Kiker v. Walters, 910027

• Decision Date: 27 March 1992
• Docket Number: No. 910027,910027
• Citation: 482 N.W.2d 626
• Parties: Russell L. KIKER, Jr., Plaintiff and Appellee, v. William D. WALTERS, Sr., and Imperial Oil of North Dakota, a North Dakota corporation, Defendants and Appellants, Lillian Y. Walters, William D. Walters, Jr., Carrie Smith, Robert T. Smith, Lillian Walters Kaiser, Marvin L. Kaiser, Leo Kaiser, Selina Kaiser, Duane C. Petersen, Defendants. Duane C. PETERSEN, Plaintiff, v. Russell L. KIKER, Defendant. Civ.
• Court: North Dakota Supreme Court

Page 626

482 N.W.2d 626

Russell L. KIKER, Jr., Plaintiff and Appellee, v. William D. WALTERS, Sr., and Imperial Oil of North Dakota, a

North Dakota corporation, Defendants and Appellants,

Lillian Y. Walters, William D. Walters, Jr., Carrie Smith,

Robert T. Smith, Lillian Walters Kaiser, Marvin L.

Kaiser, Leo Kaiser, Selina Kaiser, Duane

C. Petersen, Defendants.

Duane C. PETERSEN, Plaintiff, v. Russell L. KIKER, Defendant.

Civ. No. 910027.

Supreme Court of North Dakota.

March 27, 1992.

Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, for plaintiff and appellee Russell L. Kiker, Jr., argued by Steven A. Johnson. Appearance by Kermit E. Bye.

Dorsey & Whitney, Minneapolis, Minn., for defendants and appellants William D. Walters, Sr., and Lillian Y. Walters; argued by Roger J. Magnuson.

Winkjer, McKennett, Stenehjem, Trotter & Reierson, Williston, for defendants and appellants Imperial Oil of North Dakota, William D. Walters, Jr., Carrie Smith, and Robert T. Smith; argued by Mark L. Stenehjem.

ERICKSTAD, Chief Justice.

William D. Walters, Sr., and Imperial Oil of North Dakota have appealed from the judgment entered in an interpleader action brought by Russell L. Kiker, Jr. We reverse in part, affirm in part, and remand.

Kiker brought an interpleader action against Walters, Imperial, and others. The complaint alleged, among other things: (1) The parties are "owners in common of certain mineral interests and oil and gas properties", the record title to which is in Kiker's name; (2) Kiker collected income from the properties and distributed it to the parties pursuant to various oral agreements; (3) Disputes arose between the parties in 1987; (4) In 1988, Kiker stopped distributing the income and began placing it in a savings account, which he "will deposit with the Court at its request to be properly invested until this matter is resolved"; (5) The defendants have made conflicting claims to the undistributed income and to the underlying properties; (6) Kiker is in doubt as to what amount of income should be distributed to each party and as to how the properties should be conveyed to the parties; and (7) Kiker brought the action to settle claims of the parties to the undistributed income and to the underlying properties "and thereafter to absolve himself from any liability for any such claims, or other matters that pertain thereto." The complaint sought as relief:

"1. That the defendants be required to interplead and settle among themselves and with the plaintiff their rights in the undistributed royalty and mineral income and their rights in the various properties;

* * * * * *

"3. That thereafter, the plaintiff be generally discharged and released from all liability and from any claims arising out of the distribution of the royalty and mineral income and the various properties;

* * * * * *

"5. That plaintiff be granted such other and further relief as the Court deems just and equitable."

Imperial and Walters each answered, counterclaimed for an accounting, and demanded a jury trial. The trial court struck the demands for jury trial. Imperial, supported by Walters, sought an order "excluding from the trial of this action any evidence relating to ownership of the Lillian Glovatsky minerals or lease or the responsibilities relating to such ownership." In its brief in support of that motion, Imperial asserted: (1) Kiker was asserting that Imperial and Walters owned "an interest in minerals known as the Lillian Glovatsky minerals"; (2) "Neither Imperial Oil, Mr. Walters nor any [of] the other defendants have claimed any interest in these minerals"; and (3) The Glovatsky minerals are the basis of a separate lawsuit seeking to quiet title to the Glovatsky minerals. The latter assertion is undisputed. The trial court denied the motion.

Kiker requested Walters and Imperial to admit the following:

"1. Exhibit A attached hereto accurately reflects your ownership interest in the mineral interests described therein.

"2. That as the equitable owner of the mineral interests described in Exhibit A, you should be held responsible and agree to indemnify Russell L. Kiker for any future liabilities which may arise which are directly related to ... your ownership interests, including, but not limited to, severance taxes, income taxes, and oil company adjustments."

Exhibit A described numerous assignments of oil and gas leases, overriding royalty assignments, and deeded mineral interests. Walters and Imperial admitted ownership of almost all the properties asserted to be owned by them and to their responsibility for certain expenses and tax obligations associated with their ownership of the properties. Neither Walters nor Imperial admitted any ownership interest in the Glovatsky minerals.

At trial, the parties agreed on the ownership of all the properties in issue except the Glovatsky minerals and agreed on an accounting and apportionment of the undistributed funds, except for those attributable to the Glovatsky minerals. The trial court determined the ownership of all the properties in issue, except the Glovatsky minerals, in accordance with the parties' stipulation. The court determined that Imperial was the owner of the Glovatsky minerals in issue in this case. The court apportioned the undistributed income to the parties according to their ownership of the royalty and mineral interests in issue and held that the owners of the royalty and mineral interests are responsible for liabilities arising out of their ownership of the properties and must indemnify Kiker "for any future liabilities which may arise which are directly related to their ownership interests including, but not limited to, severance taxes, income taxes, and oil company adjustments." Judgment was entered accordingly.

Imperial and Walters appealed, contending that the trial court erred in determining the ownership of the Glovatsky minerals in this interpleader action. Imperial also contends that the trial court erred in denying its request for a jury trial.

Interpleader, whether pursuant to statute ¹ or rule, ² is a device for resolving multiple adverse claims to a fund or liability in one proceeding. It originated as a device by which a defendant could "protect himself from double vexation upon a single liability." 7 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d, Sec. 1701 (1986). "Rule 22 provides interpleader to dispose of the awkward situation where multiple claims are made against one party so that he might be exposed to double or multiple liability." L. Bucklin, Civil Practice of North Dakota, Commentary, Rule 22, N.D.R.Civ.P. (1991 Rev.). Interpleader "allows a stakeholder who is uncertain if and to whom he is liable for money or property held by him to join those who are or might assert claims against him." 7 Wright, Miller & Kane, supra, Sec. 1702. It "is a proceeding whereby the rights of rival claimants to a fund or property held by a third person having no interest therein may be adjudicated." 45 Am.Jur.2d, Interpleader Sec. 1 (1969). Interpleader may also be used to protect the individual claimants when their claims exceed the fund available. State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967).

"A basic jurisdictional requirement of statutory interpleader is that there be adverse claimants to a particular fund." Indianapolis Colts v. Mayor and City Council of Baltimore, 741 F.2d 954, 956 (7th Cir.1984), cert. denied, 470 U.S. 1052, 105 S.Ct. 1753, 84 L.Ed.2d 817 (1985). See also Libby, McNeill, and Libby v. City Nat'l Bank, 592 F.2d 504 (9th Cir.1978); Gaines v. Sunray Oil Co., 539 F.2d 1136 (8th Cir.1976). "Where there is no adverseness among the claimants an interpleader action will not lie." 21 Federal Procedure, L.Ed. Sec. 49:4 (1984). There must be exposure to multiple liability. Id.; 7 Wright, Miller & Kane, supra, Sec. 1704. A prerequisite for interpleader is two or more claimants adverse to each other. 7 Wright, Miller & Kane, supra, Sec. 1705; 45 Am.Jur.2d, Interpleader Sec. 7 (1969). The requirement of adverse claimants "is not met where only one claimant asserts a claim to a fund and the other claimants disclaim any such interest." 21 Federal Procedure, L.Ed. Sec. 49:4 (1984). An interpleaded party whose pleading effectively disclaims any interest in the property or fund in issue has "pleaded himself out of court." Dupeck v. Union Ins. Co., 216 F.Supp. 487, 492 (E.D.Mo.1962). Where all but one of two or more claimants withdraws or disclaims any interest in the interpleaded property, there is no risk of multiple liability and interpleader is inappropriate. Dallas Bank & Trust Co. v. Commonwealth Dev. Corp., 686 S.W.2d 226 (Tex.App.1984); 3A Moore's Federal Practice, p 22.08.

As the foregoing authorities illustrate, interpleader is appropriate only if there are two or more adverse claimants asserting interests in the fund or property held by the stakeholder. One claimant is insufficient. Withdrawal or disclaimer by all but one claimant renders interpleader inappropriate. Section 32-11-02, N.D.C.C., and Rule 22(a), N.D.R.Civ.P., both specifically require the presence of multiple adverse claimants for interpleader. ³ Section 32-11-02, N.D.C.C., requires that there be "two or more persons" claiming "the whole or any part of the same money, personal property, or effects" in the possession or control of another person and that their rights be "adverse to the right of any other claimant." Rule 22(a), N.D.R.Civ.P., requires that there be more than one person with "claims against the plaintiff" and that their claims be "such that the plaintiff is or may be exposed to double or multiple liability." Here, both Imperial and Walters disclaimed any interest in the Glovatsky minerals. There were no adverse claimants to the Glovatsky minerals and Kiker was not exposed to double or multiple liability. We therefore conclude that interpleader was not authorized as to the...