BRADSHAW et al. v. MINERS' BANK OF JOPLIN et al., 81 F. 902

WOODS, Circuit Judge, after making the foregoing statement, delivered the opinion of the court. We are of the opinion that upon the amended bill the appellants are entitled to relief. To the extent of the value of the stock pledged to indemnify Thompson against loss by reason of Ms contract of guaranty, the appellants have a real and substantial interest that the judgment in favor of the Miners’ Bank against Thompson shall not be enforced.

It is urged, and the authorities cited to the point are perhaps conclusive, that Thompson is not in a position to ask equitable relief against the judgment, but it is on that account only the more important that relief should not be denied to the appellants, who were not parties to the action at law, and were not permitted to present in that action, or to assist Thompson in present ing, the defense which, as they duly advised him and his attorney, they were able to make.

They would not be in a worse plight, nor with less fault on their own part, if Thompson had been in a conspiracy to enable the bank to obtain a judgment for which there was no just foundation, and against whicli, unless in the way proposed, there can be no effective remedy. It is urged on the authority of Railroad Co. v. National Bank, 102 U. S. 14, and other cases which follow Swift v.

Tyson, 16 Pet. 1, that the Miners’ Bank, on the facts alleged, became an innocent holder for value of the notes of the appellants, and that its right to enforce the guaranty cannot he affected by an inquiry into the consideration of the notes. The doctrine of Swift v. Tyson, so far as we know, has never been applied in the manner proposed.

It is averred in the bill that the notes were made payable to the Miners’ Bank as agent or trustee for the Illinois & Missouri Lead & Zinc Company, but, if that were not so, and the beneficial interest in the notes were in the hank, yet the title, having come to it as the original payee of the notes, and not as transferee, would he subject, we -suppose, to all infirmities in the original consideration between appellants and the Illinois & Missouri Lead & Zinc Company, unless in the circumstances and conditions of the transaction there was in favor of the bank an estoppel in equity.

There is none in the law merchant. The right of appeal from the decree in favor of the Miners’ Bank is not affected by tbe fact that there has been no decree against the Illinois & Missouri Lead & Zinc Company. That company, though named in the hill as a respondent, was not served with process, and therefore is not a party to the record, and its presence, though proper, is not necessary to a complete adjudication of the controversy between the appellants and the Miners’ Bank and Thompson.

The suit is to he regarded as ancillary to the proceedings on the creditors’ hill of the Miners’ Bank against Thompson in the same court, and the jurisdiction, therefore, in no manner depends on the diverse citizenship of the parties. Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27. The decree of the circuit court is reversed, and the cause remanded, with directions to overrule the demurrer of the Miners’ Bank to the hill, and to proceed in accordance with this opinion.