Hazeltine Research Corp. v. Freed-Eisemann Radio Corp.

• Decision Date: 09 June 1924
• Citation: 4 F.2d 867
• Parties: HAZELTINE RESEARCH CORPORATION et al. v. FREED-EISEMANN RADIO CORPORATION.
• Court: U.S. District Court — Eastern District of New York

4 F.2d 867 (1924)

HAZELTINE RESEARCH CORPORATION et al. v. FREED-EISEMANN RADIO CORPORATION.

District Court, E. D. New York.

June 9, 1924.

Pennie, Davis, Marvin & Edmonds, of New York City, for plaintiffs.

Koenig, Sittenfield & Aranow, of New York City, for defendant.

INCH, District Judge.

This is a motion to dismiss the bill of complaint in an equity action, at the opening of the trial of the issues raised by the bill and the answer of defendant, on the ground that this court is without jurisdiction, for the reason that no diversity of citizenship exists, between all of the plaintiffs and the defendant. Jurisdiction depends here on the required diversity of citizenship.

Where any indispensable party to a case is incapable of suing, in the federal court, any party on the opposite side, the court is without jurisdiction. The defendant claims that all of the parties plaintiff are indispensable parties plaintiff, and that, as there is a lack of diversity of citizenship between some of the said parties plaintiff and the defendant, the motion must be granted.

In order to avoid, on one hand, the postponing of a trial on the merits desired by both parties, and, on the other hand, the entry of what would be a void judgment, should this court have no jurisdiction, which both parties desire to avoid, and in view of the earnest and able argument in favor of the motion by the distinguished counsel for defendant, with his long experience in federal procedure, this court feels that the question requires a most careful consideration. This is the sole excuse for an opinion of this length.

In the bill of complaint the parties plaintiff are divided into two groups. All parties are corporations and are treated as citizens of their respective states. Louisville R. R. Co. v. Letson, 2 How. 550, 11 L. Ed. 353. The first group of plaintiffs is the Hazeltine Research Corporation, a citizen of the state of Delaware, and the Independent Radio Manufacturers, Inc., also a citizen of the state of Delaware. The second group of plaintiffs is American Radio & Research Corporation, a citizen of the state of Delaware, F. A. D. Andrea, Inc., a citizen of the state of New York, Broadcast Manufacturers, Incorporated, a citizen of the state of New Jersey, Eagle Radio Company, a citizen of the state of New Jersey, Garod Corporation, a citizen of the state of New Jersey, Howard Manufacturing Company, Inc., a citizen of the state of Illinois, William J. Murdock Company, a voluntary association organized under the laws of the state of Massachusetts, Radio Service Laboratories, Inc., a citizen of the state of New Jersey, Stromberg-Carlson Telephone Manufacturing Company, a citizen of the state of New York, R. E. Thompson Manufacturing Company, a citizen of the state of New Jersey, Ware Radio, Inc., a citizen of the state of New York, and the Work-Rite Manufacturing Company, a citizen of the state of Ohio.

The defendant is a citizen of the state of New York. It will be seen, therefore, as to the first group of plaintiffs, the required diversity of citizenship exists. As to the second group of plaintiffs, a different situation presents itself, for among them are three citizens of the same state as that of the defendant, to wit, the state of New York. It would follow, therefore, if the claim of the defendant that these plaintiffs are also indispensable parties plaintiff is correct, that this court would not have jurisdiction.

Parties to a bill in equity are usually considered as belonging to one of three kinds: Formal parties; proper parties, because they have an interest of some sort, and and therefore allowed to be before the court, in order that it may finally determine the controversy in a comprehensive and complete way; and indispensable parties, who not only have some interest in the controversy, but such an interest that a final decree should not be made without their presence. Minnesota v. Northern Securities Co., 184 U. S. 199, 22 S. Ct. 308, 46 L. Ed. 499; Hawes v. Madison First National Bank, 229 F. 51, 143 C. C. A. 645; Fed. Statutes Annotated, vol. 4, p. 957.

Passing for the moment the question of whether this second group of plaintiffs are indispensable plaintiffs and taking up the question of whether or not they might be termed simply indispensable parties, it would then be possible for the court itself to arrange the parties on one side or the other according to their interests or the facts, regardless of the places they occupy in the pleadings as plaintiffs or defendants, in order to retain jurisdiction. Gage v. Riverside Trust Co. (C. C.) 156 F. 1002; Helm v. Zarecor, 222 U. S. 32, 32 S. Ct. 10, 56 L. Ed. 77; Sharpe v. Bonham, 224 U. S. 242, 32 S. Ct. 420, 56 L. Ed. 747. It is plain, however, that each one of the plaintiffs in the second group have identical interests, if they have any interest, in this suit, and hence this court cannot distinguish between any one of this group of plaintiffs, but must put either all or none in their proper place.

As has been noted, one of this second group of plaintiffs, to wit, the American Radio & Research Corporation, is a Delaware corporation, and if this court should arrange this second group of plaintiffs as defendants, we would then have the remaining plaintiffs citizens of Delaware and one of the defendants a citizen of Delaware, and thus this court would be as much without jurisdiction for the reason assigned as it would be if the arrangement of the parties in the pleadings remained. If such arrangement must defeat jurisdiction, the bill will be dismissed. Mann v. Gaddie, 158 F. 42, 88 C. C. A. 1.

There remains, therefore, but the single question of whether or not this second group of plaintiffs are indispensable parties plaintiffs. If they are indispensable, whether placed as plaintiffs or defendants, the bill must be dismissed. If they are such parties that a complete and final determination can be had without them, and without affecting as a matter of common sense and equity the real legal or equitable interests of all of this second group, they may be stricken out. Connolly v. Taylor, 2 Pet. 556, 7 L. Ed. 518. This requires, even at the risk of making this opinion unduly long, a brief examination of the bill and the issue between the parties.

This is an action relating solely to a written contract between the plaintiff Independent Radio Manufacturers, Inc., and the defendant, Freed-Eisemann Radio Corporation. These two corporations are the sole parties to the contract. The complaint alleges a breach of this contract by the defendant, and seeks the equitable relief of having it canceled and the defendant enjoined from further proceeding under it, or enjoying any of the rights given by it, and for an accounting for any royalties unpaid under it due plaintiff. The above statement, if accurate, would seem to indicate that the only indispensable parties before the court, in order for it to completely and fairly determine the matter and do justice, are these two parties to the contract.

A number of cases cited by the counsel for the defendant are just such cases, where the court held that the parties to a written contract were indispensable, and such authorities do not seem to conflict with the question of jurisdiction raised here, for here all the parties to the written contract in question are before the court, and between them the required diversity of citizenship exists as plaintiff and defendant.

The learned counsel for the defendant, however, insists that the above is not an accurate statement...