Savage v. First Nat. Bank & Trust Co. of Tulsa

• Decision Date: 18 February 1976
• Docket Number: No. 75-C-426-C.,75-C-426-C.
• Citation: 413 F. Supp. 447
• Parties: Royce H. SAVAGE, Trustee in Bankruptcy of Home-Stake Production Company, Plaintiff, v. FIRST NATIONAL BANK AND TRUST COMPANY OF TULSA, a National Banking Association, and Chevron Oil Company of Venezuela, a Corporation, Defendants.
• Court: U.S. District Court — Northern District of Oklahoma

413 F. Supp. 447

Royce H. SAVAGE, Trustee in Bankruptcy of Home-Stake Production Company, Plaintiff, v. FIRST NATIONAL BANK AND TRUST COMPANY OF TULSA, a National Banking Association, and Chevron Oil Company of Venezuela, a Corporation, Defendants.

No. 75-C-426-C.

United States District Court, N. D. Oklahoma.

February 18, 1976.

Rooney McInerney, Kenneth M. Smith, Houston & Klein, Inc., A. F. Ringold, Rosenstein, Fist & Ringold, Tulsa, Okl., for plaintiff.

Gary McSpadden, James R. Ryan, James L. Kincaid, Tulsa, Okl., for defendants.

ORDER

COOK, District Judge.

The Court has before it for consideration a Motion to Dismiss filed by defendant Chevron Oil Company on October 24, 1975; and a Motion to Dismiss the Cross-Claim in Interpleader filed by defendant Chevron Oil Company on November 26, 1975. Based upon a thorough examination of the briefs filed in regard to said Motions and the law applicable thereto, the following determination is made.

On or about June 29, 1973, the First National Bank and Trust Company of Tulsa (hereinafter the "Bank") issued an irrevocable letter of credit authorizing defendant Chevron Oil Company of Venezuela (hereinafter "Chevron") to draw the sum of $200,000.00 from the Bank between September 30, 1973, and October 3, 1973, assuming certain conditions existed. On September 18, 1975, plaintiff, Royce H. Savage, trustee in bankruptcy of Home-Stake Production Company, filed the above-styled action against the Bank and Chevron. The Complaint alleges that the Bank issued the letter of credit at the request of Home-Stake Production Company and that on or about June 29, 1973, Home-Stake transferred $200,000.00 in certificates of deposit to be held by the Bank as consideration of the Bank's issuance of the letter of credit. Plaintiff alleges that at the time of the transfer, there were creditors of Home-Stake in existence having claims against Home-Stake provable under § 63 of the Bankruptcy Act. Plaintiff further alleges that the transfer was effectuated without fair consideration in that the $200,000.00 obligated to Chevron via the letter of credit grossly exceeded any value or pecuniary benefit accorded Home-Stake under the agreement between the parties, and the payment of the letter of credit was in essence to be the payment of a penalty for the non-performance of Home-Stake's obligations under their agreement, and is thus null and unenforceable. Plaintiff prays that the Court will determine the intended transfer of the $200,000.00 to Chevron via the letter of credit to be null and void; and will decree the Bank to be free of any obligation to Chevron to honor the letter of credit and order the Bank to transfer to plaintiff the $200,000.00 in assets securing the letter of credit.

On September 28, 1973, an Order Staying Suit or Proceeding to Demand Payment on Letter of Credit was issued in the reorganization proceedings (No. 73-B-922) enjoining the Bank from honoring any draft drawn under the Chevron credit. The aforesaid Order remains in effect and has not been vacated.

Plaintiff asserts subject matter jurisdiction pursuant to 28 U.S.C. § 1334 and alleges venue is proper as to Chevron by virtue of 28 U.S.C. § 1655. Title 28 U.S.C. § 1655 provides in pertinent part:

"In an action in a district court to enforce any lien upon or claim to, or to remove any incumbrance or lien or cloud upon the title to, real or personal property within the district, where any defendant cannot be served within the State, or does not voluntarily appear, the court may order the defendant to appear or plead by a day certain."

Pursuant to this statute, plaintiff filed a Motion for Service Without State as to defendant Chevron "on the ground that this is an action to remove an encumbrance upon the title to personal property located within this District, described as follows: "$200,000.00 worth of First National Bank and Trust Company of Tulsa Certificates of Deposit." An Order was issued pursuant to 28 U.S.C. § 1655 on September 18, 1975, requiring Chevron to appear, plead, answer or otherwise move with respect to the Complaint.

Thereafter Chevron filed its Motion to Dismiss on the ground that the Court lacks jurisdiction. Chevron filed therewith a Disclaimer of Interest which states that Chevron disclaims any and all interest in the $200,000.00 worth of First National Bank and Trust Company of Tulsa's certificates of deposit.

Before § 1655 may be successfully invoked by a litigant, three essential requisites must have been fulfilled: (1) the suit must be one to enforce a legal or equitable lien upon, or claim to, the title to real or personal property, or to remove some encumbrance, lien or cloud upon the title of such property; (2) the proceeding must be in aid of some pre-existing claim, existing prior to the suit in question, and not a proceeding to create for the first time a claim to the property as the effect of the proceeding itself, (3) the property in question must have a situs within the district in which suit is brought in a federal district court. McQuillen v. National Cash Register Co., 112 F.2d 877 (4th Cir. 1940), cert. denied, 311 U.S. 695, 61 S.Ct. 140, 85 L.Ed. 450, rehearing denied, 311 U.S. 729, 61 S.Ct. 316, 85 L.Ed. 474.

In regard to the third element, as used in § 1655, a "claim" must be upon property located within the court's jurisdiction, capable of being taken over or possessed by the court. Kohagen v. Harwood, 185 F.2d 276 (7 Cir., 1950), 30 A.L.R. 201 (1953). As stated in Crichton v. Wingfield, 258 U.S. 66, 74, 42 S.Ct. 229, 231, 66 L.Ed. 467, 471:

"Used in this connection, personal property undoubtedly refers to such as is lawfully localized within the district, and there held and enjoyed, and thus made subject to the court's jurisdiction to clear its title from clouds and liens, notwithstanding personal service within the district cannot be obtained upon those setting up adverse interests. It is the presence of property real or personal within the district which confers the limited jurisdiction . . .."

See also Chase v. Wetzler, 225 U.S. 79, 32 S.Ct. 659, 56 L.Ed. 990 (1912).

There is no question but that the only personal property at issue in the case at bar located within this district is the $200,000.00 worth of certificates of deposit. This Court must therefore determine whether this is an action to "enforce any lien upon or claim to or to remove any incumbrance or lien or cloud upon the title to the $200,000.00 worth of certificates of deposit." Plaintiff does not assert that he is attempting to utilize § 1655 to enforce any lien upon or claim to property, but rather "to remove an encumbrance upon the title" to the certificates of deposit.

As stated, Chevron has filed a Disclaimer of Interest, in which Chevron disclaims any and all interest in the certificates of deposit. In Harrison v. Prather, 404 F.2d 267 (5th Cir. 1968) an action was brought for a partition of real estate and for damages for antitrust violations. Service of process was issued pursuant to 28 U.S.C. § 1655. Defendants filed a motion to dismiss and defendant William Prather alternatively moved to quash the return of service as to him on the grounds that he was a foreign resident and had no lien or claim or interest in any lands located in the district, that he was not subject to the process of the court, and further that the action was wrongfully laid under § 1655. Accompanying this motion, he filed an affidavit in which he alleged that he had no claim or interest whatsoever in any land which was the subject matter of the suit. The Harrison Court noted that William Prather, having denied any incident of ownership in the land for which partition was sought, would be precluded from claiming any portion of the land to be divided. Likewise in the case at bar, Chevron having disclaimed any interest in the certificates of deposit, is precluded from asserting a claim as to them. The Harrison Court held that the in rem features of the suit, as they pertained to the defendant William Prather could no longer be maintained against him.

Title 28 U.S.C. § 1655 provides that an action to remove any incumbrance or lien or cloud upon the title to property may be brought within the district where the property is located. However, Chevron does not have any incumbrance or lien or cloud upon the title to the certificates of deposit which are the only property in issue located in this district.

Plaintiff states in his brief that if Chevron is successful in obtaining payment pursuant to the letter of credit the end result will be the indirect transfer of $200,000.00 worth of certificates of deposit securing the same from the Debtor to Chevron. "It is this indirect transfer of the Debtor's assets that the plaintiff is seeking to avoid in this litigation." Plaintiff relies on Shuford v. Anderson, 352 F.2d 755 (10th Cir. 1965) noting that the case indicates that a court has the power to litigate several collateral issues surrounding the right to property in a § 1655 action. This Court recognizes that prayers or demands going beyond in rem relief do not prevent the court from granting the relief to which a plaintiff is actually entitled. As stated by the Shuford Court: "The inclusion of broader claims in a complaint does not of itself negate the right to rely on § 1655 if the allegations actually set out among others the essential foundations of a civil action to enforce a lien or claim to real or personal property within the district and other allegations may be deemed incidental to such action." The Court further stated:

"The inquiry must be whether the complaint states substantially a claim to or lien against the real property situated in the district and specifically described, or whether essentially it comprises a claim merely in personam, with the status of the real property being a mere incidental inquiry." (emphasis added).

Plaintiff also notes that § 1655 has been held applicable to suits to set aside...