St. Louis Union Trust Co. v. Stone, 76-236C(1).

• Decision Date: 16 March 1977
• Docket Number: No. 76-236C(1).,76-236C(1).
• Citation: 428 F. Supp. 988
• Parties: ST. LOUIS UNION TRUST CO., a corp., as Escrow Agent under Escrow Agreement dated July 24, 1970, between Andrew L. Stone, United States of America, and St. Louis Union Trust Co., Plaintiff, v. Andrew L. STONE et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

428 F. Supp. 988

ST. LOUIS UNION TRUST CO., a corp., as Escrow Agent under Escrow Agreement dated July 24, 1970, between Andrew L. Stone, United States of America, and St. Louis Union Trust Co., Plaintiff, v. Andrew L. STONE et al., Defendants.

No. 76-236C(1).

United States District Court, E. D. Missouri, E. D.

March 16, 1977.

Thomas S. McPheeters, Jr., Robert F. Scoular, Juan D. Keller, Kenneth A. Kleban, Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., for plaintiff.

Joseph B. Moore, Asst. U. S. Atty., Richard J. Sheehan, Henry H. Stern, Jr., Susman, Stern, Agatstein & Heifetz, St. Louis, Mo., Alexander Younger, Mark A. Cymrot, U. S. Dept. of Justice, Civil Div., John J. McCarthy, Chief Litigation Section and J. Brian Ferrel, Tax Div. of U. S. Dept. of Justice, Washington, D. C., for defendants.

MEMORANDUM

MEREDITH, Chief Judge.

This matter is before the Court on the motions of the defendant United States to dismiss St. Louis Union Trust's complaint, and to dismiss defendant Andrew Stone's cross claim; on the separate motion of defendant M. Jeanne Stone to dismiss the plaintiff's complaint as to her; and on plaintiff's motion to dismiss the counterclaim filed by Andrew Stone. For the reasons stated below, the motion of the United States to dismiss the complaint will be granted in part and denied in part, and the motion to dismiss the cross claim will be granted.

St. Louis Union Trust, a Missouri corporation, has brought this action for interpleader, pursuant to 28 U.S.C. § 1335, alleging jurisdiction thereunder based on 26 U.S.C. § 7426, 28 U.S.C. §§ 1331, 1340, and 2410, and for declaratory judgment, pursuant to 28 U.S.C. §§ 2201 and 2202. Plaintiff alleges that on July 24, 1970, it entered into an escrow agreement, as escrow agent, with defendants Andrew Stone and the United States, acting through its agent, Rex E. Lee (Assistant Attorney General in charge of the Civil Division of the Department of Justice). The purposes of this agreement were to assure the United States of sufficient assets to satisfy any judgment it might recover in a civil suit then pending against the Stones, Stone v. United States, 405 F.Supp. 642 (S.D.N.Y.1975), aff'd., 538 F.2d 314 (2nd Cir. 1976), and to avoid the institution of attachment proceedings against Stone's assets by the United States. Pursuant to the escrow agreement, Stone deposited certain assets with plaintiff, who was required to deposit the income therefrom in a separate account for Stone, after deducting its fees and expenses. The Department of Justice agreed to refrain from instituting attachment proceedings and to use its ". . . best internal efforts to dissuade any other agency from proceeding by way of attachment or any other lien against the property and assets of Stone". Notwithstanding this provision, on February 8, 1972, the District Director of the Internal Revenue Service in St. Louis, Missouri, filed a notice of lien against the property the Stones had deposited in escrow, which required plaintiff to surrender to the Internal Revenue Service all of the Stones' assets it held, but was advised by the Internal Revenue Service that the assets should be held by the plaintiff and not surrendered to the Internal Revenue Service or any other party. On March 9, 1976, a Revenue officer served plaintiff with a further notice of levy and a final demand for all of the Stones' escrowed assets by March 15, 1976. On March 11, 1976, plaintiff received a telegram from Stone insisting that the levy was unlawful, demanding the plaintiff refuse to honor the Government's demand, and threatening legal action in the event that it did honor the Government's demand. On March 15, 1976, the parties stipulated that the principal and income would be deemed to have been paid into court, and plaintiff filed this complaint. On April 22, 1976, the Internal Revenue Service released the principal of the escrowed property from the levy made on March 9, 1976.

Plaintiff contends that interpleader is proper in the instant case because it has an interest in the income, the Government and Stone have conflicting claims, and it has been threatened with legal action. Andrew L. Stone, in his answer and affirmative defense, which is actually a cross claim, supports plaintiff's claim for interpleader. The United States has moved to dismiss the complaint, claiming that this Court lacks subject matter jurisdiction.

Plaintiff claims this Court's jurisdiction over the interpleader action is based on 26 U.S.C. § 7426, and 28 U.S.C. §§ 1331, 1340, 2201, and 2202. However, its reliance upon these sections is misplaced. Both the title and substance of the complaint clearly show that it is an action for interpleader, and, as such, is governed by 28 U.S.C. § 1335 or F.R.Civ.P. 22. This Court has jurisdiction over § 1335 interpleader actions only if there are at least two adverse claimants of diverse citizenship. Kent v. Northern California Regional Office of the American Friends Service Committee, 497 F.2d 1325 (9th Cir. 1974). In the instant case, plaintiff and the defendant Stones are residents of Missouri, and for the purposes of § 1335, the United States is not a citizen of any state. Id. Accordingly, it is clear that the minimal diversity requirements of § 1335 do not exist. Additionally, plaintiff cannot base jurisdiction over this interpleader action on F.R.Civ.P. 22 because of the lack of either diversity or a federal question.

Next, defendant Andrew Stone claims that 28 U.S.C. § 2410 confers jurisdiction upon this Court with regard to actions for interpleader because the provisions of § 2410 operate to waive the diversity requirements for interpleader actions. It was held in First National Bank of Brownsville, Texas v. United States, 172 F.Supp. 757, 759 (S.D.Tex.1959), that

". . . section 2410 presupposes jurisdiction in a court having jurisdiction of the subject matter and does not confer jurisdiction to sue the Government independently, or to join the United States in a case in this Court where the remaining defendants are citizens of the same state as the plaintiff." Accord, Shaw v. United States, 331 F.2d 493 (9th Cir. 1964).

Accordingly, § 2410 does not waive the diversity requirements for interpleader actions when, as here, the United States is a defendant. Kent v. Northern California Regional Office of the American Friends Committee, supra.

Plaintiff concedes that § 2410 does not provide independent grounds for jurisdiction in this action, and that it only...