Federal Reserve Bank v. Omaha Nat. Bank

• Decision Date: 14 November 1930
• Docket Number: No. 8745-8747.,8745-8747.
• Citation: 45 F.2d 511
• Parties: FEDERAL RESERVE BANK OF KANSAS CITY, MO., v. OMAHA NAT BANK OF OMAHA, NEB., et al. WYOMING NAT. BANK OF CASPER, WYO., v. FEDERAL RESERVE BANK OF KANSAS CITY, MO., et al. OMAHA NAT. BANK OF OMAHA, NEB., v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

45 F.2d 511 (1930)

FEDERAL RESERVE BANK OF KANSAS CITY, MO., v. OMAHA NAT BANK OF OMAHA, NEB., et al.

WYOMING NAT. BANK OF CASPER, WYO., v. FEDERAL RESERVE BANK OF KANSAS CITY, MO., et al.

OMAHA NAT. BANK OF OMAHA, NEB., v. SAME.

Nos. 8745-8747.

Circuit Court of Appeals, Eighth Circuit.

November 14, 1930.

COPYRIGHT MATERIAL OMITTED

Arthur R. Wells, of Omaha, Neb. (Halleck F. Rose, Paul L. Martin, and Winthrop B. Lane, all of Omaha, Neb., on the brief), for Omaha Nat. Bank of Omaha, Neb.

Edgar M. Morsman, Jr., of Omaha, Neb., for Wyoming Nat. Bank of Casper.

H. G. Leedy, of Kansas City, Mo. (Harry O. Palmer and Arthur L. Palmer, both of Omaha, Neb., on the brief), for Federal Reserve Bank of Kansas City, Mo.

Before KENYON, BOOTH, and GARDNER, Circuit Judges.

BOOTH, Circuit Judge.

These three appeals grow out of one case, and have been heard upon the same record.

The suit was originally brought by the Omaha National Bank of Omaha against the Federal Reserve Bank of Kansas City, Mo., Wyoming National Bank of Casper, Wyo., First National Bank of Cheyenne, Wyo., and T. E. McClintock, receiver of the First National Bank of Cheyenne, Wyo.

For brevity, the parties will be referred to respectively as the Omaha bank, the Federal Reserve Bank, the Casper bank, and the Cheyenne bank.

The suit was brought by the Omaha bank to set aside a certain transfer of a fund or credit standing in the name of the Casper bank on the books of the Federal Reserve Bank, Omaha branch, and to establish and enforce in the Omaha bank an equitable title to said fund or credit.

The decree below adjudged that the Casper bank was holding the apparent title to said fund or credit (amounting to $60,000) as trustee for the Omaha bank to the extent of $50,000.

From that decree, the Casper bank has appealed, first, on jurisdictional grounds; second, as to the merits.

The Federal Reserve Bank has appealed on jurisdictional grounds alone.

The Omaha bank has taken a cross-appeal, contending that the decree should have adjudged that the Casper bank held apparent title to the whole $60,000 in trust for the Omaha bank.

Prior History of the Case.

The case has been before this court on a former appeal. 26 F.(2d) 884. Questions of jurisdiction alone were involved. The facts alleged in the complaint were fully set out in the opinion rendered at that time, and need not be here repeated. A brief summary at this time of the jurisdictional grounds alleged will suffice.

There are allegations in the bill which may fairly be taken as a basis for jurisdiction in the United States court on the following grounds:

(1) The existence of a federal question arising out of the construction of section 5242, R. S., under which a cause of action is claimed.

(2) That the suit is against an officer of the United States, namely, the receiver of the Cheyenne National Bank, who is made a party defendant in the suit.

(3) Diversity of citizenship — existing as to all of the defendants except the Federal Reserve Bank, and that bank being a federal corporation.

(4) Diversity of citizenship — existing as to all of the defendants except the Reserve Bank, and that bank having no citizenship and being a merely nominal party.

After the commencement of the suit, the third ground of jurisdiction became of no avail, as this court had meanwhile decided, by reason of a recent statute, that incorporation under a federal statute could no longer constitute a basis for jurisdiction in the federal court. Act of February 13, 1925 (43 Stat. 941, 28 USCA § 42); Federal Land Bank v. United States (C. C. A.) 13 F. (2d) 36.

The final holding of the trial court, prior to the first appeal, was that jurisdiction of the suit did not exist in the federal court. The first ground was discussed at length, and a holding was made adverse to the plaintiff. The third ground had been abandoned. The second and fourth grounds were not discussed by the trial court. A decree was entered dismissing the bill, and appeal to this court followed.

The holding of this court on that appeal was that jurisdiction existed on the fourth ground; namely, diverse citizenship of all of the defendants except the Federal Reserve Bank — and that bank having no citizenship and being a merely nominal party.

When the case came on before the trial court a second time, that court again rejected the first ground of jurisdiction above mentioned, but followed the ruling of this court that jurisdiction existed on the fourth ground. The second ground was not discussed.

Both parties have again raised the jurisdictional questions in this court. The present contention of the plaintiff is that jurisdiction exists on three of the grounds above mentioned, namely, the first, second, and fourth, and we are urged so to hold. The Federal Reserve Bank and the Casper bank, on the other hand, contend that jurisdiction does not exist on any of the grounds mentioned, and ask that the decree be reversed, with instructions to dismiss the bill.

As to the ground of jurisdiction found by this court on former appeal to exist, we content ourselves with saying that we adhere to that decision on the ground that it is the "law of the case," and not within any exception to that rule. Richardson v. Ainsa, 218 U. S. 289, 295, 31 S. Ct. 23, 54 L. Ed. 1044; City and County of Denver v. Denver Tramway Corp. (C. C. A. 8) 23 F.(2d) 287, 293; Granite Brick Co. v. Titus (C. C. A.) 226 F. 557; Lackner v. McKechney (C. C. A.) 2 F.(2d) 516; Thompson v. Maxwell, etc. Co., 168 U. S. 451, 18 S. Ct. 121, 42 L. Ed. 539; United States v. Camou, 184 U. S. 572, 22 S. Ct. 505, 46 L. Ed. 694; City of Seattle v. Puget Sound, etc., Co. (C. C. A.) 15 F.(2d) 794; Texas Co. v. Pensacola, etc., Corp. (C. C. A.) 292 F. 61; 4 C. J. § 3075. Slaker v. O'Connor, 278 U. S. 188, 49 S. Ct. 158, 73 L. Ed. 258, is not to the contrary.

In Thompson v. Maxwell, etc., Co., the court said (page 456 of 168 U. S., 18 S. Ct. 121, 123):

"It is settled law of this court, as of others, that whatever has been decided on one appeal or writ of error cannot be re-examined on a second appeal or writ of error brought in the same suit. The first decision has become the settled law of the case."

In the City and County of Denver v. Denver Tramway Corp. Case, this court said page 293 of 23 F.(2d):

"On the present appeal the assignments of error raising jurisdictional questions are very similar to those on the former appeal, and are based upon the same motion to dismiss.

"It thus appears that this same motion to dismiss containing alleged jurisdictional grounds is now before this court which was before it on the former appeal, and that the assignments of error touching the jurisdictional questions are substantially the same on the two appeals. It follows that, in so far as the jurisdictional questions now presented were presented and decided upon the former appeal, they are no longer open to review. That decision has become the law of the case."

In the City of Seattle v. Puget Sound, etc., Co. Case, the court said page 795 of 15 F.(2d):

"The rule is firmly established that the decision of an appellate court on appeal or writ of error is controlling upon the court below after the case has been remanded, and is equally controlling upon the appellate court on a second appeal or writ of error in the same case. No doubt isolated cases may be found where appellate courts have disregarded the rule, and their power to do so is not questioned; but the overwhelming weight of authority is in its favor, unless between the two decisions there has been some change in the law, by legislative enactment or judicial decision, which the appellate court is bound to follow. The rule itself has been iterated and reiterated by the Supreme Court and by this court."

In the Texas Co. v. Pensacola, etc., Corp. Case, the court said (page 64 of 292 F.):

"While this court may have the power, under special circumstances, to re-examine questions decided on a previous hearing of the same case, * * * as a general rule the decision on a first appeal, or writ of error, is thereafter the law of the case."

If, however, the question were still open, yet the decision on the former appeal is, in our judgment, in accord with the highest authorities on the point involved. A custodian or stakeholder of property is usually held to be a merely nominal party whose citizenship does not affect the question of federal jurisdiction. Salem Trust Co. v. Manufacturers' Co., 264 U. S. 182, 189, 190, 44 S. Ct. 266, 68 L. Ed. 628, 31 A. L. R. 867; Bacon v. Rives, 106 U. S. 99, 104, 1 S. Ct. 3, 27 L. Ed. 69; Walden v. Skinner, 101 U. S. 577, 588, 25 L. Ed. 963; Fienup v. Kleinman, 5 F.(2d) 137 (C. C. A. 8); White v. Chase, 201 F. 896 (C. C. A. 8). See, also, Rogers v. Penobscot Mining Co., 154 F. 606 (C. C. A. 8).

The first ground of jurisdiction above mentioned, viz. under section 5242, Rev. St. (12 USCA § 91), was not definitely passed upon on the former appeal. We therefore feel at liberty to discuss it, and are impelled to do so on account of the earnest and vigorous arguments of the opposing parties.

Section 5242, Rev. St. (12 USCA § 91), will be found in the margin.¹

One of the general purposes of this section was to secure, in the event of insolvency, a ratable distribution of the assets of the insolvent bank in accordance with law. First National Bank v. Colby, 21 Wall. 609, 22 L. Ed. 687; Bailey v. Mosher, 63 F. 488, 491 (C. C. A. 8); Hayden v. Thompson, 71 F. 60, 65 (C. C. A. 8); Stuart v. Hayden, 72 F. 402, 405 (C. C. A. 8); Steele v. Randall, 19 F.(2d) 40 (C. C. A. 8).

A transfer made "in contemplation of insolvency" means one that is actuated by the knowledge of insolvency. Roberts v. Hill (C. C.) 24 F. 571, 573; In re Dibblee, 7 Fed. Cas. 651, 654, No. 3884; Hayden v. Chemical National Bank (C. C. A.) 84 F. 874; Ball v. German Bank, 187 F. 750, 753 (C. C. A. 8); Browne v. Stronach (D. C.) 7 F.(2d) 685, 688.

The intent to give a...