Menasha Wooden Ware Co. v. Southern Oregon Co.

MORROW, Circuit Judge (after stating the facts as above)/ 1. There is a preliminary question of jurisdiction of the subject-matter of this action in the District Court raised by the defendant Flanagan & Bennett Bank. The suit in which the money in controversy was deposited with the clerk of the court was brought by the Southern Oregon Company, a corporation organized and existing under and by virtue of the laws of the state of Oregon. The other parties to that action were citizens of the state of Oregon. The Southern Oregon Company could not bring that suit in a federal court in Oregon because of a lack of diverse citizenship in the parties to the suit.. The plaintiff in this case is a corporation organized and existing under the laws of the state of Wisconsin, and invokes the jurisdiction of the federal court on the ground of diverse citizenship. The objection to the jurisdiction of the District Court was raised by general demurrer to the complaint, and is based upon the first paragraph of section 24 of the Judicial Code (Act of March 3, 1911, 36 Slat. 1091), which provides, among other things, that: “No District Court shall have cognizance of any suit (except upon foreign bills of exchange) to recover upon any promissory note or other chose in action in favor of any assignee, or of any subsequent holder if such instrument 'oo payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover upon said note or other i irose in action if no assignment had been made.” [1] The obvious answer to this objection of jurisdiction is that, this is not a suit to recover upon any promissory note or other chose in action, but is for money had and received. The order of the court under which the money in controversy was deposited with the clerk of the court provided: "That upon the payment to the clerk of this court by the plaintiff, the amount of money shown by the tax rolls of Coos county, Oregon, to be due from the plaintiff as taxes upon the lands assessed to the plaintiff as owners, the defendant W. \V. Gage as tax collector for said county shall also deliver to the clerk of this court proper tax receipts for such taxes, and the .said clerk shall hold and retain said money and tax receipts until the final determination of the case of the United States of America v. Southern Oregon Company.” The Southern Oregon Company, the plaintiff in that case, assigned its interest in that money to the plaintiff in this case. The recital in the complaint in this case that the “Southern Oregon Company, in compliance with the terms of said order of court, drew its check payable to the order of James Watson, who was then county clerk, for the sum of $24,752.62, which check was duly certified by said Flanagan & Bennett Bank and delivered to the said James Watson, then county clerk/’ is simply a statement of the method adopted by the Southern Oregon Company for depositing the money with the clerk of the court; but it is wholly immaterial how the money was deposited. It is sufficient that the money was deposited and is held by the clerk of the court, or by the county treasurer subject to the order of the court. [2] There is a further answer to this objection, that the check mentioned in the complaint and another for $3,863.26 of the same character do not account for all the money deposited with the clerk. [88] There remains $35,000 furnished by this plaintiff to the Southern Oregon Company in making up the total money deposited, amounting to $63,615.88. The complaint therefore states a cause of action for the $35,000, to which the objection does not apply, and, as the demurrer is general, it was properly overruled. But we place our decision upon the ground that the suit is not- open to the objection that the subject-matter is within the prohibition of section 24 of the Judicial Code. [3] 2. It appears that the tax collector of Coos county did not deliver to the clerk of the court the tax receipts referred to in the order of the court, to be held by the clerk, with the corresponding amount of money deposited by the plaintiff, until the final determination of the case in the federal court. It is contended by the plaintiff that the order of the court was made conditional upon the tax collector depositing these tax receipts with the clerk, and, until that was done,, it was merely an offer of the Southern Oregon Company to deposit the money in court, provided the tax collector deposited the tax receipts; and that the offer of the plaintiff could be withdrawn at any time until acceptance, and, as it was never accepted, the money was. never in custodia legis. The answer to this contention is that the order was not conditional,, and that the money was in fact deposited with the clerk of the court, and was treated by the court as a deposit pursuant to the order of the court, and it was upon this deposit supporting plaintiff’s petition that the court issued its temporary order and injunction against the tax collector, and it was upon the security of this deposit that the-temporary injunction was continued in effect for a year. The failure of the tax collector to deposit the tax receipts did not prejudice the-, plaintiff in any manner, or prevent it from having the temporary injunction and the case finally determined upon the merits. It is too late-now, after the deposit has served its purpose, to claim that the orden was not conditional, and that the money was not deposited with-the clerk'pursuant to the order of the court. [4] 3. The next question to be considered is the defense that the money deposited with the clerk of the state circuit court in the suit of the Southern Oregon Company against the tax collector of Coos county, Or., is in custodia legis. The plaintiff contends that, when that suit was dismissed, the money ceased to be in‘custodia legis and became subject to process in this suit. The objection which the plaintiff in that case had to the payment of the taxes was that the United States government claimed that there had been a breach of a condition of the grant under which plaintiff claimed title to the lands and had instituted a suit to have the lands forfeited for such breach, and it was alleged that if the government was successful in its suit the plaintiff would not only lose the lands but the taxes it might páy. To avoid this alleged hardship, the plaintiff deposited the amount of the taxes with the clerk of the court upon condition that, if upon the final determination of the government’s suit it should be held that the lands were the property of the United States, then the money so deposited with the clerk should be returned [89] to the plaintiff; but, if it should be held that the lands did not belong to the United States, then the money so deposited with the clerk should be paid over to defendant, “unless it shall meanwhile otherwise be ordered by this court.” The defendant demurred to the complaint; the court sustained the •demurrer; and, the plaintiff electing to stand on the complaint, the court dismissed the suit. On appeal to the Supreme Court of the state, the judgment of the circuit court was affirmed (Southern Oregon Co. v. Gage, 76 Or. 427, 147 Pac. 1199, 149 Pac. 472).; the Supreme Court holding that, the plaintiff having the record title to the lands and being in possession of them claiming to be the owner, the assessor was required by law to list them for taxation as the property of the plaintiff, and, until a forfeiture was judicially declared, the plaintiff -was in fact the holder of the legal title to- the lands. It was said, further, that if the United States should succeed in having a forfeiture declared, one of the results would be that the lands would be restored to the public domain and would thereafter be nontaxable; hut that, it was said, would be a mere incident of the suit and not the object of it. The money deposited with the clerk of the court by the plaintiff was to abide the determination of the suit brought by the United States to forfeit the lands, and was therefore money placed in custodia legis; and, as the case brought by the United States does not appear to have been finally determined, the money remains in custodia legis in accordance with the terms under which the deposit was made, unless we accept the contention of the plaintiff that the dismissal of the suit in which the deposit was made has ended the litigation. But as no order has been made by the court in that suit disposing of the moneys deposited with the clerk, and no application appears to have been made by the plaintiff for such an order, we do not see how we can hold that the litigation is ended. It still remains for the court to hold the money subject to the terms under which the deposit was made, namely, to abide the final determination of the government’s suit, “unless it shall meanwhile otherwise be ordered by this court”; that is to say, unless in the meantime the proceedings in the suit in which the deposit was made should require some other order by the court respecting its disposition. It seems to us that, the suit having been dismissed, this contingency has arrived and the matter should be submitted to that court for an appropriate order. “Tlie court in which a fund has been deposited has power to order distribution of it; and when jurisdiction is once obtained it is not lost either by the abatement of the suit, or by the dismissal of the bill. * * * The court in which the fund is deposited has exclusive jurisdiction of the question of the right to the moneys, and all claims against the "deposit must be asserted there.” 13 Oye. 1038. This conclusion disposes of the controlling questions in the case and determines that the court below was right in dismissing the complaint upon the issues presented. The judgment is affirmed.