Warner v. First National Bank of Minneapolis

• Citation: 236 F.2d 853
• Decision Date: 11 September 1956
• Docket Number: No. 15478.,15478.
• Parties: Harold L. WARNER, Appellant, v. FIRST NATIONAL BANK OF MINNEAPOLIS, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

236 F.2d 853 (1956)

Harold L. WARNER, Appellant, v. FIRST NATIONAL BANK OF MINNEAPOLIS, Appellee.

No. 15478.

United States Court of Appeals Eighth Circuit.

September 11, 1956.

COPYRIGHT MATERIAL OMITTED

R. H. Fryberger, Minneapolis, Minn. (M. R. Keith, Minneapolis, Minn., was with him on the brief), for appellant.

Joseph H. Colman, Minneapolis, Minn. (Harold G. Cant, Frank W. Plant, Jr., John G. Dorsey, Dorsey, Owen, Barker, Scott & Barber, and Cant, Taylor, Haverstock, Beardsley & Gray, Minneapolis, Minn., were with him on the brief), for appellee.

Before GARDNER, Chief Judge, and JOHNSEN and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal from a summary judgment dismissing plaintiff's petition upon the ground that plaintiff's cause of action was barred by the statute of limitations. This action was commenced on February 15, 1954, and is a class suit for the benefit of parties interested in the estate of Ellsworth C. Warner, hereinafter called decedent, who died testate, a resident of Florida, on January 5, 1942. Decedent's will was admitted to probate by the Florida court on January 9, 1942, and two Florida banks nominated as executors were appointed executors and served in that capacity. Decedent in his will named the First National Bank of Minneapolis, defendant herein, as managing advisor of his estate, giving to said defendant broad supervisory powers.¹ Decedent had formerly resided in Minneapolis and had been a director of defendant bank. Defendant had considerable familiarity with the decedent's property interests and his family problems. Defendant had agreed with the decedent to serve as managing advisor, and acted in such capacity throughout the administration of the estate. Defendant's rights as managing advisor were recognized by the executors. In most instances the executors obtained the advisor's approval of any proposed reports or applications, and consulted with the defendant generally as to all estate problems.

Plaintiff's complaint consists of 247 numbered paragraphs covering 200 pages. Plaintiff seeks relief against the defendant for damages for loss occasioned to decedent's estate by reason of defendant's failure to perform the duties it assumed as managing advisor. The complaint, after reciting background material and general allegations of the duties assumed by the managing advisor, particularizes the various alleged improper transactions in separate counts. Plaintiff alleges that the managing advisor failed to do things which it should have done, and improperly executed duties it did perform. Some of plaintiff's principal specific complaints are that the managing advisor failed to require proper accounts and reporting by the executors; that poor supervision of estate and income tax returns created liability for penalty, interest, and attorney's fees; that careless supervision of the sale of the estate's stocks and bonds caused needless loss; that the managing advisor should have insisted that the executors pay interest on unreasonable cash balances they maintained in their own banks; that defendant permitted the estate to be loaded with excessive expenses; that defendant permitted the payment of excessive attorneys' fees; and that the payment of legacies and the distribution and closing of the estate were unduly delayed. A further complaint, considerably stressed, is that the executors were allowed fees in the amount of $400,000, of which the defendant received one-half, and that such fees were paid in violation of a fee agreement with the decedent that the total executors' fees would not exceed $50,000. Plaintiff also contends that the antagonistic attitude taken by the defendant toward the beneficiaries and the refusal to supply the beneficiaries with adequate information as to the affairs of the estate compelled the beneficiaries to institute litigation to protect their interests and to obtain information, and that they are entitled to reimbursement for the expenses so incurred. To enumerate in detail all of plaintiff's claims would unduly extend this opinion. The claims of plaintiff are summarized in footnote 3 to the trial court's opinion, 135 F.Supp. 687, 689-690.

All claims and legacies due from the Warner estate have been paid. The decedent's will leaves all of his residuary estate to the defendant bank as trustee. Any loss incurred by the estate would affect only the residuary trust. The beneficiaries of the trust are the children of the decedent and their families. Plaintiff is a child of the decedent and a beneficiary of the residuary trust.

The defendant moved for a summary judgment upon the following grounds: (a) plaintiff's failure to join indispensable parties; (b) no cause of action stated; (c) res judicata; (d) lack of probate jurisdiction; (e) statute of limitations; and (f) laches.

The trial court sustained defendant's motion for summary judgment upon the ground that the plaintiff's cause of action was barred by the statute of limitations. The validity of this determination is the principal question before us on appeal. Defendant asserts that its other grounds for summary judgment support the dismissal of the plaintiff's claim and should be considered in the event we do not uphold the trial court's determination on the statute of limitations issue.

We shall first briefly consider the rules applicable to summary judgments. The trial court has correctly stated that a motion for summary judgment is an extreme remedy, and should be granted only in the absence of a genuine material fact issue. The burden of demonstrating the nonexistence of any genuine fact issue is upon the moving party, and all doubts shall be resolved against him. Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967; Traylor v. Black, Sivalls & Bryson, 8 Cir., 189 F. 2d 213, 216.

We are required to examine the challenges made by the defendant to the trial court's jurisdiction. Diversity of citizenship and requisite jurisdictional amount are established insofar as the parties now before the court are concerned. Defendant urges that the executors or some other representative of the Warner estate, such as an administrator ad litem or, in their absence, at least all of the beneficiaries of the trust, are indispensable parties. There is considerable merit to such contention. See Young v. Powell, 5 Cir., 179 F.2d 147; McAndrews v. Krause, 245 Minn. 85, 71 N.W.2d 153; Baker v. Dale, D.C.W.D.Mo., 123 F.Supp. 364. The issue of want of indispensable parties is not a jurisdictional one. Young v. Powell, supra; Baker v. Dale, supra. Rule 21 of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides that parties may be added at any stage of the action upon such terms as are just. Ordinarily, dismissal should not be ordered for failure to join an indispensable party, but an opportunity should be afforded to bring in such party. Keene v. Hale-Halsell Co., 5 Cir., 118 F.2d 332; Baker v. Dale, supra; Moore's Federal Practice, Vol. 3, § 21.04.

Defendant also urges that the plaintiff has not adequately pleaded the necessity for a class action, and that plaintiff is not a proper party to represent the class. It appears to us that there is a fact dispute as to the number of members of the class, and also a fact dispute as to whether plaintiff's rights are antagonistic to those of other members of the class. As pointed out by the trial court, any deficiency in respect to pleading a class action is subject to correction by amendment. Since some fact questions are involved, we do not believe that the question of whether this case comes within the field of a class suit should be determined by summary judgment.

Defendant further contends that the federal court is without probate jurisdiction and can not interfere with state probate proceedings. The federal courts have no probate powers and may not exercise their jurisdiction to disturb or affect the possession of property in custody of state courts. Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256. However, it appears to us that it is not here proposed to interfere with the probate powers of the Florida court. The managing advisor was not an officer of the Florida probate court, and the approval of the executors' accounting does not necessarily include approval of the managing advisor's conduct. The basis of this action is for damages against the managing advisor for breach of duties it assumed. The will provides that if the executors in good faith rely upon the advice of the managing advisor they are protected and freed from liability. There are situations where the managing advisor might be responsible and the executors are protected. For example, if the managing advisor fraudulently or carelessly advised the executors as to the value of some security with which the executors were not familiar, and the executors in good faith relied upon this advice and acted upon it, they would be protected but there might well be liability on the part of the advisor giving such advice.

We agree with the trial court that the defendant has not established want of jurisdiction with sufficient definiteness and clarity to warrant a summary judgment of dismissal on the ground of lack of jurisdiction at the present stage of the proceedings.

We now proceed to the question of whether the trial court was warranted in granting summary judgment dismissing plaintiff's claim upon the ground that the statute of limitations bars recovery by the plaintiff. The parties agree that this action is covered by the Minnesota statute of limitations, Minnesota Statutes Annotated, § 541.05, which so far as here applicable provides:

"541.05 Various cases, six years

"The following actions shall be commenced within six years:

"(1) Upon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed;

* * * * *

"(6) For relief on the ground of fraud, in which case the cause

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