Hagan v. Central Avenue Dairy

• Decision Date: 07 February 1950
• Docket Number: No. 12211.,12211.
• Citation: 180 F.2d 502
• Parties: HAGAN v. CENTRAL AVENUE DAIRY, Inc.
• Court: U.S. Court of Appeals — Ninth Circuit

180 F.2d 502 (1950)

HAGAN v. CENTRAL AVENUE DAIRY, Inc.

No. 12211.

United States Court of Appeals Ninth Circuit.

January 4, 1950.

Rehearing Denied February 7, 1950.

Everet L. Hagan, in pro. per.

Harry C. Hedberg, Los Angeles, Cal., for appellant.

Bodkin, Breslin & Luddy, Los Angeles, Cal., for appellee.

Before GOODRICH, and POPE, Circuit Judge, and HALL, District Judge.

GOODRICH, Circuit Judge.

This case raises the question of the scope of jurisdiction of the United States District Court in an interpleader action.

The Title Insurance and Trust Company was the escrow holder of the sum of $1,750 deposited by Evert L. Hagan on an agreement between himself and Central Avenue Dairy, Inc., an Arizona corporation. Alleging that both Hagan and the Dairy company had made adverse claims against it for the $1,750, the Title Insurance and Trust Company brought in the United States District Court for the Southern District of California an action of interpleader as provided in the federal statutes, 28 U.S.C.A. §§ 1335, 1397, 2361, joining the two claimants as defendants in this suit. Service was made upon the Dairy company in Arizona.¹ It filed no answer and made no appearance in the interpleader suit. The District Court awarded the sum to Hagan. Hagan, in the meantime, had filed a cross-claim against Central Dairy asking for money damages and alleging that the claim for them grew out of the same contract which was the subject-matter of the escrow deposit. Central Dairy appeared specially and objected to the assertion of the court's jurisdiction over it with regard to this cross-claim. The trial court dismissed the cross-claim and Hagan appeals.

The interesting question raised by the appeal is whether the court, which undoubtedly had jurisdiction of the interpleader action under the very terms of the statute, was correct in limiting itself to the disposal of the fund involved in the interpleader suit. Hagan urges that it is a well settled principle of equity that "Equity delights to do justice and that not by halves."² He also presses upon us Rule 13(g) of the Federal Rules of Civil Procedure, 28 U.S.C.A., which provides that "A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counter-claim therein or relating to any property that is the subject matter of the original action. * * *" Both contentions are plausible. But equity can only do complete justice if it has before it both the party for whom justice is to be done and against whom justice is to be required. Again, the Federal Rule quoted is, we think, one for the conduct of actions, not to provide a substantive rule governing the extent of the jurisdiction of a court. There is no use in talking about how an action is to be conducted unless a court has jurisdiction of the person and competency as to the subject-matter.

We think the District Court of California did not have personal jurisdiction over the absent non-consenting Arizona corporation except to the extent of that corporation's interest in the escrow fund. That the court had jurisdiction that far is clear from the statute. Furthermore, if Congress had so provided, we think there is no reason why process from the United States District Court could not run country-wide. But Congress has not so provided, generally, and a District Court's power to hear and decide cases involving personal liability of an individual is limited to those served within the state where the court sits.³ The absentee defendant was not personally before the court here. The court could adjudicate rights in the fund, but could affect no other interest of the absentee.

It would be a startling conclusion, we think, to give to Rule 13(g) and the Interpleader statute the effect of enlarging the jurisdiction of a court to create rights going beyond those to the fund which is the subject of the interpleader action. Such a construction would go far beyond the situation which called for the Interpleader statute in the first place.⁴ Situations of considerable hardship could result. In this case, for instance, suppose Central Dairy to be a Delaware corporation not engaged in business in California. Is it to be held subject to personal liability in the District Court for California because an interpleader plaintiff says it claims an interest in an escrow fund? That would indeed be going pretty far, and we cannot think that any such result was intended by Congress when it passed the Interpleader statute or the Supreme Court when it promulgated the Federal Rules of Civil Procedure.

The attachment process furnishes a useful analogy here. Attachment is available against a non-resident, absentee defendant if he has goods or rights which are subject to seizure in the state where suit is brought. The judgment against the absentee, assuming due process has been followed, deprives him of his rights in the thing seized. But the adjudication cannot, for want of jurisdiction, create further personal liability against him nor does it act generally as res judicata upon the questions answered in awarding the seized property to the plaintiff.⁵ Attachment is often classified as an action quasi in rem, and the description does no harm so long as it is recognized as a name given to a type of legal proceeding, not an explanation of a result.

Such authority as there is upon the precise point so holds with regard to interpleader. Stitzel-Weller Distillery, Inc. v. Norman, D.C.1941, 39 F.Supp. 182; Eschger, Ghesquirer & Co. v. Morrison, Kekewich & Co., 6 T.L.R. 145 (C.A.1890).⁶

The judgment is affirmed.

HALL, District Judge.

I concur in the result.

The record in this case presents a very narrow question for decision on appeal.

The original interpleader required judicial determination only as to whether Hagan or Central Avenue Dairy was entitled to the sum of $1,750.00 deposited with the Title Company in escrow. The only terms of the escrow instructions disclosed in the record concerning $1,750.00 were that it was to be disbursed upon instructions "from both Evert Hagan and Central Avenue Dairy, Inc., or from a court of competent jurisdiction." The other terms of the escrow were all alleged to have been complied with. But such instructions for the disbursement of the $1,750.00 were not received by the escrow holder, although both Hagan and the Central Dairy had laid claim to it by demands upon the escrow holder. After the original interpleader suit was filed, and process therein issued and served upon both Hagan and Central Dairy, Hagan came into Court and claimed the $1,750.00. Central Dairy did not. It defaulted. On that record, the money was ordered paid to Hagan. There was nothing that called for judicial determination as to whether or not the Central Dairy was entitled to $1,750.00, or any of it.

Thus, the only question for...