Court Opinion

ID: 9733070
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:52:35.294047+00
Date Added: 2024-06-11T18:26:38.190645
License: Public Domain

MESCHKE, Justice,
dissenting.
I respectfully dissent. The majority opinion’s conclusion, “that interpleader was not authorized as to the Glovatsky minerals”, is puzzling.
Precedent from the federal court system is not apt to frame the jurisdiction of our trial courts. The power of federal trial courts is dependent upon Congressional dispensation. United States Constitution, Art. 3, § 1 (“The judicial power of the United States shall be vested ... in such inferior courts as the Congress may from time to time ordain and establish.”)
Only the jurisdiction of the Supreme Court is derived directly from the Constitution. Every other court created by the general government derives its jurisdiction wholly from the authority of Congress. That body may give, withhold or restrict such jurisdiction at its discretion, provided it be not extended beyond the boundaries fixed by the Constitution. The Constitution simply gives to the inferior courts the capacity to take jurisdiction in the enumerated cases, but it requires an act of Congress to confer it.
Kline v. Burke Construction Co., 260 U.S. 226, 43 S.Ct. 79, 82-83, 67 L.Ed. 226 (1922). (Citations omitted.) Unlike the controlled jurisdiction of federal courts, the power of our state trial courts is fundamentally different.
A North Dakota trial court is vested with “original jurisdiction of all causes, except as otherwise provided by law....” North Dakota Constitution, Art. VI, § 8. See NDCC 27-05-06. Rudnick v. City of Jamestown, 463 N.W.2d 632, 636 (N.D.1990): “The constitutional grant of original jurisdiction to the district court creates a court of general jurisdiction with the power to determine all controversies which can possibly be made the subject matter of civil action.”
The difference between the constitutional structures of the federal and state trial courts necessitates different analyses of their distinct powers. Those differences make it fundamentally wrong to “look to relevant federal case law construing the federal rule [22, F.R.Civ.P., on interpleader] for guidance in construing our own rule” about interpleader, as the majority opinion does. See note 2 in the majority opinion.
*631“These rules shall not be construed to ... limit the jurisdiction of the district court of North Dakota_” NDRCivP 82. “There shall be one form of action to be known as ‘civil action’.” NDRCivP 2. Under NDRCivP 8(a), no label is required, but only “a short and plain statement of the claim”. “Relief in the alternative or of several different types may be demanded.” Id.
Interpleader is an equitable remedy, not solely dependent on formulation by statute or by rule. 45 Am.Jur.2d Interpleader § 1, p. 433 (1969). See also 45 Am.Jur.2d Interpleader §§ 21, 22 p. 448-451, (1969) on state and federal statutory interpleader. That Kiker labeled his pleading “Complaint for Interpleader and Petition for Permission to Deposit Funds with Clerk of the District Court” does not warrant the majority’s facile conclusion that “the trial court erred in determining the ownership of the Glovatsky minerals in this interpleader action.” We are long past the formula and label pleading stage of the common law. In addition, besides seeking to deposit funds, Kiker also sought to confirm his accounts and to obtain indemnity for contingent liabilities.
Viewing the evidence in the light most favorable to the trial court’s findings, as we should, we know that, in late 1976, Russel L. Kiker Jr., Marvin L. Kaiser, William D. Walters Sr., and Duane Peterson formed a group to invest in oil and gas interests in the Williston Basin. They agreed to keep the existence of the group confidential. Although profits were to be split, all purchases would be made in Kiker’s name. Shares varied, depending on contributions of capital to each acquisition.
Though his role was not publicly known, Walters Sr. was the leader and coordinator. The venture was vastly successful in investing in interests that became valuable, winding up with six assignments of oil and gas leases, six overriding royalty assignments, and twenty-two mineral deeds of varying amounts of mineral acres, many producing. The parties to this lawsuit, other than the four original members of the group, all received their interests through assignments by one of the group of four. Thus, Imperial Oil, Lillian Walters, William Walters Jr., Lillian Kaiser, Carrie Smith, and Robert Smith all received their interests from Walters Sr.
In January 1977, pursuant to instructions from Walters Sr., Kiker, on behalf of himself, Kaiser, and Walters Sr., (but not Peterson), purchased 20 mineral acres in Dunn County from Pete and Lillian Glovat-sky, that later became part of the prolific Little Knife field. On the same date, per instructions from Walters Sr., Kiker leased the minerals to Target Energies, Inc., a corporation solely owned by Kaiser. Until recently, record title to these Glovatsky minerals remained in Kiker’s name, and record title to the lease remained in Target’s name.
After oil development began in 1979, Kiker distributed the oil proceeds from these Glovatsky minerals to himself, 37.5 percent; to Imperial (Walters Sr.’s assign-ee), 37.5 percent; and to Kaiser, 25 percent. Walters Sr. was the major stockholder and president of Imperial through November of 1988. Similarly, Kiker, Kaiser, and Walters Sr., through Imperial, each received one-third of the proceeds from the Target lease of these Glovatsky minerals. Quarterly, Kaiser prepared an accounting of the income from the Glovatsky minerals and lease, and delivered it, along with disbursement checks, to himself, Kiker, and Walters Sr. From 1979 through 1987, Walters Sr. and Imperial received and accepted over $600,000 solely from the Glovatsky minerals and lease.
Shortly after the Target lease of the Glovatsky minerals was recorded, a dispute arose with the William Herbert Hunt Trust Estate, which claimed priority of its unrecorded oil and gas lease from Glovatsky, dated July 22, 1972. According to Kiker and Kaiser, Walters Sr. had spent many days coaching and instructing Kiker and Kaiser about how to testify at their depositions and in the 1977 trial. As a result of the trial and the subsequent appeal, Target was held to be a bona fide purchaser for value. Hunt Trust Estate v. Kiker, 269 N.W.2d 377 (ND 1978). Target’s lease was *632deemed to have priority over the Hunt lease, and Kiker’s group greatly benefitted from the oil development that followed.
jin 1987, Kiker attempted to get Walters Sr. to join in a disclosure to Hunt, but Walters Sr. did not respond to these attempts. Then, Kiker and Kaiser approached Hunt. They admitted to Hunt that they had given false testimony about their business relationship at the 1977 trial, and they divulged the involvement of Walters Sr. and Imperial. In late 1988, Kiker and Kaiser settled with Hunt by each paying Hunt $305,500, and by transferring to Hunt their entire interest in the Target lease. In addition, though Hunt had no claim to the minerals, Kiker and Kaiser transferred to Hunt their combined 62.5 percent interest in the Glovatsky minerals. In exchange, Hunt released and discharged Kiker and Kaiser from any further liability for the Glovatsky debacle.
Before commencing this action, Kiker unsuccessfully sought to dissolve the group and to transfer record ownership of the properties, all still in Kiker’s name, to the rightful owners. As part of that effort, in 1988, Kiker ceased distributing the income from the properties, and he placed the income in a separate interest-bearing account for the benefit of the owners. Because Kiker was unable to get everyone to agree, particularly Walters Sr. and his assignees, to indemnify him for liabilities for severance taxes, income taxes, and oil company adjustments, Kiker’s settlement attempts were unsuccessful. It was not until shortly before this action began that Walters Sr. and Imperial disclaimed any interest in the Glovatsky minerals and lease.
In February 1989, Kiker sued to determine the rights and responsibilities of each member of the group and of their respective assignees in the properties and the withheld income. Appropriately, Kiker also sought indemnification for various existing and contingent liabilities connected to the properties.
At trial of this action, the parties stipulated to the ownership of all of the properties, except for the Glovatsky minerals in Kiker’s name. The parties also agreed to the accounting and apportionment of all withheld funds except for those attributable to the Glovatsky minerals.
In mid-1989, months after this action was begun by Kiker, Hunt sued Kiker, Kaiser, Walters Sr., and Imperial in Dunn County, seeking damages from Walters Sr. and Imperial for fraud, conspiracy to defraud, unjust enrichment, and slander of title, based on the income that Hunt would have received if its lease had been determined to have priority. Chevron, which in 1979 had obtained an assignment from Hunt of its lease of the Glovatsky minerals, later joined in that litigation. Cryptically, the majority opinion concludes that “the ownership of the Glovatsky minerals at issue in this case would be more appropriately determined in” this separate lawsuit by Hunt and Chevron.
Walters Sr. does not claim that any of the trial court’s findings of fact are clearly erroneous. He only argues that the trial court's “hearing and deciding the issue of ownership of the ... Glovatsky minerals was both prejudicial and purposeless here, because that same issue, in the form of a quiet title count, was present in the Dunn County action brought by Hunt_” Similarly, Imperial does not claim that any of the trial court’s findings are clearly erroneous, but rather argues that the “trial court abused its discretion by allowing Kiker, with his unclean hands, to prosecute this action as to the Glovatsky minerals”. There is no overriding principle of law that directs a joint venture, even an unscrupulous one, to dissolve and to litigate their individual responsibility with outsiders, rather than among themselves. See 46 Am.Jur.2d Joint Ventures, § 48 (1969) (“[I]n a settlement and accounting between joint venturers, each is chargeable with the consequences of his own derelictions or misconduct.”)
The separate lawsuit by Hunt and Chevron was begun after this lawsuit was started. Generally, “the exercise of concurrent jurisdiction is controlled by the principle of priority.” 20 Am.Jur.2d Courts § 128 (1965). Ordinarily, the first of two courts with concurrent jurisdiction that acquires *633jurisdiction of a case “may dispose of the whole controversy.” 21 C.J.S. Courts § 188 (1990). Walters Sr. and Imperial have not supplied any reason why we should direct the trial court to depart from this priority principle. We should affirm the trial court’s determination of the disputes among the members and assignees of the group venture, regardless of the pending claims by outsiders against some, but less than all, of the group.
Because the majority reverses and directs that ownership of the Glovatsky minerals is to be determined in the Hunt lawsuit, the majority does not address the trial court’s denial of Imperial’s request for a jury trial. This assents to the relief sought by Imperial. Because I believe that it is wrong to let Walters Sr. and Imperial choose their own forum for settling this account with their joint venturers, I would affirm the trial court’s denial of a jury trial as well.
The trial court explained the reasons why it denied a jury trial:
Since this action has the attributes of a dissolution, quiet title action, action for specific performance, and equitable accounting, which are all equitable actions, there is no right to a trial by jury. Except for the cross-claims between Kaiser and Peterson, the remaining counterclaims and crossclaims also seek specific performance, accounting, and incidental and dependent on the outcome of the accounting, money damages. Money damages merely incidental or dependent upon the equitable action do not give a right to a trial by jury. Lithun v. Grand Forks Public School, Etc., 307 N.W.2d 545 (N.D.1981).
Walters Sr. and Imperial “presented no evidence supporting their counterclaims [for damages] against ... Kiker”, the trial court found. In my opinion, the trial court did not abuse its discretion in denying Imperial a jury trial.
Because I would affirm the trial court in all respects, I respectfully dissent.
VERNON R. PEDERSON, Surrogate Judge, concurs.