Mahon v. Guaranty Trust & Safe Deposit Co.

239 F. 266 | 7th Cir. | 1917

EVANS, Circuit Judge

(after stating the facts as above). [1] The question of the court’s jurisdiction, while not presented to the learned District Judge, is squarely raised in this court.

The bill disclosed a situation where all of the defendants were citizens of states other than Pennsylvania, the home of the plaintiff, and therefore it was the appellee’s claim that the necessary diversity of citizenship existed to confer jurisdiction upon the federal court.

Defendants contend that the traction company should be aligned with the plaintiff for the purpose of determining whether the federal court has jurisdiction of the action.

In support of their contention, they cite In re Removal Cases, 100 U. S. 457, 25 L. Ed. 593, from which Foster draws the following rule:

“In determining between whom tbe controversy exists, the court is not bound by the title of the case or the form of the proceedings, but should examine the record, ascertain the matters in dispute, and arrange the parties on opposite sides of the same according to the facts, no matter what their technical place as plaintiffs or defendants may be.”

See Foster on Federal Practice, vol. 1, § 40.

One of the tests by which the court may determine whether a defendant should be aligned with the plaintiff is the prayer for relief. If no relief is sought against a defendant, such defendant should ordinarily be treated as a plaintiff. Dawson v. Columbia Avenue Trust Co., 197 U. S. 178, 180, 25 Sup. Ct. 420, 49 L. Ed. 713; Steele v. Culver, 211 U. S. 26, 29, 29 Sup. Ct. 9, 53 L. Ed. 74. Whether we examine the entire bill or merely the prayer for relief, we must reach the same conclusion, viz. that the traction company and the plaintiff are on the same side of this controversy. We fail to find any collision of interest between them. Both are interested in obtaining the same relief.

[2] But it is insisted that, even though the traction company be aligned with the appellee, the court should retain jurisdiction of the suit. For, it is pointed out, the traction company is at best not a necessary party and could be properly dismissed.

In support of this contention that the mortgagor is not a necessary party, the following cases are cited: Carter v. Fortney (C. C.) 170 Fed. 463; same case in the Circuit Court of Appeals, 203 Fed. 454, 121 C. C. A. 514; Knickerbocker Trust Co. v. City of Kalamazoo (C. C.) 182 Fed. 865; City of Denver v. New York Trust Co., 187 Fed. 890, 110 C. C. A. 24; same case in the Supreme Court, 229 U. S. 123, 33 Sup. Ct. 657, 57 L. Ed. 1101; Reagan v. Farmers’ Loan & Trust Co., 154 U. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014; Mercantile Trust Co. v. Texas & Pacific Co. (C. C.) 51 Fed. 529; Ex parte Haggerty (C. C.) 124 Fed. 441-446; Guardian Trust Co. v. White Cliffs Portland Cement Co. (C. C.) 109 Fed. 523; Old Colony Trust Co. v. City of Wichita (C. C.) 123 Fed. 762; City of Denver v. Mercantile Trust Co., 201 Fed. 790, 120 C. C. A. 100.

Appellants, in support of their claim that the traction company is an indispensable party, cite the following authorities: Dawson v. Columbia Avenue Trust Co., 197 U. S. 177, 25 Sup. Ct. 420, 49 L. Ed. 713; Consolidated Water Co. v. Babcock (C. C.) 76 Fed. 243; Consolidated Water Co. v. City of San Diego (C. C.) 84 Fed. 369; Consolidated Water Co. v. Babcock (C. C.) 76 Fed. 246; Consolidated Water Co. v. City of San Diego, 93 Fed. 849, 35 C. C. A. 631; Williams v. City Bank & Trust Co., 186 Fed. 419, 108 C. C. A. 341; Old Colony Trust Co. v. Atlanta Ry. Co. (C. C.) 100 Fed. 798; Steele v. Culver, 211 U. S. 26, 29 Sup. Ct. 9, 53 L. Ed. 74; McClelland v. McKane (C. C.) 154 Fed. 164; Foster on Federal Practice (5th Ed.) vol. 1, p. 103; Boston Safe Deposit & Trust Co. v. City of Racine (C. C.) 97 Fed. 817.

The right of a mortgagee under certain conditions to bring an injunctional suit to protect its security independently of the mortgagor is thoroughly established. Some of the cases cited above not only recognize such right on the part of the mortgagee but further hold that the mortgagor is an unnecessary party.

Such rule is applied where the suit is brought to restrain threatened injury to the security by trespassers or other tort-feasors, and -where the threatened injury is by outsiders, strangers to the affairs and contracts of the mortgagor.

But none of the cases cited hold that such rule applies where the mortgagee instituted a suit based upon a contract of the mortgagor with third parties.. Where the plaintiff sought to enjoin the employes from breaking their contract with the traction company, it necessarily was endeavoring to enforce the rights of its mortgagor. Its own rights were derivative of and limited strictly by the rights of the mortgagor. Moreover, in so far as it attempted by this action to fix of determine the rights of the employés under their contract with the traction company, it was embarking upon what was strictly a phase of the traction company’s business policy. In such a case the traction company was an indispensable party to the action.

That such company is an indispensable party is clearly shown when we consider the possible, and in fact probable, embarrassment which the courts will meet, if separate actions in respect to this contract can be maintained in different jurisdictions. If this case were to proceed to trial without the traction company and the court upheld the contract and enforced its terms against the defendant employés, its decision would not be binding upon the mortgagor in a subsequent action. If the traction company were not a party to the action it would have a perfect right to test out the same question in the state court. Such a situation should not be tolerated. The mere statement of the possibilities shows the absolute necessity of making the traction company a party to this action.

In any action by the mortgagees to enforce an agreement made and entered into between the traction company and its employés, such latter parties are within their rights in insisting that all parties to the agreement be bound by the decree.

The rule is announced in Consolidated Water Co. v. City of San Diego, 93 Fed. 852, 35 C. C. A. 634, as follows:

“The general'rule as to parties, as expressed in many of the authorities, is to the effect that all persons should be made-parties to a suit in equity who are directly interested in obtaining or resisting the relief prayed for in the bill or granted in the decree. And in a case like the present, where the trial of the suit would necessarily involve the management and conduct of the affairs, and an adjudication of the rights, of the San Diego Water Company (the mortgagor), it is essentially necessary that it should be made a party to the suit, either as a plaintiff or a defendant.”

Applying, this rule to the facts in the instant case, it is apparent that the plaintiff’s action is predicated upon the efficacy of a contract between the mortgagor and its employés. Such being the case, the transportation company, the mortgagor, is an indispensable party. By aligning the transportation company with the plaintiff as we are required to do, the necessary diversity of citizenship to give the federal • court jurisdiction is lacking.

The decree is reversed, with directions to dismiss the bill for want of jurisdiction.

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