Faricy v. St. Paul Investment & Savings Society
| Decision Date | 11 March 1910 |
| Docket Number | 16,429 - (130) |
| Parties | JOHN I. FARICY v. ST. PAUL INVESTMENT & SAVINGS SOCIETY |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county to recover $104,000 upon certain bonds issued and sold by defendant society to the Building & Loan Association of Dakota, and alleged to have been sold to plaintiff. The defenses set up by defendant society are stated in the opinion. C. F. Easton, as receiver of the Dakota Building & Loan Association, served a complaint in intervention, the substance of which is given in the opinion. Plaintiff answered the complaint in intervention and defendant demurred to it on the grounds (1) the facts stated did not constitute a cause of intervention, and (2) the facts stated did not show intervener has such an interest in the litigation that the intervener may or can gain or lose by the direct legal effect of the judgment therein. Defendant also moved to strike out the complaint in intervention. The demurrer was overruled and the motion to strike out was denied, Bunn, J. From that order, defendant appealed. Affirmed.
Intervention.
Plaintiff sought judgment for one hundred four $1,000 bonds. Defendant asserted the statute of limitations, usury, a conspiracy between plaintiff and other persons not the owners of the bonds for a contingent fee to recover judgment thereon as the basis of enforcement of stockholders' liability, that the plaintiff was not the real party in interest, and other defenses. The receiver of a loan association sought to intervene, alleging ownership of the bonds, their possession by plaintiff through fraud, the insolvency of defendant, and necessity for intervention as a basis for an action to recover stockholders' liability. It is held:
1. Intervention is an act by which a third party becomes a party in a suit pending between other parties.
2. Current statutory provisions with reference thereto have been applied to both legal and to equitable controversies, and alike whether they concern real or personal property.
3. Previous decisions of this court do not compel a construction of section 4140, R.L. 1905, that the right to intervene exists only where the party applying for leave to intervene would necessarily gain or lose by the direct legal effect of the judgment therein if he did not become a party to the action.
4. Such a statute is to be liberally construed in the interests of good practice, with due reference to its terms and to the nature of the issues involved, so as to effectuate the legislative intention, by avoiding formalism of remedy circuity of action, multiplicity of suits, and so as to conduce to the speedy and simple administration of justice.
5. Under the circumstances of this case, the trial court properly held that the appellant was entitled to intervene inasmuch as he would necessarily gain or lose by the direct legal effect of the judgment therein if he became a party to the action.
6. The fact that a person seeking to intervene in an action might protect his interests in some other way does not render the grant of his application improper.
Henry C. James and How, Butler & Mitchell, for appellant.
Young & Stone and Taubman & Williamson, for respondent.
Plaintiff and respondent brought an action against defendant and appellant, demanding money judgment for one hundred four $1,000 bonds, with interest. Defendant's answer set forth: The statute of limitations barred the action; the bonds were void for usury; plaintiff and other persons having no interest in the bonds agreed with each other to secure an arrangement with the true owner of the bonds whereby the stockholders' liability for said bonds should be enforced for a share of the proceeds; plaintiff had no interest in the bonds, and was not the real party in interest; and other defenses not material here. The reply completed the issues.
One Easton, as receiver of the Building & Loan Association of Dakota, then sought to intervene. His complaint set forth his proper appointment as receiver; the purchase by the insolvent company of the one hundred four bonds for full value; the authority from the appointing court to intervene; possession of the bonds by plaintiff through fraud; the insolvency of defendant; and the necessity of intervention in order that an action against the stockholders to recover on the stockholders' liability might be commenced. It prayed judgment that the receiver be adjudged the owner of the bonds, that plaintiff be held to have no interest therein or thereto, and that intervener have judgment for the amount of the principal and interest.
Plaintiff answered the complaint of intervener. The trial court overruled defendant's demurrer and motion to strike out, and required the defendant to answer therein. From this order, defendant appealed.
1. Intervention, in modern practice, as well as in the civil law, is an act or proceeding by which a third party becomes a party in a suit pending between others. 11 Enc. Pl. & Pr. 495. And see Cyc. Law Dict. 496, 68 L.R.A. 736; 123 Am. St. 280. It has been said to have been unknown to the common-law courts of law and equity. Hyman v. Cameron, 46 Miss. 725, 727. And see 68 L.R.A. 736; 123 Am. St. 281; 2 Chitty, Gen. Pr. 492. Doubt has been expressed whether there is any inherent power in the court to introduce a third party into the controversy despite objections; but such power has been asserted, in cases not within the relevant statute, to prevent the perpetration of injustice. Gibson v. Ferrell, 77 Kan. 454, 94 P. 783. Compare Merchants v. Hagemeyer, 4 A.D. 52, 38 N.Y.S. 626, with Rosenberg v. Courtney, 8 Misc. 616, 29 N.Y.S. 327. And see In re Etheridge Furniture Co. (D.C.) 92 F. 329; Goldman v. Smith (D.C.) 93 F. 182.
The current statutory provisions, which vary more in terms than in construed effect, have been broadly interpreted to apply alike to legal and equitable causes. (. and to controversies concerning both real and personal property, and even to reputation (post).
The right to intervene in this state is prescribed. By section 4140, R.L. 1905: "Any person having such an interest in the matter in litigation between others that he may either gain or lose by the direct legal effect of the judgment therein may serve a complaint in the pending action, at any time before the trial begins, alleging the facts which show such interest, and demanding appropriate relief against either or both of the parties." The immediate question is whether that provision of the statute is to be interpreted as meaning that such person may gain or lose by the direct legal effect of the judgment (1) by becoming a party to the action or (2) without becoming a party to the action. If the former construction be adopted, defendant must prevail; if the latter, the intervenor.
2. The defendant insists that this court has settled the construction of this statute, so far as this case is concerned, in favor of defendant. It is true that in Bennett v. Whitcomb, 25 Minn. 148, decided under the broad statute of 1876 (page 69, Laws 1876), the court approved Gasquet v. Johnson, 1 La. 425, and quoted at page 152 from it this language with reference to the interest of the intervening party: "This, we suppose must be a direct interest, by which the intervening party is to obtain immediate gain or suffer loss by the judgment which may be rendered between the original parties." This was not, therefore, an expression of independent opinion by this court. The case itself involved an independent judicial inquiry as to the validity of separate titles -- the fee against the tax title; this case, a direct inquiry as to one title to the bonds claimed by both parties adverse to the other and the determination of the validity of alleged defenses to the enforcement of the bonds. It cannot, however, be successfully denied that this case tends to sustain the defendant's position. In Smith v. Gale, 144 U.S. 509, 12 Sup. Ct., at page 676, 36 L.Ed. 521, the Louisiana case was construed as defendant insists. All, however, that was there decided was that the contingency of being held on covenants of warranty given by one of the parties was not such interest in the subject-matter as to entitle to intervention. And see Omaha v. Beeson, 36 Neb. 361, 54 N.W. 557; Yetzer v. Young, 3 S.D. 263, 52 N.W. 1054; Gale v. Frazier, 4 Dak. 196, 30 N.W. 138. It is to be noted, however, that in Horn v. Volcano, 13 Cal. 62, at pages 70, 71, 73 Am. Dec. 569, the same part of the opinion from Gasquet v. Johnson, 1 La. 425, 431 (O.S.) which was quoted in Bennett v. Whitcomb, supra, was regarded by Field, J., as equivalent to this: "To authorize an intervention, therefore, the interest must be that created by a claim to the demand or some part thereof * * * which is the subject of litigation." It was accordingly held that, while a simple contract creditor had not the right to intervene, an application of a judgment creditor should be allowed. Hillier v. Stewart, 26 Oh. St. 652, State v. Central Pacific, 10 Nev. 87, and Britton v. Bohde, 85 Hun, 449, 32 N.Y.S. 882, also tend to support defendant's view. Many other cases on the subject in this state are not especially significant, so far as the issues of this case are concerned, do not necessitate the construction for which defendant insists, and do not substantially tend to justify intervenor's view. See Lewis v. Harwood, 28 Minn. 428, 10 N.W. 586; Wohlwend v. J.I. Case Threshing-Machine Co., 42 Minn. 500, 502, 44 N.W. 517; Becker v. Northway, 44 Minn. 61, 46 N.W. 210, 20 Am. St. 547; ...
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