Calcote v. Texas Pac. Coal & Oil Co.

On Petition for Rehearing.

HOLMES, Circuit Judge.

The question of indispensable parties is primarily a matter of equity jurisprudence, 1 sometimes of due process of law; but the bringing in of such parties may present a federal jurisdictional question if federal jurisdiction depends wholly upon diversity of citizenship. Therefore, we said that the question of dispensable parties was inherent in the issue of federal jurisdiction.

In the absence of parties and without their having an opportunity to be heard, a court is without jurisdiction to make an adjudication concerning them; 2 but where the controversy may be determined without prejudice to the rights of absent parties who are beyond its jurisdiction, it will be done; and a court of equity will strain hard to reach that result. It was so held in Bourdieu v. Pacific Western Oil Co., 299 U.S. 65 , 57 S.Ct. 51 , 81 L.Ed. 42 , but there the court had jurisdiction on the ground of a federal question, and from a federal jurisdictional standpoint it was immaterial whether the absent party was brought in or not.

*225 In the Bourdieu case, supra, the Supreme Court was referring to a necessary party that could not be brought before it, and there is nothing in its opinion to indicate that a court of equity should strain hard to determine the merits of a cause in the absence of one who is within its jurisdiction and can be made a party to the suit. While the court said that it would be a waste of time to enter upon a consideration of the indispensability of the presence of the United States (which was the absent party), it later expressly held that the United States was “not an indispensable party,” since a mere inspection of the bill at once disclosed that it stated no cause of action against any one.

In the instant case the situation is entirely different. There was no reason for a court of equity to strain to find a way to adjudicate the merits of a controversy'in the absence of interested parties beyond its jurisdiction, because here, for aught that appears, the presence of the royalty grantees was readily obtainable. Aside from these considerations, every indispensable party must be brought into court, actually or constructively, or the suit will be dismissed if a substantial claim is stated in the complaint. 3 It is axiomatic that indispensable parties cannot be dispensed with in diversity cases even though their presence will defeat federal jurisdiction.

In the Bourdieu case the rights of the United States were in no way threatened; it had no interest requiring protection in a proceeding that at the threshold was seen to be without substance; and the court held that it was not an indispensable party to the particular suit, without expressing an opinion as to what its status would be “upon a good bill.” If we apply to the case before us the test thus laid down, we find that the (rights of the royalty grantees were directly threatened in the suit to cancel the lease, and that they were directly affected in the judgment confirming it. The validity of the lease was the paramount issue on the hearing below, both as to the original bill and as to the counterclaim. The confirmation of its validity in the judgment under review directly affected vested rights of the royalty grantees without giving them an opportunity to be heard.

Except where the court had jurisdiction without regard to diversity of citizenship, we have been cited to no decision of the Supreme Court or of this court, and we have found none, where an inquiry as to the presence of indispensable parties was dispensed with on the ground that no cause of action was stated in the complaint. In Sneed v. Phillips Petroleum Co., 5 Cir., 76 F.2d 785 , where jurisdiction rested solely on the ground of diversity of citizenship, this court expressly refused to proceed until certain persons whose presence it held to be indispensable were made parties. Notwithstanding the contention there that no cause of action was stated, this court held that a substantial claim was presented in the complaint, and remanded the cause with directions to bring in the absent parties.

The maxim that the law never requires the doing of an idle thing cannot be invoked in diversity cases to avoid an inquiry as to the indispensability of parties where a substantial claim is made in the complaint. The original bill in this case sought cancellation of the same lease that the counterclaim sought to confirm. 4 The judgment appealed from not only dismissed the original bill, but granted the relief prayed for in the counterclaim.

In the majority opinion we pointed out that these royalty grantees had separate and distinct vested mineral interests, which would necessarily be prejudicially affected by confirmation as well as by cancellation of the lease. To say that it is useless to inquire into the question of indispensable parties in diversity cases, where a substantial claim is stated in the complaint, is almost the same as saying that it is a waste of time for the court to look into its own jurisdiction. In Mallow v. Hinde, 12 Wheat. 193, 198 , 6 L.Ed. 599 , the court indicated that it *226 might put its decision upon lack of jurisdiction or upon a much broader ground. It said:

“We do not put this case upon the ground of jurisdiction, but upon a much broader ground, which must equally apply to all courts of equity, whatever may be their structure as to jurisdiction. We put it on the ground that no court can adjudicate directly upon a person’s rights, without the party being either actually or constructively before the court.”

Since neither of the judges who concurred in the decision in this case is of the opinion that the petition for rehearing should be granted, the petition is denied.

HUTCHESON, Circuit Judge, dissents.

New Orleans Water-Works v. City of New Orleans, 164 U.S. 471, 480 , 17 S.Ct 161 , 41 L.Ed. 518 .

Barney v. Baltimore City, 6 Wall. 280, 284, 285 , 18 L.Ed. 825 : Donovan v. Campion, 8 Cir., 85 F. 71, 72 . See also Dobie on Federal Procedure, p. 218, which says: “There can be no dispensing with indispensable parties.”

Additional parties may be brought in under the counterclaim or cross-claim. Rule 13(h) of Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c.