Chadbourne v. Coe

• Decision Date: 19 July 1892
• Docket Number: 53.
• Citation: 51 F. 479
• Parties: CHADBOURNE et al. v. COE.
• Court: U.S. Court of Appeals — Eighth Circuit

51 F. 479

CHADBOURNE et al. v. COE.

No. 53.

United States Court of Appeals, Eighth Circuit.

July 19, 1892

Statement by CALDWELL, Circuit Judge:

Reuben W. Chadbourne, a citizen of the state of Wisconsin, filed his bill in equity in the circuit court for the district of Minnesota, against Orlen P. Whitcomb, a citizen of the state of Colorado, and James N. Coe, a citizen of the state of Minnesota, alleging that Whitcomb was indebted to the complainant in a sum exceeding $5,000 upon certain promissory notes set out in the bill; that Whitcomb was insolvent, and that, to hinder, delay, and defraud his creditors, he had by deeds conveyed certain real estate, and by bills of sale transferred certain personal property, to Coe, upon certain secret trusts in writing, which instruments creating the alleged trusts are made exhibits to the bill. The last in date of these alleged trust agreements included all the property, real and personal, conveyed and transferred by Whitcomb to Coe, and the powers conferred and the trusts imposed on Coe thereby are as follows:

'Now in consideration of the premises, I, the said Orlen P Whitcomb, hereby authorize and fully empower the said James N. Coe to sell, exchange, or dispose of any or all of the said property mentioned in the agreements hereinbefore referred to, which has not been already disposed of, together with all of the personal property hereby conveyed to said Coe to such person or persons, and for such prices and on such terms, as said Coe shall see fit, and hereby fully investing him with all the rents, profits, and increase of said property, both real and personal, and giving him full authority to execute and deliver any and all conveyance or instruments necessary or proper to convey or dispose of or in the management of the same, without obtaining my consent thereto; and the net proceeds, either cash, securities, or other property, derived from the sale of any of said property, or the rents, profits, or increase thereof, said Coe is hereby authorized and directed to hold and apply, when reduced to money, on any sum or sums of money now due or hereafter owing to said Coe from said Whitcomb, and on any indebtedness incurred in the management of said property or taxes paid, and on any and all liabilities now or at any time or hereafter incurred by said Coe for said Whitcomb, as surety or otherwise, and after the satisfaction and payment of all such claims and indebtedness whatsoever, the balance thereafter to be paid to said Whitcomb.'

It is alleged that Whitcomb has no other property out of which complainant can make his debt. The prayer of the bill is that the conveyances to Coe be set aside, the trust agreements declared void, and Coe be required to account; that the real estate be sold, and the complainant's debt paid out of the proceeds, and the moneys received from Coe on the accounting. The complainant died, and the suit was revived in the name of Catherine E. Chadbourne and Smith W. Chadbourne his executors. Whitcomb appeared specially, and filed a plea to the jurisdiction of the court, upon the ground that he was a citizen of Colorado, which plea was sustained, and the bill dismissed as to him. No complaint is made of this ruling, touching which counsel for appellants in their brief say:

'Whitcomb was originally made a defendant, but he was dismissed upon filing a plea to the jurisdiction, and, as we think, properly, under the act of August 13, 1888, defining the jurisdiction of federal courts; and no exception is taken to the dismissal.'

After the suit was dismissed as to Whitcomb, Coe filed a demurrer to the bill for want of proper parties, which the court sustained, and entered a decree dismissing the bill without prejudice, and the complainants appealed. In the brief of the counsel for appellants it is said:

'The only question for the consideration of this court is as to whether or not the circuit court erred in sustaining the demurrer upon the ground that Whitcomb was not a party to the action.'

The opinion of the circuit court dismissing the bill is reported in 45 F. 822.

Davis, Kellogg & Severance, (C. A. Severance, of counsel,) for appellants.

Charles C. Willson, for appellee.

Before CALDWELL and SANBORN, Circuit Judges, and SHIRAS, District Judge.

CALDWELL Circuit Judge, (after stating the facts as facts as above.)

The supreme court of the United States divide parties to suits in equity into three classes-- First, formal parties; second necessary parties; third, indispensable parties. 'Formal parties' are those who have no interest in the controversy between the immediate litigants, but have an interest in the subject-matter which may be conveniently settled in the suit, and thereby prevent further litigation. They may be parties or not, at the option of the complainant. 'Necessary parties' are those who have an interest in the controversy, but whose interests are separable from those of the parties before the court, and will not be directly affected by a decree which does complete and full justice between them. Such persons must be made parties if practicable, in obedience to the general rule which requires all persons to be made parties who are interested in the controversy, in order that there may be an end of litigation; but the rule in the federal courts is that if they are beyond the jurisdiction of the court, or if making them parties would oust the jurisdiction of the court, the case may proceed to a final decree between the parties before the court, leaving the rights of the...