General Houses, Inc. v. Reconstruction Finance Corp.

81 F. Supp. 202, 1948 U.S. Dist. LEXIS 1855
CourtDistrict Court, N.D. Illinois
DecidedSeptember 28, 1948
DocketNo. 47C1253
StatusPublished
Cited by6 cases

This text of 81 F. Supp. 202 (General Houses, Inc. v. Reconstruction Finance Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Houses, Inc. v. Reconstruction Finance Corp., 81 F. Supp. 202, 1948 U.S. Dist. LEXIS 1855 (N.D. Ill. 1948).

Opinion

CAMPBELL, District Judge.

This cause is now before the court on plaintiff’s ¡motion to vacate an order, dated July 30, 1948, dismissing the amended complaint, and for leave to file a second amendment to the complaint. The dismissal order was issued by the court, sua sponte, for lack of an indispensable party. The background of the case may be obtained by reference to the memorandum of July 30.

Plaintiff urges several grounds in support of its motion, principal among which are (a) that defendant had lost its right to raise the question of an indispensable party by motion to dismiss or for summary judgment, since it had previously raised this point as a defense in its answer; (b) that Rule 21 of the Federal Rules of Civil Procedure, 28 U.S.C.A., does not permit the dismissal of an action by the court’s own initiative for misjoinder or non-joinder of parties; (c) that Marloch Mfg. Co. was not an indispensable party; (d) that no order for dismissal should be entered without leave to plaintiff to amend within a stated time -so as to make Marloch a party to the litigation, or to allege a new and different cause of action under which no new party would be indispensable; (e) that Count IV of the proposed amended complaint sets forth a tort action arising out of the same transactions upon which the first three counts are based, and that plaintiff may sue one or more joint tort feasors without joining others.

The first ground asserted by the plaintiff is clearly frivolous. Inasmuch as the complaint was dismissed on the court’s own initiative, it is of no consequence whether or not it could have been ' properly dismissed, under the circumstances, by motion of the defendant. That it is within the power of the court to dismiss the complaint sua sponte is unequivocally stated in Hoe v. Wilson, 9 Wall. 501, 76 U.S. 501, 19 L.Ed. 762, and Flynn v. Brooks, 70 App.D.C. 243, 105 F.2d 766.

Plaintiff’s second ground in support of its motion was apparently prompted by the fallacious assumption that the court based the dismissal order on Federal Rule 21. Such is not the fact. The court is not obliged to rely on any particular rule of procedure in order to dismiss an action where there is a lack of an indispensable party. That lack is a matter of jurisdiction, and it would be improper, to entertain a suit where jurisdiction is lacking.

The third contention of the plaintiff is an attempt to re-argue the question [204]*204of whether Marloch was an indispensable party to this action. In addition to the reasons set forth in the former memorandum for holding that it was such a party, I call plaintiff’s attention to the case of Flynn v. Brooks, 70 App.D.C. 243, 105 F. 2d 766, in which it was held that the validity of an assignment of an interest under a trust deed could not be adjudicated in the absence of the assignee, which was an indispensable party. The cases cited by the plaintiff fall far short of bolstering its position on this point. Payne v. Hook, 7 Wall. 425, 74 U.S. 425, 19 L.Ed. 260, involved a proceeding in equity in which the court held that the decree may be shaped to do justice to the parties before it. However, in my memorandum of July 30, it was stated quite clearly that “In certain equitable actions, the decree may be framed in such a way that the rights of the absent persons will not be injuriously affected. But that is not the situation here where the action is at^ law * * The language of Waterman v. Canal-Louisiana Bank, 215 U.S. 33, 30 S. Ct. 10, 14, 54 L.Ed. 80, similarly fails to add strength to plaintiff’s argument: “And there is a third class whose interests in the subject-matter of the suit and in the relief sought are so bound up with that of the other parties that their legal presence as parties to the proceeding is an absolute necessity, without which, the court cannot proceed. In such cases the court refuses to entertain the suit when these parties cannot be subjected to its jurisdiction.” As stated previously, no judgment could be entered here without injuriously affecting the rights of Marloch. Furthermore, it appears, and by plaintiff’s own admission, that Marloch is beyond the jurisdiction of this court, so that valid service of process cannot be had on it.

Continuing further with the analysis of plaintiff’s citations, it is readily apparent that the case of Bourdieu v. Pacific Western Oil Co., 299 U.S. 65, 57 S.Ct. 51, 53, 81 L.Ed. 42, is inconclusive of any question involved in the case at bar, as revealed in the following excerpt: “Upon the question whether, upon a good bill, the United States would be an indispensable party, we deem it unnecessary to express an opinion.” Calcote v. Texas Pac. Coal & Oil Co., 5 Cir., 157 F.2d 216, 225, 167 A.L.R. 413, simply reiterates what has already been stated: “Aside from these considerations, every indispensable party must be brought into court, actually or constructively, or the suit will be dismissed .if a substantial claim .is stated in the complaint. It is axiomatic that indispensable parties cannot be dispensed with in diversity cases even though their presence will defeat federal jurisdiction.”

In support of its argument that the complaint may not be dismissed without making provision for amendment, plaintiff cites numerous authorities, principal among which is the case of Topping v. Fry, 7 Cir., 147 F.2d 715, 717. However, several vital distinctions can be pointed out between that case and the one at bar. Despite the fact that plaintiff states in its brief “In that case, exactly as in the case at bar, the defense was made that there was a third party who was interested in the action, but who had been specifically excluded from the complaint for jurisdictional reasons”, such is not a fact. The omission was not a matter of defense, but was stated in the complaint; nor was there a determination that the excluded party was indispensable to the action. Further examination of the court’s language reveals that much is lacking to establish it as authority in support of plaintiff’s present motion: “Without permitting oral argument or granting plaintiff an opportunity to amend his complaint if he so desired, the court dismissed the complaint summarily, making no statement as to which of the diverse grounds stated by the two defendants in their motions to dismiss it relied upon as a basis for its action. Of course this dismissal operated as a dismissal with prejudice, and that being the case, we think that plaintiff was entitled to know on what grounds the action was based. At least one of the reasons asserted by Fry obviously and admittedly furnished no basis for dismissal with prejudice, and we cannot say that any of the grounds was so obviously good as to sustain such a motion to dismiss.”

It should be noted, however, that in the present case the memorandum of July 30th [205]*205.stated specifically the reason for dismissal, and the ground on which it was dismissed, i.

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662 P.2d 693 (Oregon Supreme Court, 1983)
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166 F. Supp. 106 (E.D. New York, 1958)
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Bluebook (online)
81 F. Supp. 202, 1948 U.S. Dist. LEXIS 1855, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-houses-inc-v-reconstruction-finance-corp-ilnd-1948.