Therrell v. Arthur, 1137.

• Decision Date: 13 December 1932
• Docket Number: No. 1137.,1137.
• Citation: 3 F. Supp. 926
• Parties: THERRELL v. ARTHUR et al.
• Court: U.S. District Court — Southern District of Florida

3 F. Supp. 926

THERRELL v. ARTHUR et al.

No. 1137.

District Court, S. D. Florida.

December 13, 1932.

Carl T. Hoffman, Charles A. Carroll and Shutts & Bowen, all of Miami, Fla., for complainant.

Henry K. Gibson, Bart A. Riley, S. P. Robineau, and Miller, McKay, Dixon & De Jarnette, all of Miami, Fla., for defendants.

RITTER, District Judge.

The grounds for remanding this cause are urged only by the alleged defendant, which, for convenience, I call the Arthur committee. The plaintiff and the defendant Edmunds committee are not questioning the removal. The real ground for asking the removal is that the defendants are not all nonresidents of the state of Florida, so as to give diversity of citizenship. The members of the so-called Arthur committee are residents of Florida. This committee asserts that it is representing bondholders of various trusts involved by reason of an agreement dated December 11, 1931, and which is attached as Exhibit B to the petition for removal filed in the circuit court of the Eleventh judicial circuit of the state of Florida, and which has been put in evidence for this hearing. This agreement, in my opinion, is one based upon the co-operation and official action of the Honorable Paul D. Barns, judge of the circuit court for the Eleventh judicial circuit of Florida. The key of the agreement is the approval of the agreement by that court, and the reservation by that court of power to supervise the work of the committee in the protection of bondholders in many respects. It attempts to not only tie in Judge Barns, but any other judge of the said judicial circuit, and provides for approval of plans and procedure. It is clear that the agreement was designed for the purpose of giving bondholders who might deposit their bonds with that committee the clear impression that the work of the committee was under the careful eye of the judge of the circuit court, and thus to establish confidence. The committee could not function without the official sanction of the said judge, or other circuit judge. Judge Barns entered an order approving the agreement, and consenting to act thereunder.

The Attorney General of the state of Florida presented an application for writ of prohibition to the Supreme Court of the state of Florida against Judge Barns from approving or acting under the said agreement, and on August 5, 1932, the Supreme Court in State ex rel. Landis, Attorney General, v. Eleventh Judicial Circuit Court et al., 143 So. 351, decided that the action of Judge Barns was without jurisdiction, and that he could not approve the said agreement as an official act or act thereunder according to its terms as judge of the circuit court, and held his action void.

The Supreme Court likewise acted upon a petition presented by William H. Edmunds committee (State ex rel. Edmunds v. Barns), found in the same above Southern Reporter, page 352. A writ of prohibition was ordered against the judge from acting. This, in my opinion, disposes of the so-called Arthur committee as a party defendant. It was not a legal committee; its agreement being void. It was, in fact, functus officio. Its representation of bondholders depending upon the validity of its agreement, and the agreement being void, it does not, therefore, legally represent bondholders in such a capacity as makes it a necessary, indispensable party defendant. Its interest, in any event, is no different in effect from that of the Edmunds committee, which committee is composed, as is admitted, of nonresidents who do represent, by a private agreement, certain of the bondholders in most, if not all, of the trusts involved here.

The facts concerning the court action on the so-called Arthur committee contract were known to the plaintiff and his counsel at the time the petition for the appointment of successor trustee was filed in the state court. Nevertheless, the said Arthur committee was made a party defendant. It is immaterial here whether this was done intentionally by the plaintiff in an effort to retain jurisdiction of the state court, or otherwise. The motion to remand raises the question of the status of this Arthur committee. The federal courts disregard parties defendant in order to sustain their jurisdiction where the party is not a necessary one, and where its being joined in the state court would withdraw jurisdiction from the federal court. While the plaintiff may in good faith proceed in the state court upon a cause of action which it alleges to be joint, it is equally true that the federal court will not sanction devices intended to prevent a removal to the federal court where one has a right to such removal, and should be equally ready to protect the right to proceed in the federal court as to permit the state court in a proper case to retain its own jurisdiction. Wecker v. N. E. & S. Co., 204 U. S. 176, 27 S. Ct. 184, 51 L. Ed. 430, 9 Ann. Cas. 757; City of Seattle v. G. N. Ry. Co. (D. C.) 239 F. 1015; McGarvey v. Butte M. Co. (D. C.) 199 F. 671; Clark v. Chicago, R. I. & P. Co. (D. C.) 194 F. 505.

"In general terms it may be stated that formal and unnecessary or merely proper parties may be disregarded, while indispensable or, as they are now called, necessary parties cannot be. A better stated rule is that defendants who are indispensable ones only should be considered, and others may be either dismissed or disregarded in determining...