Hatten v. Vose, 3236.

• Decision Date: 03 July 1946
• Docket Number: No. 3236.,3236.
• Citation: 156 F.2d 464
• Parties: HATTEN v. VOSE.
• Court: U.S. Court of Appeals — Tenth Circuit

156 F.2d 464 (1946)

HATTEN v. VOSE.

No. 3236.

Circuit Court of Appeals, Tenth Circuit.

July 3, 1946.

Roger L. Stephens, of Oklahoma City, Okl. (Fred L. Hoyt and Howard B. Hopps, both of Oklahoma City, Okl., on the brief) for appellant.

D. A. Richardson, of Oklahoma City, Okl. (Richardson, Shartel, Cochran & Pruet, of Oklahoma City, Okl., on the brief), for appellee.

Before PHILLIPS, HUXMAN and MURRAH, Circuit Judges.

HUXMAN, Circuit Judge.

This is an appeal by Roy Hatten, ancillary receiver of U. S. Cities Corporation, from the judgment of the lower court setting aside a prior order authorizing him to prosecute a conversion suit against appellee, R. A. Vose, and permanently enjoining him from prosecuting the same.

U. S. Cities Corporation is a Delaware corporation. Byron F. Everitt was one of the principal stockholders of the corporation and was its president. The corporation was engaged in the oil business in Oklahoma. It purchased a one-half interest in a valuable oil and gas lease in Oklahoma for $500,000. Only part of this purchase price was paid in cash, and the balance thereof was evidenced by the notes of the corporation, secured by a mortgage on its assets. Thereafter it undertook to procure a new loan to liquidate this indebtedness. It entered into a contract with R. A. Vose by which he was to act as its representative and agent in procuring a new loan for $130,000. The corporation issued its notes for this sum. In negotiating this new loan, Vose endorsed and guaranteed the payment of the notes of the corporation in the amount of the loan. In consideration of his endorsement of its notes, the corporation assigned to him as security Everitt's note for $100,000, held by the corporation, together with 10,000 shares of U. S. Cities preferred stock, and 1,500 shares of D. J. Ryan Foundry Company stock, which were pledged as security for the $100,000 note. The contract further provided that Vose was to act as trustee for the holders of the corporation's notes and was to receive the oil runs and apply them to the payment of the notes as they matured, until they were paid in full, after which he was required to reconvey to the corporation all the collateral which had been conveyed to him as security for his endorsement of the notes. It is around this $100,000 Everitt note and its collateral that this controversy centers.

The stipulation of facts filed in this case recites in detail six separate suits which were filed in Oklahoma and Michigan, and which are intertwined around the affairs of this corporation and the respective parties to this litigation. Reference will be made only to such of these suits as we think are essential to an understanding of the questions presented.

On May 10, 1927, Vose filed a foreclosure action against the company on its notes in the court of competent jurisdiction in Creek County, Oklahoma.¹ The company filed an answer and counterclaim against Vose in which it sought an affirmative judgment against him for charging usurious rates of interest. Everitt was not an original party to this suit, but he filed an intervening petition alleging that his $100,000 note to the company was an accommodation note. The trial court first found that he was an accommodation maker, but later set the order aside and reserved the question of ownership for subsequent determination by any court of competent jurisdiction. No further determination was made with respect thereto in the Creek County suit.

Upon a trial on the merits, judgment was entered March 15, 1929, in favor of the company and against Vose for $28,246.78. An appeal was taken by Vose to the Supreme Court of Oklahoma, where the judgment was affirmed Oct. 13, 1931. Vose thereupon paid the judgment and reassigned to the company its one-half interest in the oil and gas lease which had been assigned to him. He did not, however, reassign to the company the $100,000 Everitt note and its collateral.

On February 9, 1929, while the Creek County suit was still pending before the trial court, Hatten was appointed receiver of the company in a proceeding instituted against it by creditors in the United States District Court for the Eastern District of Michigan.² Thereafter, on February 23, 1929, he was appointed ancillary receiver in an action instituted by the same creditors in the United States District Court for the Western District of Oklahoma.³

On April 7, 1930, while the Creek County suit was pending on appeal in the Supreme Court of Oklahoma, Vose filed suit in the United States District Court for the Eastern District of Michigan⁴ against Everitt. In this action he sought affirmative relief against Everitt in connection with his foreclosure action on the $100,000 note, the exact nature of which is not material to the issues involved in this appeal. By agreement, Everitt was not required to answer in this action until April 28, 1932, the purpose thereof being to await the decision of the Supreme Court of Oklahoma in the Creek County suit. On May 23, 1932, the primary receiver was made a party to the Michigan suit. On April 26, 1932, after the institution of the Michigan suit, but prior to the time the primary receiver was made a party therein, on an ex parte application, the United States District Court for the Western District of Oklahoma entered an order authorizing the ancillary receiver of the company to institute an action against Vose to recover the $100,000 Everitt note and its collateral.⁵ It was upon this order that the ancillary receiver instituted this action against Vose for damages for the conversion of this note and its collateral. This suit was instituted May 19, 1932. On July 14, 1932, Vose filed a motion asking the court to withdraw the order authorizing the institution of the conversion suit, on the ground that the court was without jurisdiction because the title to this note and its security was being sought to be determined in the Michigan suit which had been filed prior to the institution of this suit. On a hearing on this motion, the court deferred action thereon, but enjoined the ancillary receiver from prosecuting the conversion suit until the further orders of the court. Thereafter, on October 23, 1934, Vose filed a further motion to vacate the order on the ground that the Michigan suit in which the company, the primary receiver, and Everitt all were parties, had been determined and that the Michigan court had ordered Vose to deliver the Everitt note and its collateral to Everitt.

The copy of the proceedings in the Michigan court attached to this motion established that on July 11, 1932, after the Oklahoma Supreme Court affirmed the judgment in the Creek County suit, Vose filed an amended answer and counterclaim in the Michigan suit in which he asserted that since the affirmance of the Creek County judgment by the Supreme Court of Oklahoma, he no longer asserted any right or claim against the Everitt note or its collateral, but that Everitt was asserting the right to the same and that the primary receiver also was claiming the same, and that he was therefore unable without liability to himself to determine the rights of the respective claimants thereto. He alleged the institution of the conversion suit against him. He again tendered the securities into court for disposition by order of the court. He prayed that the company and its receiver be required to dismiss the conversion action in Oklahoma and that the court adjudicate the ownership of the securities in question. On the same day, the primary receiver filed his answer to Everitt's cross complaint in the Michigan suit, denying his ownership of the collateral to his $100,000 note, and denying that the $100,000 note was an accommodation note, and alleged that the company and the receiver were entitled to the return of the note and its collateral. He further recited his appointment as ancillary receiver by the Oklahoma United States District Court, his authorization to prosecute the conversion action, and denied the jurisdiction of the Michigan court to require him to dismiss the same. The issues raised by these pleadings were referred by the Michigan court to a Master for findings of fact and conclusions of law. The Master found that Vose was willing to deliver the securities to either the primary receiver or to Everitt without restrictions, except that he asked the court to determine who was the owner thereof and by its decree direct the discontinuance of the conversion suit. He further found that according to the statements of the primary receiver and of the company they disclaimed any title or interest in the securities except as claimed in the conversion suit. The Master concluded as a matter of law that the Michigan court was without jurisdiction to direct a discontinuance of the conversion suit by the ancillary receiver. He recommended that inasmuch as Vose was only seeking to whom he could safely deliver the securities and since the receiver disclaimed any right or title therein, except as claimed in the conversion suit, that a decree be entered directing Vose to deliver the securities to Everitt.

The court adopted the recommended findings of fact and conclusions of law by the Master, and in conformity therewith, on September 4, 1934, entered a decree as follows: "That this court is without jurisdiction to order the defendant, Receiver, Roy Hatten, to discontinue the conversion suit pending in the District Court of Oklahoma County, State of Oklahoma, in which said Receiver is Plaintiff and R. A. Vose is Defendant, * * *. That inasmuch as the Plaintiff only seeks to determine by this action as between the two Defendants to whom he may safely deliver the certificates of capital stock referred to in Plaintiff's original bill of complaint, together with the instrument therein referred to in Paragraph Thirteen as Exhibit C, and because the Defendant, U.S. Cities Corporation and its Receiver, Roy Hatten, disclaim any and all right, title and interest...