1st Nat. Credit Corp. v. Von Hake, Civ. No. C 79-0718.

Citation511 F. Supp. 634
Decision Date10 April 1981
Docket NumberCiv. No. C 79-0718.
Parties1ST NATIONAL CREDIT CORPORATION, a Nevada Corporation, Plaintiff, v. Richard A. VON HAKE, and all other persons unknown claiming any right, title, estate or interest adverse to plaintiff's ownership of certain real property, Defendants.
CourtUnited States District Courts. 10th Circuit. United States District Court of Utah

COPYRIGHT MATERIAL OMITTED

Robert M. McRae, McRae & DeLand, Salt Lake City, Utah, for plaintiff.

Ken Chamberlain, Richfield, Utah, H. Ralph Klemm, and T. Quentin Cannon, Salt Lake City, Utah, for defendants.

MEMORANDUM OPINION and ORDER

JENKINS, District Judge.

Defendant Richard A. Von Hake's Motion to Dismiss the complaint in the above-entitled action pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure came on for hearing before this Court on November 10, 1980. After hearing the arguments offered by counsel in this matter, this Court took the motion under advisement. Having reviewed the memoranda and exhibits presented by counsel for this Court's examination, and having given consideration to the arguments of counsel as well as to the relevant legal authorities, and good cause appearing therefor, this Court now finds and rules as follows:

On April 9, 1979, Interlake Corporation, a holder of certain notes and mortgages executed by Richard A. Von Hake which had fallen into default, commenced mortgage foreclosure proceedings in the District Court for the Sixth Judicial District, Kane County, State of Utah. This action was entitled Interlake Corporation v. Richard A. Von Hake, No. 1603. Von Hake failed to answer the complaint in that action and a judgment by default was entered on May 3, 1979, decreeing foreclosure upon the property affected by the mortgages. The property was sold by the county sheriff at a foreclosure sale held on June 4, 1979, to the highest bidder, 1st National Credit Corporation, plaintiff herein.

Exactly six months following the sale, on December 4, 1979, Von Hake tendered a sum of money to the county sheriff amounting to $96,000, ostensibly in exercise of his asserted statutory right of redemption. See Utah Code Ann. (1953) § 78-37-6 (1977); Rule 69(f), Utah Rules of Civil Procedure. Three days later, 1st National Credit Corporation filed its complaint herein commencing this proceeding to quiet title in the relevant property, commonly known as the Seeps Ranch, as against adverse claims by Von Hake, Tex R. Olsen, Ken Chamberlain, and any other interested but unknown adverse claimants to the property. Von Hake was served with a summons and a copy of the complaint in this proceeding by a deputy county sheriff for Kane County on January 15, 1980. In the meantime, on January 7, 1980, Von Hake had filed a complaint commencing a quiet title action against 1st National Credit Corporation and others in the District Court of the Sixth Judicial District, Kane County, State of Utah, that action being entitled Richard A. Von Hake v. Ed Thomas and 1st National Credit Corporation, No. 1643. On January 17, 1980, Von Hake filed a motion in state court to set aside the default judgment entered against him in the Interlake case, supra, pursuant to Rule 60(b) of the Utah Rules of Civil Procedure. Additionally, Von Hake moved that the state district court direct that the $96,000 tendered to the county sheriff be held by the clerk of that court pending resolution of the conflicting claims presented in Von Hake v. Thomas, et al., No. 1643.1 Both motions came on for hearing before the state district court on February 7, 1980, at which time argument was heard and the court denied the motion to set aside the default judgment, while granting the request that the $96,000 be held by the clerk of the state court. On its own motion, the court orally appointed 1st National Credit Corporation as receiver of the Seeps Ranch property pending resolution of Von Hake v. Thomas, et al., No. 1643.2 For whatever reason, the action of the state district court on February 7, 1980, was not memorialized in writing in the record until September 19, 1980.3 By that time, this Court had long since entered summary judgment in favor of claimants Tex R. Olsen and Ken Chamberlain, see Judgment and Decree of July 2, 1980, and had otherwise proceeded on its orderly schedule of pre-trial conferences. On October 24, 1980, counsel for Von Hake filed his motion to dismiss this action in favor of the state court proceedings in Von Hake v. Thomas, et al., No. 1643, more than five months after 1st National Credit Corporation had filed a motion to dismiss the state action in favor of proceedings in this Court. See Defendant's Motion to Dismiss (No. 1643, filed May 7, 1980). The state court has deferred ruling on that motion pending a hearing at the convenience of counsel. See Minute Entry for July 3, 1980, No. 1643.

Within the chain of events summarized above can be discerned a "race for the courthouse" the outcome of which may have determined the jurisdiction of this Court over the subject-matter of this action relative to the District Court for the Sixth Judicial District, Kane County, State of Utah. A review of the applicable federal law proves necessary to identify the events that are decisive of this contest of adjudicative speed.

I. FEDERAL COURTS, STATE COURTS AND CONFLICTS OF JURISDICTION

Under Utah law, a quiet title action is a proceeding at law expressly authorized by statute. Utah Code Ann. (1953) § 78-40-1 (1977); Ash v. State of Utah, 572 P.2d 1374, 1376 & n.1 (Utah 1977); Holland v. Wilson, 8 Utah 2d 11, 327 P.2d 250, 251 (1958). The purpose of the action is to judicially quiet an existing title against an adverse or hostile claim by one or more others. State of Utah v. Santiago, 590 P.2d 335, 337 & n.2 (Utah 1979). Federal courts may also hear and determine actions to quiet title within their equitable jurisdiction, provided that the applicable jurisdictional prerequisites are met. See C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure §§ 1070, 1250, 1358, 3566, 3635, 3702 (1976); Reynolds v. Crawfordsville First National Bank, 112 U.S. 405, 410, 5 S.Ct. 213, 216, 28 L.Ed. 733 (1884). Federal proceedings to quiet title or to remove a cloud from title may be commenced without the usual insistence upon personal service of process. 28 U.S.C. § 1655 (1976). Unavoidably, actions to quiet title to specific land or other property are sometimes filed in both federal and state courts, since both possess original jurisdiction of the cause of action. A jurisdictional conflict over control of the property in litigation results.

As a general rule, the pendency of the same cause of action in a state court between the same parties is not a ground for abatement of an action in federal court. Butler v. Judge of the United States District Court, 116 F.2d 1013, 1015 (9th Cir. 1941). At least in cases within the in personam jurisdiction of the court, the parties may pursue their remedy in both courts at the same time. As the United States Supreme Court has explained in Kline v. Burke Construction Co., 260 U.S. 226, 230, 43 S.Ct. 79, 81, 67 L.Ed. 226 (1922):

A controversy is not a thing, and a controversy over a mere question of personal liability does not involve the possession or control of a thing, and an action brought to enforce such a liability does not tend to impair or defeat the jurisdiction of the court in which a prior action for the same cause is pending. Each court is free to proceed in its own way and in its own time, without reference to the proceedings of the other court. Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata by the court in which the action is still pending in the orderly exercise of its jurisdiction, as it would determine any other question of fact or law arising in the progress of the case.

Accord, Boynton v. Moffat Tunnel Improvement Dist., 57 F.2d 772, 778 (10th Cir. 1932) cert. denied, 287 U.S. 620, 53 S.Ct. 20, 77 L.Ed. 538. To hold, for example, that the federal court should in all cases give way to the state court would in effect deprive persons of diverse citizenship of a right given to them by the United States Constitution and the federal statutes to proceed in the federal courts. McClelland v. Carland, 217 U.S. 268, 281, 30 S.Ct. 501, 504, 54 L.Ed. 762 (1910); Butler v. Judge of the United States District Court, supra. Only "special and peculiar circumstances" could justify such deference. Commonwealth Trust Co. of Pittsburgh v. Bradford, 297 U.S. 613, 618, 56 S.Ct. 600, 601, 80 L.Ed. 920 (1936), see 17 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure §§ 4241 et seq. (1978).

In contrast, however, it has been uniformly held that where the proceedings are within the in rem or quasi in rem jurisdiction of both courts, the court, whether state or federal, first obtaining jurisdiction of the res should proceed to final judgment and that the court of concurrent jurisdiction should dismiss the action, or at least stay its proceedings and await the conclusion of litigation in the court having legal possession of the res. Donovan v. City of Dallas, 377 U.S. 408, 412, 84 S.Ct. 1579, 1582, 12 L.Ed.2d 409 (1949); Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456, 465-67, 59 S.Ct. 275, 280-81, 83 L.Ed. 285 (1939); Butler v. Judge of the United States District Court, supra. In Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 389, 79 L.Ed. 850 (1935), the Supreme Court expressed the rule in these terms:

If the two suits are in rem or quasi in rem, requiring that the court or its officer have possession or control of the property which is the subject of the suit in order to proceed with the cause and to grant the relief sought, the jurisdiction of one court must of necessity yield to that of the other. To avoid unseemly and disastrous conflicts in the administration of our dual
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    ...precedential effect in this District, unless and until they are overruled by the Tenth Circuit. See, e.g., 1st Nat. Credit Corp. v. Von Hake, 511 F.Supp. 634, 641 n. 7 (D.Utah 1981).187 Neither the Tenth Circuit nor the Eighth Circuit have expressly overruled Standley or the other 1890s "In......
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    ...a proceeding to foreclose upon a mortgage . . . is an action in rem or quasi in rem, under Utah law. 1st Nat. Credit Corp. v. Von Hake, 511 F. Supp. 634, 639 (D. Utah 1981) (citing Boucofski v. Jacobsen, 36 Utah 165, 104 P. 117, 122 (1909)); see also Blue Creek Land & Live Stock Co. v. Kehr......
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