United States District Court, Northern District of Illinois, E.D
December 15, 1950
FIRST NAT. BANK OF CHICAGO ET AL.
The opinion of the court was delivered by: Igoe, District Judge.
This controversy, which has been under inquiry in the District
Court since 1943,
involves the testamentary trust estate of Otto Young, deceased.
Opinions by the Court of Appeals, De Korwin v. First National
Bank of Chicago, 7 Cir., 156 F.2d 858, certiorari denied, 1946,
329 U.S. 795, 67 S.Ct. 481, 91 L.Ed. 680; Id., 7 Cir.,
179 F.2d 347, certiorari denied, 1950, 339 U.S. 982, 70 S.Ct. 1028 and by
this Court D.C. 1949, 84 F. Supp. 918, are referred to for a full
discussion of these proceedings.
The issues now submitted for determination are presented by the
motions of several beneficiaries for leave to intervene in the
cause. Those seeking to become parties at this stage of the
proceeding and to be bound by the judgment of this Court are Ruth
Young, individually and as administrator de bonis non of the
estate of Stanley Young, deceased, Evelyn Heyworth Stamm,
individually and as administrator de bonis non of the estate of
Otto Young Heyworth, deceased, Marguerite Heyworth, as
conservator of the estate of Lawrence Heyworth, an incompetent,
and Lawrence Heyworth, Jr. As appears from the record herein,
these applicants are the only persons having any present interest
in the Otto Young trust estate who are not presently before the
District Court as actual parties.
In view of the Court's long experience with this case and its
many issues, and after a thorough re-evaluation of the entire
record, the Court is strongly of the opinion that the
interventions should be allowed, as a matter of sound judicial
discretion under Rule 24(b). Fed.Rules Civ. Proc., 28 U.S.C.A.,
in order that the moving parties may become bound by the decree
in this cause and so that they may participate to the extent of
their interest in all further proceedings herein.
The Court has been persuaded to this view by many factors.
Unless the interventions are permitted there is grave danger of a
multiplicity of suits for the same relief as has been and may be
granted in this cause, casting a heavy burden not only upon those
who would intervene but upon the other beneficiaries as well. The
main action cannot suffer by intervention of all those who
constitute the remaining beneficiaries. This is clearly an
ancillary proceeding. The interveners will not add important new
issues, nor occasion any delay, since the beneficial interests of
the intervening petitioners are similar in character to that of
the plaintiff and their interest in a fiduciary accounting stands
on the same footing. They are vitally concerned with the pending
petitions for fees and expenses and surely should be heard in
that respect since all active parties to the cause or their
counsel have sought such allowances and consequently there is no
one before the Court to adequately represent them in the fixing
of an aggregate amount payable from the general fund. Their
share, only, with one minor exception, is to be charged with
proportional contributions to plaintiff's counsel for the special
Clearly, then, the applications are timely presented. And under
all the circumstances it is equally manifest that the claims of
applicants and the main action have questions of law and fact in
Objections to the intervention do not challenge any of the
impelling practical considerations just noticed, but are confined
to the claim that Federal jurisdictional requirements obstruct
the coming in of the absent beneficiaries. Objectors urge that
independent jurisdiction is not asserted and, therefore, the
intervention jurisdiction must stand upon the jurisdiction of
this Court over the main action. From this it is argued that the
intervention jurisdiction will fail unless (1) there is a fund in
custody of the Court, or (2) the main action is a class suit.
Finally, they say neither such ground exists here.
These contentions by the objectors are patently without
substance. Whether there is a fund in custody of the court or the
action is a class suit need be decided only when intervention is
asked as a matter of right under the second or third subdivisions
of Rule 24(a), not where permissive intervention is sought under
the second subdivision of Rule 24(b). See Allen Calculators,
Inc., v. Nat. Cash Reg. Co., 322 U.S. 137, 141, 64 S.Ct. 905, 88
L.Ed. 1188; S.E.C. v. United States Realty & Imp. Co.,
310 U.S. 434, 459-460, 60 S.Ct. 1044, 84 L.Ed. 1293. Even were this not
so, the objections are not well taken. For purposes of testing
jurisdiction, the trust
estate in legal contemplation is in court. It is unnecessary that
the property be in the physical possession of the court, but only
subject to its control. Rule 24(a) subpar. (3), as amended in
1946. The main action is a proceeding in rem or quasi in rem.
See Franz v. Buder, 8 Cir., 11 F.2d 854, 859, and the related
case of Wallace v. Fiske, 8 Cir., 80 F.2d 897, 901-902, 107
A.L.R. 726; Princess Lida v. Thompson, 305 U.S. 456, 466, 59
S.Ct. 275, 83 L.Ed. 285, and Thompson v. FitzGerald, 329 Pa. 497,
512-513, 198 A. 58; Bogert, Trusts and Trustees (1948 ed.), vol.
4, pp. 301-302.
To sustain their contention that the fund is not in court,
objectors argue that the Court of Appeals so held on its first
review of this case, 7 Cir., 156 F.2d 858. That opinion cannot be
made to support such a view, directly or inferentially.
The trustee attempts at this time to dispute whether the main
action was properly brought as a class suit, again relying upon
the decision by the Court of Appeals in 1946. In so doing the
trustee has closed its eyes to the binding effect of the
adjudication in the decree of this Court affirmed on the second
appeal, 7 Cir., 179 F.2d 347, that the main action is a class
suit. In this connection, too, it distorts the holding of the
first decision on review. Under no circumstances can that
decision be interpreted as finding that the main action was not a
class suit since the Court of Appeals reversed the District Court
and ordered that leave be given to file the amended complaint
which recited it was brought "on behalf of all of the persons
constituting such class", and which prayed that the plaintiff be
adjudged "a proper representative of all the members of such
class." As appears from that opinion, 7 Cir., 156 F.2d 858, the
court fully recognizing this was a class action went on to
expressly decide whether persons sought to be dismissed as
parties defendant were indispensable to the cause when viewed as
a suit for the construction of a will.
Other jurisdictional support of the interventions exists upon
this record, presumably overlooked by the objectors. Jurisdiction
over the main action was invoked on the ground a Federal question
was involved as well as by virtue of the diversity in
citizenship. The construction and application of the Federal
statute known as the McFadden Act, 12 U.S.C.A. § 36, was a
controlling factor in determining the status as trustee of the
First National Bank. The presence of this controlling Federal
question in the main action confers the right to decide all other
questions in the case even though the Federal question was
decided adversely to plaintiff. Siler v. Louisville & N.R. Co.,
213 U.S. 175, 191, 29 S. Ct. 451, 53 L.Ed. 753. It might be noted
in passing that were the interventions denied and the excluded
beneficiaries thus left to their independent suits, they might
effectively challenge the trustee's status and raise again the
Federal question decided here as to the construction and
application of the McFadden Act.
Also, the ancillary character of the intervention sustains the
Court's jurisdiction in that respect. As has been seen, the main
purpose of those interventions is to carry out the decree herein
and to bind those beneficiaries not actually before the court to
the decree and to the fiduciary accounting which is presently
going forward, as well as to the allowance of fees and expenses
out of the fund now under consideration. See U.S. v. Terminal R.
Ass'n, 236 U.S. 194, 199, 35 S.Ct. 408, 59 L.Ed. 535; Wichita
Railroad & L. Co. v. P.U. Comm., 260 U.S. 48, 54, 43 S.Ct. 51, 67
L.Ed. 124; Sioux City Terminal R. & W. Co. v. Trust Co. of N.A.,
8 Cir., 82 F. 124, 125-128, affirmed 173 U.S. 99, 19 S.Ct. 341,
43 L.Ed. 628; Hood ex rel. North Carolina Bank & Trust Co. v.
Bell, 4 Cir., 84 F.2d 136, 137; Wolpe v. Poretsky, 79
U.S.App.D.C. 141, 144 F.2d 505, 507-508; U.S. v. Vehicular
Parking Co., D.C.Del., 7 F.R.D. 336, 337.
In this light it becomes clear that whatever view may be taken
of the motions they ought to be granted, whether made as a matter
of right or addressed to the Court's discretion as the instant
applications appear to be, and it will be so ordered.
© 1992-2003 VersusLaw Inc.