#### FERRIS v. SOUTHERN RAILWAY COMPANY et al.

(Filed 7 December, 1927.)

Removal of Causes — Courts—Jurisdiction—Diverse Citizenship — Federal Courts — Parties—Fraudulent Joinder — N onresidence.

In an action against a nonresident railroad company and its resident claim agent, in a personal injury ease, to set aside for fraud a release from liability obtained from tbe plaintiff and to recover an adequate compensation for tbe injury: *Held,*upon tbe defendant’s petition to remove tbe cause from the State to the Federal Court for diversity of citizenship under the Federal statute, the question of the diversity of citizenship and fraudulent joinder of the resident defendant, is to be determined by the Federal court when the facts are sufficiently and properly alleged upon the petition for its removal, it thereby appearing that the claim agent was without interest in the result of the controversy ' except in his limited representative capacity, or only a formal party, and the refusal to order the controversy removed accordingly is reversible error. *KilUan v. Hanna,*193 N. C., 17, cited and distinguished.

Civil actioN before *Bowie, Special Judge,*at July Special Term, 1927, of MeckleNBueg.

*654This was a civil action instituted by tbe plaintiff through a next friend against the Atlantic-Tennessee & Ohio Bailroad Company, Southern Bailway Company and A. L. Harmon, defendants, to recover for personal injuries sustained by the plaintiff by reason of a collision near Mt. Carmel, Ill. Some months subsequent to the said injury, to wit, September, 1923, the defendant, Southern Bailway Company, secured a release from the plaintiff, paying him the sum of $7,500. Plaintiff alleged that at the time of signing the release that he was *non compos mentis*and unable to understand the nature and consequence of his acts, and that the defendant “with full knowledge of the mental condition . . . secured the signature of said I. J. Perris to a certain paper-writing for a consideration which the said I. J. Ferris was in no condition to receive, and which consideration was far less than the expense for care and attention on account of said injuries- and so grossly inadequate for the injuries as to shock the conscience,” etc.

The defendants in apt time, and in due form, filed a petition for removal of said cause to the Federal Court. The petition for removal alleges that the defendant Atlantic-Tennessee & Ohio Bailroad Company had by deed, dated 26 June, 1894, and duly recorded, sold and conveyed to the Southern Bailway Company all of its rights and privileges “of every kind and character in the State of North Carolina, including the said line of railway hereinbefore mentioned, running to Statesville, N. 0., together with all rights of way, station grounds, yards and equipment,” etc. The defendant in the petition for removal further alleged that the defendant, A. L. Harmon, was a mere claim agent for the defendant, Southern Bailway Company, and that “the said Harmon, acting solely as the agent of this petitioner, and for and on its behalf alone, did make a bona fide settlement with the plaintiff of any and all claims which the plaintiff had against the Southern Bailway Company. . . . That said release was thereupon immediately forwarded by the said A. L. Harmon to this petitioner and has ever since been, and is now, in the possession and under the control of this petitioner, and not in the possession or under the control of said A. L. Harmon. . . . The said Harmon is not a party to said release and is claiming no rights or benefits thereunder, and is not individually interested therein,” etc.

The clerk of the Superior Court declined to remove the cause and, upon appeal, the trial judge denied the petition for removal, whereupon the defendants appealed to this Court.

*Ralph Kidd and J. A. Lockhart for plaintiff.*

*John M. Robinson for*defendant, *Southern Railway Company.*

*655BeogdeN, J.

Tbe acknowledged rale in tbis jurisdiction in regard to removal upon tbe ground of fraudulent joinder is tbus declared by *Stacy, G. J.,*in *Crisp v. Fibre Co.,*193 N. C., 77: “TJpon tbe filing of sucb petition, in apt time, wben tbe fraudulent joinder is sufficiently alleged, tbe suit or action must be removed to tbe Federal Court, and if tbe plaintiff desires to traverse tbe jurisdictional facts, be must do so in tbat tribunal on motion to remand.” *Smith v. Quarries Co.,*164 N. C., 338.

It is further established law tbat: “If tbe facts alleged in tbe petition, taken to be true, show tbat tbe resident defendant has no real connection with tbe controversy, tbe petition for removal must be granted by tbe State court; if they are controverted by tbe plaintiff, tbe issues must be determined in tbe Federal Court, which will remand or retain tbe action for trial, upon its findings of facts involved in tbe issues raised.” *Connor, J.,*in *Cox v. Lumber Co.,*193 N. C., 28.

Assuming, therefore, as we are compelled to do, tbat tbe facts alleged in tbe petition for removal are true, it appears tbat tbe defendant, Atlantic-Tennessee & Ohio Bailroad Company, many years ago sold its entire property to tbe nonresident defendant, Southern Eailway Company, and further, tbat said Atlantic-Tennessee & Ohio Eailroad Company never owned or bad any control of tbe tracks, franchises or appliances in Illinois where tbe plaintiff was injured. It also appears from tbe petition tbat tbe resident defendant Harmon is a claim agent of tbe nonresident defendant; tbat be is not a party to tbe release referred to in tbe complaint, and claims no right or interest therein, and has no possession thereof. Hence it is apparent tbat tbe resident defendant Harmon “has no real connection with tbe controversy.” Therefore tbe cause is removable. In tbe recent case of *Allred v. Trexler Lumber Co., ante,*547, it is held tbat whenever it appears tbat tbe real controversy is between citizens of different states tbe presence 'of mere formal parties will not oust tbe jurisdiction of tbe Federal Court. Certainly Harmon, if a party at all, in contemplation of law, is no more than a formal party.

Plaintiff relies upon tbe case of *Killian v. Hanna,*193 N. C., 17. It should be observed tbat there was no petition for removal in tbe *Killian case,*and it was not considered from tbat aspect. In addition, tbe record discloses tbat it was alleged in tbe complaint tbat all of tbe defendants, “in order to escape their full and just liability in tbe premises, entered into a conspiracy for tbe purpose of inducing and procuring a release and settlement for a nominal consideration on account of tbe death of tbe said Eoy Killian”; and further, tbat tbe release complained of “was procured by all of tbe defendants acting together for their joint and several benefit and protection, and in fraud both for -the rights and *656duties of plaintiff as administrator of said Boy Killian,” etc. We are of tbe opinion that the *Killian case*is clearly distinguishable from the case at bar.

We conclude upon the facts, properly alleged in the petition for removal, that the nonresident defendant was entitled to have the cause removed to the Federal Court.

Beversed.