Stevens v. Loomis, 6268.

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Writing for the Court: WOODBURY, , and HARTIGAN and ALDRICH, Circuit
• Citation: 334 F.2d 775
• Parties: Helen McLanahan STEVENS, Plaintiff, Appellant, v. Chauncey C. LOOMIS et al., Defendants, Appellees.
• Docket Number: No. 6268.,6268.
• Decision Date: 23 June 1964

334 F.2d 775 (1964)

Helen McLanahan STEVENS, Plaintiff, Appellant,
v.
Chauncey C. LOOMIS et al., Defendants, Appellees.

No. 6268.

United States Court of Appeals First Circuit.

June 23, 1964.

334 F.2d 776

James D. St. Clair, Boston, Mass., with whom Robert E. Fast, Boston, Mass., was on brief, for appellant.

Wilmot R. Hastings and Robert J. Hallisey, Boston, Mass., with whom Bingham, Dana & Gould, Boston, Mass., was on brief, for appellees.

Before WOODBURY, Chief Judge, and HARTIGAN and ALDRICH, Circuit Judges.

ALDRICH, Circuit Judge.

This is an appeal from the dismissal of a diversity action, brought in the district court for the district of Massachusetts, for the want of what the district court determined to be an indispensable party plaintiff. The theory or theories of recovery, and some of the facts are less than clear. This much appears. The sole plaintiff is a citizen of New York. She and her sister Elizabeth are the present income beneficiaries of a residuary trust under the will of their mother, Ella. Elizabeth and her husband, the defendant Loomis, are citizens of Massachusetts. Loomis and the co-defendant Agricultural National Bank, also to be treated as a citizen of Massachusetts, were the executors, now discharged, of Ella's estate, probated in Pennsylvania, and are presently the trustees of the trust. It does not appear whether there may be any future income beneficiaries, or who are the remaindermen,¹ nor is their absence explained, but it is alleged that Elizabeth "has refused and will continue to refuse" to join in the action.

The grounds of the complaint seem to be two. Basically it is alleged that Loomis, while in a fiduciary relationship to Ella during her lifetime, defrauded her of certain shares of stock by purchasing them for himself at far less than their true value, and that at some undetermined time the bank learned of the fraud, but "has refused and continues to refuse to take any action * * * against Loomis to secure for the benefit of Ella's estate and trust" the proceeds realized by him. The relief prayed for is that Loomis' profits be determined and that he "be ordered to account to Ella's estate and/or the Plaintiff"; and that the bank, for "breach of its fiduciary duty to perform and dispatch its duty as co-executor and trustee * * * be ordered to pay to Ella's estate and/or the Plaintiff the amount of such damages." There was also a prayer for general relief.

The district court, understandably, ruled that the plaintiff was not entitled to have Loomis' profits paid to herself,² or to have directly any of the relief specifically sought. Her interest or damage as a result of the defrauding of Ella can only be, on this record, as a present and future income beneficiary of the trust, the principal of which would have been larger but for Loomis' alleged misconduct. Fundamentally the claim must be that Loomis committed tortious acts, as executor and trustee, by not causing the estate or trust to sue him in one capacity or another. The bank is arguably liable for similar inaction, depending, however, upon further facts not adequately set forth, but which for present purposes, we will assume.

On such a basis the court concluded that the plaintiff, "acting alone, has a direct, separable right of action" under

334 F.2d 777

Massachusetts law.³ However, it held that the federal rules for joinder of parties control, and that by accepted federal practice Elizabeth was an indispensable party under F.R.Civ.P. 19(a). From this it followed that the complaint must be dismissed because the joinder of Elizabeth as a party plaintiff would destroy diversity. The court indicated that if Elizabeth should be joined as a defendant and not realigned because of her apparent siding with her husband, no such excuse and principle were applicable to absent remaindermen

There are, broadly, under the rule, and prior thereto, three classifications of parties; indispensable, necessary (sometimes called conditionally necessary) and formal. A court cannot proceed in the absence of an indispensable party, but will proceed in the absence of a merely formal party. Whether or not it should proceed in the absence of a necessary party is a matter of discretion. Because the classic definition of an indispensable party is one as to whom any judgment, if effective, would necessarily affect his interest, or would, if his interest is eliminated, constitute unreasonable, inequitable, or impractical relief, see cases infra, and the latter question is the same that must be asked when deciding whether to dismiss in the absence of a merely necessary party, where the court concludes not to proceed in the absence of some party there has been a natural tendency to label that party "indispensable" whether he was truly indispensable or only necessary.⁴ Nevertheless there is a difference, as some courts, even while ordering a dismissal, have been careful to point out. See, e. g., California v. Southern...