442 F.2d 394 (5th Cir. 1971)
In August 1963 Haas, a citizen of Ohio, entered into an agreement with Glueck, also an Ohio citizen, under which they were to jointly purchase 250 shares of Jefferson National Bank stock with certificates to issue in Glueck's name while Haas would hold a one-half ownership interest.1 Haas paid Glueck amounts representing his half ownership, the bank had knowledge of Haas's ownership interest, and certificates and dividends issued to Glueck.2 In 1966 the parties entered a similar agreement for 34 additional shares.3
In 1967 Haas requested Glueck to order the bank to issue certificates reflecting Haas's ownership of 169½ shares.4 Glueck presented properly endorsed certificates for 250 shares to the bank with instructions to reissue 170 shares to Haas and the balance to Glueck.5 The bank refused the transfer because Glueck was indebted to it under a promissory note requiring him to pledge any property coming into the bank's possession.6 Glueck withdrew the transfer request and instead pledged the certificates to a second bank as collateral for a loan there.7
Haas filed suit in federal district court invoking diversity jurisdiction under 28 U.S.C. § 1332 and seeking a mandatory injunction directing the bank to issue him 169½ shares or alternatively damages reflecting their value.8 He alleged the bank unlawfully and recklessly seized, detained, and exercised improper dominion over his shares.9 The bank answered that it had refused the assignment due to the pledge terms in Glueck's promissory note.10
Following a pre-trial conference the parties stipulated to five questions of fact remaining for trial, including whether the bank had knowledge of Haas's claimed ownership prior to the 1967 request, whether Glueck withdrew the transfer request, the status of Glueck's obligation under the promissory note, whether the second bank possessed the stock at the time suit was filed, and whether Haas in fact owned 169½ shares.11 The district court ordered Haas to amend his complaint to join Glueck as a party, denied his motion to dismiss Glueck, and granted the bank's motion to dismiss the amended complaint on the ground of incomplete diversity.12
Haas appealed to the United States Court of Appeals for the Fifth Circuit. The court reviewed whether the district court had acted appropriately at the pre-trial stage. It also considered whether dismissal rather than proceeding without Glueck constituted an abuse of discretion.13
Whether the district court appropriately resolved at the pre-trial stage whether Glueck was an indispensable party under Rule 19?14
A district court may resolve the status of an alleged indispensable party at the pre-trial stage when the pleadings and stipulations of the parties have posed the trial issues with completeness and precision. There is no reason to postpone the resolution of the indispensability problem until after the commencement of trial.15
Yes. Upon the filing of the action by Haas, a citizen of Ohio, against the Jefferson National Bank, a citizen of Florida, seeking a mandatory injunction or damages for the bank's refusal to issue 169½ shares of stock to him, the parties engaged in a pre-trial conference.16 At that conference, they stipulated to five specific questions of fact that remained to be litigated, including whether the bank had knowledge of Haas's claimed ownership prior to the 1967 transfer request, whether Glueck withdrew the transfer request, the status of Glueck's obligation to the bank under the promissory note, whether the second bank had possession of the stock at the time the action was filed, and whether Haas in fact owned 169½ shares of the bank stock.17 These stipulations, combined with the detailed allegations in the pleadings regarding the 1963 and 1966 agreements between Haas and Glueck for joint purchase of the stock, the bank's knowledge, the 1967 transfer request, the bank's refusal due to Glueck's promissory note, and Glueck's subsequent pledge to the second bank, provided a complete and precise picture of the issues.18
The district court therefore had sufficient information to determine Glueck's status as an indispensable party without the need for further factual development at trial.19 The court properly exercised its discretion to address the joinder question promptly rather than deferring it.20 The relationship of Glueck to the action and the practical effects of an adjudication upon him and the other parties were sufficiently revealed at that stage through the stipulations and pleadings.21
The district court did not err in resolving the indispensability issue at the pre-trial stage based on the record before it.22
Whether the district court abused its discretion in dismissing the action instead of proceeding without Glueck?23
Under Rule 19, if a person to be joined if feasible cannot be made a party because joinder would destroy diversity, the court must determine whether in equity and good conscience the action should proceed among the parties before it or should be dismissed, considering factors such as the extent of prejudice to the absent person or existing parties, the possibility of lessening prejudice by shaping relief, the adequacy of the judgment in the person's absence, and the availability of an adequate remedy for the plaintiff if the action is dismissed.24
No. Glueck fell within the category of persons to be joined if feasible under Rule 19(a) because his presence was critical to the disposition of the important issues in the litigation, as his evidence would support or refute Haas's claim to half ownership of the stock, substantiate or undercut the bank's knowledge of the ownership interest, corroborate or compromise the bank's contention that Glueck rescinded the transfer order, and prove crucial to the determination of Glueck's obligation to the bank under the promissory note.25 Moreover, Glueck's absence would expose the bank to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest, since if Haas prevailed and were adjudicated owner of half the stock, Glueck, not bound by res judicata, could succeed in later litigation against the bank asserting ownership of the whole.26
Glueck's absence would, as a practical matter, impair or impede his ability to protect his interest in all of the shares, an interest that is at least apparent since all of the stock was issued in Glueck's name. Applying the Rule 19(b) factors, the first factor of prejudice to the absent person or parties weighed heavily in favor of indispensability because of the risk of inconsistent obligations and the central role of title to the stock.27 The second factor, the extent to which shaping of relief could lessen prejudice, offered little assistance because any form of relief would require a preliminary determination of title with resulting potential for prejudice.28
The third factor, adequacy of the judgment, pointed to dismissal because the absence of Glueck would result in less than a complete settlement of the controversy, with no guarantee that a judgment on Haas's terms would settle the whole dispute.29 Finally, the fourth factor favored dismissal because the plaintiff would have an adequate remedy in the state courts of Ohio, which afford an opportunity to adjudicate his rights against Glueck and settle the question of title to the stock, and a state action between Haas and Glueck was in fact pending.30
In light of these considerations under the equity and good conscience test of Rule 19(b), the district court properly concluded that Glueck was indispensable and dismissed the action without abusing its discretion.31
The district court did not abuse its discretion in dismissing the action for nonjoinder of an indispensable party.32