Stewart Oil Company v. Sohio Petroleum Company

• Decision Date: 03 August 1960
• Docket Number: Civ. A. No. 3821.
• Parties: STEWART OIL COMPANY, a corporation; Michigan Oil Company, a corporation; Stewart Producers, Inc., a corporation; Kenneth Patterson; G. F. Stewart; W. Rolland Stewart; Frank J. Tiernan; and Morris Yarbrove, Plaintiffs, v. SOHIO PETROLEUM COMPANY, a corporation, Defendant and Counterclaimant, v. Walter E. KLINE, Stella P. Kline, R. E. Hayes, Carl E. Moses, David R. Stewart, W. T. Frederking, A. P. Wagemann, John J. Steiner, Josephine M. Steiner, and Donk Bros. Coal and Coke Company, Counterdefendants.
• Court: U.S. District Court — Eastern District of Illinois

185 F. Supp. 765

STEWART OIL COMPANY, a corporation; Michigan Oil Company, a corporation; Stewart Producers, Inc., a corporation; Kenneth Patterson; G. F. Stewart; W. Rolland Stewart; Frank J. Tiernan; and Morris Yarbrove, Plaintiffs, v. SOHIO PETROLEUM COMPANY, a corporation, Defendant and Counterclaimant, v. Walter E. KLINE, Stella P. Kline, R. E. Hayes, Carl E. Moses, David R. Stewart, W. T. Frederking, A. P. Wagemann, John J. Steiner, Josephine M. Steiner, and Donk Bros. Coal and Coke Company, Counterdefendants.

Civ. A. No. 3821.

United States District Court E. D. Illinois.

August 3, 1960.

Tom E. Grace, Mattoon, Ill., Wham & Wham, Centralia, Ill., for plaintiffs.

Craig & Craig, Mt. Vernon, Ill., for defendant.

L. C. Combe, Greenville, Ill., Ryan & Heller, Mattoon, Ill., for counterdefendants, Walter E. Kline, Stella P. Kline, R. E. Hayes, W. T. Frederking and A. P. Wagemann.

John J. Yelvington, Mattoon, Ill., for counterdefendants, David R. Stewart and Carl E. Moses.

Walker & Williams, East St. Louis, Ill., for counterdefendants Donk Bros. Coal & Coke Co.

JUERGENS, District Judge.

Plaintiffs filed suit demanding proceeds from the sale of oil produced from lands to which they claim oil and gas rights. The original defendant filed an interpleader action because of disputed claims to the proceeds between the plaintiffs and other parties.

The original defendant has tendered $100,156.04 to the Clerk of this Court, alleging possession but not legal ownership thereof, and asks the Court to determine the party or parties entitled thereto.

The interpleader action prays the determination of ownership not only as to the funds paid into court but also ownership to proceeds from the sale of oil and gas to be produced from the disputed lands in the future.

Counterclaimants have been brought into the action and have filed claims to the funds presently in the court and funds which may accrue in the future.

The interpleaded funds are proceeds of oil produced and marketed by plaintiffs from land lying outside the Eastern District of Illinois in Bond County, Illinois.

On the eve of trial the counterdefendants, Walter E. Kline, Stella P. Kline, R. E. Hayes, W. T. Frederking, and A. P. Wagemann, filed their motion to dismiss for the following reasons:

1. That the Court lacks jurisdiction of the persons and subject matter in this action because the principal question involved is a local action to try title of land lying outside the territorial limits and jurisdiction of this Court.

2. That there is not proper diversity of citizenship between the parties.

3. That there is an action awaiting trial in the Circuit Court of Bond County, Illinois, which involves substantially identical issues as this case.

An examination of the pleadings discloses that the action awaiting trial in Bond County, Illinois, does not involve the title to the land here in dispute nor the parties in this action. Accordingly, the reason for dismissal set forth in number 3 above is without merit.

The brief of counterdefendants, Walter E. Kline, Stella P. Kline, R. E. Hayes, W. T. Frederking, and A. P. Wagemann, asserts that this Court does in fact have jurisdiction over the interpleader action, thereby apparently waiving the grounds in support of their dismissal as set forth in paragraph numbered 2 above. Notwithstanding this apparent waiver, the Court finds that diversity of citizenship exists.

The assertion that this Court lacks jurisdiction of the subject matter because the principal question involved is a local action to try title to land lying outside the territorial limits and jurisdiction of this Court will next be considered.

Whatever may be the extent of the jurisdiction of the lower federal courts over the subject matter of a suit with respect to persons and property, it is, in the absence of express authority by act of congress, confined to the territorial limits of the district within which the court sits. Accordingly, although a lower federal court may in the exercise of its equity powers, and acting in personam, control the acts of persons over whom it has acquired jurisdiction, outside of its territorial jurisdiction, as for instance by compelling a conveyance of lands in another state by a decree in personam against the party who holds the title, it has no jurisdiction to transfer the title to such lands by a sale and conveyance made through its master or commissioner. 35 C.J.S. Federal Courts § 16, p. 811.

Here there can be no question as to the federal court's jurisdiction in the interpleader action or as to this Court's actual possession of the property with respect to which it is called upon to adjudicate title, namely, the proceeds of the royalty payments deposited in the registry. The Court's jurisdiction is not affected by the circumstance that the funds in the registry possess the legal character of proceeds derived from the sale of interests in realty or by the fact that title to those funds is to be determined in accordance with the state law. Hickok v. Gulf Oil Corporation, 6 Cir., 1959, 265 F.2d 798.

It cannot be successfully disputed that this Court has jurisdiction over the proceeds of the funds deposited in this Court. The only point upon which jurisdiction of this Court may be challenged is premised on the fact that the Court is asked to determine ownership of future funds which may be derived from the...