Jackson County Bank v. Hester

• Decision Date: 21 June 1924
• Docket Number: 586.
• Citation: 123 S.E. 308,188 N.C. 68
• Parties: JACKSON COUNTY BANK v. HESTER ET AL.
• Court: North Carolina Supreme Court

123 S.E. 308

188 N.C. 68

JACKSON COUNTY BANK v. HESTER ET AL.

No. 586.

Supreme Court of North Carolina

June 21, 1924

Appeal from Superior Court, Jackson County; McElroy, Judge.

Action by the Jackson County Bank against A. F. Hester and W. H McElwee, partners trading as Hester & McElwee, the Fidelity & Casualty Company of New York, and another. From a judgment denying motion for removal to federal court, the last-named defendant appeals. Affirmed.

Petition for removal to District Court of United States for Western District of North Carolina by defendant Fidelity & Casualty Company of New York, heard before McElroy, J., at spring term, 1924, Jackson county. Appeal by defendant Fidelity & Casualty Company of New York. The material facts are:

The defendants, Hester & McElwee, contractors and builders entered into a contract with the Cullowhee Normal and Industrial School for the erection of a power plant and laundry building at the plant of said school at Cullowhee, N C., and procured the defendant Fidelity & Casualty Company of New York to execute a guaranty or indemnity bond, therein guaranteeing the fulfillment of the said contract of Hester & McElwee in so far as it related to the construction to completion of said power plant.

In the course of their operations, Hester & McElwee borrowed the sum of $5,000 from the plaintiff bank, for which they executed their demand note. It was provided in the contract between Hester & McElwee and the defendant school that from time to time in the progress of the work the defendant school would have special estimates prepared showing the amount then due the contractors. Hester & McElwee agreed to assign and did assign to the plaintiff bank the amount represented by said estimates, with directions to the school to apply the payments represented thereby to the several notes owing by the contractors to the plaintiff bank, and this assignment and directions were accepted and assented to by the defendant school.

About the 21st of January, 1924, the school had a special estimate prepared and turned over to Hester & McElwee, amounting to $5,090.44. By virtue of their agreement it was the duty of Hester & McElwee to turn this assignment back to the school with directions to apply the sum represented thereby to the plaintiff. Instead thereof, they turned it over to the Fidelity & Casualty Company of New York, and it has refused to turn said estimates over to the school or to the plaintiff. The plaintiff has demanded payment of the school and it refused to make payment in pursuance of said assignment.

The plaintiff asked judgment against the contractors and school for $5,000 and interest, for a mandatory injunction directing the school to pay the sum represented by said estimate, and that the surety company be restrained from interfering with the collection of said note. Hester & McElwee are in a very precarious financial condition and practically insolvent. The Jackson County Bank is a North Carolina corporation. Hester & McElwee and the Cullowhee Normal and Industrial School are residents of North Carolina, but the defendant the Fidelity & Casualty Company of New York is a foreign corporation.

In apt time, appellant gave notice and filed its petition to remove this cause to the District Court of the United States, for the reason that the controversy, in so far as it was concerned, was severable, and that its rights could be determined independently of the other interested parties--i. e., Hester & McElwee and the Cullowhee Normal and Industrial School; the latter being merely a stakeholder, and having no interest in the amount involved, except holding the same to abide the judgment of the court, as between the other parties.

The petition was heard before the clerk and the motion to remove denied. Appeal was then taken to the judge in term, and heard by consent at Murphy, N. C., and the order of the clerk affirmed, and motion to remove denied. Appellants' exceptions and assignments of error are directed to the refusal of the court below to grant the motion to remove on appeal from the clerk and signing the order denying the motion. The two assignments of error are treated as one.

A. J. Fletcher, of Raleigh, and S.W. Black, of Bryson City, for appellant.

Sutton & Stillwell, of Sylva, and Alley & Alley, of Waynesville, for appellees.

CLARKSON, J. (after stating the facts as above).

The sole question presented for us to consider: Were Hester & McElwee and the Cullowhee Normal and Industrial School "indispensable parties" to the action for a complete determination of the controversy? Were they "necessary parties"? Was it a "separable or joint controversy"? They were defendants, residents of North Carolina, and joined with the nonresident defendant, Fidelity & Casualty Company of New York. The plaintiff bank is a North Carolina corporation. If they were, and this is not a separable, but joint, controversy, the court below committed no error in refusing to remove the cause, and in this we think the court correct. C. S. § 455, is as follows:

"All persons having an interest in the subject of the action and in obtaining the relief demanded may be joined as plaintiffs except as otherwise provided."

C. S. § 456, is as follows:

"Any person may be made a defendant who has, or claims, an interest in the controversy adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of the questions involved. In an action to recover

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