Baker v. Dale, Civ. No. 1006.

• Decision Date: 23 August 1954
• Docket Number: Civ. No. 1006.
• Citation: 123 F. Supp. 364
• Parties: BAKER v. DALE et al.
• Court: U.S. District Court — Western District of Missouri

123 F. Supp. 364

BAKER v. DALE et al.

Civ. No. 1006.

United States District Court, W. D. Missouri, Southwestern Division.

August 23, 1954.

COPYRIGHT MATERIAL OMITTED

Burns & Dicus, Kansas City, Mo., for plaintiff.

Coyne & Patten, Joplin, Mo., for defendant, Dale.

John H. Flanigan, Carthage, Mo., for defendants, Flanigan, Phelps and King.

WHITTAKER, District Judge.

This matter is now before me upon the separate, but similar, motions of defendant, Dale, and of defendants, Flanigan, Phelps and King, under Rule 12(b) (6) and (7) of Federal Rules of Civil Procedure, Title 28 U.S.C., to dismiss, upon the grounds (a) that plaintiff's first amended complaint fails to state a claim upon which relief can be granted, particularly because barred by Missouri statutes of limitation, and (b) failure to join indispensable parties.

Stated briefly, but sufficiently for present purposes, the first amended complaint alleges: that plaintiff's father, W. S. Crane, died in 1931, testate, a resident of Jasper County, Missouri; that his will, which was admitted to probate in the Probate Court of that county, after providing, in Item First, for the payment of his debts and funeral expenses, provided, in Item Second, as follows:

"Second: All the balance and residue of my estate of whatsoever kind and wheresoever situated I will to my nephews, S. L. Kenny and James H. Dale, in trust. My said Trustees shall hold and manage said property so willed to them in trust, and shall have authority to dispose of, by deed or otherwise, any part of the principal of the estate, for the purpose of reinvestment or placing the same on interest, and they shall diligently hold and manage the trust estate, and after paying the necessary costs and expenses thereof then One-Half of the income shall be paid to my daughter, Rebecca Ramsay, during her natural life, or in the case of her death, to her child born of the marriage between her and Robert Ramsay, and which said income shall be paid to said child during its life.

"After paying said One-half of said income as above mentioned, out of the other One-half the sum of One Hundred Dollars per month shall be paid to each of my sisters, Nancy A. Kenny and Mary L. Dale, for and during their natural lives, and the balance of the income shall be added to the principal of the estate.

"After the death of my sisters, then it is my will that of said One-half of my income, One-half thereof shall be paid to my daughter, if living, and if not, to her said child, and the balance shall be divided annually or semi-annually, as my Trustees shall deem best, to my nephews and niece in equal parts. At the death of my daughter and her said child, then the trust estate shall cease, and shall be equally divided between my nephews and niece in equal parts, and in case any one of my nephews or niece shall die, leaving children, then such children shall receive the parent's part of my estate;"

That the original executor having died before the administration of the estate was completed, defendant, Dale, was appointed administrator de bonis non (hereinafter called "administrator") in February, 1937; that the defendant, Flanigan, was a partner, and the defendant, Phelps, was an associate, of the law firm which was counsel for defendant, Dale, as administrator of the estate, and that defendant, King, was an appraiser of assets of the estate, and that all occupied a fiduciary relationship to the estate and to plaintiff.

That the estate consisted, in the main, of 18 tracts of valuable real estate, some highly improved, in Jasper, Lawrence and Newton Counties, Missouri, described in the complaint; that deceased left a number of creditors, whose claims were presented to and allowed by the probate court; that defendants conspired to obtain for themselves the assets of the estate, and, in pursuance of the conspiracy, defendants, Flanigan and Phelps, in February and March of 1939, purchased the allowed demands from the creditors at a large discount, and then caused defendant, Dale, as administrator, to present to the probate court, on April 5, 1939, a petition to sell the real estate at private sale to obtain funds to pay the allowed claims, and an order accordingly was made that date; that defendants then caused the real estate to be appraised, by appraisers who were disqualified because interested, at a sum far less than its worth.

That subsequent to the order of sale, and prior to the filing of the appraisal on May 11, 1939, defendants, Flanigan and Phelps, formed a corporation of their own, on May 8, 1939, under the name of "F-P Realty Company" for the purpose of buying the assets of the estate at private sale from the administrator; that thereafter on May 25, 1939 the administrator filed in said probate court his report of private sale of said real estate to F-P Realty Company for the sum of $94,566.33, an amount equal to the allowed demands against the estate, and that defendants fraudulently procured the approval of said sale by the probate court on July 7, 1939; that after the sale the allowed claims were paid by the administrator, and administration of the estate was closed in 1940; that plaintiff was not advised of the proceedings when had and did not learn of the facts until "during the months of May and June of 1949", and she prays for an accounting by defendants, and that said real estate be impressed with a trust for her benefit.

As stated at the outset, defendants have moved, under Rule 12(b) (6) and (7) of Federal Rules of Civil Procedure, Title 28 U.S.C., to dismiss (a) for failure of the first amended complaint to state a claim upon which relief can be granted (particularly because they say the claims of the plaintiff appear on the face of the complaint to be barred by Missouri statutes of limitation), and (b) for failure to join indispensable parties, and these are the questions now before me.

I will first consider the question of whether the complaint fails to join indispensable parties, because, if it does so fail the action should be dismissed, not, strictly, for want of jurisdiction, Atwood v. National Bank of Lima, 6 Cir., 115 F. 2d 861-862, but for lack of the indispensable parties to proceed, and I now give attention to that matter.

While the need to join "indispensable parties" and the permissive right to join parties who are "not indispensable", in an action pending in the Federal court, is procedural, and, hence, governed solely by rules of procedures applicable in the Federal court, particularly Rule 19 of Federal Rules of Civil Procedure, Title 28 U.S.C., yet the matter of who constitute "indispensable parties", in a particular case, depends upon the nature of the right in suit and that, in turn, depends upon the substantive law of the state, and, therefore, it is necessary to examine the law of the state to determine the nature of the right and to whom it is given in order to determine who are "indispensable parties" and who are not.

Rule 19 of Federal Rules of Civil Procedure, Title 28 U.S.C., provides:

"(a) Necessary Joinder. Subject to the provisions of Rule 23 (Class Actions) and of subdivision (b) of this rule, persons having a joint interest shall be made parties and be joined on the same side as plaintiffs or defendants. When a person who should join as a plaintiff refuses to do so, he may be made a defendant or, in proper cases, an involuntary plaintiff.

"(b) Effect of Failure to Join. When persons who are not indispensable, but who ought to be parties if complete relief is to be accorded between those already parties, have not been made parties and are subject to the jurisdiction of the court as to both service of process and venue and can be made parties without depriving the court of jurisdiction of the parties before it, the court shall order them summoned to appear in the action. The court in its discretion may proceed in the action without making such ("not indispensable") persons parties, if its jurisdiction over them as to either service of process or venue can be acquired only by their consent or voluntary appearance or if, though they are subject to its jurisdiction, their joinder would deprive the court of jurisdiction of the parties before it; but the judgment rendered therein does not affect the rights or liabilities of absent persons." (Emphasis supplied.)

It is thus clear that persons having "a joint interest" are indispensable parties, and without them the action cannot proceed.

Defendants, by affidavit, verify that Nancy A. Kenny, sister of the testator, and an income beneficiary for life of the trust set up in his will, is living as are four nieces of the testator, who are remaindermen under the trust created by the will, and defendants argue that those persons have a "joint interest" with the plaintiff in the cause of action here advanced, which is unitary, and that those persons are indispensable parties, and are citizens and residents of Missouri and that when brought in, as they must be, complete diversity would no longer exist, and, therefore, the action must be dismissed.

Plaintiff, on the other hand, contends that the interest which she here advanced is not a "joint interest" but a several and separate one of her own, and that neither the other income beneficiaries nor the remaindermen under the trust created by her father's will are indispensable parties, but at most only proper parties to the suit and that, therefore, she has not failed to join indispensable parties within the meaning of Rule 12(b) (7) of Federal Rules of Civil Procedure.

This contention, affirmed on the one side and denied on the other, makes it necessary to examine the provisions of the testamentary trust created by decedent's will to determine the nature, under the controlling local law of Missouri, of the estate and interest given and to whom given, both legally and...