Golden Cross Min. & Mill. Co. v. Free Gold Min. Co.

154 F. 441 | 9th Cir. | 1907

GILBERT, Circuit Judge,

after stating the case as above, delivered the opinion of the court.

The appellant sold its mining properties to the Eree Gold Mining Company, reserving a vendor’s lien for the purchase price. Some two years later, an agreement was entered into between the appellant, together with certain of its stockholders, and the I'ree Gold Mining Company, whereby the claim of the appellee against one of the stockholders of the appellant was made a charge upon the proceeds of the operation of said properties, and the operation was placed in the hands of a board of five men, called a board of managers, who were given authority to devote a portion of the net proceeds to the payment of the appellee’s claim until it was discharged. The appellee, by subsequently assenting to this agreement became entitled to the benefits thereof. The appellant brought this suit to foreclose its vendor’s lien, and the question presented on the appeal is whether the members of the board of managers are indispensable parties to the suit.

'J'lie rule as to who are indispensable parties is stated in Bates on Federal Equity Procedure, § 39, in which it is said:

“Although no inflexible rule for all cases has been formulated, yet the authorities have stated a general rule, which, notwithstanding its many exceptions and limitations, is of incalculable practical value in the preparation of bills and the administration of equitable remedies. Lord Hardwicke has stated the rule thus: That all persons ought to he made parties before the court who are necessary to make the determination completo and to quiet the question. Lord lledesdale, who is called the father of equity pleading, has stated the rule as follows: It is the constant aim of a court of equity to do complete jus-tire by deciding upon and settling the rights of all persons interested in the subject of the suit, to make the performance of the order of the court perfectly safe to those who are compelled to obey it, and to prevent future litigation. For this purpose all persons materially interested in the subject ought generally to be parties to 1he suit, plaintiffs or defendants, however numerous they may be, so that the court may be able to do complete justice by deciding upon .and settling the rights of all persons interested, and that the orders of the court may be safely executed by those who are compelled to obey them, and future litigation may be prevented.”

We are unable to see that the managers are indispensable parties. They are not only not materially interested, but they have no interest whatever in the subject-matter of the suit. They have no title to or lien upon the property which is the subject of the foreclosure. They are neither trustees nor beneficiaries under the contract. Their powers are not essentially different from those of a superintendent or manager placed in charge of mining property under the owner’s instructions as to the disposition of the proceeds. They are not parties to the agreement under which they have operated the mines. They may be discharged at any time by the parties who placed them in control of the property, and they are free to quit the employment of those,parties whenever they see fit to do so. They derive their authority wholly from the’parties who are before the court. They have no rights to be protected by the decree. They can have nothing fo say as to the sale of the property or the disposition of the proceeds. Persons whose sole connection with the subject-matter of the suit is that they are agents for the person really interested are not necessary parties where no relief is asked against them. Story, Eq. Pl. 231; Woolstein v. Welch (C. C.) 42 Fed. 566; Garr v. Bright, 1 Barb. Ch. (N. Y.) 157. See, also, Fidelity & Deposit Co. v. Fidelity Trust Co. (C. C.) 143 Fed. 156; Payne v. Hook, 7 Wall. 425, 19 L. Ed. 260; Jerome v. McCarter, 94 U. S. 736, 24 L. Ed. 136; and Smith v. Lee et al. (C. C.) 77 Fed. 779.

But it is contended that the only right which the appellee has in the property is the right to receive therefrom a certain proportion of the net proceeds of the operation thereof by the board of managers until its entire claim of $85,000 is paid, and that it is wholly useless to bring the appellee before the'court unless the managers through whom its rights can be worked out and paid are also before the court to be bound by its decree. In answer to this it is only necessary to say that, if the court in its decree shall recognize the. right of the appellee to have the operation of the mine continued by the managers until its claim is paid, it can only so decree in accordance with the terms of the contract. The court cannot add to the terms of the contract. The court will have no power by the decree to bind the managers, any more than they are now bound, to continue the operation of the mine. If their right and authority to continue such operation is recognized in the decree, it will be only because the parties to the suit have, by their contract, conferred such authority. The court can have no power to compel them to continue the work in which they are engaged. Nor, on the other hand; have they acquired any vested right to continue such work. They sustain no such relation to the property as to empower the court to impose duties upon them, or to decree any relief either for or against them. The most that the court can do in that regard is to recognize the existence of the contract, and to say that it shall be continued under the authority given by the parties thereto until the appellee is paid. To do this, it is not necessary to have the members of the board before the court.. They have no standing to be heard as to thé rights of the parties to the contract, and their presence is not necessary for the protection of the appellee’s lien. If, on the other hand, on the final hearing, the court shall arrive at the conclusion that the rights of all the parties can be secured by a judicial sale of the property, released from the control of the board of managers, there are before the court all the parties necessary to enable the court to decree such relief and provide for the disposition of the proceeds of the sale. The board of managers, if present in court, could not be heard to object to such a decree. We are of the opinion that the court below was in error in sustaining the demurrer and dismissing the bill.

The decree is reversed, and the cause is remanded for further proceedings not inconsistent with the foregoing opinion.