Einstein v. Georgia Southern & F. Ry. Co.

• Decision Date: 04 March 1903
• Citation: 120 F. 1008
• Parties: EINSTEIN et al. v. GEORGIA SOUTHERN & F. RY. CO. et al.
• Court: U.S. District Court — Southern District of Georgia

120 F. 1008

EINSTEIN et al. v. GEORGIA SOUTHERN & F. RY. CO. et al.

United States Circuit Court, S.D. Georgia, Western Division.

March 4, 1903

Marion Erwin, for complainants.

Alexander C. King, John I. Hall, W. A. Henderson, and N. E. Harris, for respondents.

SPEER District Judge.

In this case suit is brought against a railroad company of this state to recover certain shares of stock alleged to have been issued to a person not entitled thereto. The suit is brought by Einstein and Rice, two out of three trustees, who are nonresidents of this state, representing the interest of the person alleged to be the true owner of the stock. The other trustee is a citizen of the state of Georgia, of this district, and, refusing to join as complainant, is made a party defendant, solely in order that he may be bound by the decree.

If the proper diversity of citizenship between the parties appears from the record, it is, upon authority, clear that the suit was properly brought in the judicial district where the corporation whose stock is in issue has its principal place of business. Jellenik v. Huron Copper Co., 177 U.S 1, 20 S.Ct. 559, 44 L.Ed. 647. The state statute of Michigan there construed is similar to that obtaining the Code Ga Sec. 2165.

The defendants the Georgia Southern & Florida Railway Company and Parsons and Edwards and others demur to the bill upon the important ground that since the trustee sued as a defendant was a necessary party plaintiff, and since he is a resident of Georgia the proper diversity of citizenship does not exist, and therefore that the suit cannot be maintained. In view of the superabundant authority upon this and kindred questions, it is not deemed important to state the views of the court in extenso. 15 Enc.Pl. & Prac. 458 et seq.; 22 Enc.Pl. & Prac 162 et seq.; Browne v. Strode, 5 Cranch, 303, 3 L.Ed. 108, 1 Rose's Notes on U.S. Reports, 360-1-2-3. It will be sufficient to observe that, because one trustee refuses to perform the functions devolved upon him by law this does not absolve the co-trustees from their duties to the trust and its beneficiaries. It is therefore not only their privilege, but their obligation, to bring suit against the wrongdoers, in this case alleged to be a corporation in the state and district where it is incorporated and carries on its business. If the proper diversity of citizenship exists between the trustees suing and the corporation sued, the controversy is wholly between citizens of different states. The recalcitrant trustee is not technically a party to that controversy, and can only be made a party by the process of the court issued to bring him in, in order that his attitude, whatever it may be, or his rights, whatever they are, can be ascertained in one proceeding in accordance with the favorite doctrine of equity. The real controversy between the actors before the court, being one of which the court would clearly have jurisdiction had there been no refractory trustee, to hold otherwise, would be to permit his inertia or reluctance to defeat access on the part of the vigilant nonresident trustees to that court which is especially intrusted by the Constitution and laws of the United States with the preservation and protection of their trust. That he would have been an indispensable party if the suit was against the trustees, or if it had been for joint misconduct or responsibility, or brought for the diminution of the trust or for its construction, may be conceded. This suit, however, is solely for the enhancement of the trust. He can have no possible...