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