Yuba Consolidated Gold Fields v. Kilkeary

• Decision Date: 07 August 1953
• Docket Number: No. 13370.,13370.
• Citation: 206 F.2d 884
• Parties: YUBA CONSOLIDATED GOLD FIELDS v. KILKEARY et al.
• Court: U.S. Court of Appeals — Ninth Circuit

206 F.2d 884 (1953)

YUBA CONSOLIDATED GOLD FIELDS v. KILKEARY et al.

No. 13370.

United States Court of Appeals Ninth Circuit.

August 7, 1953.

Eugene M. Prince, Robert M. Searls, Allan R. Moltzen, Pillsbury, Madison & Sutro, San Francisco, Cal., Harry B. Seymour, Downey, Brand, Seymour & Rohwer, Sacramento, Cal., Southall R. Pfund, San Francisco, Cal., for appellants.

Edward F. Treadwell, Reginald S. Laughlin, San Francisco, Cal., Charles A. Wetmore, Jr., Marysville, Cal., Colin C. Kelley, Burton J. Goldstein, Goldstein, Barcelous & Goldstein, San Francisco, Cal., Hugh W. Ferrier, San Mateo, Cal., E. L. Gray, Arthur E. Hewitt, Marysville, Cal., L. Rodney Hollingshead, Sacramento, Cal., for appellees.

Before STEPHENS and ORR, Circuit Judges, and BYRNE, District Judge.

BYRNE, District Judge.

The appellant, as plaintiff below, filed a complaint in the nature of a "bill of peace" seeking to avoid a multiplicity of legal actions by determining in one equity suit the liability asserted in hundreds of claims for damages resulting from floods of the Yuba River in the winter of 1950. The complaint was dismissed for failure to state a claim upon which relief can be granted and this appeal followed.

The material allegations of the complaint may be summarized as follows: Plaintiff is a citizen of the State of Maine; defendants are all citizens of the State of California; the amount in controversy exceeds $3,000; since March 18, 1905, the plaintiff has been engaged in mining gold by the dredging process in Yuba County; during the month of November, 1950, a series of storms brought heavy precipitation to the section of the Sierra Nevada from the Feather River on the north to the Kern River on the south; the rainfall caused the Yuba River to carry a greater volume of water than had ever before passed down the stream during its recorded history; the flood waters overflowed the south natural banks of the river and broke the south training wall — a cobble embankment that the plaintiff had constructed about the year 1925 as a part of approved projects of flood and debris control; the river's overflow spread over an area of approximately 100 square miles in Yuba County which included large acreages of farm lands, about 2669 separate ownerships of real property, and more than seven residential and business communities; the flood caused an unascertainable amount of heavy damage; claimed items include damage to agricultural lands, orchards, crops, highways, farm produce, machinery, walls and foundations of buildings, furnishings and personal effects in dwellings, automobiles, business, residential and industrial property and lost profits due to interruption of business; a state of emergency was declared in Yuba County, lasting from November 20, 1950, to December 11, 1950, during which about 8,000 persons were forced from their homes for varying lengths of time and received flood and disaster relief from the American Red Cross and others in Marysville; during and after the flood the charge was publicly made that the plaintiff's dredging in the Yuba River had caused the flood and that the plaintiff was responsible for the damage; during November and December, 1950, meetings were held at which various defendants discussed ways and means of prosecuting their claims against the plaintiff, and agreements were circulated providing for payment by claimants of 1% of their respective claims into a fund to be expended for the prosecution of actions against the plaintiff; six actions involving more than one hundred claimants and $853,964.98¹ in claims have been filed against the plaintiff in the Superior Court of Yuba County, California, in which the claimants assert that the plaintiff's operations in the Yuba River were responsible for the flood and the resulting damages, which assertions are unfounded; plaintiff's operations had no causal connection with the flood, were at all times conducted with due care in accordance with good engineering practice and in conformity with the requirements of Federal permits duly issued by statutory authority, and were part of projects approved by statute for debris and flood control that have been in progress on the Yuba River for more than 50 years; the potential claims of the unnamed defendants may run into sums aggregating millions of dollars and if the claims should be asserted and established in amounts comparable with the damage prayers of the suits on file, the resulting liability would exceed the value of the plaintiff's assets and would be beyond its ability to pay.

It is further alleged that the plaintiff has no adequate remedy at law; unless relief in equity is granted plaintiff will be subjected to a multiplicity of actions by the defendants; such actions will involve identical questions of law and fact with respect to the alleged liability of plaintiff; such actions involve damage claims beyond plaintiff's ability to pay and the defendants, therefore, have a common interest in pending and proposed litigation to enforce such claim; and the trial of such actions, potentially numbering hundreds or thousands, cannot be practically or fairly conducted at law.

The prayer of the complaint asks that the court permanently enjoin the defendants from the prosecution, "except in this court and cause", of any suit against the plaintiff for the recovery of any damage alleged to have been caused by the flood; that the court hear and determine all claims of the defendants against the plaintiff and decree such claims to be without right; that declaratory relief be granted "with respect to plaintiff's rights under the statutes pursuant to which said federal permits were issued to plaintiff".

Jurisdiction of the Subject Matter and "Equity Jurisdiction".

This case is permeated with serious questions relating to jurisdiction which requires, at the threshold of our discussion, that we point out the distinction between the term "jurisdiction" in its strict sense, and as commonly used in equity jurisprudence. "Jurisdiction", in the strict meaning of the term, is the power to hear and determine the subject matter of the class of actions to which the particular case belongs. Reference to "equity jurisdiction" does not relate to the power of the court to hear and determine a controversy but relates to whether it ought to assume the jurisdiction and decide the cause. The distinction is of the utmost importance here, as this case involves problems of both "equity jurisdiction" and "jurisdiction" in its strict sense.

The trial court's jurisdiction of this case is not disputed by any of the parties. The motions to dismiss were on the ground of failure to state a claim upon which relief can be granted.

The suits in equity of which federal courts may exercise jurisdiction constitute that body of remedies, procedures, and practices which had been evolved in the English Court of Chancery prior to the adoption of the First Judiciary Act, except as modified by Congress.² The granting of relief against multiplicity of legal actions in appropriate situations is part of that historic jurisdiction.³

The general doctrine that equity will take cognizance of a matter to prevent a multiplicity of suits is asserted in innumerable decisions, but when one seeks an answer to the question of the extent of the doctrine he finds uncertainty and a direct conflict of decisions.

Much of the confusion and uncertainty surrounding the doctrine flows from the failure to recognize that its extent and limitations are not identical in every class of cases which furnishes an occasion for its exercise. The class of cases with which we are here concerned is that class wherein a number of persons have separate and individual claims and rights of action against the same party arising from a common cause or transaction and the law defendant seeks to have all of the claims settled in a single suit in equity.

Equity jurisdiction in this class of cases will not be recognized unless there is a common bond or interest held by the number of persons against the single person. The character and essential elements of this common bond or interest constitute the fundamental question upon which the recognition of the equity jurisdiction rests, and it is in the solution of this question that most of the conflict of opinion among the courts has arisen.

Is it necessary that the common bond or interest be a community of interest in the subject matter of the controversy to such an extent as to create a privity between the individual members of the group, as well as between each of them and the single adversary party? Or is it sufficient that the common bond or interest consists solely in the fact that the claims of the members of the group have arisen from the same source and all involve and depend upon similar questions of law and fact, so that while the same positive relation exists between the single party on the one side and each individual member of the group on the other, no such legal relation exists between the individual members themselves?

The leading case supporting the restricted view is Tribette v. Illinois C. R. Co., 1892, 70 Miss. 182, 12 So. 32, 19 L.R.A. 660, which has been followed by a number of courts including the Fourth Circuit.⁴ This restricted view has never been approved by the Supreme Court and is against the great weight of authority.

The majority view is succinctly stated by Pomeroy:⁵ "* * * notwithstanding the positive denials by some American courts, the weight of authority is simply overwhelming that the jurisdiction may and should be exercised, either on behalf of a numerous body of separate claimants against a single party, or on behalf of a single party against such a numerous body, although there is no `common title,' no `community of right' or of `interest in the subject-matter,' among these individuals, but where there is and because there is merely a community of interest among them in the questions of law and fact...