Silver King Coalition Mines Co. of Nevada v. Silver King Consol. Mining Co. of Utah

• Decision Date: 05 April 1913
• Docket Number: 3,687.,3,646
• Citation: 204 F. 166
• Parties: SILVER KING COALITION MINES CO. OF NEVADA v. SILVER KING CONSOL. MINING CO. OF UTAH. SILVER KING CONSOL. MINING CO. OF UTAH v. SILVER KING COALITION MINES CO. OF NEVADA.
• Court: U.S. Court of Appeals — Eighth Circuit

204 F. 166

SILVER KING COALITION MINES CO. OF NEVADA v. SILVER KING CONSOL. MINING CO. OF UTAH.

SILVER KING CONSOL. MINING CO. OF UTAH v. SILVER KING COALITION MINES CO. OF NEVADA.

Nos. 3,646, 3,687.

United States Court of Appeals, Eighth Circuit.

April 5, 1913

[Copyrighted Material Omitted]

W. H Dickson, of Salt Lake City, Utah (A. C. Ellis, Jr., and Russell G. Schulder, all of Salt Lake City, Utah, on the briefs), for appellant in No. 3,646 and for appellee in No 3,687.

Andrew Howat and Edward B. Critchlow, both of Salt Lake City, Utah (Herbert R. Macmillan and William J. Barrette, both of Salt Lake City, Utah, on the briefs), for appellee in No. 3,646 and for appellant in No. 3,687.

Before SANBORN and CARLAND, Circuit Judges, and WILLIAM H. MUNGER, District Judge.

SANBORN Circuit Judge.

The Silver King Mining Company, a corporation of the state of Utah, and the Silver King Consolidated Mining Company, a corporation of the state of Wyoming, were equal owners and tenants in common of the Vesuvius mining claim, which was situated in the state of Utah, from 1901 until June 19, 1907. During that time the King Company secretly extracted from that claim and sold a large amount of valuable ore without accounting to its cotenant for any of it, and on June 19, 1907, it sold and conveyed all its property to the Silver Coalition Mines Company, a corporation of the state of Nevada and the defendant below, and in part payment for that conveyance the Coalition Company agreed to pay all the outstanding debts and obligations of its grantor, the King Company. The Coalition Company then secretly extracted ore from the Vesuvius claim and sold it, without accounting to its cotenant for this ore or its proceeds. On February 24, 1908, the Consolidated Company of Wyoming conveyed all its title and interest in the Vesuvius mining claim, and in its cause of action against the Coalition Company on account of the extraction of the ores by the King Company and by it, to the Silver King Consolidated Mining Company of Utah, a corporation of that state and the complainant in this suit. On May 26, 1908, the latter company exhibited its bill in equity in the court below against the Coalition Mines Company of Nevada, and prayed, among other things, for an accounting and recovery of one-half of the value of the ores extracted by it and by its grantor, the King Company. were joined, evidence was taken, and upon final hearing a decree was rendered that the defendant was indebted and should pay to the complainant $735,045.87 on account of the ores taken from the Vesuvius claim by the defendant and by its grantor. Both parties have appealed from that decree and specified many alleged errors.

(A) The defendant insisted by demurrer and motion in the court below, and still insists, that the King Company was an indispensable party to the cause of action to recover the value of the ore which its grantor, prior to the latter's conveyance on June 19, 1907, extracted and sold; but the Circuit Court overruled that contention, and its ruling is specified as error.

When a grantee contracts with his grantor to pay the latter's debt or obligation in payment, or in part payment, for the conveyance, the creditor or obligee may accept and appropriate that contract to himself and maintain a suit in equity to enforce it. In that event the grantee becomes the principal debtor and the grantor the surety, and the creditor's suit stands on the equitable doctrines that the creditor may have the benefit of any security or obligation given by the principal debtor to the surety, and that to avoid circuity of action-- that is to say, an action by the creditor against the original debtor and a subsequent action by the latter against his grantee-- the creditor may be, and is in equity, substituted for the promisee, the grantor. Keller v. Ashford, 133 U.S. 610, 623, 625, 626, 10 Sup.Ct. 494, 33 L.Ed. 667; Johns v. Wilson, 180 U.S. 440, 447, 21 Sup.Ct. 445, 45 L.Ed. 613; Thompson v. Cheesman, 15 Utah, 43, 48, 49, 48 P. 477; Blackmore v. Parkes, 81 F. 899, 900, 26 C.C.A. 670, 671.

In this case the complainant, the creditor, has accepted the promise of the defendant, the grantee, to pay the obligations of the King Company, the grantor, and standing by substitution in the shoes of the King Company, the grantor, has brought this suit to enforce the covenant of the grantee.

It is contended that this suit cannot be maintained for the value of the ore extracted by the King Company, because it was a necessary party to the suit for the value of the ore which it extracted, and it has not been made a party to this suit. But necessary parties, who are not indispensable parties, may be dispensed with in suits in equity in the national courts. An indispensable party is one who has such an interest in the subject-matter of the controversy that a final decree cannot be rendered between the other parties to the suit without radically and injuriously affecting his interest, or without 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 subject-matter which is separable from the interest of the other parties before the court, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them, is a proper party to a suit. But he is not an indispensable party, and if his presence would oust the jurisdiction of the court the suit may proceed without him. Rogers v. Penobscot Min. Co., 154 F. 606, 610, 83 C.C.A. 380, 384; Sioux City Terminal R. & W. Co. v. Trust Company, 27 C.C.A. 73, 75, 82 F. 124, 126. The King Company, the grantor, is a corporation of the same state as the complainant, and its presence in this suit would oust the jurisdiction of the federal courts.

Why is that corporation an indispensable party to this suit? Counsel sel for the defendant answer: Because the amount of the claim for the extraction of the ore taken by the grantor, the King Company, was unliquidated. But how can its liquidation in a suit between the creditor and the grantee alone radically and injuriously affect the interest of the grantor? Because, say counsel, in separate actions against a grantor and grantee, founded on the obligation of the former, different juries or courts might find different amounts recoverable, and because the grantor could not maintain an action against the grantee alone to enforce the latter's promise. Let the propositions that different courts and juries might find different amounts recoverable, and that the grantor could not maintain an action against the grantee alone to enforce the latter's promise, be conceded. Nevertheless the grantor cannot be injuriously affected by the creditor's suit and recovery against the grantee. The grantor was liable to a suit by the creditor on its obligation before the creditor's suit against the grantee was instituted, and if it is still subject to such a suit its liability is no greater since the suit and the decree against the grantee than it was before that suit was commenced. Counsel argue that if the creditor first recover a judgment of $100,000 against the grantor on its obligation, and subsequently recover a judgment of $200,000 against the grantee in an action on the grantee's promise to pay the grantor's obligation, the grantee would be subject to two judgments on the same promise-- one for $100,000 in favor of the grantor on a suit which it might bring against the grantee, and one in favor of the creditor for $200,000. But the grantee could suffer no legal injury from the judgment for $100,000, because its payment of the judgment of $200,000 against it in favor of the creditor would discharge it from all liability on the judgment for $100,000 on the same obligation, on the ground that a party is required to make but one satisfaction of the same claim.

Counsel say that if the plaintiff, the creditor, should subsequently bring an action against the King Company, the grantor, and recover one-half the amount awarded by the final decree herein, the grantor could not recover of the grantee more than one-half the amount which the grantee is adjudged to pay to the creditor, and yet the creditor could recover of the grantee twice as much as it could from the grantor. But the creditor would not recover, nor would the grantee be required to pay, more than the just amount of its liability, and no one would be injuriously affected; for, against the mere supposition of counsel that a subsequent judgment for one-half the amount fixed by the decree in this case may be recovered by the creditor against the grantor, the amount adjudged by the decree of the court below in this suit, after full hearing, must be presumed to be right and just. Counsel contend that if the creditor should subsequently recover a judgment against the grantor on its obligation for double the amount fixed by the decree herein, the grantor would be entitled to a judgment for that amount against the grantee. The supposition is too improbable for serious consideration. If the creditor subsequently sues the grantor, it is probable that it will be met by the answer that by the present suit the creditor elected to substitute itself for the grantor and in the latter's right to litigate with the grantee, whom it thereby made the principal debtor, while the grantor became the surety in this suit to determine the amount of the grantor's original obligation, that the grantee has obeyed the decree of the court and paid the amount thus adjudged judged due to the creditor, for the presumption is that it will promptly obey the decree, and that, as the creditor can have but one satisfaction of the same claim, it...