Rule 19(b) and not one of substantive law, we conclude that we should not proceed without Colonial of Pennsylvania. Taking into consideration the pragmatic factors enunciated in that Rule, we find that any judgment rendered would be prejudicial to Colonial of Pennsylvania in its absence; that the prejudice could not be avoided by any shaping of the relief; that any judgment rendered in its absence would be inadequate; and that the plaintiff would have an adequate remedy in the state courts since both companies are amenable to service of process there. See Provident Tradesmens Bank and Trust Co. v. Lumbermens Mutual Casualty Co., supra (compare majority and dissenting opinions).

 II.

 We must now determine whether or not we have federal question jurisdiction, for otherwise we will have to dismiss the action due to a lack of diversity of citizenship.

 Preliminarily, we must reject the notion that jurisdiction may be predicated on the Fifth Amendment. This amendment applies only to action or conduct by the federal government, and none is alleged here. E.g. Spiesel v. City of New York, 239 F. Supp. 106, 107 (S.D.N.Y.1964), aff'd 342 F.2d 800 (2d Cir. 1965); Trauss v. City of Philadelphia, 159 F. Supp. 672 (E.D.Pa.1958).

 We now come to the question of whether we have an action arising under the Due Process Clause of the Fourteenth Amendment. This provision applies to acts under color of state law and not to purely private conduct. Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961). E.g. Shelley v. Kraemer, 334 U.S. 1, 68 S. Ct. 836, 92 L. Ed. 1161 (1948); Civil Rights Cases, 109 U.S. 3, 3 S. Ct. 18, 27 L. Ed. 835 (1883).

 The plaintiffs have not alleged anywhere in their complaint that state action of any kind is involved in depriving them of their property. It states only that a corporation has taken private property for private use. It never indicates that the defendant was acting improperly under any eminent domain power. The suit is unlike many cases where the plaintiffs seek to enjoin the state or someone under its authority from taking private property for private use under a statute or ordinance allegedly in violation of the Due Process Clause of the Fourteenth Amendment. E.g. City of Cincinnati v. Vester, 281 U.S. 439, 50 S. Ct. 360, 74 L. Ed. 950 (1930); Rindge Company v. County of Los Angeles, 262 U.S. 700, 705, 43 S. Ct. 689, 67 L. Ed. 1186 (1923); Sears v. City of Akron, 246 U.S. 242, 251, 38 S. Ct. 245, 62 L. Ed. 688 (1918); Hairston v. Danville and Western Railway Company, 208 U.S. 598, 606, 28 S. Ct. 331, 52 L. Ed. 637 (1908); Fallbrook Irrigation District v. Bradley, 164 U.S. 112, 158, 161, 17 S. Ct. 56, 41 L. Ed. 369 (1896). From all that appears in the pleadings in this case, the defendant could have taken the property by adverse possession which is nothing more than a person ...


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