Signal Properties, Inc. v. Farha

• Decision Date: 14 August 1973
• Docket Number: No. 72-3375.,72-3375.
• Parties: SIGNAL PROPERTIES, INC., Plaintiff-Appellee, v. N. Bus FARHA et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

482 F.2d 1136 (1973)

SIGNAL PROPERTIES, INC., Plaintiff-Appellee, v. N. Bus FARHA et al., Defendants-Appellants.

No. 72-3375.

United States Court of Appeals, Fifth Circuit.

July 20, 1973.

Rehearing Denied August 14, 1973.

Gerald Sawatzky, Wichita, Kan., J. Michael Willatt, Houston, Tex., for defendants-appellants.

C. Michael Gallman, O. Otis Bakke, Houston, Tex., for plaintiff-appellee.

Before AINSWORTH, GODBOLD and CLARK, Circuit Judges.

PER CURIAM :

On December 5, 1971, N. Bus Farha and other parties holding record title to a certain tract of land in Galveston County, Texas, brought an action in Sedgwick County, Kansas, against Signal Properties, Inc., seeking to recover the reasonable value of Signal's use and occupation of the land. Signal purchased the property in 1964 from a third party who had purportedly acquired title to the property by adverse possession. No question is here raised as to the Kansas Court's personal or subject matter jurisdiction of this action. On February 11, 1972, Signal filed a trespass to try title action in the United States District Court for the Southern District of Texas and procured from that court an injunction prohibiting the Farhas from bringing the pending Kansas court action to trial. Since such an injunction was not in aid of the district court's jurisdiction, it was barred by 28 U.S.C. § 2283 and cannot stand.

It may well be, and we assume arguendo, that this trespass to try title proceeding is an in rem proceeding or a quasi in rem proceeding. See Reed v. Turner, 489 S.W.2d 373 (Tex.Civ.App. 1972) ; State v. Bryan, 210 S.W.2d 455 (Tex.Civ.App.1948), writ refused n.r.e. ; cf. Lefkowitz v. McQuagge, 296 F.2d 50 (5th Cir. 1961). Under this assumption, the federal court first acquired jurisdiction of the res—the title to the land. (The Kansas proceeding is conceded by all to have been an in personam action.) Thus, other courts are excluded from exercising jurisdiction which would interfere with the federal's possession and control of the property. See Miller v. Miller, 423 F.2d 145 (10th Cir. 1970). In two in rem or quasi in rem proceedings this factor could be dispositive ; however, the Kansas in personam action cannot result in any judgment or decree which would interfere with the constructive possession of the federal court.

A court may properly adjudicate rights in property in the possession of another court and may render any judgment "not in conflict with that court's authority to decide questions within its jurisdiction and to make effective such decisions by its control of the property." United States v. Klein, 303 U.S. 276, 58 S.Ct. 536, 82 L.Ed. 840 (1938). See also Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256 (1946) ; Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939) ; United States v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966) ; Banco Nacional de Cuba v. Sabbatino, 307 F.2d 845 (2d Cir. 1962), rev'd on other grounds, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964) ; Albuquerque National Bank v. Citizens National Bank, 212 F.2d 943 (5th Cir. 1954) ; Purcell v. Summers, 126 F.2d 390 (4th Cir.), cert. denied, 317 U.S. 640, 63 S.Ct. 32, 87 L.Ed. 516 (1942).

While such title issues as are first determined by the Kansas court may become binding on the parties to the Texas District Court action under the doctrines of res judicata or collateral estoppel if properly set up by plea in the latter court, the mere act of resolving those disputed issues which are common to both proceedings in Kansas will not disturb the Texas District Court's constructive possession or control of the land. An irreconcilable conflict between the state and federal judiciaries would only arise if both sought to exercise authority to dispose of the same res. See 1A J. Moore, Federal Practice ¶¶ O.222 and O.223.

Section 2283 was enacted to limit federal injunctions of state court proceedings in ordinary litigation between private litigants to those situations necessary to avoid unseemly conflict between state and federal courts. It is entitled to a strict construction. Atlantic Coast Line Ry. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970) ; Leiter Minerals, Inc. v. United States, 352 U.S. 220, 77 S.Ct. 287, 1 L.Ed.2d 267 (1957). It is well settled that the statute's prohibition cannot be evaded by addressing the order to the parties rather than to the state court. Atlantic Coast Line Ry. v. Brotherhood of Locomotive Engineers, supra. Since this injunction does not come within any of the statute's specifically defined exceptions, it must be vacated. The cause is remanded to the district court for further proceedings not inconsistent herewith.

Vacated and remanded.

AINSWORTH, Circuit Judge (dissenting):

The majority opinion ignores a long-standing rule of law that a federal court which obtains custody over property can restrain the litigants from asserting in another court any "claim, right, or title" to the same property. See Julian v. Central Trust Co., 193 U.S. 93, 114, 24 S.Ct. 399, 408, 48 L.Ed. 629 (1904).¹ For this reason, I respectfully dissent.

The majority assumes for purposes of its decision that the federal district court in Texas had in rem jurisdiction over the land at issue. In the Kansas suit the parties agreed that title to the land was an issue.² Accordingly, I am persuaded by the following reasons expressed by the district judge for issuing the injunction:

"A. Both the action in this Court and in the District Court of Sedgewick County, Kansas, involve a determination of the actual ownership of real property located in Galveston County, Texas. Although the Kansas suit is couched as an action for recovery of the value of the use and occupancy of land, that Court must inevitable sic decide the present titleholder before awarding damages (which are called rental), if any. That is what is proposed to be litigated in the Kansas action, as admitted in open Court by counsel for defendants here, and as reflected in the pretrial order entered in the Kansas case. Moreover, counsel for defense admitted they could succeed in the Kansas action and fail in the Texas action and thus, obtain damages for use and occupancy of land to which they had no title. This would be manifestly unfair and inequitable to plaintiffs here.

"B. In diversity actions, Texas law is required to be applied to determining title to land located in Texas. Texas courts have held that real property is exclusively subject to the laws of the sovereignty within whose territory it is situated. Therefore, the Kansas court has no in rem jurisdiction over a res located within the control of another state.

"C. For the Kansas Court to determine possessory title would effectively interfere with, if not deprive, this Court of its jurisdiction. To prevent this interference with this Federal Court\'s consideration and disposition of this case, a preliminary injunction must issue."

We should also consider the impracticality and inconvenience of trying title to Texas land in a distant Kansas court.

The anti-injunction statute, 28 U.S.C. § 2283 (1970), presents no obstacle in this case. A specific exception permits a federal district court to issue an injunction to stay proceedings in a state court where necessary in aid of the federal court's jurisdiction. Here the district court should be able to issue an injunction in aid of its jurisdiction to prevent the Kansas court from continuing multiplicitous proceedings, from rendering a decision which could effectively deprive the federal court of its in rem jurisdiction through principles of res judicata and collateral estoppel, or from rendering a decision potentially inconsistent with a decision of the federal district court.

We previously summarized the law applicable to this case in Pacific Indemnity Company v. Acel Delivery Service, Inc., 5 Cir., 1970, 432 F.2d 952, 954, as follows:

The language of § 2283 is explicit in defining the circumstances in which a federal court may stay proceedings in a state court ; however, certain timeworn judicially declared exceptions do exist. Thus, it is said that where the jurisdiction over the proceedings is in rem or quasi in rem, "The state or federal court having custody of such property has exclusive jurisdiction to proceed." Donovan v. City of Dallas, 377 U.S. 408, 412, 84 S.Ct. 1579, 1582, 12 L.Ed.2d 409 (1964).

See also Jett v. Zink, 5 Cir., 1973, 474 F.2d 149, 151, where identical issues, concerning the validity of an agreement to define the parties' interests in an oil field, were pending in both a state and federal court in Alabama. We declined to enjoin the state court suit because the federal court's jurisdiction in that case was in personam, but we said, however, that it would be "inconceivable" to allow the same issues to be pending simultaneously in state and federal courts if the federal court had exclusive jurisdiction of the res. 474 F.2d at 155.

I would adhere to the rules of law enunciated previously by the Supreme Court and our recent Fifth Circuit cases, and affirm the district court decision.

1See also Lion Bonding & Surety Co. v. Karatz, 262 U.S. 77, 89, 43 S.Ct. 480, 484, 67 L.Ed. 871 (1923) : "The court which first acquired jurisdiction through possession of the property is vested, while it holds possession, with the power to hear and determine all controversies relatting thereto. It has the right, while continuing to exercise its prior jurisdiction, to determine for itself how far it will permit any other court to interfere with such possession and jurisdiction."

The majority opinion relies on United States v. Klein, 303 U.S. 276, 281, 58 S.Ct. 536, 538, 82 L.Ed. 840 (1938), for the proposition that a court may properly adjudicate rights in property in the possession of...