Schutten v. Shell Oil Company, 27117.

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Citation: 421 F.2d 869
• Docket Number: No. 27117.,27117.
• Parties: Ferdinand Henry SCHUTTEN et al., Plaintiffs-Appellants, v. SHELL OIL COMPANY, Defendant-Appellee.
• Decision Date: 30 January 1970

421 F.2d 869 (1970)

Ferdinand Henry SCHUTTEN et al., Plaintiffs-Appellants, v. SHELL OIL COMPANY, Defendant-Appellee.

No. 27117.

United States Court of Appeals, Fifth Circuit.

January 30, 1970.

M. Aubrey McCleary, Jr., James S. Holliday, Jr., Baton Rouge, La., McCollister, Belcher, McCleary & Fazio, Baton Rouge, La., for plaintiffs-appellants.

George C. Schoenberger, Jr., Alvin B. Gibson, Winfred G. Boriack, Attys., New Orleans, La., for defendant-appellee.

Before WISDOM, GOLDBERG and CARSWELL, Circuit Judges.

CARSWELL, Circuit Judge:

Appellants filed suit in the District Court seeking to evict the appellee, Shell Oil Company, and seeking an accounting for the removal of oil, gas, and other minerals from land in Plaquemines Parish, Louisiana. Appellants, who are not in possession, claim ownership of the land and demand an accounting from Shell because of its failure to deal with appellants in removing the minerals.

Appellee filed a Motion to Dismiss on the ground that its lessor, the Board of Commissioners of the Orleans Levee District, who also claims title to the land in question, is an "indispensable party" who cannot be joined since such action would destroy the District Court's diversity jurisdiction. The District Court granted the appellee's motion and dismissed the case.

Both parties agree that if the Levee Board is indispensable to the action the suit would have to be dismissed since both appellants and the Levee Board are citizens of Louisiana and diversity jurisdiction under 28 U.S.C. § 1332 would not be obtainable. Thus the sole issue before this Court is that of the indispensability of the Levee Board.

In deciding this issue it is clear that the provisions of Rule 19 of the Federal Rules of Civil Procedure control. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1967). Rule 19 provides in pertinent part:

(a) Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring doubt, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party. If he should join as a plaintiff but refuses to do so, he may be made a defendant, or, in a proper case, an involuntary plaintiff. If the joined party objects to venue and his joinder would render the venue of the action improper, he shall be dismissed from the action.

(b) Determination by the Court Whenever Joinder not Feasible. If a person described in subdivision (a) (1)-(2) hereof cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent party being thus regarded as indispensable. The factors to be considered by the court include: first, to what extent a judgment rendered in the person\'s absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person\'s absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

The reformation of Rule 19 in 1966 was the result of judicial inequities which had slowly but steadily grown under the concept of the "indispensable" party. The reform of Rule 19 was preceded by more than a decade of scholarly inspection and debate.¹ Under its predecessor, it was often held that absence of an "indispensable" party deprived the court of any power to render relief to the parties before it. See Young v. Powell, 179 F.2d 147 (5th Cir. 1950). The 1966 revision of Rule 19 sought to give the courts greater latitude in deciding whether a case should be dismissed for nonjoinder of a supposedly "indispensable" party. Before discussing Rule 19, and the present controversy, a look at the origin and development of the doctrine of "indispensability" is required in order to properly assess the scope and effect of the 1966 amendment of Rule 19.

Prior to the Federal Rules the biggest problem in litigation over joinder of parties stemmed from the distinction which was required to be drawn between "necessary" and "indispensable" parties. This distinction is set forth in the hoary case of Shields v. Barrow, 17 How. 130, 139, 58 U.S. 130, 139, 15 L.Ed. 158 (1854):

The court here points out three classes of parties to a bill of equity. They are: 1. Formal parties. 2. Persons having an interest in the controversy, and who ought to be made parties, in order that the court may act on that rule which requires it to decide on, and finally determine the entire controversy, and do complete justice, by adjusting all the rights involved in it. These persons are commonly termed necessary parties; but if their interests are separable from those of the parties before the court, so that the court can proceed to a decree, and do complete and final justice, without affecting other persons not before the court, the latter are not indispensable parties. 3. Persons who not only have an interest in the controversy but an interest of such a nature that a final decree cannot be made without either affecting that interest, or leaving the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience. (Footnote omitted).

The Shields v. Barrow formula was a concerted attempt to formalize the joinder doctrines which had arisen in the courts. of equity. Up until the eighteenth century equity required joinder of all interested parties, but recognizing that practical difficulties and obstacles often made this impossible, relaxed its standard of complete adjudication of a controversy when faced with compelling equity.² As noted by Professors Kaplan and Hazard, supra n. 2, equity's attitude changed during the 1700's when the concept of "complete adjudication" gained the upper hand. On the other side of the aisle, the common law had developed joinder criteria which paralleled the parties substantive rights and obligations. The essence of the common law joinder doctrine was that joint rights or obligations demanded joint adjudication.³ The common law's approach, to say the least, lacked the flexibility of the earlier equity practice.

The rise of the concept of the "complete decree" encroached upon the flexible and rather pragmatic approach to joinder problems which the earlier equity practice had enjoyed and fostered. It was this encroachment which Professor Hazard believes gave rise to the "indispensable" party concept⁴ which was formalized in this country in Shields v. Barrow, supra.

In its most favorable light Shields v. Barrow states the proposition that

"if a court can proceed to a meaningful decree without affecting the interest of the absent person, that absent person is at most a necessary party; if the circumstances are such that the court cannot so proceed, then the absent one is an indispensable party."

Reed, supra n. 1 at 343. While this formulation, as an abstract proposition, is consistent with the present Rule 19, any flexibility or pragmatism envisioned by the Supreme Court in Shields was soon eliminated by courts which latched upon such unguarded words as "separable" and "* * * without affecting that interest * * *" in an attempt to devise a mechanical test to apply to joinder problems.⁵ Thus the concept of "severability" arose in equity joinder decisions. As under the common law the substantive rights of the parties became paramount.⁶

To a great extent, the severability test was carried over with the adoption of the original Rule 19. Though those drafting the rule envisioned a more flexible approach akin to that which existed under the "earlier" equity practice, they lost all hope of achieving that end when they resorted to the use of the terms "indispensable" and "joint interest" without redefinition. As pointed out by the Advisory Committee on Rules,⁷ the use of these terms

"directed attention to the technical or abstract character of the rights or obligations of the persons whose joinder was in question, an approach which characterized the decisions prior to the original rule 19 and correspondingly distracted attention from the pragmatic considerations which should have been controlling."

The 1966 amendment of Rule 19 attempts to remedy this situation by conditioning a finding of "indispensability" upon "pragmatic considerations." Provident Tradesmens Bank & Trust Co. v. Patterson, supra, 390 U.S. at 106-107, 88 S.Ct. 733.

Subdivision (a) of Rule 19 categorizes those persons whose joinder is desirable from the standpoint of complete adjudication and elimination of relitigation. If there are no procedural or jurisdictional bars to joining such a party, Rule 19 requires that he be joined. It is to be noted that subdivision (a) eliminates reference to the "abstract" or "substantive" interests involved by avoiding such terms as "joint" and "separable."⁸

Subdivision (b) of Rule 19 requires a court to examine four "interests" before deciding whether "in equity and good conscience" the court should proceed without a person whose joinder is impossible. The distilled essence of these "criteria" of subdivision (b) is the attempt to balance the rights of all concerned. See Provident Tradesmens Bank & Trust Co. v. Patterson, s...