Caylor v. Cooper

165 F. 757, 1908 U.S. App. LEXIS 5415

• Court: U.S. Circuit Court for the District of Southern New York
• Decided: December 22, 1908
• Status: Published

Opinion

RAY, District Judge.

The bill of complaint shows that the complainant, Worth E. Caylor, resides at the city of Chicago, state of Illinois, and is a citizen of that state. The defendants are all residents and citizens of the state of New York. April 25, 1904, Erank H. Cooper, William H. Cooper, Edward C. Cooper, Charles A. Cooper, Garrett D. Cooper, Eda R. Wolff, and Wallace B. Wolff severally made and executed their certain written indenture or deed of trust, a copy of which is set out in the bill of complaint, whereby they, as parties of the first part, made and constituted Charles A. Cooper and Worth E. Caylor trustees of certain property therein mentioned and described, and transferred such property to them as trustees upon certain trusts specified-in such deed of trust.

The property is described in certain schedules. Schedule A described property of Erank H. Cooper; schedule B described property of William H. Cooper; schedule C described the property of Edward C. Cooper; schedule D described the property of Charles A. Cooper; schedule E. described the property of Garrett D. Cooper; and schedule E described the property of Eda R. Wolff. The deed of trust provided that Charles A. Cooper and Worth E. Caylor, trustees, were to hold such property during the period of the lives of William H. Cooper and Edward C. Cooper, and to continue and endure until the lime of the death of the surviving one of the said William II. Cooper and Edward C. Cooper, it being understood that, on either or both of said persons living aud surviving for a period of five years from the date of such deed of trust, at the time of the expiration of said five years the trust should cease and determine.

It was further provided that physical possession of the funds, and the evidence of ownership of the real aud personal property constituting the trust estate, should be held by Charles A. Cooper as trustee; that Worth E. Caylor, trustee, should examine into the condition of things every two months, and upon ilie first sign of negligence or fraud on the part of his co-trustee take possession oí all the trust property. The property was all iurned over to the possession of said Charles A. Cooper and Worth E. Caylor, as trustees, who accepted the trust.

Edward C. Cooper died February 29, 1907, and left him surviving Mae Cooper, his widow, but no issue, He left a last will and testament, which is set out in the bill of complaint, hie made certain gifts, and the rest, residue, and remainder of his estate he gave to his wife, Mae Cooper, and the defendants Buckley and Nightingale and Mae Cooper, upon certain trusts. The bill of complain! alleges that: said Edward C. Cooper in his lifetime, and after the execution of said deed of trust and pursuant thereto, designated Charles A. Cooper to take, for the uses and purposes mentioned in his declaration, all the property which the person designated would be entitled to take from the trustees named in said deed of trust; and further alleges that the said Charles A. Cooper now claims to take and receive from the said trustees named in the deed of trust under the same by virtue of the said declaration. The bill of complaint also alleges that Mae Cooper, Buckle]', and Nightingale claim that said Edward C. Cooper designated them to take all of such property.

The bill of complaint then alleges that: the complainant, Worth E. Caylor, trustee, and the defendant Charles A. Cooper, trustee, now desire to distribute and pay the sum of $10,000 out of the funds in their possession as trustees as afore,‘'.aid to said Charles A. Cooper, or to Mae Cooper, Dennis P. Buckley, and William Nightingale, or whichever person or persons is lawfully entitled to receive the same because of the declarations of the said Edward C. Cooper. The bill alleges that because of these conflicting claims the complainant is unable to determine who is entitled to receive that part of the trust estate formerly belonging to Edward C. Cooper of which the complainant is one of the trustees. Presumably, I think the sum ready to be distributed consists of income, rents, aud profits, as the trust is not ended and the trust term has not expired.

By the third subdivision of the deed of trust the trustees were to pay to Frank H. Cooper in quarterly payments the sum of $25,000, annually from the incomes, etc., and 'to make other small payments; and by the fourth subdivision of tlie deed of trust said trustees were to pay during the life of the trust one-fifth part of the remaining net income and profits of the trust estate to each of the following: William H. Cooper, Edward C. Cooper, Charles A. Cooper, Garrett D. Cooper, and Eda Wolff. ' It "may fairly be assumed that the amount in controversy is this sum of $10,000, which the trustees named in the deed of trust desire to pay over to the ones entitled thereto. The actual controversy seems to be between Charles A. Cooper, on the one hand, and Mae Cooper, Dennis P. Buckley, and William Nightingale, on the other. Edward C. Cooper in his lifetime seems to have made conflicting designations as to the disposition of that part of the rents and incomes to which he or his estate was or should beconle entitled. Mae Cooper, Dennis P. Buckley, and William Nightingale claim as executors and trustees under the will of Edward C. Cooper. Charles A. Cooper claims under another instrument. The actual or real controversy is between citizens of the state of New York. However, both sets of claimants to the funds claim same of and from the complainant here, Worth E. Caylor, and Charles A.' Cooper, as trustees under the deed of trust. But Charles A. Cooper individually lays claim to the $10,000, as against the complainant Worth E. Caylor, as well as against himself as trustee. While Mae Cooper, Buckley, and Nightingale claim the fund as against Charles A. Cooper individually, they also lay claim to the same as against the complainant Worth E. Caylor, as trustee, and Charles A. Cooper, as trustee.

Not Enowing or being certain who is entitled to the $10,000, the complainant brings this suit to have it determined ‘whether Charles A. Cooper is entitled to the $10,000, or whether the same should be paid to Mae Cooper, Buckley, and Nightingale, as executors and trustees under the will of Edward C. Cooper.

The jurisdiction of this court is denied. It is claimed that for purposes of jurisdiction this court is to align the parties complainant and defendant as complainants or defendants according to their interests, irrespective of the place given them by the complainant in his bill of complaint, and that, so aligning them, the complainant, Worth E. Caylor, trustee, and the defendant Charles A. Cooper, trustee, are in fact complainants, and should be so considered, and that therefore, as all the complainants are not residents of a different state from that of all the defendants, there is not the necessary diversity of citizenship. If this be so, it is contended we have a citizen of Illinois, a plaintiff, and a citizen of New York, also a necessary plaintiff, with all the defendants citizens of New York, and the diversity of citizenship necessary and indispensable to the jurisdiction of the Circuit Court no longer exists. I find no allegation in the bill of complaint that Charles A. Cooper, trustee, has beén requested to bring or to joinjn bringing an action to settle the existing controversy. It is contended that, therefore, he, as trustee, is not a necessary or a proper party defendant, but is a necessary and indispensable party complainant. Where two executors or trustees have the right, and it is their duty, to bring an action or institute a suit, and one refuses to join as plaintiff or complainant, the other may bring the suit ór action making Iris coexecutor or co-trustee a party defendant. This question was presented in Venner v. Great Northern Railway and James J. Hill, 209 U. S. 24, 28 Sup. Ct. 328, 52 E. Ed. 666, decided by the Supreme Court of the United States February 24, 1908, where the railway company, made defendant, refused to bring suit, and hence "the complainant Venner, a stockholder, commenced the action, making the railway company a defendant. It was contended that as the railway company had Ike interests of a complainant, was pecuniarily interested in the recovery, it must he aligned as a complainant, and that so aligning it there would be a citizen oE New York and a citizen of Minnesota (the railway beiug a citizen of Minnesota, where its president, defendant James J. Hill, also resided) plaintiffs, and a citizen of Minnesota defendant, and the necessary diversity of citizenship did not exist. The court held that, assuming Venner had the right to bring and maintain the suit as stockholder (the railway company having refused so to do), the railway company must be regarded and considered as a defendant. The court said:

“It would doubtless be for the financial interests of the defendant railroad that the plaintiff should prevail. Hut that is not enough. Roth defendants unite, as sufficiently appears by the petition and other proceedings, in resisting the plaintiff’s claim of illegality and fraud. They are alleged to have' engaged in the same illegal and fraudulent conduct, and the injury is alleged to have been accomplished by their joint action. The plaintiff’s ■controversy is with both, mid both are rightfully and necessarily made deYeiuhmls, i»wl neither can, for jurisdictional purposes, be regarded otherwise Ilian as a defendam. Davenport v. Dows, 18 Wall. 626. 21 L. Ed. 938; Central Railroad Company v. Mills, 113 U. S. 249, 5 Sup. Ct. 456, 28 R. Ed. 949; Railroad v. Grayson, 119 U. S. 210, 7 Sup. Ct. 100, 30 L. Ed. 382; Doctor v. Harrington, 196 U. S. 579. 25 Sup. Ct. 355. 49 L. Ed. 6065; Groel v. United Electric Co. (C. c.) 132 Fed. 252; and see Chicago v. Mills, 204 U. S. 321, 27 Sup. Ct. 286, 51 R. Ed. 504. The case of Doctor v. Harrington is precisely in point on this branch of the case, and is conclusive. In that case the plaintiffs, stockholders in a corporation, brought an action in the Circuit Court against the ■ ■orporation and Harrington, another stockholder, ‘who directed the management; of the affairs of the corporation, dictated its policy, and selected its directors.’ It was alleged that Harrington fraudulently caused the corporation to make its promissory note without consideration, obtained a judgment on the note, and sold, on execution, for much less than their real value, the assets of 'he corporation to persons acting for his benefit. On the face of the pleadings there was the necessary diversity of citizenship, but it was insisted that the corporation, because its inrevest was the same as that of the plaintiff, should be regarded as a plaintiff. The court below so aligned the corporation defendant, and, as that destroyed ihe diversity of citizenship, dismissed the suit for want of jurisdiction. This court reversed the decree, saying, page 587 of 196 U. S., page 357 of 25 Sup. Ct. (49 L. Ed. 606]: ‘The ultimate interest of the corporation made defendant may bo the same as that of the stockholder made plaintiff, but ihe corporation may lie under a control antagonistic, and made to act in a way detrimental to bis rights. In other words, iris interests, and the interests of the corporation, may be made subservient: to some illegal purpose. If n controversy hence arise, and the other conditions of jurisdiction exist, it can be litigated in the federal court.’”

But the bib here fails to allege or show that defendant Charles A. Cooper, trustee, has refused to bring suit or join as a party complainant. It does appear, however, that Charles A. Cooper, individually, claims this fund of .$10,000 by appointment of or from Edward C. Cooper. He claims it as against Worth H. Caylor, trustee, and Buckle]* and Nightingale and Mao Cooper, who claim by appointment or declaration of Edward C. Cooper. It is evidealt that Citarles A. Cooper cannot decide between himself as trustee and himself as an individual. As trustee he might perhaps sue himself as an individual, and also the other claimants, to settle this dispute in court, where only it can be settled. But with this dispute existing and this peculiar condition existing, cannot Worth E. Caylor, the other trustee, institute and maintain the suit alone, making all interested persons parties ? To deny this is to deny that this present suit may be maintained at all, for, so far as appears, Charles A. Cooper, trustee, has not refused or even been invited to become a party complainant. If it can be maintained by Worth E. Caylor alone, then, within Venner v. Great Northern Railway, supra, Charles A. Cooper is a proper party defendant, and is not a necessary or indispensable party complainant, and the necessary diversity of citizenship exists. In that case the railway company might have maintained the action, was requested to commence it, and refused. Here Caylor commences the action, and the only reason for making Charles A. Cooper a defendant, and not asking him to be a plaintiff as trustee, is his personal interest in and claim to the fund.

I do not understand it to be the policy of the law or of Congress to discourage or prevent litigation in the federal courts when a proper case is presented. Congress has created and defined the jurisdiction of the Circuit Courts, and wisely placed limitations thereon, but this was not for the purpose of discouraging litigation in the federal courts.

Worth E. Caylor and Charles A. Cooper, as trustees under this deed of trust, have the legal title to all this property jointly. But Charles A. Cooper was to have, and presumably has, the actual physical possession of this $10,000, as well as of the other personal property, and also the evidences of title to the real estate wherever situated. The general rule is that, whén two or more trustees hold property jointly, both or all are necessary and indispensable parties in any action concerning it. See McRea v. Branch Bank, 19 How. 376, 15 L. Ed. 688; O’Hara v. MacConnell, 93 U. S. 150, 23 L. Ed. 840; Thayer v. Life Association, 112 U. S. 717, 5 Sup. Ct. 355, 28 L. Ed. 864; American B. S. v. Price, 110 U. S. 61, 3 Sup. Ct. 440, 28 L. Ed. 70; Billings v. Aspen, etc., 51 Fed. 338, 2 C. C. A. 252.

In Thayer v. Life Association, supra, it was held:

‘‘Two citizens of West Virginia conveyed to a trustee certain real property in tliat state to secure the payment of notes executed by them to a Missouri corporation, which was subsequently dissolved and its assets placed in the hands of a citizen of the latter state. Upon default in the payment of the notes, the trustee, under authority given by the deed, advertised the property for sale. The grantors thereupon instituted a suit in equity in one of the courts of West Virginia to enjoin the sale, making the trustee, the Missouri corporation, and the person who held its assets, defendants. Upon the joint petition of that corporation and the defendant holding its assets, the cause was removed to the Circuit Court of the United States, and was there finally determined. Sold that, since the trustee was an indispensable party, his citizenship was material in determining the jurisdiction of the Circuit Court; and as that was not averred, and did not otherwise affirmatively appear to be such as gave the right of removal, the decree must be reversed and the cause remanded to the state court.”

If litigation is necessary, and one refuses to be a complainant, he may be made a party defendant and the action proceed. In such case there is no nonjoinder of parties complainant, and in such case one of the trustees holding jointly may maintain the action. This shows that all are not necessary and indispensable parties complainant under all circumstances and conditions. That case is an exception to the general rule that all the trustees must be complainants.

In 1 Foster’s Federal Practice, 182, § 59, we find the following:

“Relaxation of rule as to parties in special cases. — The rules upon the subject of parties arcs however, very loose, and the questions arising under them are decided largely in the discretion of the court. ‘The necessity for the relaxation of the rule is more especially apparent in the courts of the United States, where, of i cutimos, the enforcement of the rule would oust them of their jurisdiction, and deprive parties entitled to the interposition of a court of equity of any remedy whatever.’ A court of equity adapts its decrees to the necessities of each case; and should a suit, brought by a single complainant concerning a matter íd which others as well as hhnsolf were interested, terminate in a decree against the defendants, it is easy to do substantial justice to all the parties in interest, and pre-unit a multiplicity of suits, by allowing the other persons similarly situated with the plaintiff, ‘either through a reference to a master, or by some other proper proceeding, to come in and share in the benefit of the litigation.’ The discretion as io the joinder or omission of parties is, however, one which, when properly raised, is subject to review upon appeal. An act^pf Congress relaxing or oxlending the rules as to parties in a particular case is constitutional.”

Can it be held that this case presents another exception to the general rule? I find no case so holding. One trustee, the one who holds the physical possession of fine trust property, claims to be entitled to take and have paid io him individually a part oí the trust fund as his own. Other persons claim to take and to have paid to them the same part of the trust fund as their own. The trustee claiming as an individual having possession has no reason to move at all. The other persons claiming may move against both trustees. They make their demand. Can, or cannot, the trustee who has no actual physical possession, who makes no personal claim to the fund, come into a court of equity, present the facts, and ask for instructions and directions, and ask to have the dispute determined? I see no good reason why he should not be permitted to do so, tinder such circumstances, except that the court has adopted certain rules, and we have the statute and Constitution confronting us.

If Charles A. Cooper, as trustee, had joined-in this bill as a party complainant, as he had the right to do and as he has not refused to do, this court would find itself without jurisdiction, as the necessary diversity of citizenship would be kicking. Could the complainant, Caylor, give this court jurisdiction by voluntarily making Charles A. Cooper a party defendant in his capacity as trustee? The directions and instructions of the court must be directed to both trustees and must guide both. Charles A. Cooper as trustee and Charles A. Cooper as an individual are distinct persons. Fqnity rules 22 and Atl have no application here. Charles A. Cooper, trustee, is not only a necessary party, but he is within the jurisdiction of this court,, and an actual party as shown by the record. The complainant has voluntarily made him a party.

Again, there is no necessity for a departure from the ordinary rules and practice. The property and all the parties are within the jurisdiction of the courts of the state of New York, and its courts are open and have jurisdiction of the subject-matter. Still, for jurisdictional purposes our courts divide parties into formal, necessary, and indispensable parties, and I think this case turns on the question whether or not Charles A. Cooper, trustee, is an indispensable party complainant. “Indispensable parties are those having an interest in the controversy of such a nature that final decree cannot be made without either affecting that interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience.” 1 Rose’s Code of Federal Proc. § 817b, p. 744; Shields v. Barrow, 17 How. 130, 15 L. Ed. 160; Donovan v. Campion, 85 Fed. 71, 29 C. C. A. 30. It is the general rule that two or more executors under the same instrument, appointed by the court of the same state, or two or more trustees, are one and the same person. Where two are sued, and an accounting is demanded, unless it relates to a wrong or devastavit committed by one alone, all are regarded as indispensable parties. Blake v. McKim, 103 U. S. 336, 338, 26 L. Ed. 563; Couolly v. Wells (C. C.) 33 Fed. 205, and see the many cases there cited and commented on. Thj^ being so, the absence of an allegation that Charles A. Cooper, trustee, was requested to join in the suit and refused, leaves a nonjoinder of parties complainant. If we treat the actual and real controversy or dispute as one between Charles A. Cooper individually and the executors and trustees of Edward C. Cooper, it is not a controversy between citizens of different states. If we regard it as a controversy between the trustees under the deed of trust and the rival claimants to the $10,000, then it is not a controversy wholly between citizens of different states, for Caylor and Charles A. Cooper, trustees, are citizens, the one of Illinois and the other of New York, where all the defendants reside. It seems to me that Coal Company v. Blatchford, 11 Wall. 172, 20 L. Ed. 179, is quite decisive of this case. In that case:

“The bill stated that the defendant was a corporation created and organized under the laws of the state of Pennsylvania; that the plaintiff, Blatchford, was a citizen of the state of New York; that the plaintiff Newman was a citizen of the state of Pennsylvania; and that tiiey as trustees sued solely for the use of Henry Beckett, an alien and' a subject of the Queen of Great Britain, and Joseph Boyd, a citizen of New Jersey, both residing in New Jersey. The defendant demurred to the bill on the ground that the plaintiff Newma-n and the defendant corporation, being citizens of the same state, the court had not jurisdiction of the cause. The court overruled the demurrer, and,' an answer and replication having been filed, the case was heard on the pleadings, and a decree rendered for the plaintiffs. Prom this decree the appeal was taken; and the question presented for consideration here was whether the jurisdiction of the federal court depended upon the citizenship of the trustees, who were the plaintiffs, or of the parties for whose benefit the suit was averred to have been brought.”

The Supreme Court of the United States reversed the decree, and directed that the bill be dismissed for want of jurisdiction.

The demurrer must be sustained on the ground there is a nonjoinder of indispensable parties complainant, and that this court is without jurisdiction, for the reason there is not a controversy wholly between citizens of different states.