Source: https://openjurist.org/212/f2d/943/albuquerque-nat-bank-v-citizens-nat-bank-in-abilene
Timestamp: 2019-04-22 12:03:10+00:00

Document:
CITIZENS NAT. BANK IN ABILENE et al.
Rehearing Denied June 25, 1954.
T. J. McMahon, Abilene, Tex., Hamilton E. McRae, F. H. Pannill, W. B. Browder, Jr., Midland, Tex., McMahon, Springer, Smart & Walter, Abilene, Tex., Stubbeman, McRae & Sealy, Midland, Tex., of counsel, for appellant.
William E. Collins, Dallas, Tex., Dallas Scarborough, Abilene, Tex., Thompson, Knight, Wright & Simmons, Dallas, Tex., of counsel, for appellee Condor Petroleum Co.
E. L. Harwell, Abilene, Tex., Frank A. Liddell, Paul Port, Houston, Tex., Wagstaff, Harwell, Alvis & Pope, Abilene, Tex., Liddell, Austin, Dawson & Huggins, Houston, Tex., of counsel, for other appellee.
Before STRUM and RIVES, Circuit Judges, and DAWKINS, District Judge.
The controversy is between two banks, one in Texas and one in New Mexico, each named as executor and as trustee in the will of Ellis A. Hall, deceased, over which shall administer certain corporate stock constituting the major asset in his estate. This appeal is from an interlocutory order granting an injunction, appealable under 28 U.S.C.A. § 1292(1), and the questions raised by the appellant relate to the jurisdiction of the district court and to the propriety of the injunction.
On August 8, 1953, evidently anticipating the dangers incident to a long trip by airplane, Ellis A. Hall executed his last will and testament. Nine days later, on August 17, 1953, Hall, his wife, Virginia H. Hall, a daughter, a daughter by his wife by a former marriage, and a young friend were all killed while Hall was flying his own airplane over Alaska.
The will was executed at Albuquerque, New Mexico, and described the testator as residing at that place, and it is not questioned by any of the parties that that was his domicile at the time of the execution of the will and at the time of his death.
On October 20, 1953, the will was probated, and immediately thereafter the New Mexico bank filed in the same probate court a 'Petition for Construction of Will and Directions to Executor', in which it called for decision of the question as to whether the shares of stock in Condor Petroleum Company, and also other shares of stock in other Texas corporations, passed under the will to the Texas bank, as trustee, or to the New Mexico bank, as trustee. This action was later transferred to the District Court of Bernalillo County, New Mexico, where it is still pending.
On the same day, October 20, 1953, and a short time before the petition for construction of the will was filed in New Mexico, the Texas bank had itself appointed temporary administrator of the estate in Texas and obtained an ex parte order authorizing it to take possession of and to preserve the estate in Texas, and to bring suits for injunction against the Condor Petroleum Company and the New Mexico bank with respect to the shares of stock in Condor Petroleum Company. Later on the same day, but still before the petition for construction of the will was filed in New Mexico, the Texas bank filed in the District Court of Taylor County, Texas, a bill seeking to assure its possession of the estate located in Texas, to enjoin Condor Petroleum Company from issuing new certificates to the New Mexico bank, and to enjoin the New Mexico bank from transferring, selling or assigning said shares of stock or the certificates which represent them. The bill prayed also that the plaintiff have judgment for general relief. On the same day, the judge of the Texas state court entered an ex parte order commanding the New Mexico bank to appear on October 30, 1953, to show cause why a temporary injunction should not be granted. On October 29, 1953, the New Mexico bank removed this suit to the United States District Court for the Northern District of Texas, and it was in this suit that the judgment here appealed from was subsequently rendered.
On the same day on which it removed the Texas state court case to the United States District Court for the Northern District of Texas, October 29, 1953, the New Mexico bank filed in the United States District Court for the District of New Mexico a Civil Action seeking to establish its title to and to remove a cloud on its title to the certificates of stock representing shares of Condor Petroleum Company, and, also, to certificates of stock representing shares in two Texas banks. Pursuant to 28 U.S.C.A. § 1655, said District Court ordered the Texas bank to appear or plead to the complaint by November 23, 1953.
On November 9, 1953, the Texas bank filed its amended complaint in the United States District Court for the Northern District of Texas in which it sought to enjoin the New Mexico bank from prosecuting either of the suits then pending in the State of New Mexico and sought to enforce the Texas bank's claim and title to the shares of stock as temporary administrator, as executor, and as trustee, free from any claims of the New Mexico bank. The next day, November 10, 1953, was the day that had been set for the hearing of the construction of will suit in the district court of Bernalillo County, New Mexico. Also, on November 9, 1953, the Condor Petroleum Company filed in the cause then pending in the United States District Court for the Northern District of Texas its answer in the nature of a bill of interpleader, asking that the court order the administration of the personal property belonging to the estate in Texas to include the stock of Condor Petroleum Company and praying that both banks be enjoined and restrained from further prosecuting the suits then pending or any other suits they might file. The judge of the District Court of the United States for the Northern District of Texas thereupon on the same day, November 9, 1953, issued a temporary restraining order, restraining the New Mexico bank from continuing the prosecution of the construction of will suit pending before the District Court of Bernalillo County, New Mexico, and of the Civil Action brought by the New Mexico bank in the United States District Court for the District of New Mexico, and an order to show cause returnable on November 20, 1953, as to why the New Mexico bank should not be temporarily enjoined from prosecuting any other suit or proceeding involving the issues before the court in said case.
On November 20 and 21, 1953, a full hearing was had in the United States District Court for the Northern District of Texas on the matter of the granting vel non of the interlocutory injunction, and at the conclusion of that hearing the District Court granted the interlocutory injunction enjoining the New Mexico bank, its officers, agents, employees and attorneys, from continuing the prosecution of the construction of will suit before the District Court of Bernalillo County, New Mexico, and the Civil Action filed by said bank before the United States District Court for the District of New Mexico, or from filing or prosecuting any other suit or proceeding other than the action in which the injunction was issued insofar as the same involves the issue of title and right to possession of shares of stock in Condor Petroleum Company. There were further related terms of the injunction. This appeal is from that order granting an interlocutory injunction.
The property of a person while living, wherever such property may be located and of whatsoever it may consist, is for many purposes considered as a unit. So, for practical purposes, the estate of a deceased person is often considered as a whole; and difficulty of administration is encountered if that portion of it in each state is to be treated as a completely separate affair. Without cooperation between the states, and between the administrators or executors in different states, the expense and difficulty of administration often operate to the serious detriment of the estate as a whole due to the fact that our States are for most purposes entirely separate legal sovereignties. A.L.I., Restatement, Conflict of Laws, p. 560; 3 Beale, Conflict of Laws, p. 1444, Sec. 465.1.
Insofar as lands or immovables are concerned, it is universally recognized that, apart from statute, administration of them must be had at the situs. A.L.I., Restatement, Conflict of Laws, Sec. 487; 3 Beale, Conflict of Laws, Sec. 487.2; 11 Am.Jur., Conflict of Laws, Sec. 48; 57 AmJur., Wills, Sec. 1039. Lands are not directly involved in the controversy between the present parties, but the fact that a considerable part of the estate consists of income producing lands in Texas demonstrates the necessity for administration in that State.
As to movables, it is necessary that we keep in mind 'the independence of the two questions, what happens to the ownership of chattels upon the death of the owner, and what happens to the administered estate ripe for distribution.' 2 Beale, Conflict of Laws, Sec. 300.1, p. 1028. For that purpose, Professor Beale employs the words 'administration' and 'distribution', the former as meaning the collection of assets, particularly personal assets, and with them paying debts, including taxes and costs of administration, until all are paid or the assets exhausted; then, 'If after full administration a balance remains, the payment of the balance to those entitled to it is here called distribution.' 3 Id. Sec. 465.1, p. 1444. In the present case we are in the stage of the administration of the estate, though we must look forward to its ultimate distribution in considering the propriety of the injunction against the New Mexico bank from continuing the prosecution of the action in the District Court of Bernalillo County, New Mexico, for the construction of the will.
Each state has the right to control and administer the personal assets of a deceased person found within its borders and to satisfy debts and obligations due to its own citizens. Baker v. Baker, Eccles & Co., 242 U.S. 394, 401, 37 S.Ct. 152, 61 L.Ed. 386. The New Mexico bank derives its appointment as executor from a New Mexico court and, at least during the administration stage, it is not entitled to recognition of its status in Texas nor to possession of assets located in Texas. Hare v. Pendleton, Tex. Civ. App., 214 S.W. 948, 593; Saner-Ragley Lumber Co. v. Spivey, Tex. Com. App., 238 S.W. 912, 915; Robinson v. First National Bank of Plainview, 5 Cir., 55 F.2d 209, 211; cf. Restatement, Conflict of Laws, Sec. 507. 'To the extent that he is entitled to receive the assets after administration here, his title is recognized. But he will not be permitted to intermeddle while the courts of this state are exercising their jurisdiction.' Saner-Ragley Lumber Co. v. Spivey, supra, 238 S.W.at page 915.
See also, 2 Beale on Conflict of Laws, Sec. 308.1; 11 Am.Jur., Conflict of Laws, Secs. 169, 174; cf. Lanius v. Fletcher, 100 Tex. 550, 101 S.W. 1076, 1077.
There is no effort in the New Mexico state court to gain possession of any property, nor to interfere with the administration proper of the estate in Texas. We think it clear, therefore, that the district court erred in enjoining the New Mexico bank, its officers, agents, employees and attorneys, from continuing the prosecution of the action before the District Court of Bernalillo County, New Mexico.
See also, Kline v. Burke Construction Co., 260 U.S. 226, 229, 43 S.Ct. 79, 82, 67 L.Ed. 226.
See also, Sylvania Industrial Corporation v. Lilienfeld's Estate, 4 Cir., 132 F.2d 887, 891, 145 A.L.R. 612; Grayson v. Robertson, 122 Ala. 330, 25 So. 229, 232; Annotations 72 A.L.R. 179, 181, 145 A.L.R. 1393. Cf. Jellenik v. Huron Copper Mining Co., 177 U.S. 1, 13, 20 S.Ct. 559, 44 L.Ed. 647; State Tax Commission of Utah v. Aldrich, 316 U.S. 174, 181 62 S.Ct. 1008, 86 L.Ed. 1358; Wirt Franklin Petroleum Corporation v. Gruen, 5 Cir., 139 F.2d 659, 660.
The corporation was not only organized in Texas, but it conducted all of its business in that State.
We hold that the District Court for the Northern District of Texas acquired jurisdiction of the res to the exclusion of the United States District Court for the District of New Mexico.
This Court, of course, has no jurisdiction to review any proceedings had in the United States District Court for the District of New Mexico. As to the order of the Texas Federal District Court, we think that it was erroneous for that Court to express even a tentative opinion on the construction of the will and on whether the shares of stock in Texas corporations passed to the Texas bank as trustee. The question before the court was merely the situs of the shares for purposes of administration, a question entirely independent from the construction of the will. The terms of the will itself drew a sharp distinction between the administration and the distribution of the estate. Administration of the estate was entrusted to the New Mexico bank as executor, and, if ancillary administration should be necessary, then to the Texas bank as executor for the purpose of administration in Texas. Independently of the terms of the will, we have indicated our view that ancillary administration in Texas is necessary, and we can see no escape from that conclusion in view of the presence in Texas of both movable and immovable assets. As to the distribution of the estate in Texas, any decree by the District Court for the Northern District of Texas should await the final conclusion of the construction of will suit pending in the New Mexico state court. We note in passing that counsel for the New Mexico bank conceded on oral argument that, in their opinion, the New Mexico bank would be bound by such a decree rather than by the judgment rendered by the District Court of the United States for the District of New Mexico.
The New Mexico bank has urged upon us that, as the domiciliary executor of such a large estate, it must raise over six million dollars to pay the federal estate tax by its due date, November 10, 1954, or the estate will suffer a considerable loss in interest. It may be that a duty as to the estate tax is imposed on all administrators and executors, wherever located. See26 U.S.C.A. § 821(a), 930, Regulations of Internal Revenue Commissioner 105, Sec. 81.64. However that may be, the will expresses the testator's wish that both banks cooperate, and under the law it is their duty to work together for the benefit of the estate. Each bank stands in a position of trust to the beneficiaries. It is the duty of each to place the welfare of the beneficiaries above its own private interest. If either should fail to do so, it would be legally responsible for any resultant damage. It may be that, as to the litigation which has already ensued, the court or courts having jurisdiction of the accounting of the respective banks as administrator or as executor may determine that either or both of the actions filed in the respective Federal courts were unnecessary from the point of view of the welfare of the beneficiaries and that the attorney's fees and court costs of such action, or a part thereof, should not properly be charged against the estate. That is a question on which we have no authority to pass and on which no court could properly pass without more complete information than is contained in the present record. We merely note the question to call it to the attention of the guardian ad litem or representative of the minor children and of the court having jurisdiction of the accounting of the respective executors and administrators. We further entertain the hope that a consideration by each bank of the paramount duty owed to the estate and to the beneficiaries and of the possible consequences of a breach of such duty may result in more effective cooperation between these two banks in the future.
As indicated in the opinion, the judgment appealed from is reversed in part and affirmed in all other parts, and the cause is remanded for further proceedings not inconsistent with this opinion.
'The terms of the trusts are identical and the surviving beneficiaries are the same, namely: the three Hall children, Richard A. Hall, age 24, James E. Hall, age 18, Charles Layton Hall, age 14, and Catherine Brandenburg, age between 2 and 3, a step-granddaughter of Ellis A. Hall.
This Court's finding that there is a necessity for administration of the estate of Ellis A. Hall in Texas was made only insofar as necessary for the disposition of this case, and was not intended to be binding upon any probate court in Texas, if indeed this Court had such power. It is clear also that the interlocutory injunction appealed from in no way restrained any interested party from going into a Texas probate court and urging limitations upon the authority of the Texas Bank in the handling or disposition of the estate, and that no further order of this Court in that respect is required. Except as herein stated, the petition for rehearing is denied.
1 See opinion on petition for rehearing 212 F.2d 951.

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