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No. 13196 I N THE SUPREME COURT OF THE STATE OF M N A A OTN 1976 THE STATE OF M N A A on t h e R e l a t i o n OTN of David G. Drum and Dorothy G , Drum, Petitioner, THE DISTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT OF THE STATE O MONTANA, F I N AND FOR THE COUNTY O YET,T,OWSTONE, and F ROBERT H. WILSON, P r e s i d i n g Judge T h e r e o f , and FIRST NATIONAT, BANK AND TRUST COMPANY, of B i l l i n g s , Montana,, ORIGINAL PROCEEDING : Counsel o f Record: For P e t i t i o n e r : Hutton, Sheehy and Cromley, B i l l i n g s , Montana John C. Sheehy a r g u e d , B i l l i n g s , Montana F o r Respondents: Hibbs, Sweeney and Colberg, B i l l i n g s , Montana William T. Wagner argued and Hugh Sweeney a p p e a r e d , B i l l i n g s , Montana Submitted: February 5 , 1976 D e c i d e d : APR Filed : ;;p~ 12 1976 1 g 1976 M r . J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion o f t h e C o u r t . The o r i g i n a l o p i n i o n i n t h i s c a u s e w a s r e n d e r e d on December 30, 1975 and a p p e a r e d i n 32 St.Rep. 1297. W granted e r e h e a r i n g on J a n u a r y 1 5 , 1976, and r e h e a r i n g was h e l d on FebThe o r i g i n a l o p i n i o n i s now withdrawn and t h i s r u a r y 5 , 1976. opinion substituted. T h i s c a s e i n v o l v e d a n a p p l i c a t i o n by r e l a t o r s f o r a w r i t of s u p e r v i s o r y c o n t r o l t o compel d i s m i s s a l of a c i v i l a c t i o n a g a i n s t them u n l e s s Chase Manhattan Bank of New York C i t y w a s joined as a p a r t y p l a i n t i f f , The F i r s t N a t i o n a l Bank and T r u s t Company, B i l l i n g s , Montana, sued r e l a t o r s David G . Drum and Dorothy G . Drum, h i s w i f e , t o c o l l e c t a b a l a n c e i n e x c e s s o f $1,000,000 a l l e g e d l y owed on t e n p r o m i s s o r y n o t e s . R e l a t o r s moved t o d i s m i s s t h e a c t i o n on t h e ground it w a s n o t p r o s e c u t e d i n t h e name of t h e r e a l p a r t y i n i n t e r e s t and f o r f a i l u r e t o j o i n a n i n d i s p e n s a b l e party plaintiff. The f o u n d a t i o n of t h i s motion was r e l a t o r s ' c l a i m t h a t F i r s t N a t i o n a l ' s e n t i r e i n t e r e s t i n s i x of t h e c l a i m s sued upon had been t r a n s f e r r e d t o Chase Manhattan Bank p r i o r t o t h e commencement of t h e a c t i o n , and p a r t o f F i r s t N a t i o n a l ' s i n t e r e s t i n t h e f o u r r e m a i n i n g claims had been s o t r a n s f e r r e d . The d i s t r i c t c o u r t , Yellowstone County, Hon. R o b e r t H. Wilson, d i s t r i c t judge, d e n i e d r e l a t o r s ' motion t o d i s m i s s by o r d e r d a t e d September 23, 1975. The s a l i e n t f a c t s forming t h e b a s i s o f t h i s l i t i g a t i o n c a n be g l e a n e d from t h e p l e a d i n g s , a t t a c h e d e x h i b i t s , t h e d e p o s i t i o n of Lee W. Johnson, and t h e a f f i d a v i t s o f r e l a t o r David G. Drum, and r e l a t o r s ' a t t o r n e y . These r e v e a l e x t e n s i v e t r a n s a c - t i o n s r e l a t i n g g e n e r a l l y t o f i n a n c i n g c a t t l e o p e r a t i o n s and i n v o l v i n g r e l a t o r s , t h r e e c o r p o r a t i o n s c o n t r o l l e d by r e l a t o r David G. Drum, F i r s t N a t i o n a l , and Chase. I n May 1972, Chase n o t i f i e d r e l a t o r David G . Drum by l e t t e r t h a t it would e x t e n d t o him p e r s o n a l l y " t h r o u g h t h e v e h i c l e o f a l o a n p a r t i c i p a t i o n w i t h The F i r s t N a t i o n a l Bank of B i l l i n g s a $2,000,000 s h a r e i n a l i n e o f c r e d i t t o t a l i n g $2,225,000. Among o t h e r c o n d i t i o n s , r e l a t o r Dorothy G . Drum w a s r e q u i r e d t o e x e c u t e a l o a n g u a r a n t e e , which s h e d i d . Per- s o n n e l from Chase went t o B i l l i n g s and f i n a l i z e d a w r i t t e n l o a n agreement between r e l a t o r David G . Drum and F i r s t N a t i o n a l . A t t h e t i m e t h e l o a n agreement w a s e x e c u t e d , t h e maximum l e n d - i n g c a p a c i t y of F i r s t N a t i o n a l t o a s i n g l e borrower w a s approxi m a t e l y $750,000. P u r s u a n t t o t h e l o a n a g r e e m e n t , r e l a t o r David G . Drum borrowed money under t h e l i n e of c r e d i t extended. A s h e borrowed v a r i o u s sums from t i m e t o t i m e , he would e x e c u t e p r o m i s s o r y n o t e s p a y a b l e t o F i r s t N a t i o n a l i n t h e amount advanced. F i r s t National, i n t u r n , would e x e c u t e a p a r t i c i p a t i o n agreement o r c e r t i f i c a t e wherein it s o l d t o Chase a p a r t i c i p a t i n g i n t e r e s t i n e a c h l o a n s o made, a d h e r i n g a s c l o s e l y a s p o s s i b l e t o t h e a g r e e d 90% s h a r e of Chase i n a l l o u t s t a n d i n g l o a n s . The p a r t i c i p a t i o n agreement p r o v i d e d , among o t h e r t h i n g s , t h a t Chase c o u l d d i r e c t F i r s t N a t i o n a l t o e n f o r c e t h e o b l i g a t i o n s o f Drum under t h e n o t e s . The l o a n p a r t i c i p a t i o n d e v i c e was a l l e g e d l y u t i l i z e d by Chase i n p r e f e r e n c e t o a d i r e c t l o a n t o Drum b e c a u s e of more f a v o r a b l e i n t e r e s t c h a r g e s a v a i l a b l e under t h e laws o f Montana ( 1 0 % ) t h a n was p e r m i t t e d under t h e l a w s of N e w York ( 8 - 1 / 2 % ) . On May 2 , 1975, a t t h e r e q u e s t of Chase, F i r s t N a t i o n a l f i l e d an a c t i o n a g a i n s t r e l a t o r s t o c o l l e c t t h e balance of p r i n c i p a l owing, i n t e r e s t , a t t o r n e y f e e s , and c o s t s on t e n promi s s o r y n o t e s r e p r e s e n t i n g l o a n s under t h e f o r e g o i n g a r r a n g e m e n t . The t o t a l p r i n c i p a l i n d e b t e d n e s s and p a r t i c i p a t i o n a l l e g e d on e a c h n o t e was: First National $ 28,520.72 Chase $ z o o . 0 0 806,704.20 1,000.00 72,450.00 500.00 2,795.20 12,460.31 1,000.00 162,000.00 6,966.01 Note 1 2 3 4 5 6 7 8 9 10 $ Total 28,720.52 820,918.91 6,205.47 72,450.00 500.00 2,795.20 12,460.31 3,000.00 162,000.00 6,966.01 Totals T h i s s u i t w a s f i l e d as C a u s e N o . c o u r t o f Yellowstone County. tiff. 66792, i n t h e d i s t r i c t F i r s t N a t i o n a l w a s t h e sole p l a i n - D e f e n d a n t s w e r e D a v i d G. Drum a n d D o r o t h y G . Drum. Chase was n o t a p a r t y i n t h i s a c t i o n . R e l a t o r s a l s o a l l e g e d i n t h e records before t h i s C o u r t t h a t C h a s e e x t e n d e d a $ 1 5 , 0 0 0 , 0 0 0 l i n e of c r e d i t t o t h r e e corpora t i o n s c o n t r o l l e d b y r e l a t o r D a v i d G . Drum u n d e r a s i m i l a r p a r t i c i pation operation. The l o a n agreement was between F i r s t N a t i o n a l o n t h e o n e hand, and t h e t h r e e c o r p o r a t i o n s o n t h e othex: Beef Industries, Inc. Montana i n w h i c h Drum o w n s 9 2 % of t h e o u t s t a n d i n g c a p i t a l s t o c k ; T-Bone F e e d e r s , I n c . , i n w h i c h Montana Beef Indus- t r i e s , o w n s a l l t h e o u t s t a n d i n g c a p i t a l s t o c k ; a n d Feeder S u p p l y C o r p o r a t i o n i n w h i c h Drum o w n s a l l t h e o u t s t a n d i n g c a p i t a l s t o c k . A s F i r s t N a t i o n a l made the l o a n s f r o m t i m e t o t i m e , it s e c u r e d promissory notes from t h e borrowers and transferred p a r t i c i p a t i n g i n t e r e s t s t o Chase. T h e three c o r p o r a t i o n s f i l e d s u i t a g a i n s t F i r s t National and Chase under Cause No. s t o n e County. 6 7 1 2 5 i n t h e d i s t r i c t c o u r t of Y e l l o w - T h i s action was b a s e d o n t h e a l l e g e d c o l l e c t i o n o f u s u r i o u s i n t e r e s t b y m e a n s o f a s c h e m e a l l e g e d l y i n i t i a t e d by C h a s e t o b o o k " p h o n y l o a n s " t o cover t h e excess o f i n t e r e s t charges. Chase subsequently secured its d i s m i s s a l from this s u i t o n t h e g r o u n d t h a t it c a n b e s u e d o n l y i n a New Y o r k c o u r t u n d e r t h e p r o v i s i o n s of t h e N a t i o n a l B a n k i n g A c t , 1 2 U.S.C. B 94. Following d i s m i s s a l of Chase i n Cause No. 67125, rel a t o r s f i l e d t h r e e counterclaims a g a i n s t F i r s t National i n i t s a c t i o n a g a i n s t them on t h e t e n p r o m i s s o r y n o t e s (Cause No. 66792). The f i r s t c o u n t e r c l a i m s e e k s a t t o r n e y f e e s f o r r e l a t o r s i n d e f e n d i n g t h e m s e l v e s t o t h e e x t e n t of C h a s e ' s i n t e r e s t i n t h e t e n p r o m i s s o r y n o t e s based upon t h e p r i n c i p l e o f m u t u a l i t y . The second c o u n t e r c l a i m by r e l a t o r David G. Drum s e e k s t h e sum of $346,842.35 r e p r e s e n t i n g s u r p l u s f u n d s from t h e s a l e of a b u i l d i n g t o Coors Brewery which Drum a l l e g e s was w r o n g f u l l y e x a c t e d from him and a p p l i e d t o a n a l l e g e d u s u r i o u s l o a n i n d e b t e d n e s s of Feeder Supply C o r p o r a t i o n . According t o him t h i s c o r - p o r a t i o n i s wholly owned by him and w a s formed t o p r o v i d e s t o r a g e f a c i l i t i e s f o r g r a i n ; he p u t $200,000 o f h i s p e r s o n a l f u n d s i n t o t h i s corporation t o provide t h e required e q u i t y f o r a loan of $680,000 from Chase and F i r s t N a t i o n a l t o c o n s t r u c t t h e b u i l d i n g . Chase made a d i r e c t l o a n t o Feeder Supply C o r p o r a t i o n o f $618,000 and F i r s t N a t i o n a l made a d i r e c t l o a n t o t h i s c o r p o r a t i o n o f $61,200 e a c h t a k i n g s e p a r a t e s e c u r i t y i n s t r u m e n t s . About two y e a r s l a t e r Drum n e g o t i a t e d a s a l e of t h e b u i l d i n g t o Coors Brewery f o r $875,000 and o f f e r e d t o pay t h e t o t a l mortgage i n d e b t e d n e s s i n exchange f o r a r e l e a s e . F i r s t N a t i o n a l and Chase d e c l i n e d , a c c o r d i n g t o Drum, and when t h e s a l e was consummated t h e y a p p l i e d t h e s u r p l u s , o v e r Drum's p r o t e s t and o b j e c t i o n , t o a l l e g e d u s u r i o u s l o a n i n d e b t e d n e s s o f Feeder Supply C o r p o r a t i o n under t h e $15,000,000 l i n e of c r e d i t extended t o t h e t h r e e c o r p o r a t i o n s , d e s c r i b e d heretofore. The t h i r d c o u n t e r c l a i m by r e l a t o r David G . Drum s e e k s $279,500 i n f e e d b i l l s expended by Feeder Supply C o r p o r a t i o n when F i r s t N a t i o n a l r e f u s e d t o pay them a s a g r e e d under t h e t e r m s o f t h e l o a n agreement between F i r s t N a t i o n a l and t h e t h r e e c o r p o r a t i o n s e x t e n d i n g t h e $15,000,000 l i n e o f c r e d i t . I n t h e meantime, r e l a t o r s ' motion f o r d i s m i s s a l o f Cause No. 66792 w a s pending. The motion f o r d i s m i s s a l w a s i n two p a r t s : (1) A motion f o r o u t r i g h t d i s m i s s a l o f s i x of t h e claims evidenced by p r o m i s s o r y n o t e s on t h e ground t h a t a l l i n t e r e s t of F i r s t N a t i o n a l t h e r e i n had been t r a n s f e r r e d t o Chase p r i o r t o commencement of t h e a c t i o n . ( 2 ) A motion f o r d i s m i s s a l of t h e r e m a i n i n g f o u r claims evidenced by p r o m i s s o r y n o t e s u n l e s s Chase was made a p a r t y p l a i n t i f f on t h e ground t h a t p a r t of F i r s t N a t i o n a l ' s i n t e r e s t t h e r e i n had been t r a n s f e r r e d t o Chase p r i o r t o commencement o f t h e a c t i o n . Following d e n i a l of t h e i r motion f o r d i s m i s s a l , r e l a t o r s a p p l i e d t o t h i s C o u r t f o r a w r i t of s u p e r v i s o r y c o n t r o l s e e k i n g a judgment of d i s m i s s a l u n l e s s Chase was j o i n e d a s a p a r t y p l a i n tiff . The e s s e n c e of r e l a t o r s ' c o n t e n t i o n s i s t h a t Chase i s a n i n d i s p e n s a b l e p a r t y under Rule 1 9 ( b ) , M.R.Civ.P. and i n e q u i t y and good c o n s c i e n c e t h e a c t i o n s h o u l d n o t proceed i n i t s a b s e n c e among t h e p a r t i e s now b e f o r e t h e C o u r t . Relators claim t h a t as a p r a c t i c a l matter Chase i s u s i n g F i r s t N a t i o n a l a s a " f r o n t " t o c o l l e c t d e b t s of which Chase i s more t h a n 9 5 % owner; t h a t i n s o d o i n g Chase i s i n s u l a t i n g i t s e l f i n t h e c o u r t s of Montana from r e l a t o r s ' j u s t and v a l i d d e f e n s e s and c o u n t e r c l a i m s a g a i n s t Chase. R e l a t o r s p o i n t o u t t h a t Chase i s h i d i n g behind 1 2 U.S.C. r e s i s t i n g c l a i m s a g a i n s t it i n t h e c o u r t s of Montana. S 94 i n They c o n t e n d t h a t C h a s e ' s g o a l i s t o s e c u r e judgment a g a i n s t r e l a t o r s and e x e c u t e on t h e i r p r o p e r t y b e f o r e r e l a t o r s c a n s e c u r e judgment a g a i n s t Chase i n t h e c o u r t s o f New York. Respondents, on t h e o t h e r hand, c o n t e n d t h a t Chase i s n o t a n i n d i s p e n s a b l e p a r t y t o t h i s s u i t by F i r s t N a t i o n a l a g a i n s t t h e Drums t o c o l l e c t t h e t e n p r o m i s s o r y n o t e s b e c a u s e of t h e n a t u r e of t h e r e l a t i o n s h i p between t h e Drums, F i r s t N a t i o n a l and Chase i n t h e l o a n t r a n s a c t i o n s evidenced by t h e t e n p r o m i s s o r y notes. They p o i n t o u t t h a t Chase i s n e i t h e r t h e owner, h o l d e r , o r payee of any o f t h e n o t e s o r t h e s e c u r i t y , and a c c o r d i n g l y complete r e l i e f c a n be accomplished between F i r s t N a t i o n a l and t h e D r u m s without prejudice t o the r i g h t s o r l i a b i l i t i e s of those against e i t h e r . M.R.Civ.P., Respondents a r g u e t h a t n e i t h e r Rule 1 9 , nor r e c e n t d e c i s i o n s of t h i s Court r e q u i r e t h a t Chase be made a p a r t y , and i n any e v e n t Chase c a n n o t be sued i n t h e c o u r t s of Montana under 12 U.S.C. Banking A c t . B 94 of t h e National On t h i s b a s i s r e s p o n d e n t s c o n c l u d e t h a t Chase c a n n o t be made a p a r t y t o t h i s a c t i o n and t h a t t h e a c t i o n s h o u l d proceed between F i r s t N a t i o n a l and t h e Drums w i t h o u t d i s m i s s a l . W e c o n c l u d e t h a t t h e n a t u r e of t h e l o a n t r a n s a c t i o n s t h a t u n d e r l i e t h e t e n p r o m i s s o r y n o t e s d o e s n o t g i v e rise t o r e c i p r o c a l r i g h t s and l i a b i l i t i e s t h e r e i n between t h e D r u m s and Chase. The l o a n agreement e s t a b l i s h e s t h e r i g h t s and l i a b i l i t i e s between t h e p a r t i e s t o i t , v i z . F i r s t N a t i o n a l and t h e Drums. The p a r t i c i p a - t i o n agreement o r c e r t i f i c a t e e s t a b l i s h e s t h e r i g h t s and l i a b i l i t i e s between t h e p a r t i e s t o i t , v i z . F i r s t N a t i o n a l and Chase. Neither e s t a b l i s h e s any c o n t r a c t u a l r e l a t i o n s h i p , r i g h t s o r l i a b i l i t i e s between t h e D r u m s and Chase. The n a t u r e of t h e r e l a t i o n s h i p i s s i m p l y a borrower--lead-p a r t i c i p a n t arrangement between D r u m , F i r s t N a t i o n a l and Chase r e s p e c t i v e l y , which i s d e s c r i b e d i n d e t a i l i n t h e a r t i c l e "The Developing Law of P a r t i c i p a t i o n Agreements", The B u s i n e s s Lawyer, A p r i l 1968, pp. 689-696. I n t h e i n s t a n t c a s e Chase i s n e i t h e r a p a r t y t o t h e l o a n agreement n o r a n owner, h o l d e r o r payee o f any o f t h e n o t e s . and F i r s t N a t i o n a l . The e n t i r e l o a n t r a n s a c t i o n i s between Drum F i r s t N a t i o n a l i s t h e owner, h o l d e r and payee o f t h e n o t e s and t h e s o l e s e c u r e d p a r t y i n t h e c o l l a t e r a l . C h a s e ' s o n l y involvement i s i n t h e p a r t i c i p a t i o n a g r e e ment. Such agreement i s simply a s h a r e d l o a n where t h e " l e a d " , F i r s t N a t i o n a l , s o l d a s h a r e of t h e l o a n t o t h e " p a r t i c i p a n t " , Chase. The r e l a t i o n s h i p between t h e two i s governed by t h e t e r m s of t h e p a r t i c i p a t i o n agreement o r c e r t i f i c a t e . Here F i r s t Nation- a l i s t h e s o l e owner, h o l d e r and payee o f t h e n o t e s and h a s f u l l dominion o v e r t h e s e c u r i t y . Drum owes F i r s t N a t i o n a l t h e f u l l amount o f t h e l o a n a s evidenced by t h e n o t e s , and F i r s t N a t i o n a l , i n t u r n , owes t h e p a r t i c i p a n t i t s s h a r e a s e v i d e n c e d by t h e p a r ticipation certificate. Drum c a n n o t c h a l l e n g e t h e amount of F i r s t N a t i o n a l ' s c l a i m on t h e ground t h a t some p o r t i o n o f it i s u l t i m a t e l y p a y a b l e t o Chase under t h e t e r m s o f t h e p a r t i c i p a t i o n agreement. I t i s no c o n c e r n o f Drum what F i r s t N a t i o n a l d o e s with t h e proceeds of t h e r e p a i d loan. T h i s r e l a t i o n s h i p i s n o t changed by t h e c i r c u m s t a n c e s of t h e i n s t a n t c a s e where Chase may have been t h e p r i m a r y mover, a r r a n g e r o r i n s t i g a t o r of t h e l o a n ; d r a f t e d and approved t h e l o a n documents; h e l d a major s h a r e o f t h e " a c t i o n " ; and " c a l l e d t h e tune". The n a t u r e of t h e t r a n s a c t i o n and r e l a t i o n s h i p o f t h e p a r t i e s i s governed by t h e l o a n documents, p r i n c i p a l l y t h e l o a n agreement between D r u m and F i r s t N a t i o n a l and t h e p a r t i c i p a t i o n agreement between F i r s t N a t i o n a l and Chase. R e l a t o r s ' c o n t e n t i o n t h a t Chase i s a n i n d i s p e n s a b l e p a r t y under Rule 1 9 ( b ) , M.R.Civ.P., and t h a t t h e a c t i o n s h o u l d n o t p r o - ceed i n i t s a b s e n c e i s n o t t e n a b l e . Rule 1 9 ( b ) , p r o v i d e s : F " ( b ) DETERMINATION BY COURT O WHENEVER J O I N D E R NOT FEASIBLE. I f a p e r s o n a s d e s c r i b e d i n sub- d i v i s i o n ( a ) (1) ( 2 ) h e r e o f c a n n o t be made a p a r t y , t h e c o u r t s h a l l d e t e r m i n e whether i n e q u i t y and good c o n s c i e n c e t h e a c t i o n s h o u l d proceed among t h e p a r t i e s b e f o r e i t , o r s h o u l d be d i s m i s s e d , t h e absent person being thus regarded a s i n d i s p e n s a b l e . The f a c t o r s t o be c o n s i d e r e d by t h e c o u r t i n c l u d e : f i r s t , t o what e x t e n t a judgment r e n d e r e d i n t h e p e r s o n ' s a b s e n c e might be p r e j u d i c i a l t o him o r t h o s e a l r e a d y p a r t i e s ; second, t h e e x t e n t t o which, by p r o t e c t i v e p r o v i s i o n s i n t h e judgment, by t h e s h a p i n g of r e l i e f , o r o t h e r m e a s u r e s , t h e p r e j u d i c e c a n be l e s s e n e d o r a v o i d e d ; t h i r d , whether a judgment r e n d e r e d i n t h e p e r s o n ' s a b s e n c e w i l l be a d e q u a t e ; f o u r t h , whether t h e p l a i n t i f f w i l l have a n a d e q u a t e remedy i f t h e a c t i o n i s d i s m i s s e d f o r n o n j o i n d e r . " I n t h e f i r s t p l a c e , i n o u r view, Rule 1 9 ( b ) i s n o t a p p l i c a b l e t o t h i s case. I t a p p l i e s o n l y t o "a p e r s o n a s d e s c r i b e d i n s u b d i v i s i o n ( a ) (1) ( 2 ) h e r e o f . " - The p e r t i n e n t p a r t o f Rule 1 9 ( a ) d e s c r i b i n g such p e r s o n p r o v i d e s : " ( a ) PERSONS TO BE J O I N E D I F FEASIBLE. A p e r s o n who i s s u b j e c t t o s e r v i c e o f p r o c e s s s h a l l be j o i n e d a s a p a r t y i n t h e a c t i o n i f (1) i n h i s a b s e n c e c o m p l e t e r e l i e f c a n n o t be a c c o r d e d among t h o s e a l r e a d y p a r t i e s , o r ( 2 ) he claims a n i n t e r e s t r e l a t i n g t o t h e s u b j e c t of t h e a c t i o n and i s s o s i t u a t e d t h a t t h e d i s p o s i t i o n of t h e a c t i o n i n h i s a b s e n c e may ( i )a s a p r a c t i c a l m a t t e r i m p a i r o r impede h i s a b i l i t y t o p r o t e c t t h a t i n t e r e s t o r (ii)l e a v e any o f t h e p e r s o n s a l r e a d y p a r t i e s s u b j e c t t o a s u b s t a n t i a l r i s k of i n c u r r i n g d o u b l e , multiple, o r otherwise inconsistent obligations by r e a s o n o f h i s c l a i m e d i n t e r e s t . * * * " Here c o m p l e t e r e l i e f c a n be a c c o r d e d F i r s t N a t i o n a l and t h e Drums w i t h o u t Chase b e i n g made a p a r t y . F i r s t N a t i o n a l can a d j u d i c a t e i t s c l a i m s f o r c o l l e c t i o n of t h e n o t e s . Chase i s n o t a r e a l p a r t y i n i n t e r e s t b e c a u s e t h e h o l d e r of t h e n o t e s i s e n t i t l e d t o s u e i n i t s own name, s e c t i o n 87A-3-301, R.C.M. 1947, and a d d i t i o n a l l y F i r s t N a t i o n a l i s t h e owner and s o l e payee on the notes. The Drums c a n a d j u d i c a t e any d e f e n s e s o r claims i n - volving t h e notes a g a i n s t F i r s t National. Any i n t e r e s t of Chase r e l a t i n g t o t h e n o t e s w i l l n o t i n Chase's absence impair o r impede i t s a b i l i t y t o p r o t e c t t h a t i n t e r e s t , b e c a u s e i t c a n l o o k t o F i r s t N a t i o n a l f o r r e l i e f under t h e t e r m s o f i t s p a r t i c i p a t i o n agreement. Judgment i n t h e p r e s e n t c a s e would n o t s u b j e c t t h e Drums t o t h e r i s k o f m u l t i p l e o r o t h e r w i s e i n c o n s i s t e n t o b l i g a t i o n s as t h e r i g h t s and l i a b i l i t i e s of t h e Drums under t h e n o t e s would be f i n a l l y concluded. A c c o r d i n g l y , Chase i s n o t "a p e r s o n a s d e s c r i b e d i n s u b d i v i s i o n ( a ) ( 1 ) - ( 2 ) " of Rule 1 9 ( a ) s o Rule 1 9 ( b ) is inapplicable. - 9 - Assuming, arguendo, t h a t Rule 1 9 ( b ) d i d a p p l y , we would a l s o r e a c h a r e s u l t d e n y i n g j o i n d e r o f Chase. Essentially the Drums s e e k t o expand t h e scope of t h i s a c t i o n beyond t h e t e n p r o m i s s o r y n o t e s sued upon, s o t h e y c a n p r e s s c l a i m s i n t h e Montana c o u r t s a g a i n s t Chase d i r e c t l y a r i s i n g o u t o f u n r e l a t e d l o a n t r a n s a c t i o n s w i t h c o r p o r a t i o n s t h a t David G . Drum c o n t r o l s . A t t h e o u t s e t it i s c l e a r t h a t Chase c a n n o t be sued i n t h e c o u r t s o f Montana under t h e p r o v i s i o n s o f t h e N a t i o n a l Banki n g Act. The r e l e v a n t s t a t u t e , 12 U.S.C. § 94, p r o v i d e s : " A c t i o n s and p r o c e e d i n g s a g a i n s t any a s s o c i a t i o n under t h i s c h a p t e r may be had i n any d i s t r i c t o r T e r r i t o r i a l c o u r t o f t h e United S t a t e s h e l d w i t h i n t h e d i s t r i c t i n which s u c h a s s o c i a t i o n may be e s t a b l i s h e d , o r i n any S t a t e , county, o r municipal c o u r t i n t h e county o r c i t y i n which s a i d a s s o c i a t i o n i s l o c a t e d having jurisdiction i n similar cases." T h i s s t a t u t e i s mandatory and n o t p e r m i s s i v e . Kader v . F i r s t N a t i o n a l Bank of F o r t Myers ( 1 9 7 5 ) , 387 F.Supp. Iron & Metal Co., F.2d 798. I n c . v . Dobson & Johnson, I n c . 535; N o r t h s i d e ( 1 9 7 3 ) , 480 I t even p r e v e n t s j o i n d e r i n t h e same a c t i o n of n a t i o n a l banks l o c a t e d i n d i f f e r e n t s t a t e s o r d i s t r i c t s who w e r e sued f o r damages based on a c i v i l c o n s p i r a c y t o d e f r a u d . Mercantile N a t i o n a l Bank a t D a l l a s v . Langdeau ( 1 9 6 3 ) , 371 U.S. 555, 83 S.Ct. 520, 9 L ed 2d 523. Chase s i m p l y c a n n o t be sued i n t h e c o u r t s of Montana, a b s e n t c o n s e n t o r w a i v e r . While w e a r e n o t i n sympathy w i t h t h i s l e g i s l a t i o n , we a r e compelled t o f o l l o w it. F i n d i n g t h e m s e l v e s i n t h i s p o s i t i o n , t h e Drums s e e k t o compel j o i n d e r of Chase on p a i n of d i s m i s s a l of t h i s a c t i o n . Where d o t h e e q u i t i e s l i e ? A d m i t t e d l y , it would be a d v a n t a g e o u s t o Drums t o g e t Chase b e f o r e t h e Montana c o u r t i n t h i s a c t i o n and p r e s s t h e i r a l l e g e d c o u n t e r c l a i m s a g a i n s t Chase d i r e c t l y . But where w i l l t h a t l e a v e F i r s t N a t i o n a l i f t h e a c t i o n i s d i s m i s s e d f o r nonjoinder? I t w i l l be l e f t w i t h no remedy i n t h e c o u r t s of i t s own s t a t e t o c o l l e c t t h e money i t l o a n e d t o t h e Drums. Drums, on t h e o t h e r hand, c a n a s s e r t any v a l i d d e f e n s e o r c o u n t e r c l a i m t h e y may have on t h e n o t e s as r e a d i l y a g a i n s t F i r s t N a t i o n a l a s t h e y c a n a g a i n s t Chase i n t h e i n s t a n t a c t i o n . I n o u r view t h e b a l a n c e o f e q u i t i e s l i e s w i t h F i r s t N a t i o n a l and t h e Drums' c o n t e n t i o n t h a t under Rule 1 9 ( b ) , M.R.Civ.P., Chase s h o u l d be made a p a r t y o r t h e a c t i o n d i s m i s s e d , c a n n o t be s u s t a i n e d . Nor d o t h i s C o u r t ' s r e c e n t d e c i s i o n s i n S t a t e ex r e l . Slovak v . D i s t r i c t C o u r t , 166 Mont. 485, 534 P.2d 850, 32 S t . Rep. 4 2 0 , and S t a t e e x r e l . Nawd's TV and A p p l i a n c e I n c . v . D i s t r i c t Court, Mont . r e q u i r e j o i n d e r o f Chase. , 543 P.2d 1336, 32 St.Rep. 1222, These c a s e s i n v o l v e s u b r o g a t e d i n - s u r e r s who s t a n d i n t h e s h o e s of t h e i r i n s u r e d s and c a n s u e t h e defendant d i r e c t l y . Here Chase d o e s n o t s t a n d i n F i r s t N a t i o n a l ' s s h o e s w i t h t h e r i g h t t o s u e Drums d i r e c t l y , b u t must l o o k t o F i r s t N a t i o n a l f o r r e l i e f under t h e t e r m s of t h e p a r t i c i p a t i o n agreement. For t h e f o r e g o i n g r e a s o n s , w e h o l d t h e d i s t r i c t c o u r t ' s o r d e r of September 23, 1975, w a s c o r r e c t . This application f o r supervisory c o n t r o l i s dismissed. adg ----------- Justice - . ---r-----

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