McElroy v. Security National Bank of Kansas City, Kansas

• Decision Date: 01 April 1963
• Docket Number: No. KC-1841.,KC-1841.
• Parties: Perrin D. McELROY, Administrator Pending Contest of the Estate of Jacob Gershon, Deceased, Plaintiff, v. SECURITY NATIONAL BANK OF KANSAS CITY, KANSAS, Defendant.
• Court: U.S. District Court — District of Kansas

215 F. Supp. 775

Perrin D. McELROY, Administrator Pending Contest of the Estate of Jacob Gershon, Deceased, Plaintiff, v. SECURITY NATIONAL BANK OF KANSAS CITY, KANSAS, Defendant.

No. KC-1841.

United States District Court D. Kansas.

April 1, 1963.

COPYRIGHT MATERIAL OMITTED

John E. Blake, John E. Blake, Jr. and Bill E. Fabian, of Blake, Fabian & Fabian, Kansas City, Kan., and Edgar Shook and Charles Bacon, of Shook, Hardy, Ottman, Mitchell & Bacon, Kansas City, Mo., for plaintiff.

N. E. Snyder, Kansas City, Kan., and Edward M. Boddington and Edward M. Boddington, Jr., of Boddington & Boddington, Kansas City, Kan., for defendant.

ARTHUR J. STANLEY, Jr., Chief Judge.

In this action, plaintiff, the administrator of the estate of Jacob Gershon, deceased, seeks to cancel a promissory note in the amount of $65,000, and an instrument captioned "Assignment of Stock, Separate From Certificate," both of which purportedly were executed by the deceased. The plaintiff also seeks the possession of a stock certificate representing 800 shares of American Telephone and Telegraph Company stock which purportedly was pledged as collateral security for the payment of the note. The plaintiff alleges that the deceased was mentally incompetent at the time of the purported loan transaction and that the deceased received no benefit from this transaction. It is further alleged that the officers of the defendant bank knew or should have known of the mental incompetency of the deceased and that the deceased was to receive no benefit from the purported transaction.

The plaintiff states that he is a resident of Missouri, acting in a representative capacity under appointment by the Probate Court of Jackson County, Missouri, and that the defendant is a banking corporation, with its place of business in Kansas. Diversity of citizenship and the requisite jurisdictional amount are not disputed.

The defendant has filed a motion to dismiss on the grounds that: (1) the plaintiff lacks the capacity to maintain this action, (2) the court lacks jurisdiction over the subject matter of this action, (3) the plaintiff has failed to join indispensable parties, and (4) the complaint fails to state a claim upon which relief can be granted.

It is the contention of the defendant that the plaintiff, as a foreign administrator, has no authority to sue in a forum other than in the state in which he was appointed and that, as a Missouri administrator pending contest, he may not maintain an action in a federal court sitting in Kansas.

In his complaint, the plaintiff alleges that he was appointed pursuant to a Missouri statute, V.A.M.S. § 473.137, which provides that:

"An administrator appointed pursuant to this section shall proceed with the administration of the estate until termination of the will contest * * *."

Under Missouri law, the powers and duties of an administrator pending contest are the same as those of a regular administrator, including the duty to collect and preserve the assets of the estate. Odom v. Langston, 351 Mo. 609, 173 S.W. 2d 826 (1943).

The capacity of the plaintiff to bring this action depends upon the substantive law of Kansas. Rule 17(b), F.R.Civ.P. The general rule, upon which the defendant relies, is that:

"* * * (A)n executor or administrator cannot sue in his official capacity in the courts of any country or state other than that from which he derives his authority to act by virtue of the letters there granted to him unless such authority is granted by statute * * *." 21 Am.Jur. Executors and Administrators § 981 (1939).

Kansas has such a statute. G.S.1949, 59-1708, provides that:

"A fiduciary duly appointed in any other state or country may sue or be sued in any court in this state, in his capacity of fiduciary, in like manner and under like restrictions as a nonresident may sue or be sued."

This statute abrogates the general rule in Kansas. Bartlett, Some Problems in Probate Law, 16 Kan.B.J. 278, 284 (1947). In construing this statute and its predecessors, the Kansas Supreme Court has stated that the statute means exactly what it says. In Clark v. Moffett, 136 Kan. 711, 18 P.2d 555 (1933), it was contended that a Missouri administrator was without capacity to sue in Kansas. The court stated that "our statute (R.S. 22—1308) predecessor of 59— 1708 authorizes an administrator of another state to sue or be sued in this state."

The cases of Moore v. Jordan, 36 Kan. 271, 13 P. 337 (1887); National Bank of Topeka v. Mitchell, 154 Kan. 276, 118 P.2d 519 (1941); and Jones v. Goodman, 114 F.Supp. 110 (D.Kan.1953), upon which the defendant relies, do not stand for the proposition that a foreign fiduciary cannot sue in Kansas, but rather that there must be assets of the estate or a valid cause of action in existence in Kansas before such fiduciary may maintain a suit.

The defendant argues that even though G.S. 59-1708 grants the capacity to sue, the statute confers only the capacity to sue and be sued in state courts, and not in the federal court in Kansas. The language of the statute relied on by the defendant is "in any court in this state." Although this precise question was not raised, actions by foreign fiduciaries under predecessors of the statute in question containing the same language have been entertained in the federal court in Kansas. See Quinton v. Neville, 152 F. 879 (8th Cir., 1907); Edwards v. Hill, 59 F. 723 (8th Cir. 1894); Eells v. Holder, 12 F. 668 (C.C.D.Kan.1880). Diversity jurisdiction of the federal courts is generally concurrent with courts of general jurisdiction of the state wherein the federal court sits. For purposes of diversity jurisdiction, a federal court is "in effect, only another court of the State." Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L. Ed. 2079 (1945); Erwin v. Barrow, 217 F.2d 522 (10th Cir. 1954). It seems clear that it was the intent of the legislature to abrogate the common-law rule of incapacity of foreign fiduciaries and to grant them the right to maintain a suit in any court having jurisdiction of the subject matter and the parties. The defendant argues that if the statute can be so construed, it is an unauthorized grant of jurisdiction to the federal court by the legislature of Kansas. The question, however, is not one of jurisdiction, but rather one of the capacity of a foreign fiduciary to invoke the jurisdiction of the court.

I hold that the general rule as to foreign fiduciaries is inapplicable and that the plaintiff has the capacity to bring this action under authority of G.S.1949, 59-1708.

Without citing any authority in support, the defendant maintains that before the plaintiff may bring suit he must first have complied with G.S.1949, 59-1706 and 59-1707. Section 59-1706 provides for the appointment of a resident service agent in Kansas by a non-resident fiduciary who is himself appointed in Kansas. This section is not applicable to the case at bar. Section 59-1707 is a permissive procedural statute whereby a foreign fiduciary is empowered to take certain actions in Kansas dealing with mortgages, judgments or liens, or to collect debts owed the estate, by filing a record of his authority in the probate court of the proper county. This section contains no language making compliance with it a prerequisite to bringing an action by a foreign fiduciary. Neither of these sections affect the capacity of a foreign fiduciary to bring suit.

The defendant asserts that this court lacks jurisdiction over the subject matter because actions of this type, under Kansas Law, are within the exclusive original jurisdiction of the probate courts. It is true that a federal court has no jurisdiction to probate a will or to administer an estate. However, questions which may be determined without interfering with probate or assuming general probate jurisdiction are within the jurisdiction of the federal court where diversity of citizenship exists and the requisite amount is in controversy. Holt v. King, 250 F.2d 671 (10th Cir. 1957); Rosenberg v. Baum, 153 F.2d 10 (10th Cir. 1946). Diversity jurisdiction in the federal courts is generally concurrent with courts of general jurisdiction of the state wherein the federal court sits. Erwin v. Barrow, supra.

The rule of Kansas relating to the jurisdiction of probate courts and that of district courts of general jurisdiction is that if the purpose of an action is to get something out of an estate, the probate court has exclusive jurisdiction of the matter; but when the purpose of the action is to bring something into an estate, that is, when an estate has a claim which its personal representative is attempting to enforce, the action is to be brought in the district court or some...