Harris & Stevens Corp. v. Tarr & McComb, Inc.

MORROW, Circuit Judge (after stating the facts as above). The jurisdiction of the court below was invoked on the ground of diverse citizenship. The motion to dismiss the action was based upon the ground that, if certain indispensable parties were madg defendants, there would be a lack of diversity of citizenship. The motion to dismiss also raised the question of a misjoinder of parties plaintiff and insufficiency of fact to constitute a cause of action in equity. We think the determination of the first question properly disposes of this appeal. The agreement of March 12, 1917, whereby the plaintiffs, with consent of certain of their creditors, continued in force previous assignments to the defendant of the leases of oil property mentioned in the agreement, the provision in the agreement for the appointment of the Citizens’ National Bank of Los Angeles as the trustee of the parties, to disburse the receipts derived from the operation of the oil wells by the defendant until the creditors had been fully paid, the transfer of the possession of that property by the plaintiffs to the defendant after all the creditors had signed the agreement, were all parts of one transaction, having for its object the security and benefit of plaintiffs’ creditors. This action brought by thé plaintiffs to recover possession of the property from the defendant before the object of the agreement has been accomplished, and while the Citizens’ National Bank of Los Angeles was actually engaged in distributing to the creditors the profits from the operation of the oil wells by the defendant, is clearly and distinctly an action affecting the interest of the creditors, and requires that they should be made parties to the action. Furthermore, the Citizens’ National Bank of Eos Angeles is charged with a duty under the agreement and an interest in its execution, and is entitled to be heard with respect to such interest. *573 It follows that the creditors and the Citizens’ National Bank of Los Angeles are indispensable parties to this action, that their interest lies with the defendant, and they must be brought into the action as defendants ; but as they are all citizens of California (so admitted), and the plaintiffs are also citizens of that state, and the jurisdiction of the court is invoked on the ground of diverse citizenship, the bringing in of such defendants will bo fatal to the jurisdiction of the District Court. The action was therefore properly dismissed by the court below. The decree therefore is affirmed.