Dunning v. Bates

Hammond, J.

I dissent from so much of the foregoing opinion as respects the question raised by the demurrer whether the North Kansas City Land and Improvement Association is a necessary party to this bill.

Here was a trust by the terms of which the property coming to the hands of the trustees was to go to a corporation thereafter to be formed. The property came to the hands of the trustees, the corporation was formed and its stock was issued to the various bondholders in accordance with the terms of the trust. This bill is brought by one of the bondholders for himself and such other bondholders as shall become parties thereto. It'alleges'in substance that the trustees have not conveyed to the corporation all the property, but have fraudulently kept or diverted some of' it, and asks for an accounting and that the trustees may be ordered to convey to the plaintiff property which under the terms of the trust should have been conveyed to the corporation.

It is to be noted that the plaintiff has not repudiated the trust. On the contrary he received his proper share of the stock of the *127new corporation, and the whole framework of the bill is to enforce a trust. It seems plain to me that under these circumstances the corporation as cestui que trust, and not the plaintiff, is entitled to the property which under the terms of the trust was' to be conveyed to it, that as such cestui que trust it could maintain a bill to get it, and that therefore it should be made a party to this suit. To me it seems to be no answer to this to say that the corporation was no party to the original agreement, and indeed was not in existence at the time the trust was created. The proposition that a cestui que trust not in being at the time of the creation of the trust, or not a party to it at that time, should for that reason not be made a party to a suit brought, not in repudiation of the trust but to enforce the obligations of the trustees under it and affecting the rights of such a cestui que trust, seems to me utterly inconsistent with the principles of equity as daily administered in trusts created either by deed or by will. The true test of course is not whether the person whose rights are to be affected was one of the creators of the trust or in being when it was created, but whether during the continuance of the trust he has or may have a beneficial interest under it as cestui que trust.

Much less does it seem to me to be an answer to say that there has been or may have been a change in the personnel of the stockholders of the cestui que trust. The rights of the corporation are measured by the terms of the trust and not by the character or personnel of its stockholders.

Of course I do not mean to say that the plaintiff cannot call the trustees to account. Where the object does not affect the rights of any other cestui que trust than the plaintiff the bill undoubtedly may be maintained without joining the cestui que trust not concerned in the subject matter; but where, as in this case, the plaintiff seeks to hold the trustees upon the ground that they have not conveyed to the corporation, which is a cestui que trust, some portion of the property which by the terms of the trust they should have conveyed to it, a question is raised in which the corporation is interested; and unless it is made a party to this suit it is not bound by the final decree and can maintain an action to have the property conveyed to it in accordance with the terms of the trust. Thus the defendants may *128be obliged to meet two suits upon tbe same subject matter. In my judgment the only proper course is to make the corporation a party. Then a decree can be made which will place the property in accordance with the terms of the trust, and will work a final settlement among all parties interested.

A. B. Weed, for the plaintiff. W. B. Farr, for the defendant Theodore C. Bates.

I am authorized to state that Mr. Justice Braley concurs in this dissent.

The case was argued at the bar in January, 1904, before Knowlton, C. J., Lathrop, Barker, Hammond, & Braley, JJ., and after-wards was submitted on briefs to all the justices except Boring, J.