Hickok v. Gulf Oil Corporation

• Decision Date: 16 April 1959
• Docket Number: No. 13587-13589.,13587-13589.
• Citation: 265 F.2d 798
• Parties: Daisy H. HICKOK et al., Appellants, v. GULF OIL CORPORATION et al., Appellees. Carl F. EISENHOUR, etc., et al. v. GULF OIL CORPORATION et al. (two cases).
• Court: U.S. Court of Appeals — Sixth Circuit

265 F.2d 798 (1959)

Daisy H. HICKOK et al., Appellants, v. GULF OIL CORPORATION et al., Appellees.

Carl F. EISENHOUR, etc., et al. v. GULF OIL CORPORATION et al. (two cases).

Nos. 13587-13589.

United States Court of Appeals Sixth Circuit.

April 16, 1959.

Robert B. Gosline and Charles J. Cole, Toledo, Ohio, for appellants Carl F. Eisenhour, et al.

Thomas L. Dalrymple, Toledo, Ohio, Henry W. Seney, William L. Kreutz, Toledo, Ohio, and Hubert E. Hartman, Detroit, Mich., on the brief, for appellants Daisy H. Hickok et al.

John R. Eastman, Toledo, Ohio, LeRoy E. Eastman, Henry R. Bloch, James J. Robison, Robert N. Torbet, Toledo, Ohio, on the brief, for appellees.

Before MILLER, Circuit Judge, and MATHES and SHELBOURNE, District Judges.

MATHES, District Judge.

Three separate appeals have been brought from an interlocutory order dissolving a temporary injunction 28 U.S.C. § 1292(1) in a diversity interpleader action involving proceeds accruing to the ownership of certain mineral rights or land-owner royalty interests, aggregating 9/256ths of 1/8 or .004395%, in certain oil producing land of Ector County, Texas, known as the "Goldsmith property." 28 U.S.C. §§ 1335, 2361; Treinies v. Sunshine Mining Co., 1939, 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 85.

The material facts are not in dispute. The interests in controversy stem from the estate of A. S. Hickok who died in 1945 domiciled in Ohio, leaving substantial property interests in Ohio and a half interest in a partnership engaged in the oil business in Texas. The Goldsmith property interest was one of the assets of this partnership. Hickok's will placed in trust most of his estate, including his interest in the Goldsmith property, with the provision that the trust income be paid to his widow and children and others for twenty years, and that the remainder be distributed in 1965 to a group of some twenty charities, most of which are appellees here.

Domiciliary probate proceedings are pending in Ohio, and ancillary proceedings are pending in Texas. The Ohio courts have held that, inasmuch as the will was not "executed at least one year prior to the death of the testator", the devise to the charities is invalid under Ohio Revised Code, § 2107.06 (formerly General Code, § 10504-5). Kirkbride v. Hickok, 1951, 155 Ohio St. 293, 98 N.E.2d 815.

On the other hand, the Texas courts have held that the devise to the charities is valid under the law of Texas. Toledo Society for Crippled Children v. Hickok, 1953, 152 Tex. 578, 261 S.W.2d 692, 43 A.L.R.2d 553, certiorari denied, 1954, 347 U.S. 936, 74 S.Ct. 631, 98 L.Ed. 1086. According to Texas law the Goldsmith royalty involved here is real property, an interest in the mineral in place prior to extraction from the land. See: Sheffield v. Hogg, 1934, 124 Tex. 290, 77 S.W.2d 1021, 80 S.W.2d 741; State ex rel. Moody v. Hatcher, 1926, 115 Tex. 332, 281 S.W. 192. And it has long been settled that the law of the State in which real property is situated governs the devise of an interest therein. De Vaughn v. Hutchinson, 1897, 165 U.S. 566, 570, 17 S.Ct. 461, 41 L.Ed. 827.

No useful purpose would be served by detailing all the court proceedings involving the Hickok estate heretofore had in Ohio, Texas and elsewhere. Exceptions filed by the charities to the domiciliary executors' accounts now await hearing in Ohio; while still further exceptions by the charities to the ancillary executors' accounts await hearing in Texas. Additionally, there is pending in the District Court of Eastland County, Texas, a suit by the charities seeking a determination of rights in, and an accounting as to, the properties comprising the Hickok estate in Texas, including the Goldsmith property. Still other litigation is pending in Ohio to enforce the Ohio judgment that the charities are not entitled to take under the will. However, the brief filed in this Court on behalf of the appellee charities declares that: "Since the decision of the Supreme Court of Ohio in Kirkbride v. Hickok, 155 Ohio St. 293, 98 N.E. 2d 4, the Charities have made no claim to any of the Ohio property of the Hickok estate. They make none now."

While these proceedings were pending, in August of 1956 the charities served notice of lis pendens in Texas on appellee Gulf Oil Corporation, lessee of the Goldsmith property, citing the pendency of the action of the charities for an accounting in the District Court of Eastland County, Texas, and the pending exceptions by the charities to the ancillary executors' accounts in the Texas probate court. Gulf Oil Corporation thereupon refused further to pay the widow or the executors or the trustees of the testamentary trust any of the royalty payments accruing under the Goldsmith property lease after August 1, 1956. Actions ensued in the Court of Common Pleas of Lucas County, Ohio, to recover the accruing royalties, and led to the bringing of this diversity interpleader action in the United States District Court for the Northern District of Ohio against all claimants.

In due course the Federal Court issued a preliminary injunction restraining the claimants, until further order of court, "from instituting or prosecuting any proceeding" against Gulf Oil Corporation for the recovery of any of the proceeds attributable to the royalty interests in controversy. This preliminary injunction is still in force and is not challenged on this appeal. Gulf Oil Corporation, as plaintiff in interpleader, was directed to deposit the accruing royalty payments in the registry of the Court until further order, and these payments have been made. By March 31, 1958, some $160,000 had been so deposited in the registry, and such payments are continuing at a monthly rate of "about $8,000."

The claimants were also ordered to and did interplead their claims, and on March 28, 1957, upon motion of the widow, the children, the executors and the trustees — all appellants here — the court entered an order enjoining "said Charities and Attorneys * * * from instituting or prosecuting any proceeding in any * * * other court against said moving defendants," for the recovery of any of the proceeds of the royalty interests in controversy, until further order of court.

Almost a year later, on March 5, 1958, upon motion of the charities, an order was entered "that the restraining order issued on March 28, 1957 * * * be, and it hereby is, dissolved, and that all proceedings in this cause be and are stayed until final determination of cause No. 21874 in the 91st District Court of Eastland County, Texas, or until further order of the court." It is this order of March 5, 1958, in effect permitting the charities to continue their Texas litigation to a final determination, which is challenged on this appeal. See Gulf Oil Corp. v. Eisenhour, D.C.N.D.Ohio, W.D. 1958, 158 F.Supp. 663.

As between federal and state courts, the settled rule of comity requires that the court, which first obtains actual or constructive possession of property in the exercise of its jurisdiction, be permitted to retain control of the property without interference from the other, since "the jurisdiction of one court must of necessity yield to that of the other." United States v. Bank of New York and Trust Co., 1936, 296 U.S. 463, 477-478, 56 S.Ct. 343, 347, 80 L.Ed. 331; Harkin v. Brundage, 1928, 276 U.S. 36, 43, 48 S.Ct. 268, 72 L.Ed. 457; Farmers' Loan & Trust Co. v. Lake St. Elevated R. Co., 1901, 177 U.S. 51, 61, 20 S.Ct. 564, 44 L.Ed. 667; Hagan v. Lucas, 1836, 10 Pet. 400, 35 U.S. 400, 403, 9 L.Ed. 470.

Here there can be no question as to the Federal court's jurisdiction in the interpleader action 28 U.S.C. § § 1335, 2361; Treinies v. Sunshine Mining Co., supra, 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 85, or as to the Federal court's prior actual possession of the property with respect to which it is called upon to adjudicate the title, namely, the proceeds of the royalty payments deposited in the registry. Nor is the Federal court's jurisdiction in anywise affected by the circumstance that the funds in the registry possess the legal character of proceeds derived from the sale of interests in Texas realty, or by the fact that title to those funds is to be determined in accordance with Texas law. See Sanders v. Armour Fertilizer Works, 1934, 292 U.S. 190, 200, 54 S.Ct. 677, 78 L.Ed. 1206; cf.: Fischer v. American United Ins. Co., 1942, 314 U.S. 549, 62 S.Ct. 380, 86 L.Ed. 444; Princess Lida v. Thompson, 1939, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285.

Thus, while the State court in Texas has unquestioned jurisdiction over the Texas land, the Federal court has equally unquestioned jurisdiction over the proceeds from sale of certain interests in the land. Mandeville v. Canterbury, 1943, 318 U.S. 47, 63 S.Ct. 472, 87 L.Ed. 605; Toucey v. N. Y. Life Ins. Co., 1941, 314 U.S. 118, 134-136, 62 S.Ct. 139, 86 L.Ed. 100, 137 A.L.R. 967; Commonwealth Trust Co. v. Bradford, 1936, 297 U.S. 613, 56 S.Ct. 600, 80 L.Ed. 920. So the problem presented upon this appeal is not whether the Federal court has power to proceed to adjudicate title to the fund under applicable law, since the power so to do is clear, both as to parties and as to subject matter. See: The Fair v. Kohler Die Co., 1913, 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716; Fauntleroy v. Lum, 1908, 210 U.S. 230, 235, 28 S.Ct. 641, 52 L.Ed. 1039.

Neither is this a case where the Federal court is attempting to abdicate diversity jurisdiction and yield to the jurisdiction of a State court, as in Meredith v. City of Winterhaven, 1943, 320 U.S. 228, 234-238, 64 S.Ct. 386, 79 L.Ed. 9; nor a case where it would be proper to do so, as in Penn General Casualty Co. v. Commonwealth of Pennsylvania, 1935, 294 U.S. 189, 55 S.Ct. 386, 79 L.Ed. 850; Commonwealth of Pennsylvania v. Williams, 1935, 294 U.S. 176, 55 S.Ct. 380, 79 L.Ed. 841. Rather the precise question at bar is whether the Federal court has abused discretion in deferring adjudication of the rights of the...