Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 75-C-736 - Richard W. McLaren, Judge.
Fairchild, Chief Judge, and Swygert and Bauer, Circuit Judges. Bauer, Circuit Judge, dissenting.
Plaintiff Leona S. Bonnet, represented by her counsel, Arthur M. Scheller, Jr., appeals from a judgment dismissing the action.*fn1 Ms. Bonnet is a resident of Florida and defendants, being Illinois school trustees and a Registrar of Titles, are presumably residents of Illinois. Plaintiff sought possession of, and a declaration that she has title to, certain Illinois real estate.
Plaintiff claimed that the district court had jurisdiction based on diversity. The district court concluded that Mr. Scheller, plaintiff's counsel, is an indispensable party by reason of a contract between him and plaintiff, and that since he cannot be joined as a plaintiff without destroying diversity, the action must be dismissed.
It appears from the complaint that in 1951 the school trustees took the land in question by eminent domain, but have since ceased to use it for school purposes. Ms. Bonnet has inherited the interest of the original condemnee, if any interest remained. The controversy is whether the condemnation proceeding transferred fee simple to the trustees, or whether their title was determinable upon cessation of use for school purposes.
On the face of the complaint, plaintiff appears to be the appropriate sole plaintiff, and there appears to be jurisdiction based on diversity. The problem arises because of the contract between plaintiff and Mr. Scheller, made a part of the record on defendant's motion.
The contract (originally made in 1965) recites that Scheller desires to purchase plaintiff's interest in the real estate, and provides that Scheller has the right to attempt to perfect plaintiff's title; that he agrees to commence litigation to perfect it, bringing it in plaintiff's name on such theories as he deems in his best interest, paying all costs and expenses, and bringing such appeals as he sees fit. As long as the agreement is in force (now extended to February 8, 1979) Scheller has the right to purchase for a price, fixed by a 1975 amendment at $10,500. If, however, plaintiff's title is perfected by litigation, Scheller will be bound to make such purchase.
The district court concluded that the contract worked an equitable conversion, so that Scheller has a real property interest, while vendor-plaintiff's interest has become personalty. Accordingly, it held Scheller an indispensable party and since joinder of Scheller would destroy diversity, it dismissed the action.
Since Scheller presently has only an option, and his obligation to buy is contingent upon the outcome of litigation, Cf. Shay v. Penrose, 25 Ill.2d 447, 450, 185 N.E.2d 218 (1962), the court's conclusion that there was an equitable conversion is debatable. The action is denominated ejectment, although it appears also to seek declaratory relief. Under Illinois law only the person who claims legal title may bring an action for ejectment. Zimmerman v. Kennedy, 405 Ill. 306, 309-10, 90 N.E.2d 756 (1950). Aside from those considerations, however, we do not agree that Rule 19(b), Fed. R. Civ. P., requires dismissal. Rule 19(a) is inapplicable because joinder would deprive the court of jurisdiction.
The question under Rule 19(b) is whether Scheller is indispensable and whether "in equity and good conscience the action should proceed among the parties before [the court]." In making this judgment the court is obliged to weigh several factors: (1) the prejudice to the nonjoined person and the parties . . . (3) the adequacy of the judgment in the absence of this person; and (4) the availability for the plaintiff of an adequate remedy if the action is dismissed for non-joinder. If, after evaluating these factors, the court decides that the action should not proceed in the absence of the person, the action must be dismissed. See Macklin v. Butler, 553 F.2d 525, 531 (7th Cir. 1977).
Under the circumstances, neither Mr. Scheller nor any party is subject to any prejudice by his not being a party. He is in a position to protect his interests as fully as the law and facts permit. He is not only in the position of counsel to plaintiff, and in control of the action in that sense. He has, moreover, a contract right to continue to control the action. The outcome depends on the legal effect of a 1951 condemnation proceeding, and establishing the decision of defendants to cease the use of the property for school purposes. There does not appear to be any advantage to defendants in having Mr. Scheller joined as plaintiff in establishing their defenses. Defendants have suggested no way in which they would be prejudiced by his absence as a party.
A judgment will be adequate in Scheller's absence as a party. If favorable to defendants, they will face no substantial risk of a later action by Scheller. He would be bound by a judgment adverse to plaintiff either because he was in privity with plaintiff as his predecessor in title, e. g., Archer v. United States, 268 F.2d 687, 690 (10th Cir. 1959) and Faribault Canning Co. v. Northwestern Nat'l. Cas. Co., 298 F.2d 58, 60 (7th Cir. 1961), or because he was a participating non-party, e. g., Rumford Chemical Works v. Hygienic Chemical ...