Dixon v. American Indus. Leasing Co., 13292

• Decision Date: 09 April 1974
• Docket Number: No. 13292,13292
• Citation: 157 W.Va. 735,205 S.E.2d 4
• Court: West Virginia Supreme Court
• Parties: William E. DIXON et al., d/b/a Beechurst Avenue Joint Venture v. AMERICAN INDUSTRIAL LEASING CO.

Page 4

205 S.E.2d 4

157 W.Va. 735

William E. DIXON et al., d/b/a Beechurst Avenue Joint Venture v. AMERICAN INDUSTRIAL LEASING CO.

No. 13292.

Supreme Court of Appeals of West Virginia.

April 9, 1974.

Syllabus by the Court

1. The determination of whether a party is indispensable under the provisions of Rule 19(a) of the West Virginia Rules of Civil Procedure is in the sound discretion of the trial court. Generally, a court must consider whether: (1) The interest of the absent party is distinct and severable; (2) in the absence of such party, the court can render justice between the parties before it; (3) the decree made will, in the absence of such party, have no injurious party; (4) the final determination will, in party; (4) the final determination will, in the absence of such party, be consistent with equity and good conscience, but each case must be considered on the basis of its peculiar facts, and the principal limitation on the court's discretion is whether, under the particular facts of each case, absent parties will be adversely affected by nonjoinder.

2. Where a partner or a member of a joint venture transfers his interest in the partnership or joint venture to a non-member without the consent of the members of the partnership or joint venture, the non-member is only an assignee and is entitled to the assignor's share of the profit or surplus, but takes no interest in the firm's assets as such, nor is he entitled to participate in the management or administration of the business.

3. An assignee of the interest of a partner or member of a partnership or joint venture, having only a proportionate interest in the possible profit or surplus of the business, is not an indispensable party plaintiff in an action brought by the remaining members of the partnership or joint venture against their lessor for damages arising out of sale and lease-back agreements.

4. Where multiple claims are involved, a trial court should not attempt to enter a final judgment until all the claims have been fully adjudicated, unless there is an express determination that there is no just reason for delay and upon an express direction for the entry of judgment under Rule 54(b) R.C.P.

5. Rule 54(b) R.C.P. has no application to an order which determines all claims as to all parties.

6. Where a court, by an order in the first instance, disposes of multiple claims and adjudicates all controversies, but a party by a Rule 59(e) R.C.P. motion asks the court to alter or amend the order as to one of the claims, but not the other, the Rule 59(e) motion extends the time of finality of the order as it relates to the claim contained in the 59(e) motion until the Rule 59(e) motion is determined, but the order in the first instance is final as to the other claims determined therein, and the time for appeal as to that claim runs from the entry of the order in the first instance.

Michael Tomasky, Morgantown, Charles C. W. Atwater, Baltimore, Md., for appellants.

Spilman, Thomas, Battle & Klostermeyer, Howard R. Klostermeyer and Frederick L. Thomas, Jr., Charleston, Robert T. Donley, Morgantown, Rothschild, Barry & Myers, Donald E. Egan, Chicago, Ill., for appellee.

SPROUSE, Justice:

This case is before the Court upon an appeal from the judgment of the Circuit Court of Monongalia County in a civil action instituted by William E. Dixon, Robert H. Law, Harry H. Meeks and John H. Junkins, partners, trading and doing business as the Beechurst Avenue Joint Venture, as the plaintiffs, against American Industrial Leasing Company, a West Virginia corporation, and the West Virginia University Board of Governors, as defendants.

The plaintiffs sought to recover damages for an alleged breach of contract between the plaintiffs and the defendant, American Industrial Leasing Company, and to recover damages from both defendants for allegedly conspiring to illegally terminate a lease between the plaintiffs and the defendant leasing company in order that the building leased by the plaintiff might be sold to West Virginia University free of the incumbrance of the lease. The Board of Governors was subsequently dismissed as a party upon agreement of counsel for the plaintiffs and defendant.

American Industrial Leasing filed an answer and counterclaim and subsequent amended pleadings. The counterclaim demanded damages from the plaintiffs for past due rent, and recovery of sums paid by American Industrial Leasing for taxes and mechanics liens.

The four plaintiffs and Alfred C. LeCocq had, on April 24, 1964, entered into an agreement designated as the Beechurst Avenue Joint Venture. The Beechurst Avenue Joint Venture was described in a deposition made a part of this record, as a partnership formulated for the purpose of financing, constructing, and maintaining a dormitory building at the campus of West Virginia University.

During the development of the project, the plaintiffs, Beechurst, and the defendant, American Industrial Leasing, concluded an involved purchase, and lease-back agreement. The net effect of the executed agreement transferred the building to American Industrial Leasing which leased it back to the plaintiffs. The plaintiffs agreed to pay as rent an annual amount equal to ten percent of the landlord's investment. The lease agreement contained other details covering payment and default, payment of taxes, mechanics liens, insurance, and other provisions not pertinent to this appeal.

Alfred C. LeCocq transferred all or part of his interest in the 'venture' to Ronald Sinclair prior to litigation. No consent was given by the other members for the transfer to Sinclair, although the original Beechurst Avenue Joint Venture agreement required consent of all the original members. The record also indicates that the other members were not aware of the transfer until after it was made.

On June 22, 1971 (some seven months after a prior separate trial on the defendant's counterclaim), the defendant moved, under Rule 12(b)(7) of the West Virginia Rules of Civil Procedure (hereinafter-referred to as R.C.P.), to dismiss the plaintiffs' action for failure to join an indispensable party as required by Rule 19(a) R.C.P.

The court, on July 12, 1971, entered an order relating to two matters; it granted defendant's June 22, Rule 12(b)(7) motion to dismiss the plaintiffs' action for failure to join Ronald Sinclair as in indispensable party, and overruled a motion made by plaintiffs on December 21, 1970 concerning the counterclaim. The court's action on the second motion will be considered later in this opinion.

As regards the order dismissing the action under Rules 12(b)(7) and 19(a), the plaintiffs, on July 21, 1971, moved that the court reconsider its order of July 12. While this motion is not specifically designated, it is apparently pursuant to Rule 59(e) R.C.P., 'Motion to Alter or Amend a Judgment.' The Rule 59(e) motion was directed solely to the Rule 12(b)(7) and Rule 19(a) indispensable party issue, and the court disposed of it by order entered October 7, 1971. The plaintiffs filed their petition to appeal to this Court precisely within eight months from that October date, and it is conceded that the part of this appeal relating to the indispensable party issue was timely filed.

There are two principal issues: The first is whether Ronald Sinclair was an indispensable party; and the second, which will be treated later, is concerned with the timeliness of appeal of the trial court's rulings pertaining to the counterclaim.

Rule 12(b)(7) R.C.P. is in part as follows:

'Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: * * * (7) failure to join an indispensable party. * * *'

Rule 19(a) R.C.P. provides:

'Subject to the provisions of Rule 23 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.'

In Lugar and Silverstein, West Virginia Rules, 170, the following statement appears:

'Although the terminology heretofore used in equity suits as to parties may have been somewhat different, there is no real difference between the former equity practice as to parties needed in a suit and the practice required by Rule 19. The former decisions will serve as precedents. However, under the Rules these principles will apply to both legal and equitable claims.'

Federal Rule 19 was identical to our procedural rule until 1966, therefore, federal precedent established during that period is helpful in reaching a determination of the issues herein involved.

'Subdivision (a) of original Rule 19 was a generalized statement concerning necessary and indispensable parties to be read in the light of cases at law and in equity. It was not intended to change the rules governing compulsory joinder that had been laid down in those cases.' 3A Moore, Federal Practice, § 19.05(1), page 2202.

Under federal practice, the phrase 'joint interest' was construed to mean those persons who were necessary or indispensable parties under the previous prior practice. Note, 68 W.Va.L.Rev. 53, 54; 3 A Moore, Federal Practice, § 19.05(1), page 2203.

There is no precise or universal test to determine when a person's interest is such as to make him an 'indispensable' party. 59 Am.Jur.2d, Parties, Section 96, page 485; 1 Hogg, Equity Procedure, § 40 (3d ed.); 3A Moore, Federal Practice, § 19.07(1), page 2227.

In the case of an indispensable party, his presence is required in order that the court may make an adjudication equitable to all persons involved. 3A Moore, Federal Practice, § 19.05(2). The principle which...