United States v. United States Fidelity & Guaranty Co.

• Citation: 106 F.2d 804
• Decision Date: 08 November 1939
• Docket Number: No. 1854.,1854.
• Parties: UNITED STATES v. UNITED STATES FIDELITY & GUARANTY CO. et al.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

106 F.2d 804 (1939)

UNITED STATES v. UNITED STATES FIDELITY & GUARANTY CO. et al.

No. 1854.

Circuit Court of Appeals, Tenth Circuit.

September 6, 1939.

Rehearing Denied November 8, 1939.

COPYRIGHT MATERIAL OMITTED

William R. Sherwood, of Washington, D. C. (Charles E. Collett, Acting Asst. Atty. Gen., Cleon A. Summers, U. S. Atty., of Muskogee, Okl., Charles W. Leaphart, Sp. Asst. to Atty. Gen., and Thomas Harris, of Washington, D. C., on the brief), for the United States.

Bower Broaddus, of Muskogee, Okl. (Julian B. Fite, of Muskogee, Okl., on the brief), for appellees.

Before PHILLIPS, BRATTON, and WILLIAMS, Circuit Judges.

BRATTON, Circuit Judge.

The Choctaw and Chickasaw Nations, pursuant to authority conferred by the Act of June 28, 1898, 30 Stat. 495, executed two separate coal and asphalt leases covering certain tribal lands. The United States Fidelity and Guaranty Company became surety on the bond given by the lessee for the faithful performance of its obligations contained in the leases. Central Coal and Coke Company, a corporation organized under the laws of Missouri, acquired the leases by assignment, the surety on the bond consenting thereto. The leases provided for payment of advance royalties and deficit royalties. Central Coal and Coke Company was placed in equity receivership in the United States Court for Western Missouri; and an ancillary proceeding in receivership was filed in the United States Court for Eastern Oklahoma. The United States, acting through the Superintendent of the Five Civilized Tribes, filed in the ancillary proceeding a claim on behalf of the Choctaw and Chickasaw Nations for $4,800, representing unpaid and delinquent royalties under the leases. By agreement of the United States Attorney for Eastern Oklahoma and the receiver of Central Coal and Coke Company such claim was transferred to the original proceeding in Western Missouri and subsequently treated as though originally filed there. Thereafter that court approved a petition for corporate reorganization of Central Coal and Coke Company under the provisions of section 77B of the National Bankruptcy Act, 11 U.S.C.A. § 207. The trustee in the reorganization proceeding filed an answer and a counterclaim. The counterclaim was for advance royalties paid on the leases in question and two other leases for which it was asserted credit should have been given against subsequent production, and for deficit royalties illegally exacted and paid. The special master to whom the matter was referred heard evidence and reported that the claim of the Government should be allowed in the sum of $2,000 and that the credits asserted by the trustee in the counterclaim should be allowed in the sum of $11,060.90. The court denied exceptions to the report and entered judgment that the United States in behalf of the Choctaw and Chickasaw Nations take nothing, and that the claim of Central Coal and Coke Company be fixed as against such Nations in the sum of $9,060.90 to be secured and collected in the manner provided by law. No appeal was taken from that judgment.

While the claim and counterclaim were pending in Western Missouri, and about three months prior to the time that court rendered its judgment, the United States, in its own behalf and for the Choctaw and Chickasaw Nations, filed this suit in the Eastern District of Oklahoma against United States Fidelity and Guaranty Company as surety on the bond, to recover judgment for the identical royalties involved in such claim. Leave to do so having been obtained, the trustee of Central Coal and Coke Company, and Central Coal and Coke Corporation, which had taken over the assets of Central Coal and Coke Company pursuant to an order of court made in the reorganization proceeding, intervened and pleaded on its merits the same counterclaim which had been litigated in Western Missouri, and they also pleaded the judgment rendered in that court. By amended answer, United States Fidelity and Guaranty Company pleaded that the claim and counterclaim had been litigated in Western Missouri, resulting in a judgment in favor of Central Coal and Coke Company on such counterclaim; that Central Coal and Coke Company was insolvent; and that the surety company adopted the allegations contained in the petition in intervention and claimed the credits fully set forth therein. By answer to the petition in intervention and by reply to the amended answer, the United States pleaded that the judgment rendered in Western Missouri was void for the reason that the court was without jurisdiction to render judgment against the United States upon the counterclaim.

The trial court determined that the court in Western Missouri had jurisdiction of the parties and of the subject matter of the claim and counterclaim; that the judgment rendered there was valid and not subject to collateral attack; that it constituted a bar to the claim of plaintiff; that for such reason judgment should be entered for defendant; and that the interveners were entitled to judgment against the Indian tribes. Judgment was rendered in which it was provided that the United States take nothing; that upon the judgment of the court in Missouri the trustees of Central Coal and Coke Company recover of and from the Choctaw and Chickasaw Tribes the sum of $9,060.90 with interest at six per cent per annum from February 19, 1936, to be secured and collected in the manner provided by law; and that United States Fidelity and Guaranty Company recover its costs. 24 F. Supp. 961. The United States appealed.

The first attack on the judgment in this case is that it was founded on the judgment rendered in the Western District of Missouri; and that the judgment of that court was void for the reason that the court did not have jurisdiction of the subject matter, that is to say, of the claim and counterclaim. It may not be amiss to recall at the outset certain well established principles. The United States as guardian of Indian tribes or individual Indians may institute appropriate suits or proceedings for the enforcement of the rights or the protection of the property of its Indian wards. Heckman v. United States, 224 U.S. 413, 32 S.Ct. 424, 56 L.Ed. 820; United States v. Noble, 237 U.S. 74, 35 S.Ct. 532, 59 L. Ed. 844; United States v. Board of Com'rs Osage County, 251 U.S. 128, 40 S.Ct. 100, 64 L.Ed. 184; La Motte v. United States, 254 U.S. 570, 41 S.Ct. 204, 65 L.Ed. 410; Cramer v. United States, 261 U.S. 219, 43 S.Ct. 342, 67 L.Ed. 622; United States v. Minnesota, 270 U.S. 181, 46 S.Ct. 298, 70 L. Ed. 539; Mars v. McDougal, 10 Cir., 40 F. 2d 247; Tiger v. Twin State Oil Co., 10 Cir., 48 F.2d 509. The right to maintain suits or proceedings of that character is the necessary complement to its obligations of guardianship. And in such a suit or proceeding it is a real party even though it does not have any pecuniary interest in the final recovery. Heckman v. United States, supra; United States v. New Orleans Pac. R. Co., 248 U. S. 507, 39 S.Ct. 175, 63 L.Ed. 388; La Motte v. United States, supra; Cramer v. United States, supra; Tiger v. Twin State Oil Co., supra. In the absence of a controlling statute, the Attorney General of the United States is authorized and empowered to institute, or cause to be instituted, and thereafter to prosecute all suits or proceedings deemed necessary to safeguard or enforce the rights of the United States. United States v. Throckmorton, 98 U.S. 61, 25 L. Ed. 93; United States v. San Jacinto Tin Co., 125 U.S. 273, 8 S.Ct. 850, 31 L.Ed. 747; Causey v. United States, 240 U.S. 399, 36 S.Ct. 365, 60 L.Ed. 711; Mars v. McDougal, supra; Pueblo of Picuris in State of New Mexico v. Abeyta, 10 Cir., 50 F.2d 12.

It is provided by section 24(1) of the Judicial Code, 28 U.S.C.A. § 41(1), that the District Courts of the United States shall have jurisdiction of all suits of a civil nature at common law or in equity brought by the United States. An action in personam on a contract is a transitory action, and ordinarily it may be brought where the party against whom relief is sought may be found. The claim of the Choctaw and Chickasaw Nations for delinquent royalties was a transitory action growing out of leases covering lands in Oklahoma, and the United States had power to file it in the ancillary proceeding. It was transferred to the principal receivership proceeding in Missouri, but final action was taken on it in the corporate reorganization proceeding under section 77B of the Bankruptcy Act. That section provides that after approval of the petition for reorganization the court shall have exclusive jurisdiction of the debtor and its property wherever located for the purposes of the section, and shall have and may exercise all the powers not inconsistent with the section which a Federal court would have had it appointed a receiver in equity of the property of the debtor by reason of its inability to pay its debts as they mature. It is clear that unless deprived thereof by some special statute, the court in Western Missouri had jurisdiction to consider the claim and to render a binding judgment respecting it. Continental Illinois Nat. Bank & Trust Co. v. Chicago, Rock Island R. Co., 294 U.S. 648, 55 S.Ct. 595, 79 L.Ed. 1110; In re Greyling Realty Corporation, 2 Cir., 74 F.2d 734.

The Atoka Agreement negotiated between the United States and the Choctaw and Chickasaw Nations in April, 1897, and ratified by the Act of June 28, 1898, 30 Stat. 495, 505, previously adverted to, is relied upon as vesting exclusive jurisdiction in the United States Court for Eastern Oklahoma of a case or proceeding involving such a claim. That agreement contains a provision that the United States Courts then existing or thereafter created in the Indian Territory should have exclusive jurisdiction of all controversies growing out of the titles, ownership, occupation, possession, or use of real estate, coal, and asphalt in the territory occupied by the tribes. In...