Travelers Ins. Co. v. First Nat. Bank of Shreveport
| Decision Date | 28 April 1982 |
| Docket Number | No. 80-3508,80-3508 |
| Citation | 675 F.2d 633 |
| Parties | The TRAVELERS INSURANCE CO., Plaintiff, v. The FIRST NATIONAL BANK OF SHREVEPORT, Defendant-Appellee Cross-Appellant, v. Arnold KILPATRICK and Harper Terrill, as co-executors of the estate of Mrs. Katherine Kilpatrick, Defendants-Appellants Cross-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
D. G. Brunson, William H. Baker, Jonesboro, La., Frederic C. Amman, III, William D. Brown, Monroe, La., for defendants-appellants, cross-appellees.
Fred H. Sutherland, H. F. Sockrider, Jr., Shreveport, La., for defendant-appellee, cross-appellant.
Appeals from the United States District Court for the Western District of Louisiana.
Before BROWN, COLEMAN and RUBIN, Circuit Judges.
What began simply enough as a diversity-based Rule 22 interpleader to determine the ownership of the proceeds of a single life insurance policy, eventually burgeoned into a luxuriant complex of disputes between nondiverse claimants to the fund involving more than twenty life insurance policies, a power of attorney, and a will. Applying the standards for ancillary jurisdiction enunciated by the Supreme Court in Owen Equipment and Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978), we conclude that none of the cross-claims raised between the original interpleader claimants was within the district court's ancillary jurisdiction. Pruning these, we vacate so much of the judgment below as relates to those claims. We affirm the district court's judgment on the claims involved in the original interpleader.
Willard Kilpatrick, who lived in the town of Jonesboro, Louisiana, was a businessman and cattle farmer. With his wife, Katherine, he had accumulated a substantial fortune, most of which was held as community property. The Kilpatricks had no children.
Mrs. Kilpatrick had been ill for some time when, in 1972, Kilpatrick executed a will leaving the bulk of his estate in trust for his wife. The will named the First National Bank of Shreveport ("bank") both executor and testamentary trustee. Later that year, Kilpatrick executed an inter vivos life insurance trust. It too was for the benefit of his wife and named the bank trustee. To provide the trust corpus, Kilpatrick designated the trustee-bank beneficiary of nineteen life insurance policies having a total face value of approximately $450,000. 1
In 1976, after lengthy conferences with counsel and representatives of the bank, Kilpatrick executed a new will ("1976 will"). This will again named the bank executor, and provided that: (1) his wife would receive his interest in their residence and certain personal items; (2) thirteen separate churches, in designated portions, would receive a cash bequest equal to ten percent of the gross estate; (3) his stock in Kilpatrick Ford, Inc., a closely held automobile sales agency, would be offered for sale at book value to the manager of that business if that person were still so employed at the time of decedent's death; and (4) the remainder of his estate would go to the bank as trustee of a testamentary educational foundation. Mrs. Kilpatrick also executed a will in 1976 which was, except for the provision concerning the Kilpatrick Ford stock, a counterpart of her husband's. Fearing small town rumors, the Kilpatricks conducted these transactions in Shreveport rather than in their hometown to insure secrecy. They stated to bank officials that they had already been generous to their relatives and felt no obligation to provide further for them.
In late 1976, soon after the execution of these wills, Kilpatrick fell seriously ill and was hospitalized, first in Jonesboro and then in Houston. There he was diagnosed as having terminal lung cancer with probable brain metastasis, and given two to three months to live. Kilpatrick returned from Houston to his home on December 16, 1976.
The next day, Kilpatrick signed a power of attorney appointing his brother, Arnold Kilpatrick, his agent. Pursuant to this power, Arnold Kilpatrick sold all of Kilpatrick's stock in the Ford agency to another automobile dealership, and, among other things, some of the Kilpatricks' real estate. 2
By January 8, 1977, Kilpatrick's condition had so worsened that, even with his around-the-clock sitters, he could no longer remain at home. He was therefore rehospitalized, at the Jackson Parish Hospital, where he remained until his death some four weeks later.
Approximately one week after his readmittance to the hospital, Kilpatrick allegedly executed another will ("1977 will"), dated January 16, 1977, and signed with an "X" mark. This will purported to revoke his 1976 will, executed only four months previously, and to leave his entire estate to his wife. Mrs. Kilpatrick also allegedly executed another will that day, even though she too was in ill health. Her new will also revoked her earlier will and left her entire estate one-half to her heirs, and one-half to her husband's. Both of these wills named Kilpatrick's brother, Arnold, and Mrs. Kilpatrick's brother, Harper Terrill, as co-executors.
Four days later, on January 20, 1977, Kilpatrick allegedly signed additional documents, again by "X" mark, purporting to change the beneficiary of his life insurance from the bank, as trustee under the 1972 inter vivos trust, to Mrs. Kilpatrick. On February 6, 1977, approximately two-and-a-half weeks after the alleged execution of these last documents, Kilpatrick died.
Two days after Kilpatrick's death, Arnold Kilpatrick and Terrill presented Kilpatrick's 1977 will to the appropriate Louisiana state court for probate, and had themselves appointed ex parte as co-executors of his estate. Approximately three months later, the bank filed a petition in that court to annul the 1977 will, primarily on the ground that Kilpatrick lacked testamentary capacity when he executed it, and to have Kilpatrick's 1976 will admitted to probate instead. That action is still pending in the Louisiana courts.
Meanwhile, on July 26, 1978, Travelers Insurance Company, one of Kilpatrick's life insurers, deposited the $67,500 provided by its policy into the registry of the federal district court below and commenced this interpleader action pursuant to Rule 22, Fed.R.Civ.P. 22, 3 alleging that it was uncertain who was entitled to the proceeds. It named Mrs. Kilpatrick and the bank as the competing claimants. Mrs. Kilpatrick claimed the proceeds under one of the January 20, 1977, change of beneficiary forms allegedly executed by her husband. The bank, denying the validity of that instrument, again primarily on the ground that Kilpatrick lacked the mental capacity necessary to execute it, claimed under the beneficiary designation made by Kilpatrick in 1972 pursuant to the establishment that year of the inter vivos life insurance trust. In due course, Travelers was dismissed from the action and discharged from any further liability to the defendants-claimants on its policy.
On March 15, 1979, while both the state court action to annul Kilpatrick's 1977 will and this interpleader were still pending, Mrs. Kilpatrick died. Shortly afterward, as they had done upon Mr. Kilpatrick's death, Arnold Kilpatrick and Terrill opened Mrs. Kilpatrick's succession in state court by presenting her 1977 will for probate and were appointed ex parte co-executors of her estate. Thereafter, on August 27, 1979, in their capacities as her co-executors, they were substituted for Mrs. Kilpatrick as defendants-claimants in this interpleader.
The bank countered by submitting a "Supplemental and Amended Pleading" ("supplemental pleading"), which attempted to assert against the now-present co-executors certain cross-claims pursuant to Rule 13(g) of the Federal Rules of Civil Procedure. 4 The bank sought, inter alia, a decree that "from and after December 15, 1976, until and through February 6, 1977, Mr. Kilpatrick lacked the mental and physical capacity legally required to execute any legally binding documents including but not limited to the January 20, 1977, purported Change of Beneficiary Form at issue herein," i.e., the one relating to the Travelers policy. Such a decree, of course, would invalidate (at least as between the bank and Mrs. Kilpatrick's executors 5) not only the Travelers change, but also all the other change of beneficiary forms allegedly executed on January 20, 1977, the December 17, 1976, power of attorney, and Kilpatrick's 1977 will. The district court immediately allowed the bank to file the supplemental pleading.
Arnold Kilpatrick and Terrill subsequently filed a number of motions seeking relief from the allowance of this pleading. They rather inartfully argued that the claims it raised against them were improper under Rule 13(g) because they were "immaterial to ... the question before (the) Court," i.e., the ownership of the proceeds from the Travelers policy. And, specifically with regard to so much of the sought decree as would invalidate Kilpatrick's 1977 will, the co-executors additionally contended that the seeking of such relief was barred from federal courts as falling within the "probate exception" to federal jurisdiction. 6
After receiving briefs and hearing oral argument on these motions, the district court ruled that the 7 Although the court did not expressly say so, it apparently assumed that the claims asserted by the bank against the co-executors were otherwise valid cross-claims under Rule 13(g).
After a seven-day trial to the court, the district judge, in findings of fact and conclusions of law orally delivered from the bench, found that from December 15, 1976, until his death, "there was a permanent mental incapacity in Willard...
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