Petroleum Anchor Equipment, Inc. v. Tyra

• Citation: 406 S.W.2d 891
• Decision Date: 05 October 1966
• Docket Number: No. A--10996,A--10996
• Parties: PETROLEUM ANCHOR EQUIPMENT, INC., Petitioner, v. William D. TYRA, Sr., et ux. Dorothy B. Tyra, Respondents.
• Court: Supreme Court of Texas

Page 891

406 S.W.2d 891

PETROLEUM ANCHOR EQUIPMENT, INC., Petitioner, v. William D. TYRA, Sr., et ux. Dorothy B. Tyra, Respondents.

No. A--10996.

Supreme Court of Texas.

Oct. 5, 1966.

Burford, Ryburn & Ford, Spencer C. Relyea, III, and John L. Estes, Dallas, for petitioner.

Baker, Jordan, Shaw & Foreman, Dallas, Robert L. Netterville, Natchez, Miss., Forrest B. Jackson, Jackson, Miss., for respondents.

CALVERT, Chief Justice.

The only question presented by the appeal in this case as it reaches this court is one of indispensable parties. The court of civil appeals on its own motion reversed a trial court judgment adverse to petitioner, Petroleum Anchor Equipment, Inc., and remanded the cause to the trial court because one Luther S. Fite was not a party to the suit. 392 S.W.2d 873. We reverse the judgment of the court of civil appeals and remand the cause to that court.

Petroleum Anchor Equipment, Inc., was the owner of an application for letters patent to an invented device used in anchoring pipelines in marshy terrain. Petroleum executed a bill of sale and assignment of the invention and the application for letters to Fite in the name of the corporation on February 14, 1963, and Fite executed an assignment to William D. Tyra, Sr., on March 4, 1963.

Petroleum, as plaintiff in the trial court, sought by its suit to cancel the bill of sale and assignments from it to Fite and from Fite to Tyra, to recover ownership and possession of the invention and the application, and to enjoin further transfer and assignment thereof by the defendants during pendency of the suit. Only Tyra and his wife were made defendants to the suit. Cancellation was sought by Petroleum on the ground that the sale and assignment from it to Fite was the result of a fraudulent conspiracy between its president and Fite, and that execution of the instrument was unauthorized by proper corporate authority and was therefore void. Following a jury trial of the issues made by the pleadings, the trial court rendered judgment directing that plaintiff take nothing and dissolving a temporary injunction, theretofore granted, which had restrained and enjoined the Tyras from selling and assigning the invention and letters during pendency of the suit. Petroleum appealed.

As heretofore indicated, neither party raised the question in the trial court or in the court of civil appeals that Fite was a jurisdictionally indispensable, a necessary, or even a proper party to the suit. Nevertheless, the court of civil appeals noted Fite's absence as a party and held that he was a necessary and indispensable party in whose absence the trial court had no jurisdiction to proceed. The court thus treated the action of the trial court in proceeding to trial and judgment in the absence of Fite as fundamental error.

If Fite were truly an indispensable party to the suit, we would agree that the error in proceeding in his absence was fundamental error which could and should have been noticed by the court of civil appeals on its own motion. It was so held in Sharpe v. Landowners Oil Ass'n, 127 Tex. 147, 92 S.W.2d 435 (1936), and it must be so in the narrower concept of fundamental error announced in the opinions in Ramsey v. Dunlop, 146 Tex. 196, 205 S.W.2d 979 (1947). Jurisdiction over indispensable parties to a suit is as essential to the court's right and power to proceed to judgment as is jurisdiction of the subject matter. See Scott v. Graham, 156 Tex. 97, 101, 292 S.W.2d 324, 327 (1956). Compare McCauley v. Consol. Underwriters, 157 Tex. 475, 304 S.W.2d 265 (1957). However, we do not agree that Fite is an indispensable party to this suit.

Decision of any question of necessary parties to a suit should be made in light of the provisions of Rule 39, Texas Rules of Civil Procedure. The rule was adapted from Rule 19, Federal Rules of Civil Procedure. Since the adoption of rule 39, the courts of this state, following the lead of the federal judiciary, have been inclined to give too little attention to the wording of the rule and overriding attention and effect to prior judicial decisions, often ignoring the rule altogether.

Rule 39, titled 'Necessary Joinder of Parties,' reads:

(a) Necessary joinder. Except as otherwise provided in these rules, persons having a joint interest shall be made parties and be joined as plaintiffs or defendants. When a person who should join as a plaintiff refuses to do so, he may be made a defendant or, in proper cases, an involuntary plaintiff.

(b) Effect of failure to join. When persons who ought to be parties if complete relief is to be accorded between those already parties, have not been made parties and are subject to the jurisdiction of the court, the court shall order them made parties. The court in its discretion may proceed in the action without making such persons parties, if its jurisdiction over them can be acquired only by their consent or voluntary appearance; but the judgment rendered therein shall not affect the rights or liabilities of persons who are not parties.

(c) Names of omitted persons and reasons for non-joinder to be pleaded. In any pleading in which relief is asked, the pleader shall set forth the names, if known to him, of persons who ought to be parties, if complete relief is to be accorded between those already parties, but who are not joined, and shall state why they are omitted.

It is at once apparent that the 'necessary' parties of which the rule speaks fall into two categories: (1) those who under paragraph (a) 'shall be made parties,' ¹ and (2) those who under paragraph (b) 'ought to be parties if complete relief is to be accorded between those already parties.' It is also at once apparent that 'persons having a joint interest' within the meaning of paragraph (a), properly interpreted, are Indispensable parties, but that those who simply ought to be joined if complete relief is to be accorded between those already parties are not Indispensable. The rule expressly confers discretion upon trial courts to proceed without joinder of persons in the second category if jurisdiction over them can be acquired only by their consent or voluntary appearance. If joinder of such persons is discretionary, their joinder cannot be essential to jurisdiction of a court to proceed to judgment.

The distinction between the two categories of necessary parties was recognized by the late Robert W. Stayton, Professor of Procedure in the University of Texas School of Law and member of the Supreme Court Advisory Committee and its subcommittee which drafted the rule. In a lecture entitled Important Developments Since 1940 in the Texas Law Relating To Parties and Actions, ² delivered within a few years after adoption of the rules, Professor Stayton said:

Now, all the authorities agree that, whether you take the old Federal rule, or whether you center upon the Texas rule, this rule 39 that you have before you embraces indispensable parties, and another class, which, for want of a better name, I will call insistible parties, that is to say parties who should be made, and, if another party in the suit insists upon it, must be made, in the proper way, unless jurisdiction cannot be gotten over them, in which event, this procedure is excused. The heads, then are 'indispensable' and 'insistible' parties. Really, there is no such word as the latter. I have invented it to give you the idea.

In 3 Moore's Federal Practice, § 19.05(2) (2d ed. 1964) persons in the second category are referred to as 'conditionally necessary' parties.

Much has been written on the subject of necessary and indispensable parties by the courts of this State, both before and since adoption of the Texas Rules of Civil Procedure. No useful purpose would be served by undertaking a review of all of the cases cited in the opinion of the court of civil appeals and in the briefs of the parties. It is sufficient to say we have concluded that Fite may be an 'insistible' or 'conditionally necessary' party, but he is not an indispensable party to this suit; and, therefore, that it was not fundamental error to proceed to trial and judgment in his absence.

Fite has no 'joint interest' in the invention or in the application for letters patent, either as assignee of Petroleum or as assignor of Tyra. He has long since disposed of his interest, and no judgment for injunctive relief or for damages is sought against him. Any judgment cancelling the bill of sale and assignment from Petroleum to him would not be res judicata as to him in any suit to which he may be a party. The Tyras do not contend otherwise. Their claim that Fite is an indispensable party is three-fold: (1) it is a settled rule of law that all parties to a written instrument are necessary parties to a suit to cancel it; (2) Fite's rights will be prejudiced by the judgment in this case if the Tyras should lose it and later sue him to recover the money paid him; (3) similarly, the Tyras' rights may be prejudiced if they should lose this case and should later sue Fite to recover the money paid him.

Most of the Texas cases cited for the proposition that all parties to a written instrument are necessary parties to a suit to cancel it antedate the Rules of Civil Procedure. Our latest decision directly on the question when the instrument sought to be...