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Tremps v. Ascot Oils Inc.

decided*fn*: July 12, 1977.


Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 75-224-C - William E. Steckler, Chief Judge.

Castle, Senior Circuit Judge, Pell and Bauer, Circuit Judges.

Author: Castle

CASTLE, Senior Circuit Judge.

Defendants Ascot Oils, Inc. ("Ascot"), a Louisiana corporation, and James R. Cunningham, Sr., a Louisiana resident who controls Ascot, appeal from an order of the district court holding them jointly and severally liable to plaintiff for amounts paid to Ascot for interests in 11 oil and gas leases. Ascot offered and sold the interests to plaintiff's settlor, the Hon. Paul H. Buchanan, Jr., an Indiana citizen, over a period from May, 1973, to March, 1974, but it did not register the interests under the Indiana Securities Law, IND. CODE § 23-2-1-1 et seq. (IND. ANN. STAT. § 25-854 et seq., Burns, 1972). In October, 1974 Buchanan and his wife executed an assignment reconveying the interests to Ascot and tendered both the assignment and a sum covering amounts received as income from the interests to Ascot's lawyer. In April, 1975, Buchanan assigned to plaintiff, as trustee of a trust of which Buchanan was principal beneficiary, all causes of action that Buchanan had against Ascot and Cunningham. Plaintiff, a citizen of Indiana, brought the instant suit alleging violation of both federal and Indiana securities laws.

The district court, resting jurisdiction on diversity of citizenship, entered summary judgment for plaintiff. It held that both Ascot and Cunningham were originally liable under the Indiana Securities Law for the offer and sale of unregistered securities. It also held that Ascot had accepted Buchanan's tender, that this acceptance created joint and several liability for the refund of the purchase price on the part of Ascot and Cunningham, and that it discharged their joint and several liability under the Indiana Securities Law. While we do not fully agree with the district court about the consequences of Ascot's acceptance of tender, we conclude that appellants' statutory liability remains an independent, viable ground for granting the relief that plaintiff seeks and we affirm the court's judgment on that basis.

Ascot and Cunningham raise eight challenges to the district court's holding. Only two require more than cursory attention. Cunningham asserts that the district court lacked in personam jurisdiction over him, and appellants together assert that the offers and sales of interests in three of the oil and gas leases were exempt from registration under the Indiana Securities Law. We reject both arguments.



Cunningham asserts that the district court did not acquire in personam jurisdiction over him prior to its entry of summary judgment because he was never served with process. He claims that service was made on his son, James R. Cunningham, Jr., instead of himself.

In the original complaint, filed April 10, 1975, plaintiff named only Ascot as a defendant. In an amended complaint, filed May 9, 1975, plaintiff named as additional defendants, among others, "James R. Cunningham, Jr.," a resident of Shreveport, Louisiana, and Wes-Tex Land Co., Inc. ("Wes-Tex"), a Texas corporation. The amended complaint stated that Cunningham was the president of Ascot. It alleged that he was one of a group of individuals who participated in the offers and sales of the interests to Buchanan and who controlled Ascot. The summons served with the amended complaint identified the defendant merely as "James R. Cunningham." The United States marshal was directed to serve Cunningham at 353 Corinne Circle, Shreveport, Louisiana. However, the marshal stated in his return of service that he made service to D.J. Crenshaw, secretary to Cunningham, "after telephone call by subject who requested it be served."

Cunningham's counsel at oral argument conceded that the appellant had actual notice of the lawsuit. The senior Cunningham resided at 353 Corinne Circle and presumably was the "subject" who requested that process be served on Crenshaw, who was both his secretary and his son's secretary. However, the appellant asserts that he could reasonably conclude that his son was the "James R. Cunningham" referred to in the summons and the amended complaint and that he, the senior Cunningham, was not obligated to answer. He relies on the fact that the amended complaint identified the defendant as "Jr." instead of "Sr." He also relies on the fact that his son was a resident of Shreveport and was president of Wes-Tex, a codefendant under the amended complaint.

A defendant who is clearly identified by a summons and complaint and who has been served with those documents may not avoid the jurisdiction of the district court merely because he is incorrectly named in them. United States v. A. H. Fischer Lumber Co., 162 F.2d 872 (4th Cir. 1947). Professor Moore has suggested that the test of whether a misnomer invalidates process should be whether, on the basis of an objective standard, it is reasonable to conclude that the plaintiff had that defendant in mind or whether the plaintiff "actually meant to serve and sue a different person." 2 J. MOORE, FEDERAL PRACTICE para. 4.44, at 1295.52 (1975). Greater room for error might be permitted a defendant under a standard that invalidates process creating reasonable doubt or confusion about who the plaintiff intended to sue. Less room for error would be allowed under a standard that imposes on the defendant the burden of answering an ambiguous complaint with which he has been served to clear up any confusion about whether he is the intended defendant. We need not choose a standard in this case, because Cunningham's argument fails under the most liberal of them from the defendant's point of view. The amended complaint was not susceptible to any reasonable doubt or confusion about who it was the plaintiff intended to sue. James R. Cunningham, Jr., was not the president of Ascot. He did not own a controlling interest in that corporation. According to the junior Cunningham's deposition, he had no affiliation with Ascot other than the fact that his father "owned" it. Although the junior Cunningham was the president of Wes-Tex, he was not identified as such in the amended complaint. Viewing the summons and amended complaint as a whole, the senior Cunningham was clearly identified as the person the plaintiff intended to sue.

The decision of the senior Cunningham to have his son answer the complaint and not to answer the complaint himself was unreasonable.

A suit at law is not a children's game, but a serious effort on the part of adult human beings to administer justice; and the purpose of process is to bring parties into court. If it names them in such terms that every intelligent person understands who is meant, as is the case here, it has fulfilled its purpose; and courts should not ...

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