Helen McLanahan Stevens v. Chauncey C. Loomis, 334 F.2d 775, 1st Cir. (1964)

334 F.
2d 775
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.
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.
3
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 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 Pacific Co., 1895, 157 U.S. 229, 251, 15 S.Ct. 591,
39 L.Ed. 683; Heyward v. Public Housing Administration, 1954, 94
U.S.App.D.C. 5, 214 F.2d 222. Although it would not comport with at least the
language of many cases,5 we think that true indispensable parties are only those
whose interests could not be excluded from the terms or consequences of the
judgment and leave anything, or appreciably anything, for the judgment
effectively to operate upon, as where the interests of the absent party are
inextricably tied in to the cause, Thayer v. Life Ass'n of America, 1885, 112
U.S. 717, 5 S.Ct. 355, 28 L.Ed. 864; Terrell v. Allison, 1874, 21 Wall. 289, 22
L.Ed. 634; Barney v. City of Baltimore, 1867, 6 Wall. 280, 18 L.Ed. 825, or
where the relief really is sought against the absent party alone, Kendig v. Dean,
1878, 97 U.S. 423, 24 L.Ed. 1061; see Note, Indispensable Parties in the
Federal Courts, 65 Harv.L. Rev. 1050, 1056 (1952).6 In other words, if there
may be a viable judgment having separable affirmative consequences with
respect to parties before the court, and the inquiry is concerned solely with the
inequities, in the light of the total circumstances, resulting from the inability to
affect absent interested parties, then such other parties should be defined as
merely necessary, not indispensable. The distinction is, of course, important. If
indispensability is determined solely by the nature of the claim, the courts will
have broader discretion to find that a particular plaintiff may proceed in the
absence of other parties. This we think is proper.7
6
Applying that principle to the case at bar, and even, we would think, with a
more restricted one, if the district court was right, as we are disposed to believe
it was, in stating that the plaintiff, as beneficiary, had a direct, separable right of
action, this made it incorrect to call the other beneficiaries indispensable.8 On
the basis that they were only necessary parties the court should have
considered, as a matter of discretion, whether or not to proceed in their absence.
However, on the present record we believe this a case where it would have
been an abuse of discretion to proceed. Only incomplete and unsatisfactory
relief could be afforded in a suit, the purpose of which was to charge the
trustees to augment the corpus of the trust, in which but one income beneficiary
was represented. 9 Plaintiff argues that if she were to lose on the merits the
situation would remain in statu quo, and no one would be hurt. But one must
wonder what would happen if thereafter another beneficiary were to sue and
have the trust corpus increased. Conversely, suppose this plaintiff were to win,
and then some other beneficiary were to lose.
It is true that the effect of the dismissal of the action is to deny this plaintiff the
benefits of diversity jurisdiction, and that it has sometimes been said that
federal courts "will strain hard" to support diversity jurisdiction in the

application of Rule 19. See Standard Oil Co. of Texas v. Marshall, 5 Cir., 1959,
265 F.2d 46, 56, cert. den. 361 U.S. 915, 80 S.Ct. 259, 4 L.Ed.2d 185; Brown v.
Christman, 1942, 75 U.S.App.D.C. 203, 126 F.2d 625, 631-32 n. 23. However,
we are shown nothing in the case at bar to make us believe that this factor, if
important, is as important as relegating the parties to a jurisdiction, the
existence of which has not been denied, where full workable and reasonable
relief may be granted. This has been the customary result in similar situations,
whether the absent beneficiaries were termed indispensable or otherwise. Baird
v. Peoples Bank & Trust Co., 3 Cir., 1941, 120 F.2d 1001, 1003; Matthies v.
Seymour Mfg. Co., 2 Cir., 1959, 270 F.2d 365; Young v. Powell, 5 Cir., 1950,
179 F.2d 147, cert. den. 339 U.S. 948, 70 S.Ct. 804, 94 L.Ed. 1362; Talbutt v.
Security Trust Co., D.C. E.D.Ky., 1938, 22 F.Supp. 241; see Rockefeller v.
First National Bank of Brunswick, D.C.S.D.Ga., 1957, 154 F.Supp. 122. The
actual decision, apart from certain language therein, in plaintiff's case of Green
v. Green, 7 Cir., 1955, 218 F.2d 130, cert. den. 349 U.S. 917, 75 S.Ct. 606, 99
L.Ed. 1250, is not inconsistent. If an absent beneficiary is merely a necessary
party, the fact that no complaint as to her absence was made for two years may
be a reason for exercising discretion in favor of not dismissing. Plaintiff's other
cases are distinguishable on the ground that the possibility of granting separate
relief made proceeding without the absent parties equitable and reasonable.
Waterman v. Canal-Louisiana Bank & Trust Co., 1909, 215 U.S. 33, 30 S.Ct.
10, 54 L.Ed. 80; Payne v. Hook, 1868, 7 Wall. 425, 19 L.Ed. 260; Atwood v.
Rhode Island Hospital Trust Co., 1 Cir., 1921, 275 F. 513, cert. den. 257 U.S.
661, 42 S.Ct. 270, 66 L.Ed. 422; Seeley v. Cornell, 5 Cir., 1935, 74 F.2d 353.
8
Judgment will be entered affirming the judgment of the District Court.
Notes:
1
It is not alleged that there are no remaindermen. We cannot believe, particularly

in the absence of such allegation, that a testamentary trust would have none.
Defendants stated, both in the court below and in this court, that there were
remaindermen, and plaintiff maintained silence. We are engaged in a lawsuit,
not in a poker game, and if plaintiff chooses not to recite the facts about the
other beneficiaries under these circumstances particularly where she was
obligated to do so by F.R.Civ.P. 19(c), we will assume that there are other
beneficiaries who, if joined, would destroy diversity
Plaintiff might, as income beneficiary, have a separable claim to the additional

income she would have received to date had the estate been larger. She does
not, however, request such fragmentary relief, nor would we, except in unusual
circumstances not shown here, be inclined to proceed on that limited basis
3
Not, however, the limited right referred to in the preceding footnote
We note, with great deference to the learned reporter to the Advisory

Committee on the Civil Rules, see fn. 7, infra, that even he cites, without
comment, cases referring to indispensable parties when he is discussing only
necessary parties. See subdivision (b) of the Committee Note to the proposed
amendment of Rule 19, citing Roos v. Texas Co., 2 Cir., 1927, 23 F.2d 171,
cert. den. 277 U.S. 587, 48 S.Ct. 434, 72 L.Ed. 1001; Niles-Bement-Pond Co.
v. Iron Moulders Union, 1920, 254 U.S. 77, 41 S.Ct. 39, 65 L.Ed. 145
The extent to which these two terms are used almost interchangeably is
illustrated by Commonwealth Trust Co. of Pittsburgh v. Smith, 1924, 266 U.S.
152, 159, 45 S.Ct. 26, 69 L.Ed. 219, where the court characterized what seem
clearly indispensable parties as "necessary," without mention of the difference
For a bibliography of secondary material, see the Committee Note to Rule 19

referred to in the next footnote
An extensive re-writing of Rule 19 is presently proposed to eliminate confusion

which has arisen regarding various aspects of the rule and to clarify the grounds
for exercising the court's discretion. The new rule omits all reference to
indispensable parties, consistent with the view that what are indispensable
parties is a matter of substance, not of procedure. See Preliminary Draft of
Proposed Amendments to Rules of Civil Procedure for the United States
District Courts proposed by the Advisory Committee on Civil Rules, March
1964, and the Committee's Note, published in Volume 227 F.Supp
This would seem equally so under Massachusetts practice, as the Massachusetts

rule with respect to joinder of parties is substantially like the federal. See
Massachusetts Superior Court Rule 15, and particularly Judge Lummus'
annotation to the 1932 edition thereof
The district court properly ruled that it had not been shown that there were so
many beneficiaries that the proceeding might be justified as a class suit under
F.R.Civ.P. 23

Helen McLanahan Stevens v. Chauncey C. Loomis, 334 F.2d 775, 1st Cir. (1964)

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Helen McLanahan Stevens v. Chauncey C. Loomis, 334 F.2d 775, 1st Cir. (1964)

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334 F.

Helen McLanahan STEVENS, Plaintiff, Appellant,

United States Court of Appeals First Circuit.

The grounds of the complaint seem to be two. Basically it is alleged that

indispensable or only necessary.4 Nevertheless there is a difference, as some

federal courts "will strain hard" to support diversity jurisdiction in the

Judgment will be entered affirming the judgment of the District Court.

It is not alleged that there are no remaindermen. We cannot believe, particularly

Plaintiff might, as income beneficiary, have a separable claim to the additional

Not, however, the limited right referred to in the preceding footnote

We note, with great deference to the learned reporter to the Advisory

For a bibliography of secondary material, see the Committee Note to Rule 19

An extensive re-writing of Rule 19 is presently proposed to eliminate confusion

This would seem equally so under Massachusetts practice, as the Massachusetts

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