Rogers v. Penobscot Min. Co.

• Decision Date: 27 June 1907
• Docket Number: 2,421.
• Citation: 154 F. 606
• Parties: ROGERS et al. v. PENOBSCOT MINING CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

154 F. 606

ROGERS et al. v. PENOBSCOT MINING CO. et al.

No. 2,421.

United States Court of Appeals, Eighth Circuit.

June 27, 1907

(Syllabus by the Court.)

The bill set forth these facts: B. and M. agreed that B. should procure options to purchase certain mining claims in M.'s name; that they should organize a corporation with 500,000 shares of stock; that this stock should be issued to M., who should place 300,000 shares of it in the treasury of the corporation, transfer 50,000 shares to B., convey the options to the corporation, and furnish the money, either by loans to the corporation or by purchase of the capital stock, to pay the unpaid balances of the purchase prices of the mining claims. B. procured the options. The corporation, the P. Co was organized. M. conveyed the options to it, took the 500,000 shares of stock, and placed 300,000 shares in the treasury. The P. Co. paid the unpaid balances of the purchase prices of the mining claims, and M. Took the deeds thereof to himself. The complainants were the assigns of 11,300 of the 50,000 shares of stock M. agreed to transfer to B., and they brought suit in equity against M. and the P. Co. to compel him to convey the mining claims to the corporation.

Held (1) The bill stated a good cause of action in equity to enforce specific performance of a contract relating to real estate and to compel the execution of the trust created by the agreement and by the complete performance of it on the part of B.

(2) The facts stated in the bill constituted the complainants the equitable owners of the 11,300 shares of stock assigned to them.

(3) Equity rule 94 and the other rules applicable to stockholders' suits do not control this suit, because complainants' cause of action existed independently of and antedated, their rights as stockholders.

A defect of jurisdiction of the trial court, such as want of diversity of citizenship, which cannot be waived, and which discloses the total absence of power in that court to take any affirmative action in the suit, will be noticed by the appellate court sua sponte, without exception or specification of error.

But objections to the jurisdiction of the trial court, such as lack of proper service of a lawful summons, which condition the method of the exercise of the power of the court and which may be waived, must be presented to the appellate court by a proper assignment of errors, which gives the opposing party an opportunity to prepare a proper record for their consideration.

Cross-errors are not assignable in a federal court.

Parties who have secured all the relief they seek cannot appeal or sue out a writ of error, nor can they, by assigning or arguing cross-errors, confer jurisdiction on a national appellate court to consider or determine alleged erroneous rulings not otherwise presented. Guarantee Co. v. Phenix Ins. Co., 29 C.C.A. 376, 379, 124 F. 170, 173.

In a determination of the jurisdiction of the national courts and the right to remove causes of action to them, indispensable parties only should be considered, because all others may be dismissed or disregarded if their presence will oust or restrict the jurisdiction or the right.

An indispensable party is one who has such an interest in the subject-matter of the controversy that a final decree between the parties before the court cannot be made without injuriously affecting his interests or leaving the controversy in such a situation that its final determination may be inconsistent with equity and good conscience.

Every other party who has any interest in the controversy or the subject-matter which is separable from the interest of the parties before the court, so that it will not necessarily be directly and injuriously affected by a decree which does complete justice between them, is a proper party.

If a proper party is incapable of being made a party to the suit because beyond the jurisdiction, or if his joinder would oust the jurisdiction of the court as to the other parties before it, the suit may proceed without him, and the decree will not affect his interests.

The P. Co. is a proper, but not an indispensable, party to the suit, because a decree which will do complete justice between the other parties to the controversy may be rendered without injuriously affecting its interests.

An assignee of a part of a credit or of a chose in action cannot, without the consent of the obligor, maintain an action at law upon it.

But such a part owner may maintain a suit in equity upon his claim, upon condition that he makes the owners of the other portions of the claim parties to the suit.

And the assignee of a part of the interest of a cestui que trust in real or personal property without the consent of the assignor may maintain such a suit to enforce the execution of the trust.

The failure to make other part owners of the chose in action parties to such a suit is a curable defect, and it will not sustain a judgment of dismissal of the bill on the merits. The bill should be retained until the complainants have reasonable opportunity to amend it and to bring in such part owners, or to show in their amended bill an excuse for their absence, under the partice in equity in the federal courts.

Under the old chancery rule such part owners would be necessary parties to the suit, and they should be joined, if practicable.

But under the modification of that rule which prevails in the federal courts they are not indispensable parties, and if they are beyond the jurisdiction of the court, or if their presence would oust its jurisdiction over other parties before it, the suit may proceed without them, because a decree which does complete justice between the parties before the court may be rendered without directly and injuriously affecting their interests.

Where a writing is indispensable to a valid contract, a pleading of a contract which does not affirmatively disclose that it was made by parol is a pleading of a written agreement.

In equity, vendors of real estate and those claiming under them hold their titles in trust for their vendees.

An action at law does not afford an adequate remedy for the breach of a contract to convey real estate or for a failure to execute a trust with which it is charged.

A joinder of two causes of action against the same party for the same relief, one against him as an individual and one against him as an officer, does not make a bill multifarious.

No bill is multifarious which presents a common point of litigation, the decision of which will affect the entire subject-matter and settle the rights of the parties to the suit.

These are appeals from two decrees in the same suit, one of which sustained the separate demurrer of the Penobscot Mining Company to the bill of the complainants and dismissed it, and the other of which sustained the separate demurrer of Alexander Maitland to the same bill and dismissed it. The suit was brought by Rogers, Rosenthal, Thomas, and Maloney against Maitland and the Penobscot Mining Company, to compel Maitland to convey certain mining claims to the Penobscot Company, a corporation of South Dakota, to secure a decree that he had no right, title, or interest in these claims, to enjoin him from disposing of or incumbering them, and for general relief. The facts stated in the bill upon which the complainants based their prayer were these: In the spring of 1902 F. R. Byrns and the defendant Maitland made an agreement that Byrns should procure options to purchase three groups of mining claims situated in South Dakota in the name of Maitland; that they would organize a corporation with a capital stock of 500,000 shares, of the par value of $1 per share; that this stock should be issued to Maitland; that he should convey to the corporation all the options, should return 300,000 shares of stock to the treasury of the company, should convey to Byrns 50,000 shares, and should furnish the money to pay the unpaid balances upon the options and to further develop the properties, either by loans which he should make to the corporation or by the purchase of its treasury stock. Byrns obtained the options in Maitland's name and thus completely performed his part of the agreement. Maitland and Byrns organized the defendant, the Penobscot Mining Company. In accordance with their agreement, Maitland conveyed the options to it, the 500,000 shares of stock were issued to him, and he placed 300,000 shares of it in the treasury of the corporation. The unpaid balances owing upon the options were thereupon paid by the Penobscot Company for its own use and benefit; but the deeds of the mining claims were taken from the former owners to Maitland, and not to the company. In February, 1903, Byrns had assigned 1,000 of the 50,000 shares of the stock of the company to which he was entitled to one Adams, and thereupon, in pursuance of the former contract between him and Maitland, he and Maitland made a second agreement to the effect that the latter would transfer to Byrns 49,000 shares of the stock, less one-half of the shares which should ultimately be found to be due, to one Bradburn. The number of the shares due to Bradburn was determined to be 13,000 before the commencement of this suit so that the number due to Byrns became 42,500. In April, 1903, Byrns sold and assigned this stock and all his rights under his contract to the United States Mines Company. Subsequently this company transferred to the complainant Rogers 2,500 shares, to the complainant Maloney 1,800 shares, and to the complainant Rosenthal 7,000 shares of the capital stock of the Penobscot Company out of the shares coming to the United States Mines Company from Maitland under Byrns' assignment, and Rosenthal assigned one-half of his 7,000 shares to the complainant...