Woolley v. Shaw ( 1943 )

I concur in the majority opinion insofar as it recognizes that jurisdiction over a part of the property is vested in the district court of Pottawatomie county, but I am unable to agree with the conclusion announced insofar as it approves administration of the remainder of the property by a receiver appointed by the district court of Tulsa county. It is my opinion that the writ of prohibition should issue to prevent the district court of Tulsa county from exercising jurisdiction through its receiver over any of the leasehold estates situated in Pottawatomie county.

The jurisdiction of that court, insofar as it is being exercised in the ancillary receivership proceeding, should be relinquished and yielded to the district court of Pottawatomie county upon consideration of principles of comity.

While no effort will be made in this dissent to make a complete restatement of the facts, it is proper that some of the salient features of this litigation be again mentioned.

Time is an important element. Parties and issues involved in the litigation, as well as the location, and contemplated use of the properties involved, constitute other factors which claim a degree of consideration.

The proceeding in the district court of Tulsa county is herein attacked. It will be first summarized.

It was instituted on June 2, 1942. T.C. Iglehart is plaintiff therein. The petitioners herein, W.W. Woolley and Ed Highfill, together with W.P. Baze, Jr., and the Mid-Continent Petroleum Company, are defendants. In his petition the plaintiff alleges that he and the defendant Woolley entered into a mining partnership or joint adventure, having for its purpose the acquisition and development of oil and gas leases in an area in Pottawatomie county included within two adjacent sections of land, namely, sections 21 and 28 of township eight north (8N.) range four east (R.4E.) of the Indian Meridian.

The plaintiff also asserted that subsequent to the initial understanding the defendant Baze became interested in the enterprise by agreeing to furnish money to accomplish its purposes.

Iglehart further alleged that several leases aggregating 760 acres located in the area above referred to were acquired by Woolley in furtherance of the joint adventure, and that it was understood that he, the plaintiff, was to receive portions of the profits expected to be received from each of the leases, ranging from one-sixth to one-half in amount. He further asserted in substance that a dispute had developed over the respective interests and that a portion of his interests was being claimed by others interested in the joint adventure and also by Ed Highfill.

It was averred that production had been accomplished on some of the leases, and the Mid-Continent Petroleum Corporation was made a party defendant on the theory that it is accountable for funds received from production of the partnership property. Iglehart sought a judicial declaration of the existence of a partnership or joint adventure and a dissolution thereof, together with an accounting. Ancillary to this action, the appointment of a receiver was sought.

The Tulsa county action was transitory in nature and could be instituted and maintained in any county of the state where service could be had upon some one of the alleged partners or coadventurers. Myers v. Garland, 122 Okla. 71, 251 P. 34; Replogle v. Neff, 176 Okla. 333, 55 P.2d 436.

In this connection it should be observed that the defendant Woolley, although not a resident of Tulsa county, was served while temporarily there.

The ancillary remedy of receivership therein sought was appropriate even though the property sought to be placed under receivership was located outside the county (Replogle v. Neff, supra) unless, of course, for some reason the jurisdiction or authority to control the property rests or should rest in some other tribunal.

The petitioners take the position that an ancillary receivership in the Tulsa county district court action to take charge of the property situated in Pottawatomie county was improper because of the pendency of an action in Pottawatomie county by virtue of which the district court therein was the proper tribunal to exercise control thereof. They took the same position before the district court of Tulsa county and that court sustained it as to one of the several leases, but assumed control of the remainder of the leases in its own receiver appointed on July 21, 1942. The lease not included in the receivership was apparently excluded on the theory that it constituted the only property actually involved in the action then pending in the district court of Pottawatomie county. The question, then, is whether the litigation in Pottawatomie county was such as to require the district court of Tulsa county to refrain from assuming control.

Two actions are in the district court of Pottawatomie county. They may be differentiated generally by their respective docket numbers. One is No. 19013, the other, No. 19078. The properties are all included in the 760 acre total hereinbefore referred to.

Cause No. 19013 was instituted on May 12, 1942, by C.L. Jenkins, as plaintiff, against Woolley and Highfill to foreclose a lien on a portion of the properties. Later, July 21, 1942, cause No. 19078 was filed. Thus one of the Pottawatomie county actions was filed after the other, before the institution of the action in the district court of Tulsa county. The district court of Pottawatomie county had thus attained actual control of only a portion of the property situated in that county before the district court of Tulsa county undertook to assume jurisdiction.

The majority of my associates are of the view that the Tulsa county district court was free to assume jurisdiction over any and all property not actually previously under control of the other court.

In brief, the majority opinion approves a continuation of the receivership in Pottawatomie county and the jurisdiction in rem of the district court of that county over one of several leases situated there, but undertakes to preclude that court from exercising its jurisdiction over the remainder of such leases.

In so deciding the majority do not traverse any of the absolute rules of law which have been established in connection with the resolution of conflicts or potential conflicts between courts of concurrent jurisdiction. However, it overlooks comity as a factor to be taken into consideration. It fails to recognize that there are situations in which one court of concurrent jurisdiction should yield or relinquish its jurisdiction even though the existence of that jurisdiction is not subject to question.

A situation which requires the relinquishment of jurisdiction by the district court of Tulsa county upon consideration of comity is, in my judgment, presented in the case at bar. If this premise is correct, it follows that this court possesses the power and authority to require an adherence to the considerations which should govern the conduct of the Tulsa court, since we, as a court, are by constitutional mandate vested with authority and charged with the duty of exercising "a general superintending control" over that court as a part of our original jurisdiction. Article 7, sec. 2, Oklahoma State Constitution. Notice in this connection State ex rel. Freeling, Atty. Gen., v. Kight, 49 Okla. 202, 152 P. 362. Prohibition is an appropriate method of exercising this supervisory control. 14 Am. Jur. 468.

Collectively, the three pending actions involve ten oil and gas leases, all in Pottawatomie county and all in two adjoining sections of land in that county. The location of the property makes an administration thereof through a receiver appointed by the Pottawatomie county district court more practical and economical from a business standpoint, but it does not in itself constitute a reason for recognizing that tribunal as the proper seat of venue. It does, however, give an added force to purely legal reasons which support the venue and jurisdiction of that court.

Conscious of the practical considerations but deferring for the present the discussion thereof, I now direct attention to the purely legal principles which govern our decision and prescribe the limits of judicial discretion in the matter.

We have already noted that when the venue of an action is properly fixed in one of the district courts of this state, and a receivership is appropriate as an ancillary proceeding or remedy, the receiver may be authorized to possess, control, and manage property elsewhere within the state. Replogle v. Neff, supra; Myers v. Garland, supra; Schofield v. Melton,166 Okla. 64, 25 P.2d 279.

To this general rule authorizing the acquisition of control over property within the state, there is one unqualified exception of which cognizance has previously been taken by this court. That is, control of property cannot be assumed if another court of concurrent jurisdiction has already attained actual or constructive control. State ex rel. Ketchum v. District Court of Tulsa Co., 82 Okla. 54, 198 P. 480; Lanyon v. Braden, 48 Okla. 689, 150 P. 677; Schofield v. Melton, supra. If this were the only exception, the soundness of the conclusion announced in the majority opinion could not be questioned. However, the rule is otherwise qualified. There is another exception based upon well-reasoned authority. That is: When a court has obtained jurisdiction of a controversy in a cause therein pending, and the control of property is necessary to the exercise of that jurisdiction, another court of concurrent jurisdiction should not upon subsequent application attempt to seize the property. Comity requires that the latter court refuse to extend its jurisdiction to such property. Fundamentally, this includes the recognition that the appointment of a receiver is discretionary and not a substantive right, and that even when jurisdiction to make the appointment exists the exercise of a proper judicial discretion may require that the appointment be refused. Clark on Receivers (2d Ed.) vol. 1, pp. 371, 372; Tolbert v. Chisholm,163 Okla. 92, 21 P.2d 16; McDonald v. Bohling, 102 Okla. 243,228 P. 783.

The two exceptions were concisely stated by the federal court in Empire Trust Co. v. Brooke, 232 F. 641, 146 C.C.A. 567, at 570-571:

"From these cases it appears that the rule may be invoked in two classes of cases: First, in cases where there has been a disturbance of the actual or constructive possession of the res in one court by the officers of another court of concurrent jurisdiction. Property in the actual possession of a receiver, appointed by one court, can in no event be disturbed by the action of a court of concurrent jurisdiction. It is equally true that property in the constructive possession of a receiver of one court, who has been appointed and qualified, but has not reduced the property to his actual possession, cannot be taken from his custody or that of the court appointing him by the action of any other court of concurrent jurisdiction. The rule is without exception that the actual or constructive possession of one court through its receiver cannot be disturbed by another of concurrent jurisdiction. The second class of cases to be considered is that in which there is no interference with the possession, either actual or constructive, of one court by another court of concurrent jurisdiction, but only an interference with the jurisdiction of one court by another of concurrent jurisdiction by the taking possession by the latter of property, not in the possession actual or constructive of the former, but which may become necessary to the exercise of its jurisdiction in the progress of the cause pending before it. . . ."

Subsequently in the opinion it is pointed out that the basis of the exception is the infringement upon jurisdiction as distinguished from the interference with possession. It is therefore essential as a basis for the application of the rule that an identity of issues exist or at least such a similarity as to render probable a potential conflict of jurisdiction, and of course such conflict must have reference or potential reference to the same property. That is, it should be apparent that the jurisdiction of the first court may not be fully and properly exercised if the second court interferes and that the seizure of control of the property will constitute such an interference.

It is apparent that the application of these principles to any given case requires a careful analysis of the cause first instituted for the purpose of determining the probable extent of the jurisdiction to be exercised and the issues to be determined. (Notice in this connection Ingram v. Jones,47 F.2d 135, as well as Empire Trust Co. v., Brooks, supra.)

Thus the proceeding and issues in the cause first filed in Pottawatomie county, insofar as they antedate the proceedings in Tulsa county, demand careful consideration in this proceeding.

It has been noted that the Tulsa county case was instituted on the 2d day of June, 1942. In that action T.C. Iglehart is plaintiff and W.W. Woolley, W.P. Baze, Jr., Ed Highfill, and the Mid-Continent Petroleum Company are defendants. The plaintiff therein is asserting the ownership of a fractional interest in the several leaseholds based upon the asserted existence of an alleged partnership or joint adventure in which he claims to have been one of the partners or joint adventurers. He seeks a declaration of the partnership or joint adventure and dissolution thereof and the appointment of a receiver.

The first action instituted in Pottawatomie county antedated the Tulsa county action some 20 days. It was commenced by C.L. Jenkins, doing business as the Jenkins Supply Company, as plaintiff, against W.W. Woolley and Ed Highfill, as defendants. The plaintiff therein sought the foreclosure of materialmen's liens alleged to exist on four of the leasehold estates mentioned in the majority opinion. He asserted the existence of such liens to secure an alleged indebtedness of $4,335.77. He also sought the appointment of a receiver.

On May 15th one Adam Butler intervened in the action and filed a cross-petition in which he averred ownership of an undivided interest in a portion of the property. He also sought the appointment of a receiver.

In their answer and cross-petition Wooley and Highfill assert that Butler's ownership is in reality nominal only and is held in trust by him for one John Catlett, who was thereafter, on May 20th, made a party defendant. On May 21st Jenkins dismissed the action insofar as his petition was concerned.

It is at once apparent from the pleadings filed that, while the Pottawatomie county action at its inception was instituted for the purpose of foreclosing a materialman's lien, it soon took on the added phase of an action to determine the ownership of fractional interests in the leased property upon which the liens had been claimed and new issues appropriate for the determination of such interests became an added feature in the action. After the dismissal of the petition to foreclose the lien (May 23rd) the major aspect of the case presented a controversy between claimants of fractional interests in the property.

The dispute did not nominally extend to all of the leaseholds later described in the Tulsa county action, but that was because Iglehart had not yet made any formal assertion of a claim.

It is apparent from a review of the entire record that the additional property later brought in dispute by Iglehart in the Tulsa county action was being operated and developed in conjunction with the property previously placed in litigation in the Pottawatomie county action. It was located in two adjacent sections of land and manifestly acquired on the theory that it was in the same producing area.

Iglehart himself, the plaintiff in the Tulsa county action, is asserting a related scheme of development and fractional ownership by himself, Woolley, and Baze which extends to all of the properties.

In Replogle v. Neff, supra, we said in paragraph 4 of the syllabus:

"Where one member of a partnership or joint adventure sues other alleged members thereof, it is competent for one of the defendants sued to assert by cross-petition against another defendant that the property held by such other defendant, and alleged by plaintiff to be a part of the assets of the main partnership, is really also assets of a smaller partnership or joint adventure, and to ask for a determination of his rights and an accounting as against his co-defendant and other parties to the action, for this is a necessary incident to the main action started by plaintiff, and equity will give complete relief to avoid multiplicity of suits."

If the jurisdiction of equity invoked for the purpose of determining a dispute between asserted partners comprehends a determination of the rights of a subpartnership on the theory that equity affords an opportunity for complete relief, it is apparent that for the same reason, when the aid of the court is invoked to determine the lesser relationship, its jurisdiction comprehends extension to the greater or more extended partnership if complete relief can be afforded by such comprehensive jurisdiction.

Thus the property is located in a single area in a single county. It is intended to be progressively developed as a single enterprise (Iglehart describes it as a joint adventure, which indicates singleness of enterprise; 30 Am. Jur. 679). In Pottawatomie county, where it is situated, litigation is already pending involving issues which constituted a controversy for the purpose of determining who was the owner of portions of the property accumulated in furtherance of the single enterprise. These issues in the progress of litigation could reasonably be expected to extend to the remainder of the property involved in the enterprise.

We therefore have before us a situation where there is sufficient identity of the issues, sufficient identity of the subject matter, and sufficient probability that the jurisdiction of the entire res would be essential to an exercise of the previously acquired jurisdiction of the district court of Pottawatomie county to require that the Tulsa district court of Tulsa county refuse as a matter of comity to appoint a receiver to take charge of the property or any portion thereof.

There is another rule applicable to receiverships which by analogy supports the position of the petitioners and demonstrates that courts look with favor upon unity in supervision of property through receivership.

It is the general holding that where a receiver has been appointed in connection with one pending action and another suit is filed involving the same property or the same and other property, in which latter case a receivership is also authorized and sought by the litigants, the proper practice is to enlarge the existing receivership. Lloyd v. Chesapeake, O. S.W. R. R. Co., 65 F. 351; Wabash, St. L. P. Ry. Co. v. Central Trust Co., 22 F. 272; State of Florida et al. v. Jacksonville, Pensacola and Mobile Railroad Co. et al., 15 Fla. 201; see, also, Bailey Collins v. Ryan Cotton Oil Mill Co.,119 Okla. 57, 248 P. 321.

This court has already recognized that a receivership over a part of defendant's property may be extended to other property at the instance of a new party. Bailey Collins v. Ryan Cotton Oil Mill Co., supra.

A distinction between the case at bar and the cited cases, of course, exists in the fact that one of the suits here involved is in a different court than the other two. The courts are also in different judicial subdivisions of the state, but both of the courts in receivership actions have jurisdiction coextensive with the territorial limits of the state. This difference should not be of vital importance except as to the legal method or mechanics of accomplishing the desired result.

Our power of superintending control is comparable to the power exercised by a court with respect to two different cases involving receivership pending before it. By its order of consolidation or other appropriate order it brings the two together and causes an expansion of the receivership in one to provide a harmonious administration of the estate. This court possesses the discretionary power to accomplish a similar result when actions are pending before two courts.

Reasoning, then, from the cases cited, supra, if the appropriate disposition, when the cases are in the same court, is to cause an expansion of the receivership in one to cover the requirements of the other, then the same result is proper when the cases are in different courts unless there is some reason that the parties litigant in one court cannot apply to the other for relief. No such reason is here shown to exist.

The remedy of receivership is subject to many abuses, and the rules of law with reference thereto should be applied in such a manner as to minimize the abuses.

Frequently, transitory actions are filed and receivership proceedings are instituted in connection therewith for the principal purpose of preventing a court more conveniently situated from obtaining jurisdiction. Such litigation is calculated to serve the selfish interest of a minority of the interested parties.

Since the rule of receivership is that the court first acquiring jurisdiction retains it, situations frequently arise where the convenience of one of many litigants prevails to the detriment and inconvenience of the others. Since the reward in such cases is to the speedy rather than the fair, inequitable situations with reference to venue must frequently be countenanced by the courts. But the possibility of unfair tactics should not be enhanced by expanding the opportunities through precedent which allows the greedy to prevail over litigants who are both swift and fair in the matter of choosing a court.

That the precedent herein established will have an unwholesome effect is well illustrated by the situation in the case at bar.

There is still another consideration, which although incidentally covered in a general way by the previous portions of this opinion, is worthy of special note. Persons claiming liens are asserting interests in the properties involved as, for instance, Bryan Poling and N.L. Heintzelman, interveners before the district court of Pottawatomie county. The normal venue fixed by law for the foreclosure of such liens is the district court of Pottawatomie county. A recognition of the continuation of the receivership in Tulsa county forbodes added and unnecessary complications and confusion in the foreclosure of the liens or the determination of the existence thereof; complications which might and could well be avoided by an appropriate application of the rules of law previously mentioned.

I therefore entertain the view that the Tulsa court should yield to the district court of Pottawatomie county on principles of comity, and that the petitioners should prevail.

It is my view that the latter court should not only retain jurisdiction of that portion of the property which the majority opinion recognizes to be vested there, but that its jurisdiction should be recognized to extend to the remainder of the property insofar as the administration and control thereof through a receiver is appropriate.

For the reasons stated, I respectfully dissent in part.

I am authorized to state that Justices WELCH and HURST concur with the views herein expressed.