Source: http://openjurist.org/597/f2d/51/duncan-v-first-national-bank-of-cartersville-georgia-b
Timestamp: 2016-12-06 13:15:04
Document Index: 649268345

Matched Legal Cases: ['§ 138', '§ 201', '§ 1416', '§ 1416', '§ 138', '§ 138', '§ 1416', '§ 7426']

597 F2d 51 Duncan v. First National Bank of Cartersville Georgia B | OpenJurist
597 F. 2d 51 - Duncan v. First National Bank of Cartersville Georgia B HomeFederal Reporter, Second Series 597 F.2d.
597 F2d 51 Duncan v. First National Bank of Cartersville Georgia B 597 F.2d 51
79-2 USTC P 9431
Felton D. DUNCAN, Plaintiff-Appellant,v.FIRST NATIONAL BANK OF CARTERSVILLE, GEORGIA, and UnitedStates of America, Defendants-Appellees,Lamar B. Hill, Defendant.
No. 77-1938.
On June 30, 1975, in First National Bank of Cartersville v. Hill, Civil No. 2422 (N.D.Ga.) a judgment was entered in favor of the United States against Hill for the unpaid assessment in the amount of $4,052,842.60 plus interest from the day of judgment. On the same day, judgment was entered for the First National Bank of Cartersville for $4,601,546.33 for the embezzled funds.
In April, 1975, Duncan requested a jury trial in the federal district court relying on Fed.R.Civ.P. 38, 39 and 81(c) and relying also on Ga.Code Title 81A §§ 138, 139 and 140 arguing that although he had not previously requested a jury trial in either the state or federal court, the above cited rules gave him the right, upon removal of the action, to a jury trial. The district judge tried the case without a jury. The district court found that the conveyances were fraudulent transfers under Ga.Code Title 28 § 201. The federal district court did not recognize any debt owed by Hill to Duncan except a $25,000 balance remaining on the sale of a one-third interest in Duncan Credit, Inc. This appeal followed.
Although Duncan did not request a jury trial at the state level before the trial was removed to federal district court, he argues that he was entitled to a jury trial under Fed.R.Civ.P. 81(c). This Rule states in part that if at the time of removal all necessary pleadings have been served, a party entitled to trial by jury under Rule 38 shall be accorded it, if his demand is served within ten days after service on him of the notice of the filing of petition. Particularly, Rule 81(c) states in relevant part:
Under Ga.Code Title 37, § 1416 a party may be entitled to a trial by jury in a quiet title suit Upon the party's demand or upon request of a master.2 However, even assuming that appellant's suit fell under § 1416, it is clear that appellant did not make such a demand at the state level. Rather, appellant would have us believe that a right to a jury trial in his case existed without demand under Title 81A § 138. Such an interpretation of § 138 is too strained. Even though Duncan's complaint filed in the state court specifically states that Duncan sought to quiet title, appellant now contends that he was not really seeking to quiet title and that such a suit was improper.3 If a suit to quiet title was indeed improper and if no jurisdiction existed in the state court, the federal court, nevertheless, had jurisdiction of the government's counterclaim for equitable relief.4 In our recent En banc decision of United States v. McMahan, 569 F.2d 889 (5th Cir. 1978) we stated that when a suit involves the issue of a person's liability for taxes and penalties imposed by the Internal Revenue Service, that person is entitled to a trial by jury even though there may be other issues in the case which are of an equitable nature. But McMahan involved a situation where both the legal issue of tax liability and penalties, and equitable claims were asserted. The clear implication of the language in McMahan, however, is that if a case involves Only equitable issues, a trial by jury is not guaranteed by the Seventh Amendment of the Constitution. In Dairy Queen v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962) the Supreme Court quoted with approval this Court's opinion in Thermo-Stitch, Inc. v. Chemi-Cord Processing Corp., 294 F.2d 486 (5th Cir. 1961):
"It is therefore immaterial that the case at bar contains a stronger basis for equitable relief than was present in Beacon Theatres (Beacon Theatres v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988). It would make no difference if the equitable cause clearly outweighed the legal cause so that the basic issue of the case taken as a whole is equitable. As long as any legal cause is involved the jury rights it creates control. This is the teaching of Beacon Theatres, as we construe it."
369 U.S. at 473 n.8, 82 S.Ct. at 897, Quoting 294 F.2d at 491 (emphasis added).
Duncan may have had a right to a jury trial for his quiet title suit at the state level if he requested it. See Ga.Code Title 37 § 1416. However, since such a request was not made, Fed.R.Civ.P. 81(c) does not give appellant the right to a jury trial. Under Rule 81(c), appellant was required to file a demand for jury trial within ten days after the petition for removal was filed because under state law a demand was required and had not been made prior to removal. Furthermore, if the quiet title suit was improperly brought and the state court had no jurisdiction, it is clear that the federal district court had jurisdiction of the government's counterclaim to set aside the fraudulent conveyance and foreclose the government's tax liens. The government's counterclaim is also equitable in nature and Duncan was therefore not entitled to a trial by jury. We are convinced that whether or not the quiet title suit was proper, the federal district court had jurisdiction and, in any event, appellant was not entitled to a jury trial under Fed.R.Civ.P. 81(c) or under McMahan.
During oral argument before this Court, appellant raised the question of lack of jurisdiction. Duncan argued that the state court lacked jurisdiction of the suit to quiet title since such an action was improper after having been served with a notice of levy by the United States to remit payment of money or property in his possession not belonging to Hill. Duncan argues that the proper procedure would have been to bring an action in federal district court for wrongful levy under 26 U.S.C. § 7426(a)(1). Appellant further argues that because the state court lacked jurisdiction, upon removal of the action the federal district court also lacked jurisdiction