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SECURITY TRUST CO. v. WOODWARD

May 20, 1947

SECURITY TRUST CO. OF ROCHESTER, NEW YORK,
v.
WOODWARD et al.



The opinion of the court was delivered by: BRIGHT

On November 27, 1946, plaintiff filed its complaint under section 41(26) of the Judicial Code, 28 U.S.C.A. in which it demands judgment, (1) that each defendant be restrained from instituting action against it for the recovery of a portion of the trust income payable by plaintiff as trustee under a voluntary trust to it by the defendant Orator Frank Woodward on February 9, 1928; and (2) that defendants interplead and settle between themselves their rights to such income, and plaintiff be discharged from liability except to the successful defendant.

Simultaneously plaintiff obtained an order for the service of the summons and complaint upon the defendants, directing that they interplead, enjoining them from instituting any suit concerning the property, and directing a hearing (adjourned to this time by the order mentioned in the next paragraph) for the purpose of making the injunction permanent and discharging plaintiff from liability.

 Thereupon the defendant Mary Trask Woodward obtained an order to show cause why, under Rule 12(b), Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c, the complaint should not be dismissed and the injunction dissolved on the grounds that no doubt exists regarding the duty of plaintiff to continue paying to her, as alimony, certain amounts of such income, and that this action is wanting in equity and good faith.

 Section 41(26) of the Judicial Code, so far as material, provides that this court shall have original jurisdiction 'Of suits in equity begun by bills of interpleader or bills in the nature of bills of interpleader duly verified, filed by any * * * corporation * * * having in his or its custody or possession money or property of the value of $ 500 or more, * * * or being under any obligation * * * to the amount of $ 5000 or more, if -- (i) Two or more adverse claimants, citizens of different States, are claiming to be entitled to such money * * * arising by virtue of any * * * instrument, or arising by virtue of any such obligation; and (ii) The complainant (a) has deposited such money * * * into the registry of the court, there to abide the judgment of the court; * * *

 (b) Such a suit may be brought in the district court of the district in which one or more of such claimants resides or reside. * * *

 (d) Said court shall hear and determine the cause and shall discharge the complainant from further liability; and shall make the injunction permanent and enter all such other orders and decrees as may be necessary or convenient to carry out and enforce the same. * * * '

 Rule 22(l), Federal Rules of Civil Procedure, permits the joinder as of the complaint, and, as a crossclaim against his codefendant, alleges the Nevada plaintiff is or may be exposed to double or multiple liability. * * * (2) The remedy herein provided is in addition to and in no way supersedes or limits the remedy provided by Section 24(26) of the Judicial Code, as amended, U.S.C., Title 28, Sec. 41(26). Actions under that section shall be conducted in accordance with these rules.'

 The essentials required by section 41(26) are: (1) that the stakeholder shall be subjected to conflicting claims, by (2) two or more claimants, citizens of different states, (3) to one or more of whom he is under obligation for $ 500 or more, and (4) he shall have deposited the amount claimed in the registry of the court to abide final judgment. Those facts being established the stakeholder may maintain interpleader in a District Court of a district in which one or more of the claimants reside.

 The complaint is concise and simple. It alleges that the action is brought under Sec. 41(26) of 28 U.S.C.A.; that defendant Orator Frank Woodward, is a citizen of Nevada, and defendant Mary Trask Woodward, of New York; and that the amount in controversy exceeds $ 500. It further alleges plaintiff's trusteeship under the trust instrument mentioned, that Orator Frank Woodward is the life beneficiary designated therein, and that it holds certain funds by reason thereof. It states that on September 25, 1941, a judgment of separation was entered in the New York Supreme Court in an action in which Mary Trask Woodward was plaintiff against Orator Frank Woodward, as defendant, by which plaintiff was directed to pay to Mrs. Woodward $ 3,500 monthly for her support and $ 500 monthly for the support and education of Orator Ernest Woodward, the minor child of the parties. Thereafter on January 20, 1942, Mr. Woodward procured a decree of absolute divorce against Mrs. Woodward in the Second Judicial District Court of Nevada. And later, and on April 4, 1946, in an action brought by Mrs. Woodward against Mr. Woodward and another, in the Fifteenth Judicial Court in Palm Beach County, Florida, the Nevada decree of absolute divorce was adjudged valid and binding upon the parties and upon the Forida Court under the full faith and credit clause of the United States Constitution. Plaintiff has since been notified in writing by Mr. Woodward not to make any payment to Mrs. Woodward from the trust indenture or income thereof. The New York decree of separation in favor of Mrs. Woodward directs it to do so. Plaintiff claims no beneficial interest in the income from the trust, and is a mere stakeholder. It alleges it does not know whether the Nevada decree has terminated the marriage between the defendants, and nullified and terminated the New York judgment; and cannot pay further sums to Mrs. Woodward without danger of being accountable to Mr. Woodward therefor. It further states it has paid and will pay into the registry of this court the sums due or hereafter to become due as specified in the judgment of this court.

 There is thus alleged all of the requisites specified in section 41(26) quoted; and it would seem that on the face of the complaint and affidavit attached to plaintiff's temporary injunction order, first mentioned, plaintiff is entitled to the relief of interpleader sought; unless the motion of Mrs. Woodward presents an obstacle.

 Her motion, as appears from the order to show cause, is under Rule 12(b), Federal Rules of Civil Procedure. Counsel's affidavit attached to that order states that, for reasons stated, the complaint is without reasonable foundation in fact or law, and wanting in equity and good faith. His replying affidavit urges that the undisputed facts show an absence of essential elements of interpleader, and by reason of that this court should not, and may not, entertain jurisdiction, and 'that such facts show that the complaint fails to state a claim upon which relief can be granted.' He now urges that the court consider the motion as having been made under Rule 56(b) for summary judgment as against plaintiff and the husband.

 It is plain that the moving defendant cannot succeed under Rule 12(b). She is there permitted to make six certain defenses by motion -- (1) lack of jurisdiction over the subject matter, (2) over the person, (3) improper venue, (4) insufficiency of process, (5) insufficiency of service of process, and (6) failure to state a claim.

 A comparison of the complaint with section 41(26) shows a full compliance with allegations of jurisdiction and a statement of the other facts required for interpleader, all of which are not disputed, and are substantiated by the moving affidavit.

 Under Rule 56(b) a party against whom a claim or cross claim is asserted may at any time move for a summary judgment in his or her favor, and, under subdivision (c) be entitled to it if ...


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