Case Name: HUDSON v. McWILLIAMS et al.
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 1927-02-28
Citations: 17 F.2d 733
Docket Number: No. 5000
Parties: HUDSON v. McWILLIAMS et al.
Judges: Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 17
Pages: 733–734

Head Matter:
HUDSON v. McWILLIAMS et al.
(Circuit Court of Appeals, Ninth Circuit.
February 28, 1927.)
No. 5000.
Charles C. Montgomery, of Los Angeles, Cal., for appellant.
Charles A. Sunderlin and Moore & Farraher, all of Los Angeles, Cal., for appellees.
Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.
Rehearing denied May 9, 1927.

Opinion:
GILBERT, Circuit Judge
(after stating the facts as above). The appellant attacks the, order appointing the receiver upon the grounds (1) that the lessors were indispensable parties, and, they being citizens of California, their joinder would, if they had been brought in, have destroyed diversity of citizenship, and consequently the jurisdiction of the court; (2) that a federal court has no jurisdiction of an action at law for declaratory relief under the California statute, or to appoint a receiver therein, for the reason that it is not only not a civil suit, within the meaning of the Constitution of the United States, but it provides for a blending of equitable and legal causes of action, not permissible in a Federal court; (3) that there is pending an action involving the same parties and the same issues in the superior court of Los Angeles county, California.
As we view the allegations of the complaint, we need not enter into a discussion of the question whether or not they present a civil suit such as is cognizable in a federal court, for the facts alleged, as we regard them, involve more than a mere suit for declaratory relief under the Civil Code of the state of California, and call upon the court to do more than to declare the rights of the appellees under a contract. For the court is required, not only to construe the leases and the instruments under which the appellees claim a portion of the proceeds of an oil well now being operated, but the facts pleaded, coupled with a prayer for general relief show a suit between parties litigant claiming adversely the right to portions of the output of an oil well and the proceeds of the sale thereof; the appellees seeking to impound their share of those proceeds and enjoin the payment thereof to the appellant. Upon the facts presented the trial court may, at the conclusion of the suit, direct the payment of those proceeds to the person or persons entitled ultimately to receive the same. In other words, there is here presented as the subject-matter of a suit property to be taken into the possession of the court, and subject to the final disposition of the court by a judgment, and not a mere case brought for the declaration of rights of parties under a contract.
The prior suit, the pendency of which is relied upon as divesting jurisdiction in the present case, is pending on appeal to the Supreme Court of California. Hopkins, although named as a party defendant in that case, was never served, nor was there any attachment of his interest in the subject of the litigation. He has been served with summons in the present case. It is conceded, however, by the court below that, if the judgment in said prior suit is affirmed on appeal, it will be considered a binding adjudication. But the pendency of that suit was clearly no obstacle to the jurisdiction of the court below to maintain the present suit, and to protect in the meantime the alleged interests of the appellees.
To the controversy thus presented we think that Baker and his wife are not indispensable parties. The right of the appellees in and to their portion of the proceeds of the oil well, and the protection of the fund so realized, and the prevention of its dissipation may be determined without bringing in parties other than those which are before the court. In those matters Baker and his wife have no property interest. But, when we view the terms of the order appointing the receiver, we are of the opinion that, in defining his functions and directing his action, the court exercised powers which directly affect property interests of the Bakers. The receiver is directed to go upon the property and superintend the operation of the oil plant and the' selling and marketing of the oil. In so doing he must necessarily invade the rights reserved to the lessors, the owners of the property. They have an interest in determining who shall have possession of and operate the mining property, and who shall sell the proceeds of the oil well, and we think'that the order goes farther than the court was empowered to go, in the absence of the owners of the property as parties.
We think the case should be remanded to the court below, with instructions to modify the order appointing the receiver, so as to authorize him only to receive and hold the portion of the proceeds of the oil well which the appellees allege belong to and are payable to them, and not to disturb the permission of the leased property, or divest its control by the operators in charge of the ease.
» The cause is remanded to the court below, with instructions to modify, as above indicated, the order appealed from, and, so modified, it is affirmed, without costs in this court to either party