Adler v. Seaman

• Decision Date: 11 May 1920
• Docket Number: 5449.
• Citation: 266 F. 828
• Parties: ADLER v. SEAMAN et al.
• Court: U.S. Court of Appeals — Eighth Circuit

266 F. 828

ADLER v. SEAMAN et al.

No. 5449.

United States Court of Appeals, Eighth Circuit.

May 11, 1920

Rehearing Denied September 18, 1920.

Edward W. Foristel, of St. Louis, Mo., for appellant.

Ephrim Caplan, of St. Louis, Mo., for appellee Seaman.

Irvin V. Barth, of St. Louis, Mo. (George H. Williams, William R Gentry, M. F. Watts, and Edwin W. Lee, all of St. Louis, Mo on the brief), for appellee Leed Mining Co.

Randolph Laughlin, of St. Louis, Mo. (Ephrim Caplan, of St. Louis Mo., on the brief), for appellees Laughlin.

Before HOOK and STONE, Circuit Judges, and LEWIS, District Judge.

STONE Circuit Judge.

January 7, 1918, John W. Seaman, a preferred stockholder of the United Railways Company of St. Louis, filed his bill, charging waste and maladministration by certain present and past directors of that company, wherein he sought the recovery of the sums so wasted and the removal of the directors. An amended bill and a supplemental bill were later filed, and the cause brought to issue thereon by answer filed February 7, 1919. February 15, 1919, complainant filed his motion for the appointment of a receiver, which resulted in an order, February 17, 1919, appointing a master to take testimony and report upon the advisability of such receivership.

March 27, 1919, the Leed Mining Company, a bondholder of the United Railways, sought and was permitted to intervene. April 1, 1919, E. A. Laughlin and Robert T. Laughlin, who were similar bondholders, intervened. Both intervening petitions prayed receivership, though with some differences.

April 11, 1919, Samuel W. Adler, a bondholder under a mortgage junior to that of the above interveners, filed his bill in equity against the United Railways, and its predecessor, St. Louis Transit Company, wherein he sought a receivership. Upon the same day the defendants filed separate answers in the Adler suit, admitting all of the allegations of that bill, and the United Railways joining in the prayer of the petition for a receiver. The following day, April 12th, Rolla Wells was appointed receiver in the Adler suit, and took immediate possession. April 22, 1919, Seaman and the two interveners filed separate motions in both the Seaman and Adler cases, praying that the two causes be consolidated, and that the Adler suit be treated as an intervention in the Seaman case. The above pleadings will be developed, and other pleadings which were filed will be noticed, further in this opinion. April 24, 1919, the court heard such motions, and ordered that--

'Cause No. 5608 (Adler suit) is considered an intervention in cause No. 4820 (Seaman suit), and is consolidated with the latter, and said causes shall hereafter proceed under the title 'John W. Seaman, Complainant, v. Richard McCulloch et al., Defendants, Consolidated Cause No. 4820, in Equity.''

As a further part of said order Rolla Wells was appointed as receiver in the consolidated cause. The same day two other orders were made, by one of which the special master theretofore appointed in the Seaman case was appointed in the consolidated case under the receivership, and by the other Charles W. Bates was appointed general counsel for the receiver in the consolidated cause.

May 6, 1919, two interventions were permitted in the Adler suit; one by the above Laughlins, and the other by Henry F. Mueller et al., who were preferred stockholders in the United Railways and holders of bonds issued by that company, or by one of the companies making up the consolidation of the United Railways. May 22, 1919, Charles B. Cole and William B. Thompson, preferred stockholders of the United Railways, applied for leave to intervene in the consolidated cause. This application was reported adversely by the master November 26, 1919, and upon December 4, 1919, the court denied such application.

From various of the above proceedings three appeals have been taken. The present one, by Adler; another, by Henry S. Priest, a defendant in the Seaman Case, 266 F. 844, decided at this time; and the third, by Charles B. Cole and Thompson, 266 F. 846, also decided at this time. This appeal by Adler is from the above order of April 24, 1919, to the effect that 'cause No. 5068 is considered an intervention in cause No. 4820 and is consolidated with the latter,' and from the appointment of a receiver in that order.

The motions to which this order responded were expressly based upon equity rule 37 (198 F. xxviii, 115 C.C.A. xxviii, 33 S.Ct. xxviii). The words of each motion are, in this respect, identical and are 'to treat said cause No. 5068 (Adler suit) as an intervention in said cause No. 4820 (Seaman suit), and to consolidate the same under equity rule 37 with said cause No. 4820 and to appoint Rolla Wells, receiver in said consolidated cause. ' Rule 37 has nothing to do with consolidation of causes, which is governed by section 921 of the Revised Statutes (Comp. St. Sec. 1547). The rule controls interventions in equity suits. The purpose of the motions was therefore to secure intervention. No desire was evidenced for the mere trial of two independent cases at the same time for purposes of saving time and expense, such as contemplated by section 921. But it was sought to employ consolidation as a medium of getting the two independent suits united, so that the movants might, as an intervention, bind up with and in subordination to their existing litigation the independent suit of Adler, who vigorously opposed such union in any form or for any purpose. To determine whether this could properly be done involves an examination of the purposes and some of the characteristics of consolidations and of interventions, and an application of those principles to the matters in hand.

Consolidation of separate and distinct causes pending in the same court is, in federal courts, authorized by section 921 of the Revised Statutes. In its conception that statute was designed for the sole purposes of saving the time of the court and the costs to the litigants. As originally enacted in 1813 (3 Stat. 21) it was one of three sections in an act dealing with costs. Under its beneficent provisions, not only may cases affecting the same property, title, res, or fund be thus brought together and tried at one time, but cases unrelated in right or liability, but connected by some common controlling issues or facts, which can conveniently be heard and determined by a jury or a chancellor at one hearing. Instances of the former character are Gila Bend Res. Co. v. Gila Water Co., 202 U.S. 270, 26 Sup.Ct. 615, 50 L.Ed. 1023; The North Star, 106 U.S. 17, 1 Sup.Ct. 41, 27 L.Ed. 91; The Dove, 91 U.S. 381, 23 L.Ed. 354; Bankers' Trust Co. v. Ry. Co., 251 F. 789, 164 C.C.A. 23 (C.C.A.8th Cir.); The Rochester (D.C.) 227 F. 203; Gay v. Power Co. (C.C.) 190 F. 773; City of Boston (D.C.) 182 F. 171; Bird v. People's Gas and Elec. Light Co. (C.C.) 158 F. 903; Cole v. Ry. Co. (C.C.) 140 F. 944, 947; Toledo, etc., R.R. Co. v. Trust Co., 95 F. 497, 36 C.C.A. 155 (C.C.A.6th Cir.); The Job T. Wilson (D.C.) 84 F. 204; Sioux City Terminal, etc., Co. v. Trust Co., 82 F. 124, 27 C.C.A. 73 (C.C.A.8th Cir.); Park v. R.R. Co. (C.C.) 70 F. 641; Compton v. Jesup, 68 F. 263, 15 C.C.A. 397 (C.C.A.6th Cir.). Instances of the latter are AEtna Life Ins. Co. v. Moore, 231 U.S. 543, 34 Sup.Ct. 186, 58 L.Ed. 356; B. & O. Southwestern R.R. v. U.S., 220 U.S. 94, 31 Sup.Ct. 368, 55 L.Ed. 384; Conn. Mut. L.I. Co. v. Hillmon, 188 U.S. 208, 23 Sup.Ct. 294, 47 L.Ed. 446; Mutual Life Insurance Co. v. Hillmon, 145 U.S. 285, 12 Sup.Ct. 909, 36 L.Ed. 706; Hanover Fire Ins. Co. v. Kinneard, 129 U.S. 176, 9 Sup.Ct. 269, 32 L.Ed. 653; Teal v. Bilby, 123 U.S. 572, 8 Sup.Ct. 239, 31 L.Ed. 263; U.S. v. U.P.R.R. Co., 98 U.S. 569, 604, 25 L.Ed. 143; Am. Trust & Sav. Bank v. Coal Co., 165 Fed. 34, 91 C.C.A. 72 (C.C.A.7th Cir.) ; Am. Window Glass Co. v. Noe, 158 F. 777, 86 C.C.A. 133 (C.C.A.7th Cir.); Diggs v. R.R. Co., 156 F. 564, 84 C.C.A. 330 (C.C.A.6th Cir.); Butler v. Pub. Co., 148 F. 821, 78 C.C.A. 511 (C.C.A.4th Cir.); Holmes & Co. v. Ins. Co. (C.C.) 142 F. 863; Denver City Tramway Co. v. Norton, 141 F. 599, 73 C.C.A. 1 (C.C.A.8th Cir.); Betts v. U.S., 132 F. 228, 65 C.C.A. 452 (C.C.A. 1st Cir.); Frank v. Geiger (C.C.) 121 F. 126; Times Pub. Co. v. Carlisle, 94 F. 762, 36 C.C.A. 475 (C.C.A.8th Cir.); Berry v. Seawall, 65 F. 742, 13 C.C.A. 101 (C.C.A.6th Cir.); Stone v. U.S., 64 F. 667, 12 C.C.A. 451 (C.C.A.9th Cir.).

Consolidation is in no wise mandatory, but the advisability of such an order is based upon the practical administration of justice and the economical and convenient disposition of the cases in the trial court. It is therefore a matter of judicial discretion. But the statute has in terms limited the exercise of this discretion to cases 'of a like nature or relative to the same question'; also this discretion, even within the above limits, is judicial, not arbitrary, and there must be some indication of 'avoiding unnecessary costs or delay in the administration of justice,' and some basis that such action is 'reasonable' as required by the statute. Since consolidation of independent cases is lawful only under this statute, litigants are deprived of legal rights if their causes are consolidated outside the terms of the statute, to their injury, and the appellate courts of the United States have often examined orders of consolidation.

Intervention is an entirely different character of proceeding. It is a method of practice by which one having an interest or right which will be affected by existing litigation to which he has not been made a party, may, if he desire, by leave of court come into that litigation to protect such interest or right. Rocca v. Thompson, 223 U.S. 317, 330, 32 Sup.Ct. 207, 56 L.Ed. 453. It is not an...