Simler v. Wilson, 4656.

• Decision Date: 26 April 1954
• Docket Number: No. 4656.,4656.
• Parties: SIMLER v. WILSON et al.
• Court: U.S. Court of Appeals — Tenth Circuit

210 F.2d 99 (1953)

SIMLER v. WILSON et al.

No. 4656.

United States Court of Appeals Tenth Circuit.

November 9, 1953.

Rehearing Denied March 3, 1954.

Writ of Certiorari Denied April 26, 1954.

James E. Grigsby, Oklahoma City, Okl. (Leslie L. Conner, Charles W. Conner, Arnold B. Britton, and Phil E. Daugherty, Oklahoma City, Okl., were with him on the brief), for appellant.

Fred E. Suits, Oklahoma City, Okl. (Mary L. Weiss, Oklahoma City, Okl., was with him on the brief), for appellees.

Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.

Writ of Certiorari Denied April 26, 1954. See 74 S.Ct. 681.

BRATTON, Circuit Judge.

With provisos not having any present material bearing, section 2, article 22, of the Constitution of Oklahoma provides among other things that no corporation doing business in the state shall buy, acquire, trade, or deal in real estate for any purpose except such as may be located in cities and towns and in additions thereto, and except such as shall be necessary and proper for carrying on the business for which the corporation was chartered or licensed. The Business Corporation Act of Oklahoma was enacted in 1947. Section 20 of the Act, 18 O.S.1951 § 1.20, provides that no corporation of any sort, whether coming within the general scope of the Act or not, shall, except as therein provided, take, hold, or own any real estate located in the state outside of any incorporated city, town, or addition thereto. The section further provides that nothing contained in the Act shall be construed as prohibiting the taking, holding, or owning of such real estate as is necessary and proper for carrying on the business for which any corporation was lawfully formed or domesticated in the state. And the section contains other provisions but they are not material here. Section 21, 18 O.S.1951 § 1.21, provides that any person who shall take or hold any real estate for the use or benefit of any corporation with the intent of evading the provisions of section 20 shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished as therein specified; and that any corporation which shall fail or refuse to file a statement as required by section 22 shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished as therein specified. Section 22, 18 O.S.1951 § 1.22, provides among other things that on or before the first day of April of each year every corporation holding or owning any real estate in contravention of the provisions of the Act shall file in the office of the county clerk of each county in which such real estate is located, a statement in duplicate containing the legal description of each tract, piece, or parcel of the land so owned and acquired; and that the statement shall be verified by the oath of an officer or duly appointed agent of the corporation. Section 23, 18 O.S. 1951 § 1.23 provides that any corporation owning or holding any real estate in violation of the provisions of sections 20 and 21 shall, in addition to other penalties provided by the Act, be required to pay, for each year, or fraction thereof, during which such title or interest is unlawfully held or owned certain civil penalties computed on the basis of a specified per centum of the assessed value of such real estate; that the state shall have a lien against any such piece, parcel, or tract of land unlawfully held or owned to secure the payment of the penalties, interest, and fees; and that upon collection, the penalties shall be paid into the Permanent School Fund of the state. And sections 24 and 25, 18 O.S.1951 §§ 1.24, 1.25 relate to the foreclosure of such liens.

By residuary provision contained in her will, Birdine Fletcher devised and bequeathed all of the rest, residue, and remainder of her property wherever situated to Mount Alverno Convent, of Maryville, Missouri, St. Francis Hospital of Maryville, Missouri, and St. Anthony Hospital, of Oklahoma City, Oklahoma. Sisters of St. Francis, a corporation organized under the laws of Missouri, owns and controls the three residuary devisees named in the will. The testatrix died in 1952, owning at the time of her death among other property a tract of land in Oklahoma containing 160 acres. The will was submitted to the county court of Oklahoma County, Oklahoma, for probate. A. J. Simler lodged objections to the probate of the will. The county court admitted the will to probate and Simler appealed to the district court. While the proceeding was pending on appeal, Simler, as surviving brother and sole heir of the decedent, instituted in the United States Court for Western Oklahoma this action against the executor of the estate of the decedent and Sisters of St. Francis seeking a declaratory judgment determining that the residuary devise in the will was void insofar as it related to the tract of land in Oklahoma for want of capacity of the defendant corporation to accept, receive, and own, such devise, and further determining that in respect to such real estate the decedent died intestate. The defendants filed a motion to dismiss the action. The State of Oklahoma, on the relation of the County Attorney of the county in which the land is situated, filed a motion for leave to intervene. A complaint in intervention accompanied the motion. In the complaint it was alleged that the devise of the real estate to the named devisees in the general residuary provision in the will was void and that such property should be escheated to the state. Holding that the question of the invalidity of the devise by reason of the incapacity of the defendant corporation to take or hold the real estate could be raised only by the state in a direct proceeding, and that plaintiff in his capacity as sole heir of the decedent was not the proper party to challenge the right of the defendant corporation to benefit from the devise in question, the court entered judgment dismissing the action and denying the application to intervene as there was no pending action subject to intervention. 110 F.Supp. 761. Plaintiff appealed.

A preliminary question concerning the jurisdiction of the trial court should be considered at the threshold of the case. Appellees contend that the subject matter of the action was not within the jurisdiction of the court. The substance of the argument in support of the contention is that under the law of Oklahoma, the county courts are vested with exclusive jurisdiction and control of probate proceedings, subject only to the right of appeal to the district courts; that while probate proceedings are pending, the district courts do not have original jurisdiction to entertain a proceeding of this kind involving the validity of a provision in a will; and that therefore the court below was without jurisdiction of the subject matter of the action. It is the well recognized rule that where the district courts of a state, under their general grant of equity jurisdiction, do not have original jurisdiction to entertain in the first instance a proceeding equitable in character to construe a will, or to determine that a provision contained in a will is invalid as an effective disposition of property, a United States court in that state is without jurisdiction to entertain such an action; but that where the district courts of a state, in the exercise of their general grant of equity jurisdiction, are clothed with jurisdiction of the subject matter of an action of that kind, a United States court in that state has jurisdiction to entertain such an action if there is diversity of citizenship and more than three thousand dollars is in controversy, exclusive of interest and costs. Sutton v. English, 246 U.S. 199, 38 S.Ct. 254, 62 L.Ed. 664; Porter v. Bennison, 10 Cir., 180 F.2d 523, certiorari denied 340 U.S. 817, 71 S.Ct. 47, 95 L.Ed. 600; Rice v. Sayers, 10 Cir., 198 F.2d 724, certiorari denied 344 U. S. 877, 73 S.Ct. 172. Guided by that general rule, we recently reviewed the law of Oklahoma and reached the conclusion that the district courts in that state were vested with jurisdiction to entertain an original proceeding to determine the validity of a provision contained in a will, and that therefore a United States court in that state was clothed with like jurisdiction in an action of that kind, diversity of citizenship with the requisite sum in controversy being present. Ferguson v. Patterson, 10 Cir., 191 F.2d 584. There is diversity of citizenship in this case, and more than three thousand dollars is in controversy, exclusive of interest and costs. Therefore, we adhere to the view that the trial court had jurisdiction of the subject matter of the action. Ferguson v. Patterson, supra.

There is irreconcilable conflict among the decided cases in respect to whether only the state can be heard to complain that a corporation has acquired and holds property which exceeds in quantity or value the maximum permitted by the charter of the corporation or the law of the state. There are cases to the point that where a corporation is given power to acquire property not in excess of a specified quantity or a specified value, the taking and holding of property which exceeds the limit named is open to challenge only in a direct proceeding by the state. The underlying philosophy of these cases is that the question whether a corporation has acquired and holds property in excess of the limit authorized by the charter of the corporation or by the law of the state is solely between the corporation and the state and does not concern anyone else. Jones v. Habersham, 107 U.S. 174, 2 S.Ct. 336, 27 L.Ed. 401; Hamsher v. Hamsher, 132 Ill. 273, 23 N.E. 1123, 8 L.R.A. 556; Chase v. Dickey, 212 Mass. 555, 99 N.E. 410; Farrington v. Putnam, 90 Me. 405, 37 A. 652, 38 L.R.A. 339; McBride v. Murphy, 14 Del.Ch. 242, 124 A. 798, affirmed 14 Del.Ch. 457, 130 A. 283; In re Darlington's Estate, 289 Pa. 297, 137 A. 268; Mansfield v. Neff, 43 Utah 258, 134 P. 1160; Waters v....