China Sugar Refining Co. v. Andersen, Meyer & Co.

• Decision Date: 10 April 1956
• Citation: 6 Misc.2d 184,152 N.Y.S.2d 507
• Parties: CHINA SUGAR REFINING COMPANY, Limited, Plaintiff, v. ANDERSEN, MEYER & COMPANY, Limited, and Andersen, Meyer & Company, Limited, Defendants.
• Court: New York Supreme Court

Page 507

152 N.Y.S.2d 507

6 Misc.2d 184

CHINA SUGAR REFINING COMPANY, Limited, Plaintiff, v. ANDERSEN, MEYER & COMPANY, Limited, and Andersen, Meyer &amp Company, Limited, Defendants.

Supreme Court, Special Term, New York County, Part I.

April 10, 1956.

Shearman & Sterling & Wright, New York City (Chauncey B. Garver and W. Harvey Reeves, New York City, of counsel), for defendants, for the motion.

Burke & Burke, New York City (James B. Burke and J. Frederic Taylor, New York City, of counsel), for plaintiff, opposed.

EDER, Justice.

China Sugar Refining Company, Ltd., a Chinese corporation, has sued defendants, American corporations, herein referred to collectively as Amco, to recover deposits of $350,000 made to defendants pursuant to a contract executed in 1945 which provided for post-war delivery of machinery and payment in advance. Amco has moved, prior to answer, for an order requiring plaintiff to bring in Bank of China and Yu Foong Cotton Mill, Chinese corporations, as additional parties, staying the action until complied with and dismissing it after a reasonable time in the event of non-compliance. The motion is made pursuant to section 193 of the Civil Practice Act which provides that the failure to join an 'indispensable' party requires a dismissal of the action and the failure to join a 'conditionally necessary party' vests the court with discretion to dismiss or permit the action to be continued without him. An indispensable party is defined as one 'whose absence will prevent an effective determination of the controversy or whose interests are not severable and would be inequitably affected by a judgment rendered between the parties before the court'. A conditionally necessary party is one 'who ought to be a party if complete relief is to be accorded between those already parties'.

The test of indispensability is such legal unity of interest or joint connection with relation to the subject matter that a separate action involving less than all such persons should be precluded. Obviously persons to whom or against whom a cause of action has accrued jointly, or parties jointly interested in a found, are indispensable parties. The guiding principle is whether the absentees have such interest in the subject matter before the court that their interests must necessarily be passed on if the controversy is to be settled, or whether a determination in their absence will nevertheless have the element of finality for the protection of those before the court.

The presence of a conditionally necessary party, however, is required only if he is subject to the jurisdiction of the court and can be brought in without undue delay. The court will consider the extent of his interest, among other things, in deciding whether or not to dismiss. For example, where several assignees each hold part of a claim, they are only conditionally necessary to an action by one against the debtor. Blake v. Weiden, 291 N.Y. 134, 51 N.E.2d 677, 149 A.L.R. 1050.

It is important to keep in mind the distinction between a situation embraced in section 193 requiring plaintiff to bring in additional parties and those in which a defendant merely shows facts which involve in some way other participants in the transactions, which may be the basis of defense to plaintiff's action or for defendant's pleading them pursuant to section 193-a, Civil Practice Act. Unless the absentees come within the statutory definitions of section 193, a plaintiff is entitled to proceed upon his theory of action and defendant is properly required to avail himself of other remedies. Thus, where a sole assignee sues a debtor, the latter may not throw upon plaintiff the burden of bringing in the assignor as an additional party but may assert his contention either by way of defense, impleader or interpleader. Bergman v. Liverpool & London & Globe Ins. Co., 269 App.Div. 103, 54 N.Y.S.2d 204.

In this case the facts as they appear from the affidavits and documents annexed are as follows:

Amco manufactured and sold machinery and had been so engaged in China for many years. In 1945 it obtained the contract which is the basis of this action, whereby a credit of $350,000 was established in China Sugar's favor for a post-war delivery of machinery. During the same period Amco was also dealing with Yu Foong, which had ordered but not paid for a power plant and other machinery. At the end of 1948 Yu Foong owed Amco approximately $500,000.

Both China Sugar and Yu Foong are concededly subsidiaries of Bank of China, but separately administered with separate boards of directors and officers. In the Spring of 1949, with the advance of the Communists, China Sugar removed its head office to Taiwan (Formosa) as evidenced by certificated documents of the Nationalist Government; and the Bank of China similarly removed its head office and foreign...