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November 21, 1938


The opinion of the court was delivered by: KNIGHT

KNIGHT, District Judge.

Albert B. Shultz died June 3, 1932, leaving him surviving his widow, now Carolyn Shultz Dolcater, applicant for intervention, a son, Wyatt D. Shultz, defendant, and two infant children, Albert Byron Shultz and Donna Carol Shultz, on whose behalf and on behalf of unborn persons contingently interested, plaintiff sues. The testator left a will, admitted to probate June 21, 1932, naming his wife, his son, Wyatt D. Shultz, and the defendant, Manufacturers & Traders Trust Company (hereinafter called bank), as executors. These executors qualified and began the administration of the estate. On November 2, 1933, the executors filed a final account and petitioner for judicial settlement before the Surrogate of Erie County, New York, of which county testator died a resident. On November 22, 1933, a final settlement of the accounts of the executors was had before the said Surrogate; the account was passed, and the commissions payable to the executors and the fees of special guardian fixed, and an allowance to the attorney for the executors affirmed. In the proceeding upon the settlement defendant Deckop was appointed special guardian for Donna Carol Shultz and Albert Byron Shultz, Jr. Allowances were made to the defendant executors in the total amount of $36,759.33, to the attorney for the executors in the amount of $9,000 and to the special guardian in the sum of $500.

The account gives a detailed statement of the bonds, stocks, real estate and other holdings of the deceased, the increases over the inventory, and moneys received by the executors. The total assets of the estate, as shown by the final account, were $627,069.40, and the liabilities $464,151.72. It shows debts owing to the defendant bank in the sum of $250,617.50, to the Liberty Bank of Buffalo, New York, in the sum of $46,762.50, and to the Marine Trust Company of Buffalo, New York, in the sum of $47,667.83. These banks held notes of the deceased in above amounts, and they were secured by collateral of the deceased. This collateral was sold by the executors, and the proceeds applied on the said notes. The account shows all moneys received from securities to be "applied" on the payment of these loans.

 This suit is brought to recover alleged excessive commissions paid to the defendant, Wyatt D. Shultz, and all commissions paid to defendant bank, the moneys paid to the attorney for the executors, and the moneys paid to the special guardian. The alleged basis for the action is fraud on the part of defendant bank, and its attorney, and fraud or gross negligence on the part of defendant, Deckop, in his failure to discover the amount of the legal liability for commissions. No fraud is charged as against Wyatt D. Shultz, and his liability is predicated on an excessive allowance of commissions to him.

 Various motions are presented for decision. These are:

 (1) A motion to permit Carolyn Shultz Dolcater to intervene as executrix as a party plaintiff;

 (2) A motion by plaintiff to dismiss portions of several separate answers of the defendants and for final judgment pro confesso.

 (3) A motion by all defendants to dismiss the complaint upon the ground that it does not state a cause of action either in law or in equity; that the court has no jurisdiction to entertain the suit; that the decree of the Surrogate is conclusive; and that there is a fatal misjoinder of causes of action.

 Caroline Shultz Dolcater seeks to intervene as a party plaintiff in her capacity only as one of the co-executors. This case presents most unusual features. The plaintiff, as the representative of infants, brings suit charging fraud as the basis of the action as against one of the executors where all three executors signed the account which is mainly the basis of the charge of fraud. It is encumbent on this plaintiff, suing as he does, to prosecute fraud against all who may be liable, nor should one defendant be permitted to escape the charge of fraud by mere confession of civil liability. The entire matter of the accounting should be searched, and the chips should fly where they will.

 This motion was argued and submitted before the effective date of the new Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and it is thought it should be decided under the old Rules under the facts presented. However, it appears to me that the applicant for intervention is not a necessary party under either rule. The suit is in tort. It may be brought against one of several tort feasors. Here two executors are named as defendants. Plaintiff still has the right to proceed against this applicant for intervention in the Florida courts on the same cause. Caroline Shultz is a proper party as executrix. She properly should be allowed to intervene as such, but such allowance should be granted on the condition that she also intervene individually. She stands in the same position as her co-executors as respects liability. Her liability in fraud, if any, requires the honest investigation by the plaintiff as representing the infants.

 Intervention must be in subordination to and in recognition of the main litigation, and that intervention may not be allowed solely to attack jurisdiction. Mueller v. Adler, 8 Cir., 292 F. 138. This applicant is not required to intervene.In a situation such as disclosed here, in order that all the issues involved may be settled, the court may make intervention conditional, and, if the condition is not accepted, the suit may proceed as now laid.

 If applicant elects to intervene both as an individual and as executrix, she should be aligned as a party defendant. It is not seen that she is in any different position than the defendant Wyatt D. Shultz, and she may be in no different position than both other executors. Her intervention as an individual as a defendant would oust this court of jurisdiction, but the plaintiff is not without remedy. Suit can be brought in a proper state court.

 The requisites to make a party "indispensable" are not shown here. State of Washington v. United States, 9 Cir,, 87 F.2d 421. While the court can not proceed in the absence of indispensable parties, "If the court can do justice to the parties before it without injuring absent persons, it will do so, and shape its relief in such a manner as to preserve the rights of the persons not before the court." Waterman v. Canal-Louisiana Bank & Trust Co., 215 U.S. 33, 30 S. Ct. 10, 14, 54 L. Ed. 80. See, also, Payne v. Hook, 74 U.S. 425, 7 Wall. 425, 19 L. Ed. 260.

 In view of the decision at which this court arrives as to the right of intervention and its views hereinafter expressed, it is necessary to decide whether the complaint states a cause of action in fraud. Attached to the amended complaint and made a part of it is a statement of the assets and debts of the deceased and a copy of the account of the executors upon which the final decree was made. This statement was rendered by the bank after the death of Albert B. Shultz and contained, among other things, an itemized statement of the indebtedness to the three banks and the particular collateral held by the banks as security for such indebtedness. It is not claimed that this statement is erroneous in any respect. An inventory of the estate of the deceased was made by appraisers appointed by the Surrogate of the County of Erie, and such inventory likewise contains a full and complete statement of bonds, stocks, and properties held by the several banks as collateral to loans. Included in the final account of the executors is an inventory of the estate following the inventory made by the appraisers, together with accretions to the estate. The account at great length contains a full and complete statement of the assets and the debts of the estate. The original complaint herein charged fraud on the part of the defendants, bank, Thomas and Deckop, in procuring the allowance of the commissions in question. The original complaint did not charge concealment. It did allege that "the most cursory examination of the aforesaid final account would have put any one on notice of the fact large amounts of the decedent's property were subject to liens to secure the decedent's obligations." The material substance of the allegations of fraud in the amended complaint are (1) that the defendant bank procured by improper influence the execution of said will and appointment as executor and the employment of defendant Thomas as attorney for the executors upon the false statement that Thomas was not indebted to the bank and was not "dominated and controlled by it"; (2) that the co-executors Shultz and Dolcater consented to the allowance of Thomas' fees upon representation that they were ...

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