National U. Fire Ins. Co. of Pittsburgh, Pa. v. LIPPERT BROS, INC.

• Decision Date: 20 August 1964
• Docket Number: Civ. No. 02048.
• Citation: 233 F. Supp. 650
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. LIPPERT BROS., INC., and Denver U. S. National Bank, Defendants.
• Court: U.S. District Court — District of Nebraska

233 F. Supp. 650

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. LIPPERT BROS., INC., and Denver U. S. National Bank, Defendants.

Civ. No. 02048.

United States District Court D. Nebraska.

August 20, 1964.

Cassem, Tierney, Adams & Henatsch, Omaha, Neb., for plaintiff Edwin Cassem.

John R. Dudgeon, Chambers, Holland, Dudgeon & Hastings, Lincoln, Neb., for defendant Lippert Bros., Inc.

J. A. C. Kennedy, Jr., Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., for defendant Denver U. S. Nat. Bank.

VAN PELT, District Judge.

The complainant, National Union Fire Insurance Company of Pittsburgh, Pa., hereinafter referred to as National, commenced a declaratory judgment action under 28 U.S.C.A. § 2201 in this court, naming as defendants Lippert Bros., Inc. and the Denver U. S. National Bank. Lippert Bros., Inc., a corporation engaged in the general contracting and construction business, is an Iowa corporation with its principal place of business in Oklahoma; the Denver U. S. National Bank, hereinafter called Bank, is a national banking association with its principal place of business in Colorado. This matter is before the court upon the motion of Lippert Bros. to dismiss and a separate motion by the defendant Bank to quash the return of service of summons or in the alternative to dismiss the complaint.

The facts surrounding this controversy will be set forth only insofar as they are material to the disposition of these motions. On April 9, 1964 Lippert Bros. commenced suit in the United States District Court for the Western District of Oklahoma against National claiming compensation under a payment and performance bond in which National was named as surety. Lippert Bros. had entered into a sub-contract agreement on May 1, 1962 with Western Steel Erectors, Inc. whereby Western Steel was to perform certain work upon residence halls under construction on the University of Nebraska campus at Lincoln, Nebraska. The Oklahoma complaint alleged that Western Steel was unable to complete the job in accordance with the plans and specifications and that Lippert Bros. was required to complete the contract at a loss. It was further alleged that during the course of the work performed by Western Steel an employee of that corporation was injured and an award for workmen's compensation was entered by the Nebraska courts, and that Lippert was forced to cover this award for the reason that Western Steel's compensation insurance had expired.

Western Steel is now apparently either a defunct corporation or insolvent. The complaint prayed for damages against National, as Western Steel's surety, in the sum of $33,535.28.

National moved for a change of venue to the District of Colorado, one of the grounds set forth being the desirability of determining the rights and liabilities of the Bank which was a co-obligee on the performance and payment bond. This motion was denied. National then filed a motion to reconsider the motion for change of venue to the District of Colorado, or for a change of venue to this court. On June 1, 1964 this motion also was denied.

The present declaratory judgment complaint was filed in this court on May 27, 1964. As previously indicated both Lippert Bros. and the Bank have been named as defendants. The complaint is based upon the identical contract as is the Oklahoma action and prays the court to enter judgment (1) declaring that there exists no liability under the payment and performance bond, (2) that the defendant Lippert Bros.' action in taking over the completion of the contract on behalf of Western Steel Erectors was prejudicial to National, and (3) that Lippert Bros. had a duty to promptly notify National of the default of Western Steel and that they failed to do so.

The allegations in paragraphs 3 through 9 in the present complaint are almost verbatim with those contained in paragraphs 4 through 10 of the answer of National in the Oklahoma action. The remaining allegations in the Oklahoma answer and the complaint in this case relate only to formal matters of admissions or denials or allegations of jurisdiction or venue. It can be said that the defenses raised in the Oklahoma case are identical with the claims made in this action.

The facts having been set forth, the motions of the individual defendants will be considered separately.

MOTION OF DENVER U. S. NATIONAL BANK

In support of its motion to quash or in the alternative dismiss the Bank has advanced two contentions — improper service and immunity from suit in this district because of improper venue. Both positions are meritorious.

The marshal's return on the summons recites that the defendant Bank was served in the District of Colorado at Denver by personal delivery to an assistant cashier. Rule 4(f) of the Federal Rules of Civil Procedure provides, inter alia:

"All process other than a subpoena may be served anywhere within the territorial limits of the state in which the district court is held, and, when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state."

The court is not aware of any applicable Nebraska or federal statute which would authorize a valid service on the Bank in the State of Colorado of process issued in the District of Nebraska, nor has counsel referred the court to any such provision. Certainly the Declaratory Judgment Act (28 U.S.C.A. § 2201) does not change the established rules of service of process. Putnam v. Ickes, 64 App.D.C. 339, 78 F.2d 223, cert. denied, 296 U.S. 612, 56 S.Ct. 132, 80 L.Ed. 434 (1935). It is almost axiomatic and requires no citation of authority that service of summons beyond the territorial limits of a state is invalid unless specifically authorized by a state or federal statute. No such provision being herein applicable, the defendant Bank's motion to quash should be granted.

Aside from the claim that proper service could not be obtained upon the defendant Bank, there exists another impelling reason why the alternative motion to dismiss must be sustained. Proper venue in any suit or proceeding against a national banking association is expressly limited or curtailed by the National Banking Act. Title 12 U.S.C.A. § 94 provides:

"Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases."

A national bank is established within the meaning of this statute only in the place where its principal office and place of business is located as specified in its organization certificate. Leonardi v. Chase Nat'l Bank of City of New York, 81 F.2d 19, cert. denied, 298 U. S. 677, 56 S.Ct. 941, 80 L.Ed. 1398 (2d Cir. 1936). The principal place of business of the defendant Bank is alleged in the complaint to be in the State of Colorado. The general operations of a national banking association can be carried on only in the place specified in its organization certificate. See 12 U.S.C.A. §§ 22, 81.

The United States Supreme Court has stated that "For jurisdictional purposes, a national bank is a `citizen' of the state in which it is established or located, * * * and in that district alone can it be sued." Cope v. Anderson, 331 U.S. 461, 467, 67 S. Ct. 1340, 1343, 91 L.Ed. 1602 (1947). See also Mercantile Nat'l Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963). Venue, therefore, as to the defendant Bank does not lie in this district. Under 12 U.S. C.A. § 94 it is impossible to obtain venue in this district. It follows that the motion of the Bank to dismiss should be granted.

MOTION OF LIPPERT BROS., INC.

In support of its motion to dismiss Lippert Bros. has furnished this court with a certified copy of all proceedings which have taken place in the action now pending in the Western District of Oklahoma, and urges this court to grant its motion because of this other pending suit. Although the pendency of another action is a justifiable ground for dismissing a declaratory judgment complaint, such action is not mandatory. This allegation does, however, bring into focus the discretionary power of the court.

Jurisdiction of declaratory judgment actions is conferred upon this court by 28 U.S.C.A. § 2201; the extent to which it should be exercised lies within the sound discretion of the court. In this regard the jurisdiction conferred in declaratory judgment actions differs from that granted in other instances where the well settled rule that courts may not decline the exercise of jurisdiction conferred upon them is applicable. See e. g., Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 5 L.Ed. 257 (1821). In fact the Declaratory Judgment Act does not add to the jurisdiction of the court but is merely a procedural device providing for an additional remedy. Aetna Casualty & Surety Co. v. Quarles, 92 F.2d 321 (4th Cir. 1937).

The mere existence of another pending action which involves the same or similar issues and parties is not, standing alone, a sufficient reason for ordering dismissal of the declaratory judgment complaint. In fact, Federal Rule 57 is quite specific on this point and provides that "The existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate."

The court has examined many of the authorities which have considered this problem of pending litigation involving similarity of issues. It appears that a variety of factors are determinative on the exercise of discretionary jurisdiction. Those factors which the court considers significant, although it does not intimate that the list is exclusive, are (a) the degree to which the issues can be integrated; (b) the finality of a declaratory judgment as compared to the action for traditional relief; (c) the...