United States v. Estate of Swan
| Decision Date | 26 April 1971 |
| Docket Number | No. 29372.,29372. |
| Citation | 441 F.2d 1082 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. The ESTATE of Pope Lott SWAN, Deceased, Patsy Ann O'Gilvy, Administratrix of the Estate of Pope Lott Swan, Deceased, Defendants. The LUBBOCK NATIONAL BANK, LUBLOCK, TEXAS, et al., Interpleaders-Appellees, v. Patsy Ann O'GILVY, Administratrix of the Estate of Pope Lott Swan, Deceased, and Individually, Defendant-Appellee-Cross Appellant, v. The UNION BANK OF CALIFORNIA, Defendant-Appellant-Cross Appellee, Zola Blicker, Evelyn West and J. R. Blumrosen, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Willaim H. Evans, Evans, Pharr, Trout & Jones, Carlton B. Dodson, Lubbock, Tex., for Union Bank of Cal.
Bill A. Davis, Lubbock, Tex., for Patsy Ann O'Gilvy.
Eldon B. Mahon, U. S. Atty., Alex H. McGlinchey, Asst. U. S. Atty., Fort Worth, Tex., Clarence J. Brogan, William S. Estabrook, Attys., Tax Div., Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, Crombie J. D. Garrett, Attys., Dept. of Justice, Washington, D. C., for the United States.
Ronald M. Yeager, Lubbock, Tex., for Lubbock Nat. Bank.
J. R. Blumrosen, Lubbock, Tex., for J. R. Blumrosen and Zola Blicker.
Forrest Bowers, Lubbock, Tex., for Evelyn West.
Before COLEMAN, AINSWORTH and GODBOLD, Circuit Judges.
Rehearing Denied on Behalf of Union Bank of California April 19, 1971.
As Amended on Denial of Rehearing on Behalf of Patsy Ann O'Gilvy April 26, 1971.
At stake in this interpleader action is the sum of $35,857.93, the undistributed assets of the Estate of Pope Lott Swan, deceased. On October 18, 1968, the Lubbock National Bank and the County Clerk of Lubbock County, Texas, custodians of these funds, filed a complaint for interpleader under 28 U.S.C. § 1335, in the United States District Court for the Northern District of Texas. Named as potential claimants were Patsy Ann O'Gilvy, individually and as administratrix of the estate; Zola Blicker and J. R. Blumrosen, erstwhile attorneys for O'Gilvy and the estate; Evelyn West, a beneficiary under the will of the deceased; Union Bank of California, claiming as purchaser of a Trust Fund Warrant drawn against the funds; and the United States of America, claiming for back taxes. Five of the six defendants filed answers in the action. The interpleaders having failed in their efforts to serve O'Gilvy personally, the court appointed Bill A. Davis as her attorney ad litem.
The District Judge heard testimony, made findings of fact and conclusions of law, and awarded $30,000 of the funds to the Government, dividing the remaining $5,857.93 among Blicker, Blumrosen, West, Davis, and Union Bank. From this judgment Union Bank and O'Gilvy, by her attorney ad litem, appeal. We affirm.
Pope Lott Swan of Lubbock County, Texas, died on February 1, 1965. A will contest ensued between two daughters of the decedent, Patsy Ann O'Gilvy and Evelyn West. During the period of the contest, the property of the estate, a sum of $35,857.93, was paid into the Registry of the Clerk of the Lubbock County Court and deposited in the Lubbock National Bank. The contest was settled by an agreement that O'Gilvy would receive three-fourths and West one-fourth of the net estate. The will was thereupon probated, and O'Gilvy appointed independent executrix of the estate without a bond. She took her oath as independent executrix on July 17, 1967.
In June of 1966, the District Director of Internal Revenue made assessments against Pope Lott Swan for federal income tax liabilities for the years 1963 through 1966, in the total amount of $33,152.84. On July 1, 1966, the United States filed notice of a federal tax lien covering these assessments with the County Clerk of Lubbock County, Texas.
Demands were duly made on O'Gilvy for payment of these federal taxes. In June of 1968 the Government and Zola Blicker, attorney of record for O'Gilvy, reached agreement on a settlement of $30,000. Blicker sent word of the agreement to O'Gilvy, who by that time had moved to California, and requested his co-counsel, J. R. Blumrosen, to take the steps necessary to have the funds released from the Registry of the Clerk of the Lubbock County Court. On assurances by counsel that the tax claim had been settled, the court entered an order releasing the funds. On July 29, 1968, the County Clerk issued a draft — denominated "Trust Fund Warrant No. 162" — in the sum of $35,857.93, drawn on the Lubbock National Bank and payable to "Patsy Ann O'Gilvy, Independent Executrix of the Estate of Pope Lott Swan deceased."
A struggle now took place for control of the warrant. Blumrosen forwarded it to Blicker. Blicker wrote O'Gilvy and requested that she execute a power of attorney to give him authority to endorse the warrant for her so that he could deposit the money and settle with the Internal Revenue Service. O'Gilvy refused with some heat, and demanded that the warrant be sent to her. Blicker instead returned the warrant to Blumrosen, who took it to the Lubbock County Clerk's Office and persuaded the chief deputy clerk to make an additional entry on the warrant, so that it now read payable to the order of "Patsy Ann O'Gilvy, Independent Executrix of the Estate of Pope Lott Swan deceased and Zola Blicker, atty." The Trial Judge found that, while neither Blumrosen, Blicker, nor the chief deputy clerk were authorized to make this alteration, it was not the purpose of the attorneys in causing the alteration to defraud anyone. Blumrosen then transmitted the warrant to O'Gilvy for her endorsement.
Mrs. O'Gilvy endorsed the warrant, and on August 21, 1968, presented it to the Union Bank of California for deposit in a previously opened commercial checking account in the name of "Estate of P. L. Swan, deceased." Union Bank's teller failed to notice that the warrant lacked the endorsement of Zola Blicker, and accepted it for deposit. Shortly thereafter Mrs. O'Gilvy withdrew the entire sum, and her whereabouts are unknown. Union Bank, denied payment on the warrant by Lubbock National Bank on account of the incomplete endorsement, brought suit against O'Gilvy in the State of California and recovered a default judgment against her for the full amount. It has not been able to collect on the judgment.
Patsy Ann O'Gilvy is named in this action both individually, as a beneficiary of the estate under the will compromise, and in her capacity as executrix of the will approved by the Lubbock County Court. The record does not indicate that she has ever been formally relieved of her duties.
In November of 1968, shortly after the interpleader action was filed, the Trial Judge directed the United States Marshal for the Central District of California to serve a copy of the complaint on O'Gilvy at her last known address in Huntington Beach, California, pursuant to 28 U.S.C. § 2361.1 The deputy marshal's affidavit indicates that he was able to ascertain that the address given was her correct address, but that before he could serve her personally she moved and left no forwarding address. In March of 1969 the Trial Judge further directed that O'Gilvy be served by publication, as provided by 28 U.S.C. § 1655.2 Notice of the action was then published for six consecutive weeks in a newspaper of general circulation in Lubbock. O'Gilvy having failed to respond to the published notice, the Judge took the final step required by Section 1655 and appointed an attorney ad litem to represent her interests.
On appeal, the attorney ad litem contends that failure to serve O'Gilvy personally deprived the District Court of jurisdiction over the conflicting claims to the assets of the estate. We do not agree.
Some federal courts have held that in an interpleader action under 28 U.S.C. § 1335, personal service is a strict prerequisite to jurisdiction over a particular claimant. See, e. g., Metropolitan Life Insurance Company v. Dumpson, S.D.N. Y.1961, 194 F.Supp. 9. Others have held, to the contrary, that where an interpleader action satisfies the requirements of 28 U.S.C. § 1655, constructive service of process pursuant to that section confers jurisdiction over claimants not amenable to personal service. See, e. g., A/S Krediit Pank v. Chase Manhattan Bank, S.D.N.Y.1957, 155 F.Supp. 30, 36, aff'd per curiam, 2 Cir., 1962, 303 F.2d 648; Republic of China v. American Exp. Co., S.D.N.Y.1952, 108 F.Supp. 169, aff'd 2 Cir. 1952, 195 F.2d 230. See generally 3A J. Moore, Moore's Federal Practice ¶ 22.042 (2d ed.1970). We hold to the latter view.
A statutory interpleader action instituted under 28 U.S.C. § 1335 is an action to determine the validity of competing claims to identified property. If parties with claims against the property are permitted to exempt those claims from adjudication in an interpleader action by evading personal service, the basic policies underlying interpleader — permitting a stakeholder to avoid multiple liability and a multiplicity of suits — are disserved. Cf. National Fire Ins. Co. v. Sanders, 5 Cir., 1930, 38 F.2d 212, 214; 3A J. Moore, supra, ¶ 22.021. Where, as here, the property is located within the district in which the District Court sits, the action may also fall within that class of actions defined by Section 1655. We believe that Congress did not intend to exclude from coverage under Section 1655 actions such as this one, in which the stake consists of the assets of an estate on deposit in a bank pursuant to court order, the claims are numerous, and service by publication constitutes a reasonable mode of conveying notice to an absent party.3
The 1916 case of New York Life Insurance Company v. Dunlevy, 241 U.S. 518, 36 S.Ct. 613, 60 L.Ed. 1140, has been cited for the proposition that jurisdiction over the person of a claimant in an interpleader action requires personal service. See Cordner v. Metropolitan Life Insurance Company, S.D.N.Y.1...
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