United States District Court, Eastern District of Illinois
August 3, 1960
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,
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.
The opinion of the court was delivered by: 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
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
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
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
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 sale of oil and gas produced from land lying
outside the territorial limits of the district.
It is counterclaimants' assertion that in this action the
Court must determine title to lands lying outside the
territorial limits of the district and therefore, the action
is local and must be brought within the district where the
land is located.
Whether a cause of action involving land is local or
transitory depends upon the law of the state wherein the land
is situated. Kentucky Coal Lands Co. v. Mineral Development
Co., 6 Cir., 191 F. 899.
Section 7 of Chapter 110, Illinois Revised Statutes,
provides in pertinent parts as follows:
"§ 7. Venue — * * *
"(2) Any action to quiet title to real estate,
or to partition or recover possession thereof or
to foreclose a mortgage or other lien thereon,
must be brought in the county in which the real
estate or some part of it is situated."
At the start of this action there may have been grave doubt
as to whether this Court was the proper venue for this cause.
When the defendants entered their unlimited appearance, any
questions of venue which may have been raised were waived and
consequently are not now open to consideration by the Court.
In Bevans v. Murray, 251 Ill. 603, 96 N.E. 546, 554, the
Illinois Supreme Court had before it a question somewhat akin
to the question here presented, wherein it was asserted that
the lower court lacked jurisdiction to enter a decree
construing deeds to land, some of which was located in the
State of Indiana. The Court quoted from Enos v. Hunter, 4
Gilman, Ill., 211, as follows:
"`Where the relief sought could be effected by
acting directly upon the person of the defendant,
the court of chancery has never hesitated to
entertain the bill where the defendant is found
within its jurisdiction, whether the subject
matter of the controversy be within its control
or not. Of this character are those cases where
the courts have compelled specific performances
of contracts for the conveyance of or relating to
land which is situate beyond its jurisdiction,
and in such case the court will compel a
conveyance to be executed in such manner and form
as may be prescribed by the laws of the country
where the land is situate, * * *'."
The court also quoted from Massie v. Watts, 6 Cranch 148, 3
L.Ed. 181, as follows:
"`When the defendant is liable, either in
consequence of a contract or as trustee or as
holder of a legal title acquired by a species of
mala fides practiced on the plaintiff, the
principles of equity give a court jurisdiction
wherever the person may be found; and the
circumstance that a question of title may be
involved in the inquiry, and may even constitute
the essential point on which the case depends,
does not seem sufficient to arrest the
jurisdiction. * * * In case of fraud, of trust or
of contract, the jurisdiction of a court of
chancery is sustainable wherever the person is
found, although lands not within the jurisdiction
may be affected by the decree.'"
The court further stated that the concluding part of the above
citation is not to be understood as authorizing a court of
equity in any case to render a decree directly affecting land
in another jurisdiction. The court further stated that the
decree in such cases settles the rights of the parties before
the court with respect to some contract, conveyance, trust or
fraudulent conduct, and by attachment or other coercive means
compels the offending party to comply with the requirements of
the decree or simply declares the transaction complained of
void and thereby removes the obstruction to the enforcement of
his legal remedies.
In Blackhurst v. James, 304 Ill. 586, 136 N.E. 754, the
appellants contended that the suit, insofar as it was sought
to set aside deeds affecting land in counties outside the
jurisdiction of the trial court, was improper and that the
decree setting aside and canceling such deeds was a decree in
rem, not in personam, and was therefore void. The court held
that the decree setting aside the deeds was not void on the
ground that the court did not have jurisdiction of the subject
matter and that the requirement of the law that suits
affecting land shall be brought in the county where it or some
part of it is situated was not violated by the decree setting
aside the deeds.
In their amended joint claim the counterdefendants, Walter
E. Kline, Stella P. Kline, R.E. Hayes, W.T. Frederking, and
A.P. Wagemann, assert that the oil and gas interest claimed by
the plaintiffs was obtained through fraud or mistake by the
plaintiffs' predecessors in title and ask for reformation of
the deeds to properly reflect the interest which was intended
to be conveyed. Thus, it appears that the claim of these
counterdefendants is based on fraud or mistake and that any
dispute which exists as concerns property rights to land
located outside the territorial limits of the district is
founded on such fraud or mistake.
In accordance with the above authority, it appears that
Illinois law has established that such a cause of action so
asserted is an action in personam and therefore transitory and
may be brought wherever the parties may be found.
The Court finds that the cause here asserted may be brought
in this district notwithstanding it may affect title to lands
lying outside of this district.
This Court has jurisdiction to entertain the cause here
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