United States Gypsum Co. v. Hoxie
| Decision Date | 14 August 1909 |
| Docket Number | 265. |
| Citation | 172 F. 504 |
| Parties | UNITED STATES GYPSUM CO. v. HOXIE et al. |
| Court | U.S. District Court — Northern District of Iowa |
C. C Cole, for cross-complainants.
Dawley & Wheeler and Edwards & Longley, for defendants.
The original bill is by the United States Gypsum Company, a New Jersey corporation, to establish an equitable right and title to a judgment recovered by the Carbon Plaster Company, an alleged corporation of Iowa, in the district court of that state in and for Blackhawk county, July 13, 1907, for some $18,500 and interest, against N. J. Berkley and Henry Meyers defendants in that bill, and John Thee, who is not made a party thereto. The defendants N. J. Berkley and Henry Meyers and said John Thee, without leave of court, have filed a cross-bill against the original complainant, the United States Gypsum Company and A. J. Edwards, Alfred Longley, and Jesse Gouge, defendants in the original bill, in which it is alleged in substance that the judgment against the cross-complainants in the state court, which it is alleged in the original bill equitably belongs to the complainant therein, was fraudulently obtained by the defendants A. J Edwards, Alfred Longley, and Jesse Gouge, in the name of the Carbon Plaster Company, upon a cause of action alleged to exist in favor of that corporation, when in fact there was no such corporation then in existence, it having been dissolved as alleged, in February, 1902, prior to the commencement of that suit, by the unanimous consent of all of its stockholders; and affirmative relief is prayed that said judgment be canceled and set aside, and that the amount thereof paid by them to the sheriff of Blackhawk county be returned to the cross-complainants.
The defendants A. J. Edwards, Alfred Longley, and Jesse Gouge demur to the cross-bill, upon the ground that the Carbon Plaster Company is an indispensable party to the complete determination of the matters alleged in that bill and is not made a party thereto.
A serious, if not fatal, defect in the cross-bill, is that one of the complainants therein is not a defendant or party in any way to the original bill. The rule is elementary that a cross-bill can only be filed by a defendant or defendants in the original bill against the complainant therein, or other defendants, or against both, touching matters alleged in the original bill. Story's Eq. Pl. (8th Ed.) Sec. 389 et seq.; Bates' Fed. Eq. Sec. 374 et seq.; Street's Fed. Eq. Secs. 1046-1049. Ordinarily new parties cannot be brought into a suit as defendants in the federal court by a cross-bill. If the interest of a defendant requires their presence, he takes the objection of nonjoinder, and the complainant is forced to amend, or the bill is dismissed. Shields v. Barrows, 17 How. 130-144, 15 L.Ed. 158; Bank v. Carrollton Railroad, 11 Wall. 624-632, 20 L.Ed. 82; Smith v. Woolfolk, 115 U.S. 143-148, 5 Sup.Ct. 1177, 29 L.Ed. 357. This rule is generally followed in the federal courts, though it may not be in the state courts, especially in those states where a statute authorizes third parties to be made defendants to a cross-bill, as is the case in Iowa. Code Iowa 1897, Sec. 3574.
This question, however, need not now be determined; for it does not arise in this case, and it is plain that one not a party to a suit in equity in the federal court is not permitted to file a cross-bill, or other pleading to the merits, therein, until he becomes a party to the suit in some recognized mode of equity procedure. The complainant in the original bill has not seen fit, for some reason, to make the cross-complainant John Thee a party defendant to that bill. It is true that in the body of the bill John Thee is referred to as one of the defendants therein; but he is not in fact named as a defendant, either in the caption of the bill or in the subpoena, and no relief is prayed against him, and no service has been made upon him. He is not, therefore, a party to the original bill and cannot rightly file, or be a party complainant to, a cross-bill therein.
If this difficulty should be overlooked, or if it could be avoided, the question would remain: Is the Carbon Plaster Company, alleged in the original bill to be a corporation of Iowa, and as such to have recovered in the state court the judgment in question against the cross-complainants, an indispensable party to this cross-bill? If the judgment is absolutely void because the Carbon Plaster Company had ceased to exist before its rendition, that fact would be available as a defense to the original bill upon answer of the judgment defendants, or such of them as are defendants to that bill. But are the cross-complainants entitled to the affirmative relief, prayed by them, that the judgment be canceled and set aside, and the amount thereof, paid by them under duress, as they allege, to the sheriff of Blackhawk county, returned to them, in the absence both of the Carbon Plaster Company, or its stockholders, and the sheriff to whom they paid the judgment?
If the judgment had in fact been assigned to the United States Gypsum Company by the Carbon Plaster Company, it may be that neither the latter named company nor its stockholders would be an indispensable party or parties to the suit, inasmuch as the company would then have parted with all of its interest in the judgment; but it would be a proper party, if still in existence. It is not, however, alleged, either in the original bill or in the cross-bill, that the judgment had been assigned to the original complainant. That complainant only alleges that it was the owner, either by assignment from the Carbon Plaster Company of the cause of action upon which the judgment was recovered or by its purchase of all of the stock of that corporation, and that it was therefore the equitable owner of the judgment so recovered, and entitled to the amount that has been paid, or that may be collected, thereon. The Carbon Plaster Company, therefore, under the allegations of the original bill, is an indispensable party to that bill, and it is made defendant thereto.
The cross-bill alleges, in substance, that the Carbon Plaster Company had assigned and transferred to the United States Gypsum Company all of its property and assets of every description (save some specified exceptions not necessary to...
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