Muggill v. Reuben H. Donnelley Corp.
| Decision Date | 19 January 1965 |
| Court | California Supreme Court |
| Parties | , 398 P.2d 147, 18 A.L.R.3d 1241, 51 Lab.Cas. P 19,473 Michael B. MUGGILL, Plaintiff and Appellant, v. The REUBEN H. DONNELLEY CORPORATION, Defendant and Respondent. L. A. 27435 |
Eugene Kelly, Los Angeles, for plaintiff and appellant.
O'Melveny & Myers, Maynard J. Toll, Philip F. Westbrook, Jr., and Richard E. Sherwood, Los Angeles, for defendant and respondent.
Plaintiff appeals from an adverse judgment in an action for declaratory relief to establish his right to reinstatement in the employees' retirement plan of defendant corporation.
Plaintiff left defendant's employ on July 1, 1960, after meeting all the requirements for benefits under the retirement plan. On October 24, 1960, he went to work for a competitor of defendant. On December 5, 1960, the retirement committee that administers the plan notified plaintiff that his rights to receive payments had been terminated pursuant to section 2 of article five of the plan on the ground that he had entered the employ of a competitor. 1 Plaintiff then brought this action against the corporation, the members of the retirement committee, and the trustee that disburses the funds under the plan, seeking a declaration that he was entitled to reinstatement on the ground that the section invoked by the retirement committee was against public policy and unenforceable. The trial court held that it was valid. The court also held that the members of the retirement committee and the trustee were indispensable parties (see Code Civ.Proc., § 389) over whom it had no jurisdiction. It therefore entered judgment for the defendant.
The trial court correctly concluded that it did not have personal jurisdiction over the members of the retirement committee or over the trustee, a foreign corporation. They were not residents of this state, and plaintiff's service of summons by publication (Code Civ.Proc., §§ 412, 413) did not give the court personal jurisdiction over them. (Code Civ.Proc., § 417; see Atkinson v. Superior Court, 49 Cal.2d 338, 346, 316 P.2d 960.) Section 417 does not preclude securing personal jurisdiction over a foreign corporation doing business in this state by service of process pursuant to section 411 of the Code of Civil Procedure, but since plaintiff did not serve the trustee pursuant to that section, we need not decide whether it was doing business in this state in acting as trustee of a pension plan covering California employees.
Plaintiff contends that the members of the committee and the trustee are not indispensable parties. 'A person is an indispensable party to an action if his absence will prevent the court from rendering any effective judgment between the parties or would seriously prejudice any party before the court or if his interest would be inequitably affected or jeopardized by a judgment rendered between the parties.' (Code Civ.Proc., § 389.) Care must be taken to prevent this rule of fairness in procedure from imposing a 'burdensome requirement which may thwart rather than accomplish justice.' (Bank of California, Nat. Ass'n v. Superior Court, 16 Cal.2d 516, 521, 106 P.2d 879, 883.) It we were to hold that the committee members and the trustee were indispensable parties, corporations could evade their obligations under retirement plans merely by naming nonresidents as members of the committee and as trustee. Indeed such a ruling would prevent plaintiff from obtaining relief in this case.
Neither the trustee nor the committee members are indispensable parties. An effective judgment ordering plaintiff's reinstatement under the plan and declaring section 2 of article five unenforceable can be rendered against the corporation alone.
The retirement committee need not be separately joined for an effective judgment. In suspending plaintiff the committee acted as an agent of the corporation, which holds the ultimate authority. The committee members, appointed by the corporation, serve without compensation and at the pleasure of the corporation. A judgment against the corporation effectively binds the committees that act on its behalf. Thus, in an action to compel the declaration of dividends, a judgment against the corporation alone is effective, for the members of the board of directors are not indispensable parties. (Doherty v. Mutual Warehouse Co., 5 Cir., 245 F.2d 609, 612; Kroese v. General Steel Casting Corp., 3 Cir., 179 F.2d 760, 763-765, cert. den. 339 U.S. 983, 70 S.Ct. 1026, 94 L.Ed. 1386; Whittemore v. Continental Mills, 98 F.Supp. 387, 391; contra, Schuckman v. Rubenstein, 6 Cir., 164 F.2d 952, 957-958, cert. den. 333 U.S. 875, 68 S.Ct. 905, 92 L.Ed. 1151.) Likewise, the president or secretary need not be joined in an action against the corporation to compel the execution and delivery of a stock certificate. (Hertz v. Record Publishing Co., 3 Cir., 219 F.2d 397, 400, cert. den. 349 U.S. 912, 75 S.Ct. 601, 99 L.Ed. 1247; see Tregear v. Etwander Water Co., 76 Cal. 537, 18 P. 658.) Moreover, the corporation and the committee have concurrent power to terminate payments under section 2 of article five and, presumably, would also have concurrent power to reinstate.
Similarly, the trustee need not be separately joined. Under the plan it merely disburses funds and does so 'only at the time, in the amount, and in the manner directed in written directions received by the Trustee from the Retirement Committee.' (Retirement Trust, article five.) A judgment affecting corporate policy would determine what the trustee will be told, and it 'may follow such instructions without question.' (Retirement Trust, article five.) We cannot presume that it will refuse to do so.
We therefore find no justification for holding that the trustee or the committee members are indispensable parties. The corporation, as the party before the court, will not be prejudiced by a judgment, since it has authority to control the actions of the nonparties. Their interests will not be...
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