Franz v. Buder

• Decision Date: 06 March 1926
• Docket Number: No. 7019.,7019.
• Parties: FRANZ et al. v. BUDER.
• Court: U.S. Court of Appeals — Eighth Circuit

11 F.2d 854 (1926)

FRANZ et al. v. BUDER.

No. 7019.

Circuit Court of Appeals, Eighth Circuit.

January 26, 1926.

On Motion to Modify Opinion, March 6, 1926.

S. Mayner Wallace, of St. Louis, Mo. (Allen McReynolds, of Carthage, Mo., Thomas M. Pierce, Samuel H. Liberman, A. Holt Roudebush, all of St. Louis, Mo., and John B. Hollister, of Cincinnati, Ohio, on the brief), for appellants.

G. A. Buder, Jr., and Oscar E. Buder, both of St. Louis, Mo. (A. W. Wenger, of St. Louis, Mo., on the brief), for appellee.

Before STONE and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge.

PHILLIPS, District Judge.

This is an appeal from a decree dismissing the bill in a suit in equity brought by Ehrhardt W. Franz (hereinafter called plaintiff) against Gustavus A. Buder (hereinafter called defendant).

The facts pertinent to the inquiry here are these:

Ehrhardt D. Franz died on February 7, 1898, leaving a last will and testament by which he gave all of his property, real and personal, to his wife, Sophie Franz, for life, with remainder over to his ten children in equal shares. The will was duly probated and the estate administered in the probate court of the city of St. Louis. Thereafter Sophie Franz, the executrix under the will, filed her final report as such executrix and was discharged. Thereafter, by trust agreement executed January 30, 1909, Sophie Franz transferred and conveyed certain stocks, bonds, notes, mortgages, deeds of trust, obligations, and securities (part of which belonged to the estate of Ehrhardt D. Franz, deceased, and part to Sophie Franz individually) to G. A. Franz and G. A. Buder, as trustees, to hold the same during the life of Sophie Franz. The trust agreement empowered such trustees to collect the income and profits from such property, and directed them, out of such income and profits, to pay to Sophie Franz the sum of $4,000 per annum, and from the balance remaining to pay to each of the nine children then living the sum of $2,500 per annum, and to the guardian of the children of Minna F. Kleinschmidt, a deceased child, the sum of $2,500 per annum. It further provided that, in the event of the death of a child or grandchild, such payments should thereafter be paid to his or her heirs.

Thereafter the plaintiff, a son of Ehrhardt D. Franz, deceased, brought an action in the circuit court for the city of St. Louis, Missouri, against the other beneficiaries under the will, and against G. A. Buder. On June 16, 1910, a decree was entered in that suit, in which, among other things, it was found that, by said trust agreement, Sophie Franz intended to convey and did convey to said trustees merely a life estate for and during the period of her life in such of the property derived by her from the estate of her deceased husband as was still on hand on January 30, 1909, and intended to convey and did convey to them absolutely only such property as she owned outright; that the plaintiff and defendants in that suit had ratified the trust agreement by the acceptance of the benefits thereof; that the trustees had full and complete power and authority to collect the income from all of the property conveyed to them by said trust agreement and to distribute the same in accordance with the terms thereof; that Sophie Franz intended to provide and did provide in such trust agreement that, upon her death, such of the assets as were derived by her from the estate of her deceased husband and in which she had but a life estate and interest, and which might then be in the hands of the trustees, should be divided between the beneficiaries named in the will, their heirs or assigns, in accordance with the terms and provisions of such will; and that the property then in the hands of the trustees not so derived by her, and in which she had the sole and absolute title on January 30, 1909, should be divided and distributed in accordance with her last will and testament, or, if she should die intestate, under the statutes of descent and distribution of the state of Missouri. The decree adjudged that the parties to the suit had ratified the trust agreement, that the trustees should give a bond in the sum of $100,000 for the faithful performance of the trust, and that on the death of Sophie Franz the property of the estate then in the hands of the trustees should be distributed in accordance with the above finding.

Among the assets of the estate of Ehrhardt D. Franz were 210 shares of the capital stock of the American Arithmometer Company. The Burroughs Adding Machine Company, after the death of Ehrhardt D. Franz, acquired the assets and became the successor of the Arithmometer Company. At the time of the signing of the trust agreement, the shares in the Arithmometer Company had been increased by a stock dividend to 420 shares. These 420 shares were transferred to the trustees by the trust agreement. When the Adding Machine Company was organized, it issued in lieu of the 420 shares of the Arithmometer Company 4,200 shares of the Adding Machine Company. These have been increased since by stock dividends to 15,750 shares.

On March 5, 1924, the plaintiff brought this suit in equity against G. A. Buder. In his bill of complaint he alleged the death of Ehrhardt D. Franz, the probating of the will, the terms of the will, the making of the trust agreement, and the decree of the circuit court of the city of St. Louis. He further alleged that, from the date of the trust agreement, the trustees therein named had had exclusive possession, management, and control of the property in which he and the other children of Ehrhardt D. Franz, deceased, held an estate in remainder; that the shares of stock of the Adding Machine Company had been increased by stock dividends until they aggregated 15,750 shares; that the value of the property belonging to the estate of Ehrhardt D. Franz, deceased, in the hands of the trustees, was approximately $3,000,000; that he had demanded of the trustees information concerning, and an account of, the present nature, condition, extent, and value of the various properties; that the trustees had refused to furnish such information or account; and that the trustees wrongfully asserted and contended that plaintiff no longer had or owned any remainder interest in such properties.

Plaintiff prayed that the defendant be required to make full disclosure and discovery of the nature, condition, extent, and value of the various properties, and to render a true account concerning the same, that plaintiff's vested remainder interest in and to one-tenth of the properties be adjudged and quieted, and that defendant be required to give adequate security for the protection of the present value of said remainder interest.

The Mississippi Valley Trust Company, as the administrator of the estates of Walter G. Franz and Ernst H. Franz, two of the children who had died since the death of their father, filed intervening petitions, setting up substantially the same facts and praying the same relief as plaintiff, and asked in addition that the defendant be restrained and enjoined from making or attempting to make any distribution or division of the capital assets or corpus of the estate of Ehrhardt D. Franz, deceased, until such disclosure and discovery had been made and such account rendered, and the vested remainder interest in all of said properties had been adjudged and quieted.

The defendant by his answer set up, among other things, that the stock dividends belonged to the life tenant, and that the interest in remainder of the plaintiff had been released and discharged by payments and advances made to him by Sophie Franz.

The trial court dismissed the bill, on the ground that there was an absence of indispensable parties.

The rules regarding parties to suits in equity in the national courts were stated by this court in Sioux City Terminal R. & Warehouse Co. et al. v. Trust Co. of North America (C. C. A. 8) 82 F. 124, 126, 27 C. C. A. 73, 75; 19 S. Ct. 341, 173 U. S. 99, 43 L. Ed. 628, as follows:

"The general rule in chancery is that all those whose presence is necessary to a determination of the entire controversy must be, and all those who have no interest in the litigation between the immediate parties, but who have an interest in the subject-matter of the litigation, which may be conveniently settled therein, may be, made parties to it. The former are termed the necessary, and the latter the proper, parties to the suit. The limitation of the jurisdiction of the federal courts by the citizenship of the parties, and the inability of those courts to bring in parties beyond their jurisdiction by publication, has resulted in a modification of this rule, and a practical division of the possible parties to suits in equity in those courts into indispensable parties and proper parties. An indispensable party is one who has such an interest in the subject-matter of the controversy that a final decree between the parties before the court cannot be made without affecting his interests, or leaving the controversy in such a situation that its final determination may be inconsistent with equity and good conscience. Every other party who has any interest in the controversy or the subject-matter which is separable from the interest of the parties before the court, so that it will not be immediately affected by a decree which does complete justice between them, is a proper party. Every indispensable party must be brought into court, or the suit will be dismissed. The complainant may join every proper party, and he must join every proper party who would have been a necessary party under the old chancery rule, unless his joinder would oust the jurisdiction of the court as to the parties before it, or unless he is incapable of being made a party by reason of his absence from the jurisdiction of the court or otherwise. If, however, such a party is incapable of being made a party, or if his joinder would oust the jurisdiction...