Knoll v. Socony Mobil Oil Company, 8811.

Decision Date09 December 1966
Docket NumberNo. 8811.,8811.
Citation369 F.2d 425
PartiesAnna KNOLL and Rose Keller, Appellants, v. SOCONY MOBIL OIL COMPANY, Inc., a Corporation, et al., Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Robert Reiter, Washington, D. C., for appellants.

Tom C. Triplett and Richard A. Loyd, Wichita, Kan. (George B. Collins, Robert Martin, K. W. Pringle, Jr., W. F. Schell, Robert M. Collins, William L. Oliver, Jr., William V. Crank, Wichita, Kan., Thomas M. Burns, Peter J. Wall, Denver, Colo., Robert R. Freeman, Emmet A. Blaes, Roetzel Jochems, Robert G. Braden, J. Francis Hesse, James W. Sargent, Stanley E. Wisdom, Cecil E. Merkel, Harry L. Hobson, Bruce W. Zuercher, L. D. Klenda, Charles M. Cline, Stephen M. Blaes, and Jack S. Ramirez, Wichita, Kan., were on the brief), for appellees (except Mobil Oil Corporation).

Donald G. Canuteson, Dallas, Tex., Richard B. Altman, Mark H. Adams, Charles E. Jones, William I. Robinson, J. Ashford Manke, Clifford L. Malone, Mark H. Adams, II, John S. Seeber, Floyd E. Jensen, Robert Hall, Philip L. Bowman, and Joe Rolston, Wichita, Kan., were on the brief), for appellee Mobil Oil Corporation (formerly Socony Mobil Oil Company, Inc.).

Before PHILLIPS and HICKEY, Circuit Judges, and DOYLE, District Judge.

WILLIAM E. DOYLE, District Judge.

This is an appeal from a judgment in consolidated interpleader suits in which the trial court, in determining the right to deposited funds, made findings and conclusions with respect to the ownership of a one-half section of land situated in Graham County, Kansas, the oil and gas leases covering said land, and the proceeds for the sale of oil produced from said land which were on deposit with the clerk of the court. The appellants, Anna Knoll and Rose Keller, seek reversal contending that the lower court lacked federal interpleader jurisdiction; that it erred in its order of distribution of the oil sale proceeds and in proceeding with the trial after the appellants filed affidavits that the judge disqualify himself; that the court erred in failing to appoint counsel to represent appellant Rose Keller; and that the sum total of these actions was a deprivation of due process of law.

Each of the consolidated actions was commenced by Mobil Oil Company pursuant to the interpleader provisions of Title 28 U.S.C. § 1335, as purchaser of oil produced from certain oil and gas leases on the Graham County, Kansas, lands. The complaints alleged that Mobil was the purchaser of crude oil produced from said lands and that the parties named as defendants (who, with the exception of appellants Anna Knoll and Rose Keller, appear on this appeal as appellees along with Mobil) were in dispute over their respective ownership rights to the land and the leases thereunder; that because of these adverse and conflicting claims by the defendants Mobil could not with safety to itself pay or distribute monies due to them from the purchase of crude oil by Mobil. It prayed that the defendants be required to interplead and settle among themselves their respective rights to the monies due, and that they be restrained from instituting any further action against Mobile involving said monies. In conjunction with the filing of the complaints, Mobil deposited the monies due (which exceed $500.00) with the court.

Appellants asserted a counterclaim against Mobil alleging that Mobil had been negligent in the previous distribution of royalties. The trial court dismissed this prior to trial on the basis that Mobil was a mere stakeholder and not an "opposing party" against appellants and hence a counterclaim filed pursuant to Rule 13, Federal Rules of Civil Procedure, could not be supported.

There was also a pretrial effort on the part of a defendant other than the present appellants to dismiss the interpleader for lack of jurisdiction. Surprisingly, this effort was opposed by the appellants who now question the trial court's jurisdiction. The Court denied this motion holding that as a mere stakeholder the plaintiff's interpleader actions were proper.

The appellants failed to appear at either the pretrial conference or the trial itself. Indeed, they failed to appear at other hearings which involved matters which directly affected them. They did frequently file documents. As the result, however, of their having ignored the proceedings in the trial court, their problems are the more complex in the present review proceeding and we are limited to issues jurisdictional in character.

All of the defendants, with the exception of Anna Knoll and Rose Keller, admitted all the allegations of the complaints. The appellants asserted a larger interest in said properties than was alleged in the complaints, denied the validity of the said oil leases, alleged that Mobil had been negligent in making payments to the defendants for oil purchases in amounts inconsistent with their respective interests in the properties, and further alleged fraud on the part of several of the defendants with respect to certain mesne conveyances of fee simple, mineral and royalty interests in the said properties.

The trial was in a sense a default hearing although evidence was taken and statements of counsel were made into the record. From the evidence taken and the statements made it would appear that the conflict here is of long standing. In the early 1940's the appellants conveyed to Adolph Knoll their interest in certain Kansas lands which later produced oil. Adolph transferred the entire interest to the brother of the appellants, Alex Knoll. In 1959 there was litigation in the United States District Court for the District of Kansas, involving the question whether the conveyance had been in trust. This litigation was finally culminated when an agreement was reached whereby the appellants and other members of the Knoll family were given small royalty interests. That agreement, however, did not settle the dispute and we find the appellants bringing an action in 1964 in the United States District Court for the District of Kansas against their brothers and sisters and Mobil in which they asserted fraud in the settlement agreement and demanded an undivided one-ninth interest in the property. This case was dismissed for failure to join parties. Knoll v. Knoll, 10 Cir. 1965, 350 F.2d 407, cert. denied 383 U.S. 909, 86 S.Ct. 891, 15 L.Ed.2d 664, reh. denied 383 U.S. 973, 86 S.Ct. 1270, 16 L.Ed.2d 313.

At the trial, the judge made rather extensive findings of fact and conclusions of law in which he recognized the prior settlement and decreed a distribution of the funds which had been deposited in the registry of the court.1 The Court also permanently enjoined the appellants from ever asserting any title to the property inconsistent with the order and judgment.

I.

Appellants argue that the trial court lacked jurisdiction to entertain interpleader because, as they maintain, it does not appear that the named defendants had made adverse claims to the fund. A conclusive answer to this is that the present act (Title 28 U.S.C. § 1335) is not limited to adverse claimants who "are claiming," but also includes two or more adverse claimants who "may claim" to be entitled. There must be a real risk of vexatious, conflicting claims2 but certainly that is present here. In fact, the appellants were engaged in litigation and were asserting similar types of claims at the very time that the present suit was filed.3

Appellants assert further that Mobil is not a disinterested stakeholder; that it was a named defendant in the 1964 suit and is "independently liable" to them as evidenced by their counterclaim alleging Mobil's prior negligent distribution.4

The fact that Mobil was defending litigation at the time the present action was brought does not preclude the court's jurisdiction. Mobil had eschewed any interest in the fund and there is nothing in the record to suggest that Mobil's interest in the fund deposited was or is anything more than a desire to obtain an adjudication as to rightful ownership of the fund. This is precisely the type of situation for which interpleader is designed. See Holcomb v. Aetna Life Insurance Co., 10 Cir. 1955, 228 F.2d 75.

The further objection of appellants that Mobil is "independently liable" to them as shown by their counterclaim, is also without merit. The previous decisions of this Court preclude a holding that the existence of a prior independent liability defeats jurisdiction in an interpleader suit. Thus, in First National Bank in Dodge City v. Johnson County National Bank & Trust Co., 10 Cir. 1964, 331 F.2d 325, an effort to file a counterclaim was made by one in a position identical to that of the appellants. The holding was that Rule 13, Federal Rules of Civil Procedure, precludes the filing of a counterclaim against one who asserts no primary claim against the "counterclaimant."

In a more recent decision, Erie Bank v. United States District Court for the District of Colorado, 10 Cir.1966, 362 F.2d 539, the Court went even further. It held that a court in an interpleader suit in which plaintiff asserts no claim to the deposited fund, lacks jurisdiction to proceed with the counterclaim and must dismiss it. In that case it was said:

"The motion to dismiss the counterclaim, filed in the action below by the bank, goes to the jurisdiction of the court to further proceed as to the counterclaim. This court, in First National Bank in Dodge City v. The Johnson County National Bank and Trust Co., etc., et al., 10 Cir., 331 F.2d 325, held that in an interpleader suit, where the plaintiff asserts no claim to the interpleaded fund, a counterclaim cannot be asserted by one of the claimants to the fund against the plaintiff because they are not `opposing parties\' within the meaning of Rule 13, F.R.Civ.P. The facts presented here fall squarely within that decision and the bank\'s motion to dismiss the counterclaim should have been granted."5

We read this as holding that in an interpleader suit...

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