Doerr v. Warner

• Decision Date: 06 April 1956
• Docket Number: No. 36770,36770
• Citation: 247 Minn. 98,76 N.W.2d 505
• Parties: Katherine Warner DOERR et al., Respondents, v. Harold L. WARNER and Warner Holding Company, Appellants, Katherine M. Doerr et al., Intervenors, Respondents. Katherine B. Warner, Intervenor, Respondent.
• Court: Minnesota Supreme Court

Page 505

76 N.W.2d 505

247 Minn. 98

Katherine Warner DOERR et al., Respondents, v. Harold L. WARNER and Warner Holding Company, Appellants Katherine M. Doerr et al., Intervenors, Respondents Katherine B. Warner, Intervenor, Respondent.

No. 36770.

Supreme Court of Minnesota.

April 6, 1956.

Syllabus by the Court.

1. Although an indispensable party to an action must be joined, and for failure to join him the action must be dismissed since the adjudication cannot proceed to judgment without him, such defect is not jurisdictional.

2. The joinder of all indispensable parties is not a prerequisite to the acquirement of jurisdiction by the court over the subject matter of an action, and the court acquires such jurisdiction the moment the action is commenced despite the fact that an indispensable party has been omitted.

3. An order remanding an action to the Federal court does not absolutely divest the state court of its jurisdiction but merely suspends or holds that jurisdiction in abeyance either until the action is terminated in the Federal court or until the latter court remands the action to the state court; and in the event of a remand, the state court's continuous, though dormant, jurisdiction is revived and such court then proceeds to a final determination of the action in the exercise of its continuing original jurisdiction which was acquired when the action was originally commenced.

4. Among the factors deemed controlling by the courts in determining the proper territorial forum for the administration of a trust are these: (1) The provisions of the trust instrument; (2) the residence of the beneficiaries, the settlor, and the trustee; (3) the location of the trust res; (4) the place of the trust business; and (5) the personal jurisdiction acquired over the parties interested in the trust through personal service.

5. When a court of equity assumes jurisdiction of a controversy it has jurisdiction to determine all relevant issues, and in the exercise of that power it may restrain the prosecution of other suits which raise the same issues until a final judgment has been rendered; and it is well settled that the court first obtaining jurisdiction of the subject matter and of the parties may properly restrain one of the parties from proceeding in another state.

6. The true reason for denying an injunction against a nonresident is not that the court has no jurisdiction but that if the injunction were granted it could not ordinarily be enforced.

7. Where an action has been commenced for the confirmation of a trust--as well as for an accounting and other relief--whereby the court has acquired a jurisdiction in personam over the trustee and a quasi in rem jurisdiction over the trust res then located within the state, and when the orderly and uninterrupted exercise of that jurisdiction pursuant to a controlling statute (M.S.A. § 501.33) will give the court a full in rem jurisdiction over the trust, and while the action is thus pending the trustee in a calculated and systematic manner seeks to deprive the court of its jurisdiction by removing the trust res to another state, it becomes the duty of the court, in the interest of the orderly administration of justice, to protect its jurisdiction by enjoining such nonresident trustee from prosecuting a similar action in another state insofar as, in the exercise of a sound discretion, the court can directly enforce its commands by imposing a penalty upon such nonresident or can indirectly enforce obedience by denying him judicial aid necessary for the enjoyment and protection of his rights in its forum.

R. H. Fryberger and M. R. Keith, Minneapolis, for appellants.

Covell & Bachelder, Minneapolis, for respondents.

MATSON, Justice.

Appeal from two orders of the district court, namely, (1) an order granting a temporary injunction enjoining defendants from further prosecuting certain proceedings in the Washoe County District Court of the State of Nevada; and (2) an order denying defendants' motion to dismiss this action for lack of jurisdiction in the Hennepin County District Court.

This action was first commenced on June 6, 1951, in the Hennepin County District Court to confirm a trust; for an accounting by the trustees; and for the removal of the sole remaining trustee and appointment of a successor trustee.

On December 7, 1929, defendant Harold L. Warner and Katherine B. Warner, one of the intervenors, were husband and wife. Harold then made a gift of certain property to Katherine who, as trust settlor, at once placed the property in trust, with Harold and herself designated as the beneficiaries of the trust income for life and their five children named as remaindermen. As the trust was originally established, Harold and the Warner Holding Company, a South Dakota corporation, were named as trustees. The action herein was commenced by the children, the aforesaid remaindermen, against the two trustees.

We are concerned with only two amendments to the original 1929 trust instrument, namely, the March 8, 1944, amendment, which made Harold the sole trustee, and the February 20, 1948, amendment, whereby the status of the children was changed from that of remaindermen to successor beneficiaries of the trust income after and upon the death of both Harold and Katherine, and whereby the grandchildren were made the remaindermen entitled to the corpus upon the termination of the trust.

Sometime in 1949 Harold and Katherine moved from Minnesota and established residence in Reno, Nevada. As already noted, this action was first commenced by the children on June 6, 1951, in the Hennepin County District Court. Personal service was obtained on defendant Harold when the action was commenced. Upon his demand, the action was removed to the United States District Court on June 21, 1951, on the ground of diversity of citizenship. In the fall of 1951, after the action had been commenced, defendant Harold, as trustee moved the res of the trust, consisting primarily of stocks and bonds of Minnesota corporations, to Nevada where it has remained with the exception of a period of time during which it was brought back to Minnesota by court order for examination by the plaintiffs.

On January 18, 1954, in an ex parte proceeding, pursuant to the petition of defendant Harold, the Washoe County District Court of Nevada issued several orders which purported to take jurisdiction of the trust, confirm the appointment of defendant Harold as trustee, qualify him as such, and fix his bond. This proceeding was held pursuant to the statutes of Nevada which were enacted by the Nevada Legislature in 1953, Nevada L.1953, c. 22, in substantially the same provisions as those of the corresponding Minnesota statutes, M.S.A. §§ 501.33, 501.34, 501.35, 501.38.

Pursuant to stipulation the grandchildren, who became the remaindermen under the February 20, 1949, amendment, were made intervenors on August 23, 1954, while the action was pending in the United States District Court in Minnesota. A short time later, by order of the court, Katherine was also made an intervenor. On October 8, 1954, the United States District Court remanded the case to the state court for the reason that the requisite diversity of citizenship for jurisdiction was extinguished when Katherine was permitted to intervene since she, in addition to the defendant Harold, was a resident of Nevada at the time the action was commenced.

On July 28, 1955, the state district court issued its orders from which this appeal is taken confirming and adopting the proceedings and pleadings had in the United States District Court; denying defendants' motion for dismissal on the ground of lack of jurisdiction; and finally enjoining the defendants from further proceeding in the Nevada court.

We are concerned with the following issues: (1) Is the actual joinder of All indispensable parties to an action a prerequisite to the acquirement of jurisdiction over the subject matter of the action? (2) Assuming the state trial court acquired jurisdiction on June 6, 1951, without a joinder of all indispensable parties, was the state court completely divested of that jurisdiction June 21, 1951, when the action was removed to the Federal court so that the state court retained no vestige of jurisdiction between such date and October 8, 1954, when the Federal court remanded the action to the state court? (3) In a pending action to confirm a trust, for an accounting, and for the removal of the trustee, which action was commenced by obtaining jurisdiction by personal service within the state upon a trustee who is a nonresident, may the court in the exercise of its equitable jurisdiction properly enjoin, until final judgment, such nonresident trustee from prosecuting in another state other suits which raise the same issues?

1. We turn to the first issue of whether the joinder of all indispensable parties is a prerequisite to the acquirement of jurisdiction by the state court. Assuming jurisdiction was not lost by the removal of the action to the Federal court, defendants apparently concede, as they must, that, if Katherine and the grandchildren had been made parties to the action in the Minnesota district court before proceedings were commenced in the Nevada court, the Minnesota court would have jurisdiction of this action. Defendants contend, however, that Katherine and the grandchildren were indispensable parties whose joinder as parties was a prerequisite to the acquirement by the state court of jurisdiction over the action, and that they did not become parties in the state court until July 28, 1955, when that court adopted the proceedings had in the United States District Court. It follows therefore, defendants assert, that since the Nevada action was commenced prior to July 28, 1955, the Nevada court has prior jurisdiction over the trust to the exclusion of an acquirement and exercise of jurisdiction over the trust by the Minnesota district court. Hence...