505 F.2d 1064 (10th Cir. 1974), 74-1117, United States v. Wyoming Nat. Bank of Casper

Docket Nº:74-1117.
Citation:505 F.2d 1064
Party Name:UNITED STATES of America, Plaintiff, v. WYOMING NATIONAL BANK OF CASPER, Defendant-Appellee, H. A. True, Jr., Impleaded-Defendant-Appellee, Riverton Auction and Livestock Co., Impleaded-Defendant-Appellant.
Case Date:November 04, 1974
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1064

505 F.2d 1064 (10th Cir. 1974)

UNITED STATES of America, Plaintiff,

v.

WYOMING NATIONAL BANK OF CASPER, Defendant-Appellee, H. A.

True, Jr., Impleaded-Defendant-Appellee, Riverton

Auction and Livestock Co.,

Impleaded-Defendant-Appellant.

No. 74-1117.

United States Court of Appeals, Tenth Circuit

November 4, 1974

Argued Sept. 11, 1974.

No appeal by, or appearance for, the United States.

Page 1065

Harold E. Meier, Lander, Wyo. (Meier & Gist, Lander, Wyo., on the brief), for impleaded-defendant-appellant Riverton Auction and Livestock Co.

Page 1066

William E. Barton, Casper, Wyo. (Claude W. Martin and Brown, Drew, Apostolos, Barton & Massey, Casper Wyo., on the brief), for defendant-appellee Wyoming National Bank of Casper.

Houston G. Williams, Casper Wyo. (Frank D. Neville and Wehrli & Williams, Casper, Wyo., on the brief), for impleaded-defendant-appellee H. A. True, Jr.

Before BREITENSTEIN, SETH and McWILLIAMS, Circuit Judges.

BREITENSTEIN, Circuit Judge.

This controversy relates to the respective rights of creditors of a defunct packing company. The action was brought by the United States to enforce a tax levy. Jurisdiction lies under 28 U.S.C. 1340 and 1345; see also 26 U.S.C. 7402. The district court gave judgment for two secured creditors and against both the United States and the unpaid seller of certain cattle. The United States has not appealed. Our concern is with the claims asserted by the seller against the secured creditors. We affirm.

Appellees Wyoming National Bank of Casper and H. A. True were secured creditors of Wyoming Beef Packers, Inc. Appellant Riverton Auction and Livestock Co. on November 24, 1970, sold cattle to Packers. Packers took immediate possession of the cattle and they became part of its inventory. In payment for the cattle Packers gave Riverton two checks totalling $10,155.38. Bank refused to pay one check because of insufficient funds and the other because of an insufficient endorsement. On December 6 an audit disclosed that Packers was in default under its loan and security agreement with Bank. On the next day Packers turned all of its assets over to Bank. Riverton has never been paid for the cattle.

The United States sued Bank to enforce a tax levy against property of Packers held by Bank. Bank impleaded True and Riverton. Riverton filed a cross-claim against Bank and True. True filed a cross-claim against Riverton. Trial was to the court which made findings that are not here contested. Bank was adjudged a first, and True a second, secured creditor with rights superior to the United States. Riverton was relegated to the position of a general creditor.

On the day of trial, but before it began, Riverton moved under Rule 41, F.R.Civ.P., to dismiss its cross-claims against Bank and True, and moved under Rule 21, F.R.Civ.P., to be dropped as a party. The motions were opposed by the other parties and were denied by the court. Riverton claims that under Wyoming law it has a superior right to recover the unpaid purchase money, and desires to have that issue decided in state court.

The motions are interrelated and may well be considered together. Riverton was a proper party to the suit. In an action to enforce a tax lien 'all persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto.' 26 U.S.C. 7403(b). Riverton and True each claimed an interest in the property which Bank held and which the United States asserted was subject to its levy. Joinder was feasible and proper under Rule 19 because without Riverton and True in the suit Bank would be subjected to the 'substantial risk of incurring double, multiple, or otherwise inconsistent obligations.'

Rule 41(c) provides that voluntary dismissal by a cross-claimant of a cross-claim is impermissible after a responsive pleading has been filed. Because responsive pleadings to Riverton's cross-claim had been filed, dismissal could be had only by court order, Rule 41(a)(2), reviewable for abuse of discretion. Shaffer v. Evans, 10 Cir., 263 F.2d 134, 135. The grant of the motion to dismiss would not have taken Riverton out of the case because it was both an impleaded defendant and a cross-defendant.

Page 1067

Rule 21 permits a party to be dropped on motion. Here again the motion is addressed to the discretion of the court. 7 Fed.Pract. & Proc. 1688, p. 342; see also Standard Industries, Inc. v. Mobil Oil Corporation, 10 Cir., 475 F.2d 220, 232, cert. denied, 414 U.S. 829,94 S.Ct. 61, 38 L.Ed.2d 63. The court did not abuse its discretion in denying either the Rule 41 or the Rule 21 motion. Riverton was a proper party whose presence was needed to protect...

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