directly interested in its contract dispute with Bisk.
Selfix also argues that it is possible that Bisk will call the letters of credit in violation of an injunction, that Continental will be bound to pay on them, and that Selfix will then have no recourse against Continental. Therefore, Selfix argues, an injunction against Continental from paying the letters of credit is necessary in addition to the injunction against Bisk from calling those letters of credit. But this does not make Continental a necessary party to this lawsuit. In the event that Bisk violated an injunction, Selfix would have recourse against Bisk.
Finally, in support of its position, Selfix cites several cases, none of which the court finds persuasive. In the first case, the dispute centered around the City of Seattle's payment of bonds and warrants that it had issued to fund its street railway system. Von Herberg v. City of Seattle, 27 F.2d 457 (9th Cir.), cert. denied, 278 U.S. 644, 49 S. Ct. 80, 73 L. Ed. 558 (1928). A warrant holder filed suit against the city, claiming priority over a bondholder to a city fund which held proceeds from operation of the railway. Id. at 457-58. The city then filed an interpleader action in state court against the warrant holder and the bondholder. The bondholder sought to remove the case to federal court, claiming that the city was a nominal party whose citizenship did not defeat diversity. Id. at 458-59.
The court held that the city was a necessary party to the suit, because the objective of the warrant holder's suit was to annul the contract between the city and the bondholder. As such, both parties to the contract were necessary. Id. at 461. As to the interpleader action, the court held that the city was not a mere stakeholder because it had aligned itself with the bondholder, and said that it would carry out its contract with the bondholder unless restrained from doing so by a court. Id. Such a position, the court held, was inconsistent with the posture of a mere stakeholder, who stands utterly indifferent between the parties.
The reasoning of Von Herberg does not apply here. No party in this case is seeking to nullify Continental's arrangement with Selfix or Bisk, which would make Continental's presence necessary to protect its interest. Furthermore, Continental has not aligned itself with either Selfix or Bisk, as did the city in Von Herberg. Continental is, therefore, indifferent to the outcome between the parties, and properly called a nominal party.
Plaintiffs also cite H.F. Vegter Excavation Co. v. Village of Oak Brook, 790 F. Supp. 184 (N.D. Ill. 1992). In that case, an Illinois subcontractor sued a Wisconsin general contractor, a Wisconsin surety, and the Village of Oak Brook, Illinois, for amounts it claimed were owed to it by the general contractor for "extras" on work performed for the Village of Oak Brook. The court held that Oak Brook was not a nominal party whose citizenship could be ignored for diversity purposes. Id. at 187. The court noted that the general contractor might seek to deflect the costs of the "extras" to Oak Brook. Given its economic interest in the litigation, Oak Brook was not a nominal party.
In Vegter, Oak Brook was not a nominal party because it was not disinterested in the outcome of the litigation between the general contractor and the subcontractor. Oak Brook might have been liable for the cost of the extras. See Shaw, 994 F.2d at 369; Cherif, 933 F.2d at 414. Because the subject of the litigation was who would pay for the "extras," and Oak Brook might have borne the cost, it could not be nominal. In contrast, as explained above, Continental will not incur any individual liability in the Selfix-Bisk dispute.
Finally, the plaintiffs cite two cases in which the courts held that the trustee of a trust was not a nominal party. Gustafson v. Finn, No. 90 C 6822, 1991 U.S. Dist. LEXIS 2671 (N.D. Ill. March 6, 1991); Code Consultants, Inc. v. G.M. Hock Constr., Inc., 702 F. Supp. 766 (E.D. Mo. 1989). The validity of these cases is now questionable, given the Seventh Circuit's later statement that a nominal defendant is a "trustee, agent, or depositary." Cherif, 933 F.2d at 414 (emphasis added).
Having decided that Continental is a nominal party, the court need not decide whether this action is in the nature of an interpleader.
Plaintiffs' motion to remand is denied. Defendant Bisk is given until November 7, 1994, to amend his petition for removal to allege diversity jurisdiction properly.
DATED: October 18, 1994
ENTER: John F. Grady, United States District Judge