Respondents Brief — Cory v. White
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NO. 80—1556
_—
IN THE
SUPREME COURT OF THE UNITED ST
OCTOBER TERM, 1981
CONTROLLER OF pee a OF CALIFORNIA
COUNTY TREASURER OF THE COUNTY OF
LOS ANGELES,
Petitioners,
Vv.
ATTORNEY GENERAL OF THE STATE OF
TEXAS, et ai.,
Respondents.
On Writ of Certiorari to the
United States Court of Appeals for the Fifth Circuit
BRIEF FOR RESPONDENTS WHITE
AND BULLOCK
RICK HARRISON* MARK WHITE
PATTON G. LOCHRIDGE Attorney General of Texas
McGINNIS, LOCHRIDGE &
KILGORE GILBERT J. BERNAL, Jr.
900 gy Avenue Assistant At General
Austin, Texas 78701 Chief, Taxation Division
(512) 476-6982 Post Office Box 12548
| Capitol Station
DAVID DEADERICK* Austin, Texas 78711
GIBBINS, BURROW, (512) 475-4721
WASH & BRATTON
f Post Office Box 1452
| Austin, Texas 78767
(512) 474-2441
; Attorneys for Respondents
* Counsel of Record White and Bulloe
TABLE OF CONTENTS
Page
IES 3 ck ec orb ueaead bess ae eReh ba SRA eek 1
ST er IE is sonic cece banbdaessnap beh eoswee er
Neh uC LUN ee ceteyeis bens ebeb ae eaeehen 7
Ee eT Tee Tee Ee eT eee ee TT Te eee 7
|. The Resolution of the Issues Presented Hinges on
the Eleventh Amendment Question ..................... .. 10
A. If This Action Is Not Barred by the Eleventh
Amendment, Interpleader Jurisdiction Is
NC eG setasecadcaeoaetekukeeceseunsesss 12
1. 280U.S.C. §1251(a) Is Irrelevant to
Jurisdiction Under 28 U.S.C. §1335 ..........., 13
2. The Diversity Requirement of 28 U.S.C.
tl cehassnck bikes oneeeorsns a0 14
B. If the Eleventh Amendment Bars This Action,
State Courts Should Resolve This Controversy
Over State Inheritance Taxes ............. 00000005, 18
1. Original Jurisdiction In This Court Is Not
RF RE ar ry re ra 18
2. The Texas Probate Court Has Jurisdiction
Over All Parties Necessary to This
DIS TAUCCR CEM SiG Yeoh ahs aaa kane eet 22
ll. Venue of This Action is Now Properly Laid ................. 24
A. The Lower Courts Correctly Denied Petitioners’
EE css tC Cbdy savewnese cee vices ee 25
B. The Lower Courts Correctly Denied Petitioners’
Motion to Transfer ThisCase ................00005, 34
EE ciel 5a DhedGh steeamr eee ries Fees ARRAS TE hee wes 45
TABLE OF AUTHORITIES
Cases Pages
Aerojet-General Corp. v. Askew, 511 F.2d 710
(5th Cir.), cert. denied, 423 U.S. 908 (1975) 0... cn 27
Allegaert v. Chemical Bank, 432 F.Supp. 685
ED cn Us CSCS A CTs ehh aie eae Ne okee enw i eeee 35
Allen v. Flournoy, 26 Cal. App. 3d 774,
EY ova ecse Na cv nek ¥easeens 30,31
Altman v. Deramus, 342 F.Supp. 72 (S.D.N.Y. 1972) .......... 43
Arizona v. New Mexico, 425 U.S. 794(1976) .............. 21-23
Atlantic Ins. Co. v. Fulfs, 417 S.W.2d 302
(Tex.Civ.App.—Fort Worth 1967,
CS weal cers Teles sehen cracceventsaeseeke 26
Blackstone v. Miller, 188 U.S. 189(1903) «6.0... cca 19
Boeing Airplane Co. v. Perry, 322 F.2d 589
(10th Cir. 1963), cert. denied, 375 U.S. 984(1964) ........... 29
Builders & Developers Corp. v. Manassas
Iron & Steel Co., 208 F.Supp. 485 (D.Md. 1962) .............. 15
Bush v. Carpenter Brothers, Inc., 447 F.2d 707
i Pee rates Ys eed CNet ena heave Kee eee 32
California v. Texas, No. 88, Original .................. 21,23,39
California v. Texas, order no. A-433, 434 U.S. 993 (1977) ........ l
California v. Texas, 437 U.S 601 (1978) ....... 1,6,8,11,12,18,19,20
Carnes v. Meador, 533 S.W.2d 365
(Tex.Civ.App.—Dallas 1975, writ ref'dn.r.e.) ............5. 26
Chicago, R.I. & P.Ry. v. Schendel, 270 U.S. 611 (1926) ...... 26,29
Chicago, R.I. & P.Ry. v. Igoe, 212 F.2d 378
(7th Cir. 1954), cert. denied, 350 U.S. 822(1955) ............ 41
Childress v. Emory, 21 U.S. (8 Wheat.) 642(1823) ............ 29
Cohn v. Cohn, 20 Cal. 2d 65, 123 P.2d 833 (1942) .............. 33
Complete Auto Transit, Inc. v. Brady, 430 U.S, 274(1977) ..... 19
-iii-
Pages
Commonwealth Edison Co. v. Montana,
eis oe fF eee 18
Connally v. Georgia, 429 U.S. 245 (1977) 26.6 39,40
Cory v. Walsh, 72 Cal. App. 3d 895,
ote eg Pree er eee 33
Curry v. McCanless, 307 U.S. 357 (1939) ©... 19
Denver & Rio Grande Western R.R. v. Brotherhood
of R.R. Trainmen, 387 U.S. 556 (1967) ©. 06 e 9,42
Bugan v. Gate, STs UE. GE GAG eve ceebvcev esses s0eceemen 40
Edelman v. Jordan, 415 U.S. 651 (1974) ©. 0c 11,12
Estate of Johnson v. Bellville Hospital,
PARE 8 Peeerrierery .. 29
Expert Electric, Inc. v. Levine, 554 F.2d 1227 (2d Cir.),
cort, dented, 434 UB. BOB (IGTT) own ccc vcccssevvcseseysn 27
Ex parte Young, 209 U.S. 123(1908) ............ ccc aes 12,14
Farmers Loan & Trust Co. v. Minnesota,
po SPE er re oe 19
Federated Dept. Stores, Inc. v. Moitie, __U.S._,
og te |) rere a rr 35
First Nat'l Bank v. Maine, 284 U.S. 312 (1932) ............4.. 19
Flintkote Co. v. Allis-Chalmers Corp.,
pA ee Tf 8st me , BOPP OR Eee ee 42
Florida Dept. of Health & Rehabilitative Services v.
Florida Nursing Home Ass'n, __U.S.__, 101 S.Ct. 2008 (1981) . 11
Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459 (1945) ....... 12
Glover v. Landes, 530 S.W.2d 910 (Tex.Civ.App.—
Houston [1st] 1975, writ ref'dm.r.e.) 0.6 26
Graves v. Elliott, 307 U.S. 383 (1939) «0.00... eee 19
Great Northern Life Ins. Co. v. Read, 322 U.S. 47 (1944) ....... 12
Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947)
Harry Rich Corp. v. Curtiss-Wright Corp.,
308 F.Supp 1114 (S.D.N.Y. 1969)
Heckman v. United States, 224 U.S.413 (1912)
Hill v. Rolleri, 615 F.2d 886 (9th Cir. 1980)
Hoffman v. Blaski, 363 U.S. 335 (1960)
Humane Society of Austin & Travis County v.
Austin Nat'l Bank, 531 S.W.2d 574 (Tex. 1975)
Illinois v. City of Milwaukee, 406 U.S. 91 (1972) .
In re Estate of Holt, 61 Cal. App. 464, 215 P. 124 (1923)
In re Estate of Rossi, 169 Cal. 148, 146 P. 430 (1915)
In re Estate of Turino, 8 Cal. eee 3d 642,
87 Cal. Rptr. 581 (1970) .
in re Pearson's Estate, 90 Cal. APP. 2d 436,
203 P.2d 52(1949) ......... af
In re Trowbridge's Estate, 266 N.Y. 283,
194 N.E. 756(1935) ........ eee
Jett v. Zink, 362 F.2d 723 (5th Cir. 1966)
Johnson v. Alma Investment Co., 47 Cal. eas 3d 155,
120 Cal. Rptr. 503 (1975) .
Jones v. Walt Disney World Co., 409 F. Sup. 526
fo re .
Jordan v. Weaver, 472 F.2d 985 (1973) .
Kelso v. Sargeant, 11 Cal. App. 2d 170, 54 P.2d 26 (1936)
Kennecott Copper Corp. v. State Tax Comm'n,
S337 U.S. GTS(1O6G) .. 1.020. pee en
Kerrison v. Stewart, 93 U.S. 155 (1876)
Kersh Lake Drainage District v. Johnson,
309 U.S. 485 (1940) .
Pages
10,16,42
35
26-28
17
36
. 26
21
-23
33
33
. 26
33
23
32
. 30
38
il
. 33
om
. 27
26
Pages
Kisko v. Penn Central Transportation Co.,
408 F.Supp. 984 (M.D. Penn. 1976) ................000 005. 36
Leith v. The Rocroi, 203 F.Supp. 48 (S.D. Tex. 1962) .......... 35
Lennefelt v. Cranston, 231 Cal. App. 2d 171,
SE EE Sere ccc tcch eee bereaved eceneces 31
Leroy v. Great Western United Corp., 433 U.S. 173 (1979) .... 9,16
Los Angeles Memorial Coliseum Comm'n v.
National Football League, 89 F.R.D. 497
2 SX FR errors re rie 35,40,41,43
Lummis v. White, 491 F.Supp. 5 (W.D. Tex. 1979) ............. 2
Lummis v. White, 629 F.2d 397 (5th Cir. 1980) ........... 2,13,15
McCrocklin v. Fowler, 285 F.Supp. 41 (E.D. Wis. 1968),
aff'd, 411 F.2d 660 (7th Cir. 19060)... 0... e eee ee 29
McElroy v. Security Nat'l Bank, 215 F.Supp. 775
DE cehscoscceeeevaRver ssa inbeeekeu scene mesat 29
Markham v. Allen, 326 U.S. 490 (1946) «0.0.0... ee eee 18
Maryland v. Louisiana, __U.S.__, 101 S.Ct. 2114(1981) ..... 20-23
Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183(1931) .... 29,32
Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) ............ 19
Milwaukee County v. White Co., 296 U.S. 268 (1935) .......... 19
Mobil Oil Corp. v. W.R. Grace & Co.,
Se BOP EN PU UWED 6 kbc tock eestestsvecerencs 43
Mollan v. Torrance, 22 U.S. (9 Wheat.) 537 (1824) ............. 17
Montana v. United States, 440 U.S. 147 (1979) ..... 0... 0.065. 27
Navarro Savings Ass'n v. Lee, 446 U.S. 458 (1980) ............ 31
Northern Acceptance Trust 1065 v. Gray,
423 F.2d 653 (9th Cir.), cert. denied, 398 U.S. 939(1970) ...... 43
Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493 (1971) ....... 20
Olberding v. Illinois Central R.R., 346 U.S. 338 (1953) ......... 35
-Vi-
Pages
Pacific Coast Agricultural Export Ass'n v. Sunkist
Growers, Inc., 526 F.2d 1196 (9th Cir. 1975),
cert. denied, 425 U.S. 959 (1976) ...............0.0005. .. 29
Pan Am. Fire & Cas. Co. v. Revere,
oe ES errren eee 15
Patterson v. Louisville & Nashville R.R.,
eS 8 eee ree 42
Pollard v. Cockrell, 578 F.2d 1002 (5th Cir. 1978) ............. 28
Postal Telegraph Cable Co. v. Alabama,
I Soha a arsine yd bieté'e ba i vk ache 6c 14
Rosewell v. LaSalle Nat'l Bank, __U.S.__,
ee ae I wie Wa bd een tie Fees 18
Saminsky v. Occidental Petroleum Corp.,
Pe Pe GUNS Be BUUUD vec k thse tere esenenns 43
Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573(1974) ........ 28
Shaw v. Railroad Co., 100 U.S. 605 (1879) ..... 0.00. 27
Shields v. Barrow, 58 U.S. (27 How.) 130(1854) .............. 27
Sinclair Oil Corp. v. Union Oil Co. of California,
SOS Fe, FES eee Be ROOD ce etc ce cence svncens 38
Smith v. Sperling, 354 U.S. 91 (1957)... 0.6... eee 17
Southwest Airlines Co. v. Texas International
Airlines, Inc., 546 F.2d 84 (5th Cir.),
eo LG es eee eeSUTETieTr arene 27,28
State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (1967) ..... 15
State Tax Comm'n of Utah v. Aldrich, 316 U.S. 174 (1942) ..... 19
Sutton v. English, 246 U.S. 199(1918).. 6.0.6. 18
Texas v. Florida, 306 U.S. 398 (1939) ........... 9,18,20,21,24,39
Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145
CRN Ay me sn A eee 38
Toler v. Travis County Child Welfare Unit,
520 S.W.2d 834 (Tex.Civ.App.—Austin 1975, nowrit) ....... 22
Tumey v. Ohio, 273 U.S. 510 (1927)... 66. eee 39,40
-vii-
Pages
United States v. Lamb, 575 F.2d 1310 (10th Cir.),
eure: Gente, GIOVE. GEG GTE nw vee aes seuvecones vs 41
United States v. Haldeman, 559 F.2d 31 (D.C. Cir. 1976),
ee ey, eee 41
United States v. Raddatz, 447 U.S. 667 (1980) ............... 20
United States v. Sorcey, 515 F.2d 899 (7th Cir.),
COPE, GON, GT UB. TOO TIOED on ccc c eee eeseeeesanss 41
Virginia Electric & Power Co. v. Sun Shipbuilding
& Dry Dock Co., 389 F.Supp. 568 (E.D. Va. 1975) ........... 40
Westinghouse Electric Corp. v. County of Los Angeles,
42 Cal. App. 3d 32, 116 Cal. Rptr. 742 (1974) ............... 30
Wigand v. Flo-Tek Inc., 609 F.2d 1028 (2d Cir. 1980) .......... 17
Wisconsin v. Pelican Ins. Co., 127 U.S. 265 (1888) ............ 39
Worcester County Trust Co. v. Riley, 302 U.S. 292 (1937) 6,11,12,19
York v. State, 73 Tex. 651, 11 S.W. 869(1889) ............... 22
CONSTITUTIONAL PROVISIONS, STATUTES AND RULES
ed sic.bwcGe baths bb's 6 een bane hee 8,9
U.S. Const.amend. XI ............. .., 2,6,8-14,18,24,38,42,45
eee Se GO Bees SAGO ow rece cevevervevansens 33
I no nouns ee uvaan ns oie Seen 32
Ss a ow be Bch ys vn 8 8S 6 nb SOR 37
CTE: ss bos cb sa bivevercvavracn vane Geren 26
SE PU EU OOONE: chav vcececreerveeewneeneus 33
Calif. Rev. & Tax. Code §14104 (1979) ©6006. ee 17
ee Se eee er 31,33
SE AP PEED oon vc occ cece cesnusne cued ens 31
ee | Tee eeTEe eo 33
Calif. Rev. & Tax. Code §14795 (1979) .......... cece eee 17
-Viii-
Pages
Tex. Prob. Code §37 ......... ores 26
Tex. Prob. Code §233....... 26
26 U.S.C. §2001 (1976) ...... . 20
26 U.S.C. §2011 (1976) ...... a a
28 U.S.C. §125l(a) ....... ! | 2,6,13,14,21,23,29
28 U.S.C. $1332 ............ es 14
28 U.S.C. §1335 ............ ‘4 Fats 6-10,13-17,24,39
28 U.S.C. §1341 ............ | et are cee
28 U.S.C. §1397 ........ 7,9,15,24,25,35,43
28 U.S.C. §1404(a) ........ 7,9,16,24,25,34-36,38,42,44
ie fk here .. 20
§ he 8 4S) Pee eee ie es 36
Fed. R. Civ. P.17(a) ........... sae 29,31
Tex. R. Civ. P.75b. ........ 23
OTHER AUTHORITIES
Advisory Committee Note, Rule 17(a) cae
California Controller's Inheritance Tax Regulation 13409(b) 33
CCH Inheritance, Estate and Gift Taxation aight
State Vol. 1,915,318 .......... 33
F. James, Civil Procedure, (1965) .... . ea pe
Moore's Federal Practice ...... ae 27-29,43
Vestal, Preclusion/Res Judicata Variables: Parties,
50 Iowa L. Rev. 27(1964) |. Are DOr Faryprire 27
Vestal, Res Judicata/Preclusion: Expansion,
47 So. Cal. L. Rev. 357(1974) .............. were 27
C. Wright & A. Miller, Federal Practice & Procedure 15,16,32,39
C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure . 32
STATEMENT OF THE CASE
The seeds of this lawsuit sprouted from the grave of an abortive
original action filed by the State of California on November 11,
1977. California v. Texas, 437 U.S. 601 (1978). That original
action, in turn, had evolved from lengthy probate court litigation in
Houston over the domicile of Howard Hughes. Following sixteen
months of intensive discovery and trial preparation in the Texas
case—during which time Petitioners gave no indication that they
intended to press any domicile claim with respect to Hughes—
California emerged on the eve of the Houston trial and attempted to
barter access to this Court's original jurisdiction in return for a
chance to collect most of its death taxes regardless of the merits of
a California domicile claim. '
This Court properly refused to enjoin the Texas domicile
trial. California v. Texas, order no. A-433, 434 U.S. 993 (Dec.
12, 1977). That trial lasted eleven weeks and resulted in a jury
verdict, and, subsequently, a final judgment, that Hughes died
domiciled in Texas. Respondent Lummis and one potential legatee
appealed from that judgment.
California's motion for leave to file an original action was
unanimously denied on June 22, 1978. California v. Texas,
437 U.S. 601 (1978). In response to the concurring opinions ac-
companying that decision, the Hughes estate (hereinafter ‘‘the
Estate’’) filed this interpleader action in the United States District
Court for the Western District of Texas, Austin division, on July 14,
1978. (J.A. 1). The District Court promptly restrained all parties
from proceeding with Hughes domicile litigation in any other
1. As the Court may recall, the primary agreement between California and the
Hughes estate was contingent upon this Court's exercise of original jurisdiction
over California's suit against Texas. It provided that California would receive
2% of the federal net taxable estate if the Court accepted jurisdiction and deter-
mined that Hughes was a domiciliary of Texas at his death. California was to
receive 18% of the federal net taxable estate if this Court determined that
Hughes was domiciled anywhere other than Texas. A supplemental letter agree-
ment also obligated the Hughes estate to furnish California with copies of
pleadings, depositions and documentary evidence relevant to domicile, along
with providing its attorneys tor consultation to aid California in its suit against
Texas. The texts of these agreements were set forth as appendices ‘E’’ and
‘‘F’’ to Texas’ brief in opposition filed in California v. Texas, supra.
-2-
forum. On August 3, 1978, the Texas taxing officials, respondents
White and Bullock, filed a motion to dismiss, asserting primarily
that the action was barred by the Eleventh Amendment and the
doctrine of collateral estoppel. (J.A. 14).
In the fall of 1978, Petitioners, who had obtained an extension of
time to respond to the original complaint, persuaded the District
Court that issues of joinder and venue should be resolved prior to a
determination of subject matter jurisdiction. Petitioners then filed
two companion motions. (J.A. 21, 22). The first they accurately
describe as a motion to join some twenty-two alleged heirs as
defendants. (Pet. for Cert. 4). The second is incorrectly portrayed
as a lofty, magnanimous motion brought solely to transfer the ac-
tion to a ‘‘neutral forum,’’ the District of Colorado. (Jd.). Peti-
tioners also alternatively sought in that motion to transfer the case
to Los Angeles, California. (J.A. 23). In November of 1978, the
District Court denied Petitioners’ motions to add parties and
change venue. (Pet. App. D & E).
Unable to effect a transfer of the case, Petitioners filed a motion
to dismiss in February of 1979, based upon grounds similar to
those asserted earlier by respondents White and Bullock. The
District Court granted the motions to dismiss. Lummis v.
White, 491 F.Supp. 5 (W.D. Tex. 1979). (Pet. App.
G). Respondent Lummis appealed, and Petitioners cross-
appealed, seeking a transfer of the case to a federal district court
in Colorado. The Court of Appeals reversed the finding of no
jurisdiction but affirmed the denial of Petitioners’ motions to add
parties and change venue. Lummis v. White, 629 F.2d 397
(Sth Cir. 1980). (Pet. App. A).
Having again failed in their attempt to transfer the case to
another district court, Petitioners filed with this Court a petition for
certiorari and a second motion for leave to file an original action
against Texas. Now preferring to proceed in this Court only, Peti-
tioners have made certain changes to help achieve that goal. First,
they alter their earlier position and argue for the first time that no
district court has jurisdiction over this action because 28 U.S.C.
§1251(a) vests original jurisdiction exclusively with this
Court. See Petitioners’ Brief (hereinafter ‘‘Pet. Br.’') at
-9-
17-26. Second, after this case was submitted on oral argument to
the Court of Appeals, California revised its inheritance tax laws ina
manner which Petitioners now assert undercuts the jurisdictional
basis of an interpleader action in district court. (Pet. Br. at
32-36). And, finally, Petitioners manipulate the style of the case
—which had been ‘‘Lummis v. White’’ in the lower courts, and
here logically should be ‘‘Cory v. Lummis'’—to emphasize in a
very cosmetic fashion their position that this is in actuality a suit
between states.
This action arises as a result of the death of Howard Robard
Hughes, Jr., on April 5, 1976, and the efforts of Petitioners and
respondents White and Bullock to impose domicile-based death
taxes on the Hughes estate.
Mr. Hughes was born in Houston, Texas, on December 24,
1905. His father was an inventor and manufacturer. His mother,
a member of a prominent family that settled in Texas in 1856, died
in 1922. When his father died in 1924, a Houston court removed
the disability of minority from the nineteen-year-old Hughes and
allowed him to take control of Hughes Tool Company, a Houston
corporation that manufactured oil well equipment.
In June of 1925, Mr. Hughes married Ella Botts Rice, a member
of the distinguished Houston family for whom Rice University is
named. Mr. Hughes developed interests in filmmaking and avia-
tion and began making trips to Los Angeles, California to pursue
those avocations. By 1929, when Mrs. Hughes obtained a divorce
in Houston, Mr. Hughes had begun to spend a considerable
amount of his time in southern California. For the next two
decades he traveled extensively, spending much of his time mak-
ing cross-country test flights. While Mr. Hughes based his avia-
tion and movie activities in California, he spent much of his time
traveling during this period, predominantly on the East Coast.
In 1940 Mr. Hughes registered with a Houston draft board and
was given a deferment to continue his airplane and armament
manufacturing in Texas and California during World War II. In
sworn testimony in 1947 before a Senate committee investigating
Claims of profiteering on wartime contracts, he gave his residence
as Houston, Texas and stated that his company was headquartered
s@e
there. He expressed disdain at the attempt to impugn his integrity,
Stating, ‘'| believe | have the reputation in that respect which most
Texans consider important. That is to say, if | may use a corny
phrase, | believe people consider my word to be my bond.'’ Testi-
fying in a state court civil trial in California in 1952, Mr. Hughes
stated that although he was then staying at the Beverly Hills Hotel,
his domicile was Houston, Texas.
From 1950 until 1966 Mr. Hughes spent most of his time in
California, although he was also in Nevada, Florida, Canada and
the Bahamas for significant periods of time. The majority of his
time in California during this period was spent at the Beverly Hills
Hotel, where he rented rooms on a day-to-day basis.
From 1966 until his death, Mr. Hughes stayed in hotels in
Boston, Las Vegas, the Bahamas, Nicaragua, Vancouver, London
and Acapulco. Throughout his travels—indeed, throughout his en-
tire life—Hughes listed Houston, Texas as his residence on his
passports, on all of his federa! income tax returns, and on all state
income tax returns he was required to file. On April 5, 1976, Mr.
Hughes was placed on a private jet in Acapulco, Mexico, bound for
Methodist Hospital in Houston, Texas. He died en route shortly
after the plane passed over Brownsville, Texas. Mr. Hughes was
buried next to his parents in Houston's Glenwood Cemetery. He
had maintained a family burial plot since his father's death in 1924
but did not finally purchase a perpetuity deed thereon until 1973,
soon after he had undergone major surgery in London for a hip in-
jury that was to keep him bedridden for the remaining three years
of his life.
On April 14, 1976, probate proceedings were begun in Califor-
nia, Texas and Nevada. A purported will of Mr. Hughes, dated
March 19, 1968 (the ‘‘Mormon’’ will), containing substantial be-
quests to several charitable organizations (including the University
of Texas and Rice University), surfaced in late April of 1976 and
was offered for probate in California, Nevada and Texas. Howard
Hughes Medical Institute (‘‘HHMI''), a non-profit corporation, ap-
peared and asserted that Mr. Hughes had executed and never
revoked a valid will (the ‘‘lost’’ will) leaving his entire estate to
HHMI.
-5-
The Texas Attorney General entered an appearance for the State
of Texas in the Houston probate proceeding on June 10, 1976,
asking the Court to determine the validity of any purported will of
Mr. Hughes and to declare Texas his domicile at the time of
death. After extensive discovery a trial of the issues of domicile
and the validity of the Mormon will was held in Houston beginning
November 14, 1977. After three months of trial, including the
testimony of some seventy-three witnesses and the introduction of
1,619 exhibits, the jury found that Mr. Hughes was domiciled in
Texas at death and that the Mormon will was invalid. Judgment to
that effect was subsequently entered. (J.A. 139).
Final judgment has also been rendered in Nevada that the Mor-
mon will is invalid. Final judgment has been rendered against
HHMI in Nevada on the lost will; the Houston probate court recent-
ly entered a summary judgment against HHMI on the lost will,
which judgment has been appealed.
Proceedings to determine heirship are continuing in the Houston
probate court. In separate proceedings undertaken between July
and September, 1981, that Court has entered summary judgment
against three women who contend they were legally married to
Hughes at the time of his death; all three have appealed. Ina non-
jury trial, the Court has determined the maternal heirs of Hughes,
and in a subsequent two-week jury trial, a jury verdict has been
received as to the paternal heirs. Formal judgments have not as
yet been entered, and in all likelihood appeals will follow.
Efforts to valuate the Hughes estate are also being made by tax-
ing officials. The Internal Revenue Service has valued the gross
estate at $468,085,903. The Hughes estate is contesting this
valuation in United States Tax Court. The California inheritance tax
referee has valued the gross estate at $1,106,345,561. Although
the Texas valuation has not been released to the public, it more
Closely approximates the Internal Revenue Service valuation than
the California valuation.
On July 21, 1981, Petitioners filed a ‘‘Motion To Temporarily
Remove Original Exhibits'’ with Harris County Probate Court No. 2
in Cause No. 139,362 entitled The Estate of Howard R. Hughes,
Jr., Deceased, the ongoing cause of action in which all of the
[This Page Intentionally Left Blank]
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aforementioned domicile and heirship litigation in Texas has en-
sued. Petitioners’ motion was granted by the Honorable Pat
Gregory, judge of said court. Respondents White and Bullock have
filed in said court a response to petitioners Cory's and Alvord's ap-
pearance, and have joined issue with them as to the domicile of
decedent, Howard R. Hughes, Jr. in the Houston Probate Court.
SUMMARY OF ARGUMENT
The death of Howard Hughes has spawned two bilateral disputes
about his estate's liability for state death taxes: one between the
Estate and the taxing officials of California, and the other between
the Estate and the taxing officials of Texas. In an effort to avoid the
possibility of double state death taxation, the Texas administrator
of the Estate filed this action under 28 U.S.C. §1335 in federal
district court in Austin, Texas, interpleading those state taxing of-
ficials and seeking a unitary determination of Hughes’ domicile at
the time of his death. This case presents for review the Fifth Cir-
cuit’s decision that this statutory interpleader action is jurisdic-
tionally sound and that the denial of a motion to transfer the case to
Colorado was not an abuse of discretion.
The obvious impediment to the exercise of jurisdiction under
section 1335 in this case is Worcester County Trust Co. v.
Riley, 302 U.S. 292 (1937), which holds that the Eleventh
Amendment bars such an action. However, serious doubt has
been raised about the present vitality of Worcester County, and
only this Court can resolve that question. See California v.
Texas, 437 U.S. 601 (1978). If the Eleventh Amendment still
bars this action, these separate controversies which the Estate has
concerning its liability for state death taxes should be remitted to
State courts, which have traditionally resolved these
disputes. These bilateral disputes involving the Estate do not com-
prise a Suit between states, no controversy now exists between the
State of California and the State of Texas over this matter, and
original jurisdiction in this Court is therefore not present.
lf, on the other hand, the Eleventh Amendment is no longer a
bar, statutory interpleader jurisdiction is present in this case. 28
U.S.C. §1251(a) does not preclude this action because it is simply
not one between two states. And the minimal diversity require-
ment of section 1335 is satisfied by the diverse citizenships of
plaintiff Lummis and defendant Alvord, the County Treasurer of
Los Angeles.
Petitioners requested the district court to transfer this case
either to Denver or Los Angeles. Because such a transfer can only
be made to a district where the action ‘‘might have been brought’’
originally (28 U.S.C. §1404(a)), and because no claimant resided
in Colorado to support venue there (28 U.S.C. §1397), Petitioners
also moved to add twenty-two potential heirs of Hughes as
parties. The district court correctly determined that transfer to Los
Angeles was not justified by the convenience of the litigants and
witnesses, and that the transparent attempt to manipulate venue
through the artificial device of joining the heirs was
inappropriate. The heirs clearly should not be joined because they
have no role to play in this litigation. Their interests are fully
represented by the administrators of the Estate, and the heirs will
therefore be bound by any domicile determination without being
made parties.
Finally, even if the Court should order joinder of the heirs, this
case should not be transferred to Colorado. Such a transfer would
mean incredible inconvenience to all of the litigants and virtually all
of the scores of potential witnesses. Moreover, such a transfer
would astronomically increase the litigation expenses for all par-
ties. Petitioners’ unfounded fears of local prejudice in Austin,
Texas cannot override the determinations by the District Court and
Court of Appeals that Austin is the most convenient and ap-
propriate forum for the litigation. That determination does not con-
stitute an abuse of discretion. .
ARGUMENT
Introduction
When California unsuccessfully sought to invoke this Court's
original jurisdiction in 1978, it did so announcing that its proposed
action against Texas was motivated in large part by its ‘‘own sense
of fairness’’ regarding the situation confronting the Hughes
estate.’ Revelation of the covert contractual link between Califor-
nia and the Estate—essentially an attempt to barter access to this
Court's original jurisdiction—was an early clue that California's in-
terpretation of ‘‘fairness'’ might be somewhat unique. Now, with
four members of this Court suggesting that 28 U.S.C. §1335 pro-
vides the Estate with a remedy for the perceived unfairness of dou-
ble state death taxation and Petitioners with their desired unitary
adjudication of domicile, Petitioners oppose that interpleader
remedy primarily because its venue is ‘‘unfair’’ and
‘“‘unseemly’’. (Pet. Br. at 6, 10, 11, 16 & 45). While Petitioners’
sense of fairness has apparently been tempered by a healthy dose
of self-interest, it is as misdirected now as it was in 1978. For
Petitioners now attempt to convert their dissatisfaction with venue
in this case into jurisdictional principles which would eliminate the
interpleader remedy for similarly situated estates in most future
cases.
While the Texas taxing officials certainly have not warmly em-
braced the proposed interpleader remedy’, if this Court determines
2. At oral argument on the motion for leave to file complaint, counsel for
California stated:
MR. FALK: ‘Finally, another factor that | want to men-
tion just briefly that brought us here and |
think is important for this Court's exercise of
jurisdiction was our own sense of fairness. To
have proceeded independently to litigate the
tax claim in our own courts, as Texas sought
to do, even if we could do so, Western
Union notwithstanding, simply did not com-
port with our notion of a fair and appropriate
process.'' (Tr. of oral argument in Califor-
nia v. Texas, No. 76, original, March 29,
1978 at p. 19)
3. From the outset of this litigation, the taxing officials of the State of Texas
have believed and argued that no federal court has jurisdiction to relitigate the
Texas state court determination that Howard Hughes was domiciled in Texas tor
purposes of the Texas inheritance tax. That position has been grounded
primarily upon the Eleventh Amendment and the doctrine of collateral estoppel,
and secondarily upon concepts of federalism embodied, inter alia, in the Tenth
(footnote continued on following page)
-9-
that the federal system itself should provide a solution to multiple
State death taxation, it is submitted that an action under section
1335 is the only available remedy—and certainly the most ex-
peditious and reasonable one. For either Texas v. Florida, 306
U.S. 398 (1939), was wrongly decided and an original action in
this Court is completely unavailable, or Texas v. Florida was
correctly decided and provides relief in so precious few cases that
it is no remedy at all. Therefore, if the Court decides that the
Eleventh Amendment bars actions such as this under section
1335, these domicile disputes should be resolved by the state
courts, which have traditionally handled issues of state tax law.
lf this interpleader action can proceed consistently with the
Eleventh Amendment, the fact that venue is laid in a state asserted
to be the decedent's domicile is neither improper nor jurisdictional-
ly debilitating. In this case, venue options are limited to districts
located within California and Texas. 28 U.S.C. §1397. But even if
choice of venue were unrestricted, it would be a grievous error to
transfer this litigation to Colorado.
Several factors commend trying a case such as this in one of the
Claimant states. Many of these reasons are set forth in 28 U.S.C.
§1404(a) and in the judicial interpretation of that statute. As this
Court has noted, venue ‘‘is primarily a matter of choosing a conve-
nient forum.’’ Leroy v. Great Western United Corp., 443
U.S. 173, 180 (1979); Denver & Rio Grande Western R.R.
v. Brotherhood of R.R. Trainmen, 387 U.S. 556, 560
(1967). In this case, the District Court considered all of the fac-
tors under section 1404(a), weighed all evidence submitted per-
taining to each of those factors, and appropriately concluded that
this litigation was better venued in Austin than in Los
Angeles. (Pet. App. F). In light of that ruling—which Petitioners
did not appeal— section 1404(a) cannot possibly countenance the
proposed transfer to Colorado, where all parties, witnesses, and
(footnote continued from previous page)
Amendment, the Tax Injunction Act (28 U.S.C. §1341), and the abstention doc-
trines. These various jurisdictional objections all implicate, to some extent, the
same concerns of federalism bound up in the Eleventh Amendment issue which
this Court now faces.
-10-
attorneys will be greatly inconvenienced, all parties put to an enor-
mous increase in litigation expense, and the courts and populace of
Denver saddled with the many burdens and costs inherent in the
lengthy trial of this case. See Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 508-09 (1947).
Petitioners have consistently lashed out at any argument oppos-
ing transfer on the grounds of inconvenience and expense as dis-
ingenuous and view opposition to a transfer of the case from Austin
to Denver as buttressing their position that Austin venue is im-
proper—i.e., since the Texas officials want to try the case in
Austin, Petitioners’ fears of local prejudice must be valid. See
Petitioners’ Reply Br. on Cert. at 8. Respondents White and
Bullock know of no way to convince the Court that their true con-
cerns are the convenience and availability of the anticipated
witnesses, parties and counsel; minimizing further expenditures
on this case, which, because of the prior state court trial, has
already cost Texas a huge sum; and a reluctance to impose the ex-
cessive expenditures of time and money on the courts and
populace of Denver, which has absolutely no connection with this
controversy. No more can be done to demonstrate the sincerity
with which Respondents White and Bullock believe that local pre-
judice—either in Texas or in California—will not be a significant
factor at any trial of this case than this: if the Court should decide
that the issue of Hughes’ domicile should be tried in a federal
district court under section 1335, and if the Court should feel for
any reason that venue in Austin, Texas is improper and must be
transferred, the Texas taxing officials would ask the Court to send
this case to Los Angeles rather than to Denver. For while Los
Angeles is clearly a less convenient forum for this litigation than
Austin, Denver is, by far, the least appropriate place to try this
case. And Respondents White and Bullock firmly believe that the
trial judge—whether sitting in Austin or Los Angeles—can protect
the litigants from any possible danger of local bias or prejudice.
1. The Resolution of the Issues Presented Hinges on
the Eleventh Amendment Question
A unanimous, unreversed decision of this Court holds that an in-
terpleader action such as this one is barred by the Eleventh
of Je
Amendment. Worcester County Trust Co. v. Riley, 302
U.S. 292 (1937) (hereinafter ‘“‘Worcester County’’). Four
Justices of this Court, however, have suggested that the holding of
Worcester County has been undercut by Edelman v. Jor-
dan, 415 U.S. 651 (1974) (hereinafter ‘‘Edelman”’). Califor-
nia v. Texas, 437 U.S. 601 (1978) (Brennan, J., concurring),
608 n. 10 (Stewart, J., concurring), 615 (Powell, J., concurring).
This Eleventh Amendment issue appears even further clouded
because several members of the Court, for various reasons that
may or may not affect this case, feel that Edelman itself was
wrongly decided. See Florida Dept. of Health &
Rehabilitative Services v. Florida Nursing Home Ass'n,
U.S. , 101 S.Ct. 2008 (1981). All that is clear is that
Eleventh Amendment interpretation—already cluttered with more
than its share of judicial debris during the 183 years since its
ratification—is still unsettled.
The Texas taxing officials argued below and still believe that the
holding of Worcester County remains good law, completely
unscathed by Edelman. Edelman involved a class action suit
brought against Illinois officials administering the federal-state
programs of Aid to the Aged, Blind and Disabled in violation of
numerous federal regulations. The district court granted a perma-
nent injunction requiring compliance with those regulations and
further ordered the Illinois officials to pay benefits wrongly
withheld during the preceding three years. 415 U.S. at 656. The
Seventh Circuit affirmed that order, rejecting the officials’ argu-
ment that the Eleventh Amendment prohibited the order requiring
retroactive benefit payments. Jordan v. Weaver, 472 F.2d 985,
989-995 (1973). This Court reversed, holding that the Eleventh
Amendment did bar such retroactive monetary relief against the
State of Illinois. 415 U.S. at 678. The Court concluded that un-
consented suits brought in federal courts to ,ecover money from a
State were incompatible with the purpose and past interpretation of
the Eleventh Amendment. 415 U.S. at 660-663. The line between
retroactive relief from state treasuries and prospective injunctive
relief against state officials was thus drawn by the Court in
Edelman simply by connecting the dots of its past
decisions. 415 U.S. at 663; see Kennecott Copper Corp. v.
-12-
State Tax Comm'n, 327 U.S. 573 (1946); Ford Motor Co.
v. Dept. of Treasury, 323 U.S. 459 (1945); Great Northern
Life Ins. Co. v. Read, 322 U.S. 47 (1944).
In hewing that line, the Court rejected the theory— espoused by
the Seventh Circuit (472 F.2d at 990 n. 10, 990-992)—that the
doctrine of Ex parte Young, 209 U.S. 123 (1908), can be used
to permit retroactive relief as well as injunctive relief against future
conduct. 415 U.S. at 666. By doing so, the Court closed a gap in
Eleventh Amendment law and provided the States with additional
protection against suits in federal court. Nothing in the analysis or
holding of Edelman suggests that the Eleventh Amendment is
now so withered that it allows all suits which seek only prospec-
tive relief from state officials.
The threshold inquiry under Ex parte Young—i.e., whether
the alleged actions of the state officials conflict with paramount
federal law—must still be made before those officials can be strip-
ped of their official character and Eleventh Amendment immunity,
thereby permitting prospective injunctive relief against them. It is
that very inquiry which the unanimous court in Worcester Coun-
ty resolved in favor of the state taxing officials. Nothing has oc-
curred since 1937 to undermine the determination in Worcester
County that the actions of those officials did not contravene
federal or state law, and were therefore the actions of the sovereign
States. See California v. Texas, supra, 437 U.S. at 612 and
n. 13 (Stewart, J., concurring). The analysis and holding of
Edelman thus appear to leave the Eleventh Amendment holding
of Worcester County completely untouched.
The continuing vitality of Worcester County will, of course,
hinge on this Court’s view of the present development and role of
the Eleventh Amendment. While such a significant constitutional
decision will certainly not be founded on its results in this par-
ticular case, it is helpful to focus on the effect of the Eleventh
Amendment decision on the options facing the Court in this case.
A. If This Action Is Not Barred by the Eleventh Amend-
ment, Interpleader Jurisdiction Is Satisfied.
If this Court should determine that the Eleventh Amendment no
longer precludes an action such as this, the Fifth Circuit's decision
-13-
that this case satisfies the jurisdictional prerequisites of 28 U.S.C.
§1335 should be affirmed. The Fifth Circuit based statutory in-
terpleader jurisdiction upon the diverse citizenships of plaintiff
Lummis and defendant Alvord, the County Treasurer of the County
of Los Angeles. Lummis v. White, 629 F.2d 397, 402-403
(1980). Petitioners argue that the citizenship of neither Lummis
nor Alvord may be used to fulfill the diversity requirement of sec-
tion 1335 and that district court jurisdiction is barred by 28 U.S.C.
§1251(a) because this is a controversy ‘‘between two ...states’’
within this Court’s exclusive jurisdiction. All of these arguments
are quite wide of the mark, and statutory interpleader jurisdiction
is present.
1. 28 U.S.C. §1251(a) Is Irrelevant to Jurisdiction
Under 28 U.S.C. §1335.
If the Eleventh Amendment does not bar a federal district court
from entertaining this interpleader action, the provisions of 28
U.S.C. §1251(a) would certainly not do so. For if this case can
proceed consistently with the Eleventh Amendment, it will have
already been determined that this is not a suit against either the
State of California or the State of Texas. It surely cannot then be
considered a suit between the two states if it is not a suit against
either state. For this reason, section 1251(a) adds nothing to the
Court’s determination of whether this action can be tried in a
federal district court.
It is interesting to note that no party to this litigation ever
asserted in the lower courts that no federal district court can enter-
tain this case because jurisdiction rests exclusively with this
Court. In fact, Petitioners, in an effort to induce a transfer to a
federal district court in Colorado, argued below that such a transfer
would cure all jurisdictional defects. The District Court and Court
of Appeals would be amazed and boggled to learn that Petitioners
now assert that no district court, regardiess of location, can exer-
cise jurisdiction over this case.‘ Petitioners downplay this stagger-
4. For example, in oral argument before the Fifth Circuit Petitione’ counsel
stated as follows:
MR. FALK: No, we don't want to play any procedural
(footnote continued on following page)
-14-
ing change in position, selflessly attributing it to oversight by
counsel, and argue that it is irrelevant because jurisdictional
issues may be raised at any time. (Pet. Reply Br. on Cert. at 1 n.
1). This flip-flop is significant, however, for it underscores the in-
validity of Petitioners’ argument under section 1251(a). Counsel
failed to see only what was never there. Petitioners have always
realized that section 1251(a) is ultimately irrelevant to statutory in-
terpleader jurisdiction.
2. The Diversity Requirement of 28 U.S.C. §1335 Is
Met.
Petitioners argue that the citizenships of the defendant state tax-
ing officials cannot be used to satisfy the diversity requirement of
section 1335 because the states themselves are the real parties in
interest, and states are not ‘‘citizens of a state’’ for diversity pur-
poses.” Postal Telegraph Cable Co. v. Alabama, 155 U.S.
482 (1894). (Pet. Br. at 27). The Fifth Circuit did not address this
contention, for it found the requisite minimal diversity in the
citizenships of plaintiff Lummis and defendant Alvord, the County
(footnote continued from previous page)
game. And | understand why the result in this
case is unacceptable. It's unacceptable to us
as well. We agree with the estate that federal
interpleader ought to be used in this case. We
do not assert the Eleventh Amendment, and
we are willing to submit to the federal in-
terpleader act. (Tr. of March 31, 1980, 5th
Cir. Arg. at p. 19)
Such representations are hardly consistent with Petitioners’ current position
that 28 U.S.C. §1251(a) precludes this action from being heard by any court
save this one.
5. If this Court holds that the Eleventh Amendment does not bar this action, it
may also be called upon to decide for the first time whether the doctrine of Ex
parte Young, supra, not only strips state officials of their official character for
purposes of the Eleventh Amendment but also renders them individual citizens
for purposes of diversity analysis under 28 U.S.C. §1332 (and therefore under
§1335 as well). If this question is answered affirmatively, diverse citizenships
will abound in this case.
-15-
Treasurer of the County of Los Angeles. While Petitioners argue
that the citizenship of neither of these gentlemen can be used to
satisfy section 1335, in fact the citizenships of these men alone are
sufficient to meet the requirements of the interpleader statute.
First, the Court of Appeals ruled that the citizenship of plaintiff
Lummis can be considered because, as an administrator of the
Hughes estate, he is an interesied stakeholder and therefore a
Claimant. Lummis v. White, supra, 629 F.2d at 403. That
ruling comports with the overwhelming weight of the case law and
commentary, which permit and urge the broadest possible applica-
tion of interpleader. See, e.g., Builders & Developers Corp.
v. Manassas Iron & Steel Co., 208 F. Supp. 485, 488 (D.Md.
1962); Pan Am. Fire & Cas. Co. v. Revere, 188 F. Supp.
474, 477 n. 8(E.D.La. 1960); 7 C. Wright and A. Miller, Federal
Practice & Procedure, §1710 at 405-407 (1972); cf. State
Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (1967)
(§1335 requires only ‘‘minimal diversity’’).
Unable to cite a single case to support their position, Petitioners
instead offer some examples to demonstrate how consideration of
an interested stakeholder’s citizenship will have an untoward ef-
fect on established principles of diversity jurisdiction. (Pet. Br. at
30-31). In the first example, Petitioners posit a simple bilateral
dispute between an insurer from one state and a Claimant from a
second state and contend that the ruling below would provide
jurisdiction for such an action under section 1335. Such a case
obviously cannot be brought under section 1335 because it is not
an interpleader or in the nature of interpleader—a threshold re-
quirement under the statute—for the simple reason that the
stakeholder is faced with only a single claim to the stake in his
possession. By contrast, in the case at bar, while the citizenships
of only Lummis and Alvord were used to satisfy the diversity re-
quirement of section 1335, the additional claims of the state taxing
officials were viewed by the Court of Appeals as creating the re-
quisite situation in the nature of interpleader.
Petitioners’ next example is no more instructive than the first. It
suggests that an interested stakeholder, as a ‘‘claimant’’ under
sections 1335 and 1397 (venue), would be able to bring suit in the
-16-
place of his own residence, thereby causing unthinkable forum
abuse. The specific example is of a Delaware insurer who denies
liability to, and ther interpleads, a dozen California (or west coast)
Claimants and forces them to litigate their claims in Delaware,
despite the fact that none of those claimants had any prior contacts
with Delaware. It is strange for Petitioners to mention this type of
potential forum abuse when that is precisely what they seek the
Court to do in their motion to transfer this case to Colorado. For no
party to this case has any prior contacts with the State of Colorado.
Clearly, the solution to the forum abuse posed by Petitioners’ ex-
ample would be a motion by any of the west coast claimants to
transfer the hypothetical case from Delaware to California for the
convenience of the witnesses and parties, and to promote the in-
terest of justice. Courts will not permit plaintiffs ‘‘an unfettered
choice’’ of districts and will not allow litigation to proceed in a
forum with no relation to the case. Leroy v. Great Western
United Corp., supra, 443 U.S. at 185; Gulf Oil Co. v.
Gilbert, supra, 330 U.S. at 508-509. In fact, the obvious merit
to such a 1404(a) motion underscores why Petitioners’ motion to
transfer this case was properly denied.
In sum, Petitioners’ contention that the citizenship of an in-
terested stakeholder cannot establish diversity under section 1335
is most clearly laid to rest by the analysis of Professor Wright:
‘Nevertheless, once an interested stakeholder
deposits the fund with the court or posts an appropriate
bond, he does become a claimant for all practical pur-
poses and his citizenship should be relevant in deciding
the jurisdiction question. Moreover, since by
hypothesis, the stakeholder's citizenship will be diverse
from that of at least one of the claimants, the in-
terpleader has interstate aspects and therefore seems to
fall within the class of cases intended to be covered by
the statute."’ (7 C. Wright & A. Miller, supra, at 407)
The citizenship of plaintiff Lummis can therefore be utilized to fulfill
the diversity requirement of section 1335.
1 7-
Second, Petitioners argue that the citizenship of petitioner
Alvord can no longer satisfy the diversity requirement of section
1335 due to changes in California inheritance tax law which took
effect after the Fifth Circuit's ruling in this case.° It is clear that
California's deletion of petitioner Alvord from its tax collection
scheme, a unilateral action taken after oral argument before the
Fifth Circuit, cannot dissipate previously existing jurisdiction in
this case. Few principles have been longer, or more firmly,
established than that jurisdiction is determined when the original
complaint is filed and that later occurrences are irrelevant. Smith
v. Sperling, 354 U.S. 91 n. 1 (1957). Chief Justice Marshall
unequivocally announced the governing rule in 1824:
“It is quite clear that the jurisdiction of the Court
depends upon the state of things at the time of the action
brought, and that, after vesting, it cannot be ousted by
subsequent events.'’ (Mollan v. Torrance, 22 U.S.
(9 Wheat.) 537, 539 (1824))
That rule is, of course, still followed today. See, e.g., Hill v.
Rolleri, 615 F.2d 886, 889 (9th Cir. 1980); Wigand v. Flo-
Tek Inc., 609 F.2d 1028, 1032-33 (2d Cir. 1980). Were that not
the law, diversity jurisdiction would be purely ephemeral because a
defendant—or, on appeal, any litigant dissatisfied with the result
below—could always change his domicile to match that of an op-
posing party and seek dismissal for lack of jurisdiction.
For that very reason, California's voluntary revision of its in-
heritance tax laws after this suit was on appeal cannot affect the
evaiuation of jurisdiction in this case.
6. Under California law in force at the time Hughes died and at the time this
interpleader action was filed, Alvord would collect any inheritance tax due from
the Hughes estate and retain for the County a percentage of the amount so col-
lected. See Calif. Rev. & Tax. Code §§14104, 14795 (1979). In the summer of
1980—after oral argument, but months prior to a decision in the Fifth Cir-
cult—California passed a bill, which became effective on January 1, 1981,
deleting the role of county treasurers in the tax collection process. (App. to Pet.
tor Cert. 381). Petitioners made no effort to apprise the Court of Appeals of this
revision prior to its decision and first did so on January 15, 1981—only after
their petition for rehearing en banc had been denied—in an out-of-time petition
for rehearing that the Fifth Circuit refused to file.
-18-
B. If the Eleventh Amendment Bars This Action,
State Courts Should Resolve This Controversy
Over State Inheritance Taxes.
Both probate matters and issues of state tax law have traditional-
ly fallen into the domain of the states and their judicial
systems. See Sutton v. English, 246 U.S. 199
(1918); Markham v. Allen, 326 U.S. 490 (1946); and Com-
monwealth Edison Co. v. Montana, ___U.S.___., 101
S.Ct. 2946, 2956 (1981); see also 28 U.S.C. §1341; Rosewell
v. LaSalle Nat'l Bank, U.S. , 101 S.Ct. 1221
(1981). If the Court decides that this matter should not be litigated
in a federal district court, state courts should be allowed to resolve
these controversies. That is the only alternative to statutory in-
terpleader because this is not a suit between states within this
Court's original jurisdiction. Furthermore, this alternative should
not be at all unpalatable to the Court or to the Hughes estate,
because it is highly unlikely that inconsistent adjudications of
domicile would result. The State of California, by and through its
taxing officials Cory and Alvord, has recently entered an ap-
pearance in the Texas state court probate proceeding which is
ongoing with respect to the Hughes estate, and that court now has
jurisdiction over the requisite parties to make a unitary, binding
determination of domicile.
1. Original Jurisdiction in This Court
Is Not Present.
As a conceptual matter, the dispute California and Texas both
have with the Hughes estate over its liability for state death taxes is
not a suit between states within this Court's original and exclusive
jurisdiction. And as a practical matter, even if this suit could be
Classified as one between states, this case, and others like it,
should not be resolved in this Court. Justice Stewart correctly
analyzed the premises underlying Texas v. Florida, supra, and
accurately demonstrated why that case was wrongly decided and
why, therefore, this case is not original action material. Califor-
nia v. Texas, supra, 437 U.S. at 602-615.
Although Petitioners contend they are on a collision course with
the State of Texas over the issue of Hughes’ domicile for purposes
-19-
of death taxation, the paths of the two states’ taxing officials in this
respect actually run parallel. Each is pursuing an independent
death tax claim, and ‘‘there is no constitutional impediment to both
California and Texas imposing death taxes upon the Hughes estate
by proceedings in their own courts.’’ Id., 437 U.S. at 612 n. 13;
see Worcester County, supra, 302 U.S. at 299. The alleged
theoretical inconsistency of the two domicile claims is irrelevant in
an original action because the basis of the Texas tax—be it
domicile or some other concept’—is of absolutely no concern to
Petitioners. From Petitioners’ standpoint, any Texas tax judgment,
regardless of its nature, is indistinguishable from a ‘‘judgment
upon a simple contract debt....'’ Milwaukee County v.
White Co., 296 U.S. 268, 276 (1935). Therefore, Petitioners’
only legitimate interest—the collectibility of a potential tax
judgment—is wholly unrelated to domicile.
Thus, Hughes’ death has generated two bilateral disputes—one
between his estate and Texas, and another between his estate and
California—over the issue of domicile and the right to impose death
taxes. But the only possible dispute between California and Texas
would simply be over money, not domicile or the right to tax. As
Justice Stewart noted, that potential dispute—which is more
7. It was established long ago that two states can collect death taxes on the
transfer of a decedent's intangible property. Blackstone v. Miller, 188 U.S.
189 (1903). For a brief period during the 1930's this rule was temporarily
reversed. Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204
(1930); First Nat'l Bank v. Maine, 284 U.S. 312 (1932). The Court soon
recognized its error, however, and returned to the rule of Blackstone v.
Miller, supra. See Curry v. McCanless, 307 U.S. 357 (1939); Graves v.
Elliott, 307 U.S. 383 (1939). In 1942 this Court officially overruled First
Nat'l Bank v. Maine, supra, and held that ‘‘there is no constitutional rule of
immunity from taxation of intangibles by more than one State.'' State Tax
Comm'n of Utah v. Aldrich, 316 U.S. 174, 181 (1942). And this Court's
view of permissible state taxation is even broader today. See, e.g., Complete
Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977); Michelin Tire Corp.
v. Wages, 423 U.S. 276, 293 (1976).
It is therefore clear that Texas, if its statutes so provided, could constitutional-
ly impose death taxes unrelated to domicile on the intangibles of the Hughes
estate. Such a tax would impinge upon California's ability to collect any death
tax judgment it might eventually obtain in exactly the same fashion as a
domicile-based tax.
-20-
analogous to a bankruptcy proceeding than to a suit in the nature
of interpleader—is unlikely ever to constitute a controversy be-
tween states, and surely does not until both states have tax
judgments which the estate cannot pay and thus occupy the
‘*status of unsatisfied creditor.'’ 437 U.S. at 615 n. 15.
In addition to the conceptual probiem of categorizing these con-
troversies aS a Suit between states, several practical reasons
counsel against this matter being resolved in this Court. First,
because the domicile issue underlies only the bilateral dispute each
state has with the estate and not that between the states
themselves, an original action under Texas v. Florida would in-
appropriately eliminate the parties’ right to have a jury resolve the
domicile question. A right to jury trial apparently does not exist in
a suit between states tried in this Court. See, e.g., 28 U.S.C.
§1872 (right to jury in original actions at law against citizens of the
United States). The usual procedure, which was utilized in
Texas v. Florida, is to appoint a special master, who takes
evidence and prepares findings of fact and conclusions of
law. While the master’s recommendations are advisory only, ‘‘this
Court regularly acts on the basis of the master’s report and excep-
tions thereto.'’ United States v. Raddatz, 447 U.S. 667, 683
n. 11 (1980). See Ohio v. Wyandotte Chemicals Corp.,
401 U.S. 493, 511 (1971) (Douglas, J., dissenting). With all
respect, this Court is simply too ill-equipped, and too over-
burdened, to function effectively as a trial court for this case. See
Maryland v. Louisiana, _U.S._, 101 S.Ct. 2114, 2137
(1981) (Rehnquist, J., dissenting).
Second, an original action under Texas v. Florida cannot, as
Petitioners suggest, provide a wholesale remedy for future domicile
disputes. For even Petitioners now concede that jurisdiction under
Texas v. Florida cannot be invoked unless the tax claims of the
competing states, together with the federal estate tax, exceed
100% of the estate’s assets, such that one state’s claim will be at
least partially uncollectible. (Pet. for Cert. 14 n. 14). Effective
shortly after Hughes’ death, the maximum rate of the federal estate
tax was reduced from 77% to 70%, with no corresponding reduc-
tion in the amount of the maximum available credit for state death
taxes. See 26 U.S.C. §§2001, 2011 (1976). Thus, claims by on-
-21-
ly two states—even where one has extremely high maximum death
tax rates exceeding the federal credit, such as California's rate of
24%, rather than the customary ‘‘pick-up tax’’ which falls within
the federal credit— would not exceed that 100% jurisdictional limit
even on the largest of estates. On a ‘‘small’’ estate of two million
dollars, which would incur a maximum federal estate tax rate of
45%, it would take competing domicile claims from at least eight
states whose maximum tax rate equals the federal credit of 7.2%
in order to provide the necessa‘y predicate for original jurisdiction
under sexas v. Florida. Clearly, an original action in this Court
could provide a remedy for multiple state death taxation, under the
guise of resolving a dispute between states, only for the estates of
the most wealthy and most mobile members of our society.
Finally, as more fully set forth in Texas’ Brief in Opposition to
California's Motion for Leave to File Complaint in No. 88, Original,
even if this controversy could be categorized as a suit between
States, it is not an appropriate one for exercise of this Court's
original jurisdiction. As the Court recently noted,
‘(W]e have construed the congressional grant of ex-
Clusive jurisdiction under §1251(a) as requiring resort to
our obligatory jurisdiction only in ‘appropriate
cases.’ Illinois v. City of Milwaukee, 406 U.S.
91, 93 (1972); Arizona v. New Mexico, 425 U.S.
794, 796-797 (1976).
[T]he issue of appropriateness in an original action
between States must be determined on a case-by-case
basis."’
(Maryland v. Louisiana, supra, 101 S.Ct. at 2125
& 2127)
The magnitude and nature of the injury California alleges it might
suffer at the hands of Texas render this case an inappropriate one
for an exercise of this Court's original jurisdiction. See Texas
Brief in Opposition, No. 88, Original at 15-16. More importantly,
the recent appearance by Petitioners in the Houston probate court
proceeding provides an alternative forum where this dispute can be
-22-
settled. Maryland v. Louisiana, supra; Arizona v. New
Mexico, supra; Illinois v. City of Milwaukee, supra.
2. The Texas Probate Court Has Jurisdiction Over
All Parties Necessary To This Action.
There is currently pending in Probate Court No. 2 of Harris Coun-
ty, Texas (‘‘Houston Probate Court’’) Cause No. 139,362, styled
The Estate of Howard R. Hughes, Jr., Deceased. This cause has
been pending since April 14, 1976. It is an ongoing proceeding in
which the Houston Probate Court is determining all matters inci-
dent to the estate of Howard R. Hughes.
On July 21,1981, Petitioners filed a motion in the Houston Pro-
bate Court to remove original exhibits from the record. This motion
was granted by Judge Pat Gregory, and the original exhibits were
withdrawn by Petitioners. By virtue of so invoking the jurisdiction
of the Houston Probate Court in the ongoing probate proceedings,
petitioners Cory and Alvord have entered a general ap-
pearance—albeit inadvertently—in Cause No. 139,362, the Estate
of Howard R. Hughes, Jr., Deceased. Of course, whether Peti-
tioners intended to make a general appearance when they filed
their motion is irrelevant to the impact of their action. For it has
been the law of Texas since at least 1889 that
‘if, in the exercise of his own untrammeled volition, [the
defendant] . . . makes an appearance, then he must be
held bound thereby, as would be one who could be, but
had not been, subjected to the jurisdiction of the courts
here by the proper issuance and service of process. The
purpose of which appearance is made is unimportant, as
is the intention with which it is made, if the act done is
one which the statute declares is such as gives to the
court jurisdiction to render a personal judgment against
the person appearing.’’ (York v. State, 73 Tex. 651,
11 S.W. 869 (1889))
York is still the law in Texas today. Toler v. Travis County
Child Welfare Unit, 520 S.W.2d 834 (Tex. Civ. App.—Austin
1975, no writ). In fact, Petitioners’ act of withdrawing original, fil-
ed exhibits is one that only a party is permitted to do under Texas
-23-
law. Tex. R. Civ. P. 75b. By filing their motion to withdraw
original exhibits, instead of simply inspecting or making copies of
the exhibits as public records, Petitioners have invoked the
jurisdiction of the Houston Probate Court and are now parties to
that proceeding.
If this Court should determine that the issues of state tax law
presented in this case should not be resolved in a federai district
court, the matter can now be safely remitted to state court without
fear of inconsistent adjudications of the domicile issue. The
Houston Probate Court provides an alternative forum where the
issues tendered in this case, and in California v. Texas, No.
88, Original, can be resolved. Maryland v. Louisiana, supra;
Arizona v. New Mexico, supra; Illinois v. City of
Milwaukee, supra.
It is uncertain whether Petitioners will argue that 28 U.S.C.
§1251(a) precludes state courts, as well as the lower federal
courts, from exercising jurisdiction over this matter. For the
reasons already set forth in Part 1B(1), supra, this dispute does
not constitute a ‘‘controvers[y] between two or more
States.’’ Petitioners do suggest this argument by implication,
however, by attributing unwarranted significance to a phrase lifted
from Maryland v. Louisiana, supra, 101 S.Ct. at 2128. (Pet.
Br. at 17 n. 21). Petitioners quote that portion of this Court's opi-
nion which states: ‘‘a district court action brought by the United
States, which necessarily would not include the plaintiff States,
would be an inadequate forum in light of the present posture of this
case.’’ Id. The quoted passage would not appear to be a pro-
nouncement of this Court’s exclusive jurisdiction, but rather more
likely refers to the perplexing problem of personal jurisdiction the
Court had noted earlier: ‘‘there exists no procedural mechanism in
Louisiana for the plaintiff States or the United States to be made
parties to the state refund suit.’’ Jd., 101 S.Ct. at 2126 n. 17.
That jurisdictional obstacle is wholly absent here, for Petitioners
voluntarily entered an appearance in the proceeding pending in the
Houston Probate Court. This unusual situation has occurred at
least once before, and the state court exercised jurisdiction and
resolved the controversy. See In re Trowbridge’s Estate,
-24-
266 N.Y. 283, 194 N.E. 756 (1935). No less a scholar of this
Court's jurisdiction than Justice Frankfurter approved that solution
to state death tax disputes and certainly perceived no constitutional
or statutory impediment to that exercise of state court
jurisdiction. Texas v. Florida, 306 U.S. 398, 431 (1935) (opin-
ion of Frankfurter, J.). That solution is available in this case as
well.
li. Venue of This Action Is Now Properly Laid
The Federal Interpleader Act includes specific provisions for
venue of actions brought pursuant to section 1335. These venue
limitations are set forth in 28 U.S.C. §1397, which provides that
such actions ‘‘may be brought in the judicial district in which one
or moré of the claimants reside-**All parties concede that the ~~
Texas taxing officials reside in Austin, Texas and are claimants for
inheritance taxes from the Hughes estate. Venue in Austin is in-
disputably proper under section 1397.
Petitioners, however, assert that the nature of this particular in-
terpleader action makes venue in Austin ‘‘unfair’’ and ‘‘unseem-
ly’’ (Pet. Br. at 6, 10, 11, 16 and 45) and requires transfer of the
case to Denver, Colorado. This transfer is necessary, Petitioners
Claim, in order to provide a ‘‘neutral forum’’ for this litigation.’ As
a necessary predicate to their transfer motion under 28 U.S.C.
§1404(a), Petitioners filed a motion to add as defendants some
8. In the District Court, Petitioners also moved, alternatively, that the case be
transferred to Los Angeles, California. Having been unable to persuade either
the District Court or Court of Appeals to transfer this action, Petitioners now
argue here—for the first time—that 28 U.S.C. §1251(a) precludes any federal
district court from exercising jurisdiction over this case. See Parts \(A)(1) &
(B)(2), supra. And, to buttress their position that an original action in this
Court is the only appropriate remedy for this dispute, Petitioners further contend
that because the strictures of section 1397 do not permit transfer of this case to
Colorado, section 1335 is ‘‘the wrong remedy.'’ (Pet. for Cert. 14). While it is
indeed true that Colorado is not a potential transferee forum, statutory in-
terpleader is a viable remedy in this case if the Eleventh Amendment does not
foreclose it.
twenty-two self-proclaimed heirs’ of Hughes, one of whom was
allegedly a resident of Denver, Colorado.
The district court denied Petitioners’ motion to add parties and
also denied their motion to transfer the case either to Los Angeles
or to Denver. (Pet. App. D, E & F). The Fifth Circuit affirmed
those rulings. (Pet. App. A). These decisions were clearly cor-
rect.
A. The Lower Courts Correctly Denied Peti-
tioners’ Motion to Add Parties.
Unhappy with the Hughes estate's decision to file this action in
Austin, Petitioners realized in 1978 that a motion under 28 U.S.C.
§1404(a) to transfer the case to California for the convenience of
witnesses and parties would inevitably be denied for lack of merit.
Since section 1397 restricts venue to districts in which a claimant
resides, and because no claimant resided in a district where Peti-
tioners alternatively desired venue, Petitioners filed a motion to add
as defendants the twenty-two signatories to an inter-heir settle-
ment agreement. (J.A. 25, 30). As the basis for this motion, Peti-
tioners urge that these heirs must be joined to prevent relitigation
of the domicile issue and to protect the heirs, who are personally
liable for state inheritance taxes. (Pet. Br. at 40-43). In raising
these professed concerns, Petitioners are tilting at self-constructed
windmills fabricated solely for the unsubtle purpose of attempting
to enlarge the number of potential transferee forums for a change
of venue. This transparent attempt at forum manipulation fails
because Petitioners’ alleged fears of relitigation and unprotected
personal interests of heirs are frivolous.
The primary reason why the heirs need not be joined to protect
their individual interests is precisely the same reason why the heirs
cannot relitigate any domicile finding reached in this interpleader
. 9. The Houston Probate Court ruled only two weeks ago that of the hundreds
of persons claiming heirship under Texas law, the twenty-two signatories of this
agreement were in fact the true heirs of Hughes. It is too early to know whether
that ruling will be appealed. But the fact that it has taken more than five years
for an initial ruling on heirship confirms that heirs, or potential heirs prior to
resolution of the heirship question, cannot be necessary parties to an in-
terpleader such as this.
-26-
action: the interests of the heirs are completely represented by the
administrators of the estate, who have full authority to represent
those interests. The very nature and extent of this representation
ensure that interests of the heirs will be carefully protected, which
in turn guarantees that the heirs will be bound by any judgment
rendered herein.
The role of an administrator as the representative of the entire
estate, including the interests of the estate’s beneficiaries, is
crystal clear under state law. An administrator has the duty to
marshal the assets of an estate and the right to possession of those
assets pending distribution. Cal. Prob. Code §571; Tex. Prob.
Code §37; In re Estate of Turino, 8 Cal. App. 3d 642, 87 Cal.
Rptr. 581 (1970); Atlantic Ins. Co. v. Fulfs, 417 S.W.2d 302
(Tex. Civ. App.—Fort Worth 1967, writ ref'd n.r.e.). An ad-
ministrator also has broad authority to institute all suits necessary
for the preservation of the estate pending distribution. In re
Estate of Turino, supra; Carnes v. Meador, 533 S.W.2d
365 (Tex. Civ. App.—Dallas 1975, writ ref'd n.r.e.); Glover v.
Landes, 530 S.W.2d 910 (Tex. Civ. App.—Houston [1st] 1975,
writ ref'd n.r.e.); Tex. Prob. Code §233. It is clear beyond cavil
that the present interpleader action, brought to eliminate the
possibility of both Texas and California imposing domicile-based
death taxes on the intangibles of the estate, is one pursuant to the
Statutory rights and duties of an administrator to bring a suit
necessary for the preservation of an estate. Jd. The interests of
the administrators and heirs in this proceeding totally coin-
cide—both wish to preserve the largest estate possible by avoiding
double taxation—and will be fervently represented by the ad-
ministrators, who are under a fiduciary obligation to do so. See
Humane Society of Austin & Travis County v. Austin
Nat'l Bank, 531 S.W.2d 574 (Tex. 1975). Clearly, the heirs
need not be joined to have their interests represented.
For this very reason, the heirs will be precluded from relitigating
the issues decided in this interpleader action. This Court has
repeatedly held that a person can be bound by the judgment in a
proceeding to which he was nota party. Kersh Lake Drainage
District v. Johnson, 309 U.S. 485 (1940); Chicago, R.I. &
P. Ry. v. Schendel, 270 U.S. 611, 613-20 (1926); Heckman
-27-
v. United States, 224 U.S. 413 (1912); Shaw v. Railroad
Co., 100 U.S. 605, 611 (1879); Kerrison v. Stewart, 93 U.S.
155, 160 (1879); cf. Montana v. United States, 440 U.S. 147
(1979) (non-party controlled prior litigation). Federal courts have
recognized a variety of situations in whic}: the relationship between
a party and a non-party is ‘‘sufficiently close’’ to justify precluding
the non-party, by applying res judicata or collateral estoppel,
from relitigating issues resolved in his absence. Southwest
Airlines Co. v. Texas International Airlines, Inc., 546
F.2d 84, 95 (Sth Cir.), cert. denied, 434 U.S. 832 (1977);
Aerojet-General Corp. v. Askew, 511 F.2d 710, 719 (5th
Cir.), cert. denied, 423 U.S. 908 (1975); see Vestal, Preclu-
sion/Res Judicata Variables: Parties, 50 \owa L. Rev. 27,
59-66 (1964); Vestal, Res Judicata/Preclusion: Expansion,
47 So. Cal. L. Rev. 357, 373-76 (1974).
One of the most well-settled situations in which this principle is
applied to non-parties is encompassed by the rule that ‘a person
whose interest was represented by one having authority to repre-
sent him is bound by the judgment, although he was not formally a
party...."' 1B Moore’s Federal Practice 410.411[1]} at 1253
(hereinafter ‘‘Moore’’); Expert Electric, Inc. v. Levine, 554
F.2d 1227, 1233 (2d Cir.), cert. denied, 434 U.S. 903 (1977);
Southwest Airlines Co. v. Texas International Airlines,
Inc., supra.
An example of this type of preclusion, demonstrating its ap-
propriate application in the context of joinder, is found in
Heckman v. United States, 224 U.S. 413 (1912). There the
United States brought suit to set aside certain conveyances of
lands allotted to Cherokee Indians, but conveyed by them during a
period in which alienation of the land was prohibited by statute.
The grantees of the land made the same argument Petitioners do
here—that the Indian grantors, as owners of the land, should be
joined as parties under Shields v. Barrow, 58 U.S. (27 How.)
130 (1854), in order to provide complete adjudication and to pre-
vent relitigation. 224 U.S. at 444-45. The Court noted that the in-
terest of the Indian grantors was represented completely by the
United States and that ‘‘[t]heir presence as parties could not add
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to, or detract from, the effect of the proceedings....'' 224 U.S. at
445. The Court went on to explain:
““[I]f the United States, representing the owners of
restricted lands, is entitled to bring a suit of this
character, it must follow that the decree will bind not on-
ly the United States, but the Indians whom it represents
in the litigation. This consequence is involved in the
representation. [citations omitted] And it could not,
consistently with any principle, be tolerated that, after
the United States on behalf of its wards had invoked the
jurisdiction of its courts to cancel conveyances in viola-
tion of the restrictions prescribed by Congress, these
wards should themselves be permitted to relitigate the
question.’’ (224 U.S. at 445-46)
Also subsumed within the rule that the preciusive effect of a
judgment extends to a non-party whose interest was represented
by a party with authority to do so is the relationship of fiduciary
representative-beneficiary. As this Court explained in Sea-Land
Services, Inc. v. Gaudet, 414 U.S. 573, 593-94 (1974):
‘‘[NJjonparties may be collaterally estopped from
relitigating issues necessarily decided in a suit brought
by a party who acts as a fiduciary representative for the
beneficial interest of the nonparties. In such cases, ‘the
beneficiaries are bound by the judgment with respect to
the interest which was the subject of the fiduciary rela-
tionship; they are ... bound by the rules of collateral
estoppel in suits upon different causes of action,’ F.
James, Civil Procedure §11.28, p. 592 (1965)."’
The fiduciary relationship between an estate administrator and
an heir to an estate falls squarely within the ambit of this rule. See
Southwest Airlines Co. v. Texas International Airlines,
Inc., supra, 546 F.2d at 95; Pollard v. Cockrell, 578 F.2d
1002, 1008-1009 (5th Cir. 1978). As formulated by Professor
Moore in traditional terminology, the rule is that ‘‘the administrator
or executor on the one hand and the heirs ... on the other, are
privies on the basis of their concurrent relationship to the personal
property...’’, 1B Moore 410.411[12] at 1665, ‘‘so that a judgment
rendered for or against one pariy to the relatiesehip is normally
conclusive... in litigation by or against the other....’’ Jd. at
1672. Not surprisingly, federal courts have reached this same
conclusion, holding that the preclusive effect of a judgment
rendered against the administrator of an estate extends to nonparty
beneficiaries of the estate. Chicago, RI. & P. Ry. v.
Schendel, 270 U.S. 611, 620 (1926); McCrocklin v. Fowler,
285 F.Supp. 41 (E.D. Wis. 1968), aff'd, 411 F.2¢ 580 (7th Cir.
1969).
The validity of this conclusion is confirmed by Rule 17(a) of the
Federal Rules of Civil Procedure, which codifies long-recognized
federal practice by providing that an executor or administrator is
the real party in interest and may sue in his own name without
joining the party for whose benefit the action is brought. See
Childress v. Emory, 21 U.S. (8 Wheat.) 642, 669 (1823);
Mecom uv. Fitzsimmons Drilling Co., 284 U.S. 183 (1931);
Boeing Airplane Co. v. Perry, 322 F.2d 589 (10th Cir. 1963),
cert. denied, 375 U.S. 984 (1964); Estate of Johnson uv.
Bellville Hospital, 56 F.R.D. 380 (S.D. Tex. 1972); McElroy
v. Security Nat'l Bank, 215 F.Supp. 775 (D. Kan. 1963).
The purpose of the real party in interest rule was stated in the
Advisory Committee Note to the 1966 amendment to Rule 17(a):
‘*[T]he modern function of the rule in its negative aspect
is simply to protect the defendant against a
subsequent action by the party actually entitled
to recover, and to insure generally that the judg-
ment will have its proper effect as res judicata.”’
(39 F.R.D. 69, 85 (1966)(emphasis added); see
Pacific Coast Agricultural Export Ass'n uv.
Sunkist Growers, Inc., 526 F.2d 1196, 1208 (9th
Cir. 1975), cert. denied, 425 U.S. 959 (1976)).
Thus Rule 17(a) incorporates, as one of the basic tenets of federal
procedure, the principle that a beneficiary of an estate is bound by
a judgment rendered in his absence against the executor or ad-
-30-
ministrator of the estate. "°
Petitioners seek to avoid this long-standing precedent by asser-
ting that the heirs are personally liable for state death taxes and
therefore they, not the administrators, are the real parties in in-
terest, and the administrators are incapable of representing the
heirs. The cornerstone of this argument is Allen v. Flournoy,
26 Cal. App. 3d 774, 103 Cal. Rptr. 275 (1972), which Petitioners
would interpret as making the heirs indispensabie parties to any
proceeding which would affect the amount of death tax to be paid
by an estate. Petitioners’ argument is ill-conceived for at least
three reasons: one, it misinterprets Allen v. Flournoy; two, the
existence of potential personal liability on the part of the heirs does
not affect the application of the preclusion doctrine; and, three,
heirs are not indispensable parties to a lawsuit involving a liability
or an asset that falls directly upon the heirs rather than upon the
estate.
Petitioners stretch Allen v. Flournoy, supra, beyond the
breaking point; that case will not support the ponderous weight of
Petitioners’ argument. In Flournoy, the court merely held that
due process requires that all heirs who are easily ascertainable be
given notice of the tax appraiser's report in a proceeding which
fixes inheritance taxes on the transfer of non-probate
property. See Westinghouse Electric Corp. v. County of
Los Angeles, 42 Cal. App. 3d 32, 116 Cal. Rptr. 742 (1974);
Johnson v. Alma Investment Co., 47 Cal. App. 3d 155, 120
Cal. Rptr. 503 (1975). It does not hold that heirs must be joined in
every proceeding which could affect, directly or indirectly, an
10. This universally-accepted principle is also recognized in section 85 of the
Restatement (Second) of Judgments (tentative draft No. 2, 1975) which pro-
vides, in pertinent part:
(1) A person who is not a party to an action but who is
represented by a party is bound by and entitled to the benefits of the
rules of res judicata as though he were a party. A person is
represented by a party who is:
(c) The executor, administrator, guardian, conservator, or
similar fidiciary manager of an interest of which the person is
a beneficiary;...
-31-
estate’s inheritance tax liability. In fact, it does not even hold that
heirs are indispensable parties to proceedings which fix the in-
heritance tax liability for property which passes under a will or by
intestacy. The quotation from Flournoy upon which Petitioners
so heavily rely—‘‘the heirs are ‘indispensable part[ies] to that por-
tion of the proceeding in which inheritance taxes [are] fixed....’"’,
4llen v. Flournoy, 26 Cal. App. 3d 774, 781, 103 Cal. Rptr.
275, 279 (1972)—clearly limits any possible application of Flour-
noy to a ‘sproceeding in which inheritance taxes [are] fixed.’ In
this case, no inheritance tax will be fixed and no heir will be held
personally liable for any tax. All that will be determined in this
case is the domicile of Howard Hughes at the date of his death, the
threshold issue to any assessment of an inheritance tax. Following
Petitioners’ reasoning to its logical, but absurd, end, courts would
be required to join the heirs at every stage of any proceeding which
might affect the inheritance tax due. Such a result would im-
mensely and irrationally encumber the inheritance tax and probate
system and is not required. Cf. Lennefelt v. Cranston, 231
Cal. App. 2d 171, 41 Cal. Rptr. 598 (1964).
Petitioners’ conjured specter of the potential personal liability of
the heirs does not make the heirs the real parties in interest in this
proceeding, nor does it alter the application of the traditional prin-
ciples of preclusion set forth above. This Court recently explained
that, at least for procedural purposes—which surely include
joinder—Rule 17(a) determines who is the real party in
interest. Navarro Savings Ass'n v. Lee, 446 U.S. 458, 462
(1980). Moreover, Petitioners offer no reason why the ad-
ministrators cannot or should not represent whatever interest the
heirs may have in this tax proceeding. Petitioners fail to differen-
tiate this potential tax claim against the heirs from the multitude of
other tax claims and creditors’ claims which are regularly handled
by estate administrators. Because any California inheritance taxes
would be paid by the administrator prior to distribution of the estate
(Cal. Rev. & Tax. Code §§14121, 14127), as will all other estate
liabilities, the fact that the heirs might be personally liable for such
taxes is truly a distinction without a difference. This case is simply
one brought by the administrators to preserve the assets of the
estate and is the first step in the long taxing process. As such, it
-32-
falls into the general category of lawsuits which an administrator is
empowered to bring for the benefit of the heirs, in which, accor-
ding to Professor Wright, the heirs need not be joined.
‘‘Normally, however, state substantive law gives the ad-
ministrator or executor control of a suit for wrongful
death, and the fiduciary is not required to join the per-
sons for whose benefit the action is brought; the same
would be done in a federal court action.’’
(6 C. Wright & A. Miller, Federal Practice & Pro-
cedure §1548 at 670)
An additional line of cases illustrates the error in Petitioners’
position that the potential heirs are indispensable parties to this
litigation because the tax liability which will be affected by the out-
come of this suit falls on the heirs rather than the estate. It is well
settled that in determining diversity jurisdiction, courts must look,
sua sponte if necessary, at the citizenship of indispensable par-
ties to the litigation. The court must join them if they are not par-
ties even if to do so would defeat diversity jurisdiction. E.g., Jett
v. Zink, 362 F.2d 723 (5th Cir. 1966). On several occasions,
courts have held that even where the asset (and conversely the
liability) belongs to the heirs and not to the estate, if the ad-
ministrator is authorized to bring the lawsuit, then the court should
look only to his citizenship. Mecom v. Fitzsimmons Drilling
Co., supra; Bush v. Carpenter Brothers, Inc., 447 F.2d 707
(Sth Cir. 1971); 13 C. Wright, A. Miller & E. Cooper, Federal
Practice & Procedure, §3606 (1975). In Mecom v. Fitzsim-
mons, supra, the Supreme Court noted with approval the rule
that in wrongful death cases in which by statute the amount
recovered belongs to the heirs and not to the estate, the citizenship
of the administrator, i.e. the indispensable party, controlled. Con-
sequently, it follows than even in such cases, heirs are not in-
dispensable parties and need not be joined.
Petitioners’ simultaneous solicitude for the interest of the heirs
and fear of relitigation by them are made even more unbelievable
by the fact that Annette Gano Lummis, the now-deceased aunt of
Howard Hughes, is the sole heir to the Hughes estate under
California law. Cal. Prob. Code §226. The executor of her estate
-33-
is therefore the only person other than the administrators of the
Hughes estate liable to the State of California fo: its inheritance
tax. Cal. Rev. & Tax. Code §14101. While the heirs may agree
among themselves as to the distribution of the estate and the ap-
portionment of the inheritance tax, the tax itself becomes fixed at
death, and such an agreement does not affect the right of California
to the tax or change the basis upon which it is to be computed.
Cohn v. Cohn, 20 Cal. 2d 65, 123 P. 2d 833 (1942); In re
Estate of Rossi, 169 Cal. 148, 146 P. 430 (1915); In re
Estate of Holt, 61 Cal. App. 464, 215 P. 124 (1923); Kelso v.
Sargeant, 11 Cal. App. 2d 170, 54 P. 2d 26 (1936). In other
words, the settlement agreement is disregarded in computing the
inheritance tax due. California Controller's Inheritance Tax
Regulation 13409(b); Cal. Admin. Code Tit. 19, p. 660.4; CCH In-
heritance, Estate and Gift Taxation Reporter, State Vol. 1,
415,318; Cory v. Walsh, 72 Cal. App. 3d 895, 140 Cal. Roptr.
462 (1977).
Though as a practical matter the administrator, as required by
law, will pay all inheritance taxes prior to distribution of the estate,
if distribution were to occur prior to the deduction of the tax, the
administrator and the executor of Mrs. Lummis’ estate would alone
be liable to California. Cal. Rev. & Tax. Code §§14121, 14143; In
re Pearson's Estate, 90 Cal. App. 2d 436, 203 P. 2d 52
(1949); Cohn v. Cohn, supra. The signatories to the settlement
agreement would be liable only to the estate of Mrs. Lummis, and
solely because of their private contractual agreement to pay a por-
tion of the tax in relation to their distributed share. These
signatories thus never enter the picture for purposes of California's
inheritance tax and certainly will not be personally liable for
it. Petitioners clearly have nothing to fear from, and no legitimate
concern about, the signatories to the settlement agreement.
Finally, for an intensely practical reason, the joinder of heirs or
potential heirs cannot be proper in an action such as this. This is
not a proceeding to determine who the heirs are or what their tax
liabilities may be. The entire estate has not been tendered into the
registry of the Court for a resolution of all claims against it. This
suit will resolve only the issue of domicile—the threshold inquiry in
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the taxing process—and the heirs have no role to play in such a
lawsuit.
It is unrealistic to suggest that at the second stage of such an in-
terpleader, all the potential heirs, and their respective attorneys,
will be controlling the litigation on behalf of the estate. For if the
domicile issue were in the control of the various potential heirs,
these heirs would presumably be free to make their own peace with
the claimant taxing authorities, which could result in a hodgepodge
of settlements that could turn the remainder of the administration,
as well as the remainder of the interpleader action, into a
circus. In addition, potential heirs, who are not even assured of a
share in the estate assets, would be forced to bear the substantial
costs of litigating the merits of the domicile issue.
The scenario would be even more bizarre in this case, where the
intestacy laws of the asserted domiciliary states differ. Petitioners
seek to join a person—allegedly a resident of Denver—who is an
heir only under the intestacy laws of Texas, in order to bootstrap a
change of venue from Texas to Colorado in an effort to obtain a
California domiciliary finding, which would render the alleged resi-
dent of Denver not an heir at all and would consequently establish
that his residence could not have supported a change of venue.
The irony of that situation confirms that the law of joinder does not
permit, and surely cannot require, that the heirs be added as par-
ties.
B. The Lower Courts Correctly Denied Peti-
tioner’s Motion to Transfer This Case
Petitioners contend that if the heirs are joined, this Court is re-
quired to uproot this litigation from the district where it has been
pending for more than three years and summarily drop it more than
one thousand miles away on the unwitting courts and people of
Denver, Colorado. This remarkable contention is made without so
much as a mention of the factors under 28 U.S.C. §1404(a) that
govern such a transfer or the evaluation of those factors made by
the district court in denying Petitioners’ motion to transfer the case
to Los Angeles. Petitioners rely solely on a talismanic invocation of
the term ‘‘juror prejudice’’—which is unsubstantiated, un-
-35-
justified, and unfair—to argue that all traditional legal and factual
reasons for denying this transfer can and should be overridden in
the name of ‘‘the interest of justice’. However, ‘‘[t]he require-
ment of venue is specific and unambiguous; it is not one of those
vague principles which, in the interest of some overriding policy, is
to be given a ‘liberal’ construction.'’ Olberding v. Illinois
Central R.R., 346 U.S. 338, 340 (1953). Justice is best attain-
ed when a ‘‘body of law developed over a period of years is
evenhandedly applied.’’ Federated Dept. Stores, Inc. v.
Moitie, __U.S.__, 101 S.Ct. 2424, 2429 (1981). Here, the law
is clear that transfer was properly denied.
The most complete and well-reasoned judicial treatment of the
venue arguments advanced by Petitioners demonstrates that the
conclusion reached by the district court in Austin would also have
been reached by the federal judiciary of the Central District of
California. For in Los Angeles Memorial Coliseum Comm'n
v. National Football League, 89 F.R.D. 497 (C.D.Cal.
1981)(hereinafter ‘‘L.A. Coliseum v. NFL"), all of Petitioners’
‘*neutral forum’’ arguments, and then some, were fully reviewed
and rejected. For those same reasons, plus the fact that Colorado
is not an available transferee forum here, the denial of Petitioners’
motion for change of venue should be affirmed.
First, as Petitioners concede, unless the heirs are joined this
Case Cannot be transferred to Denver because no claimant would
reside there and the District of Colorado would therefore not be one
where this action ‘‘might have been brought’’ in the first
instance. 28 U.S.C. §§1397, 1404(a). But even if the twenty-two
signatories to the inter-heir settlement agreement are joined as
parties, this same impediment exists, for there has been absolutely
no showing that any of those twenty-two signatories resided in Col-
orado on July 14, 1978, when this suit was filed. Because the
relevant date for determining where an action ‘‘might have been
brought"’ is the date of the filing of the original complaint, it is in-
cumbent upon Petitioners to prove that as of July 14, 1978, a
claimant resided in Colorado. Allegaert v. Chemical Bank,
432 F.Supp. 685 (E.D.N.Y. 1977); Harry Rich Corp. v.
Curtiss-Wright Corp., 308 F.Supp. 1114 (S.D.N.Y. 1969);
Leith v. The Rocroi, 203 F.Supp. 48 (S.D. Tex. 1962); cf.
-36-
Hoffman v. Blaski, 363 U.S. 335 (1960); Rule 15, Fed. R.
Civ. P.
The record below does not contain a morsel of proof that a claim-
ant resided in Colorado at the time this suit was brought. In fact,
there is not even an allegation to that effect. The only allegations
that a claimant resides in Colorado are found in California's
Memorandum in Support of Motion for Change of Venue.
‘‘As shown in Exhibits F and G to the Mayer affidavit,
these additional parties reside in Texas, Massachusetts,
Ohio, Florida and Colorado.’’ (R.1. 85).
‘As the granting of our motion for joinder of additional
parties will require Plaintiffs to file an Amended Com-
plaint which includes an heir resident in Colorado, that
district is one where this case could be brought within
the meaning of Section 1404(a)'’. (R.1. 88).
Neither of these allegations assert that a party sought to be joined
was a resident of Colorado on July 14, 1978. Moreover, mere
allegations without factual support are insufficient to support a
1404(a) motion. Kisko v. Penn Central Transportation
Co., 408 F.Supp. 984 (M.D. Penn. 1976).
Petitioners’ factual support is deficient. They rely entirely on the
affidavit of Steven L. Mayer, dated August 24, 1978, and exhibits
F and G attached thereto. (J.A. 24-32). Neither this affidavit nor
the attached exhibits indicate that an heir resided in Colorado on
July 14, 1978.
‘*The known heirs to the Hughes estate have entered in-
to a series of settlement agreements, which purport to
distribute the estate to the heirs in specified percen-
tages, irrespective of the state ultimately found to be Mr.
Hughes’ domicile.
Attached hereto as Exhibit F-1 is a true and correct copy
of the original Settlement Agreement reached between
the heirs in 1976; and Exhibit F-2 attached hereto is a
true and correct copy of the Supplemental Agreement
signed in 1977. Attached to the agreements are true
copies of the notarized signatures of the heirs which,
-37-
assuming the heirs signed the agreement in their states
of residence, indicates their geographical distribution.
It can be seen that, as of the date of the recent Sup-
plemental Agreement, the heirs resided in Ohio,
Massachusetts, Colorado, Texas and Florida. A list of
the heirs which shows the date and place they signed
the Supplemental Agreement is attached hereto as Ex-
hibit G. In addition, | have been informed by members
of the firm of Andrews, Kurth, Campbell and Jones,
counsel for plaintiffs herein, that at least one heir
presently resides in the District of Colorado.’’ (J.A.
24-25).
What this affidavit does not state is significant. It does not state
which heir allegedly resides in Colorado, nor does it state that any
heir resided in Colorado on July 14, 1978.
Exhibits F and G do not contain any factual proof than an heir
resided in Colorado on July 14, 1978. Petitioners rely on the
assumption that the heirs signed the Settlement Agreement and
Supplemental Agreement in their state of residence, and then note
that several of the heirs signed these documents in Colorado. This
proof is insufficient for two reasons. First, the assumption that the
heirs signed in their place of residence is unfounded. The heirs
could have signed in Colorado and lived elsewhere. The exhibits
themselves indicate as much. Three of the heirs, Elspeth De
Pould, Margot Fleming Houstoun and John Mcintosh Houstoun,
acknowledged the original agreement on July 10, 1976 in Col-
orado. (J.A. 27). As to the Supplemental Agreement, however,
De Pould acknowledged in Cuyahoga County, Ohio, (J.A. 32), and
Margot Fleming Houstoun acknowledged in Harris County, Texas.
(J.A. 34). Only John Mcintosh Houstoun acknowledged in Col-
orado, and this was done June 10, 1977. (J.A. 34). Allene Lum-
mis Russell acknowledged once in Texas and once in Massa-
chusetts. (J.A. 28, 33). Barbara Cameron executed once in
California and once in Ohio. (J.A. 29, 32). And Richard C. Gano,
Jr., the administrator of the estate of Howard Hughes in California,
who by statute must be a resident of California,’ executed the Sup-
11. Cal. Prob. Code §420 requires administrators to be bona fide residents ot
California.
-38-
plemental Agreement in Harris County, Texas. (J.A. 33). Even if
the site of signing these agreements were proot of the signatories’
residence as of the date of signature, none of the dates on which
the alleged Colorado residents signed the documents is related to
the determinative date of July 14, 1978. Thus, the statements
concerning residence in the Mayer affidavit are merely unsup-
ported conclusions, which will not support a change of venue.
Texas Gulf Sulpher Co. v. Ritter, 371 F.2d 145 (10th Cir.
1967); Jones v. Walt Disney World Co., 409 F.Supp. 526
(W.D.N.Y. 1976); Sinclair Oil Corp. v. Union Oil Co. of
California, 305 F. Supp. 903 (S.D.N.Y. 1969).
Should this Court find that Colorado is a forum where this suit
might have been brought on July 14, 1978, this case still should
not be transferred. Petitioners have not met their burden of show-
ing that it is in the interest of justice that the case be transferred to
Colorado, nor have Petitioners even addressed the other factors
under 28 U.S.C. §1404(a), which militate strongly against the pro-
posed transfer.
The reasons offered in support of a transfer to Colorado all rest
on an assumption of juror prejudice. Petitioners assert that the
minute financial interest which Texas jurors might have in the out-
come of the case, ‘‘the parochial effects of local and regional
pride’’ (Pet. Br. 13), and the influence of prior publicity covering
the 1978 Houston domicile trial make it impossible to hold a fair
trial in Austin, Texas." These arguments that a transfer is
12. Nor does the statement that Mr. Mayer had been informed that ‘‘at least
one heir presently resides in the District of Colorado’’ add any strength to his af-
fidavit, for it does not indicate that an heir resided in Colorado on July 14, 1978.
13. Petitioners further claim that it is ‘inappropriate to compel a state to
resort to the tribunals of another state for redress'’ because it will have an im-
pact on state sovereignty. (Pet. Br. 16). This concern about state sovereignty
is nothing more than a reiteration of Eleventh Amendment and sovereign im-
munity concepts. However, for a district court to have jurisdiction over this in-
terpleader action, it will necessarily have been held that the Eleventh Amend-
ment and sovereign immunity do not apply. That being the case, Petitioners’
sovereignty concerns evaporate as well, since no state's sovereignty will be
Challenged.
(footnote continued on following page)
-39-
necessary to provide a ‘‘neutral forum'’ ignore the very logic
underlying the grant of diversity jurisdiction to federal courts.
Petitioners would be submitting their claims to a federal district
court, a ‘‘national tribunal,’ (Wisconsin v. Pelican Ins. Co.,
127 U.S. 265, 289 (1888)), whose jurisdiction under 28 U.S.C.
§1335 would be bottomed on diversity of citizenship. The very ra-
tionale for that jurisdictional grant was that a federal district court
would provide a forum in which out-of-state litigants could escape
local prejudice. 13 C. Wright & A. Miller, Federal Practice &
Procedure, §3601 at 574 (1972).
Petitioners contend that even if the district court were fair, Texas
jurors would not be. This assumption of juror bias dangles from
three thin strands—pecuniary interest, regional pride, and prior
publicity—which cannot support a transfer. The primary argument
is that the dizzying sum of $6.02" that each juror might stand to
gain in taxes by a verdict of Texas domicile would make the jury
panel ignore their sacred juror’s oath and render a verdict based
on pecuniary self-interest rather than on the evidence adduced.
Merely to state this reasoning shows why the cases relied on by
Petitioners are inapposite. For in contrast to this case, the fact
finder in Tumey v. Ohio, 273 U.S. 510 (1927), received approx-
imately $100 per month from his pecuniary interest in convictions,
while the justice of the peace in Connally v. Georgia, 429 U.S.
245 (1977), made more than $50,000 in three years by issuing
(footnote continued from previous page)
Furthermore, even if Petitioners were right about the impact on state
sovereignty, transfer of this case to Colorado would only exacerbate the
problem, for then two, rather than one, sovereign states would be required to
litigate their claims in a sister state.
14. In the petition for certiorari, Petitioners claimed that each juror’s stake in
the outcome of the case would be $12.34, a figure based on the valuation of the
Estate by the California inheritance tax referee. Petitioners now utilize the valua-
tion by the Internal Revenue Service, apparently recognizing that under the
California valuation of the Hughes estate, ample assets exist to satisfy the tax
claims of the United States, California and Texas, thus precluding original
jurisdiction in this Court under Texas v. Florida, supra. See Texas’ Brief in
Opposition, California v. Texas, No. 88, Original, at 8-12.
-40-
warrants, and those fees were his salary. Here, there is no
substantial, repeating and direct interest by Texas jurors as ex-
isted in Tumey and Connally. The one-time, indirect interest of
$6.02 that a juror might have is clearly de minimus and does not
mandate transfer of the case. L.A. Coliseum v. NFL, supra;
Virginia Electric & Power Co. v. Sun Shipbuilding &
Dry Dock Co., 389 F.Supp. 568 (E.D. Va. 1975); cf. Dugan v.
Ohio, 277 U.S. 61 (1928) (distinguishing Tumey).
The suggestion that ‘‘the pride and affection which each Texas
juror justifiably has for the State of Texas’’ (Pet. Br. 13) would
cause the rendition of an improper verdict is the unkindest cut of
all. Nothing is more ‘‘unfair’’ and ‘‘unseemly’’ than this attempt
to twist the concept of ‘‘Texas pride’’ to impugn the integrity, im-
partiality and honesty of Texas jurors. That pride is based on the
very qualities Petitioners now call into question. When a similar
argument was made by the NFL about the emotional and political
biases of Los Angeles jurors concerning an issue infinitely more
charged with emotion than the dry question of domicile—the loca-
tion of a professional football team—the court noted that, as here,
‘there has been no attempt to compile any statistical or survey
data to substantiate this claim’’ and decided that ‘‘any decision on
the extent of alleged ‘emotional’ or ‘political’ biases must await
further substantiation in the context of the voir dire.’ L.A. Col-
iseum v. NFL, supra, 89 F.R.D. at 510.
Petitioners’ professed fears about publicity concerning the prior
State court domicile trial and verdict are similarly unfounded.
These arguments were weak and exaggerated when first offered to
the district court in the fall of 1978, some eight months after the
end of the Texas trial. Now, almost four years after that trial, any
possible impact of media coverage in the Austin area about the
Houston trial has completely dissipated. By the time this case
reaches trial, no residual effect of prior publicity could possibly ex-
ist.
The voir dire process is designed to screen any potential juror
who may actually be affected by the factors which worry Peti-
tioners. If this case is to be transferred due to juror partiality, it
should only be done by the district court after a thorough voir dire
examination, rather than on the basis of Petitioners’ unfounded
-41-
assumptions. See United States v. Haldeman, 559 F.2d 31,
62-63 (D.C. Cir. 1976), cert. denied, 431 U.S. 933 (1977);
United States v. Lamb, 575 F.2d 1310, 1315 (10th Cir.),
cert. denied, 439 U.S. 854 (1978) (‘‘The proper occasion for
determining juror partiality is upon voir dire examination. '’).
"Since the defendants here have submitted no such
evidence [statistical evidence or the results of opinion
polls], and since the copies of newspaper articles thus
far submitted do not compel a conclusion, prior to voir
dire, that six fair and impartial jurors cannot be found in
this district, the argument that the central district is not
a ‘fair and impartial’ forum due to pre-trial publicity
must be rejected at this time.’’ (L.A. Coliseum v.
NFL, supra, 89 F.R.D. at 509)
There has been absolutely no showing that the system of voir
dire and juror instruction will be incapable of handling any potential
juror bias in this case. The Court should not indulge Petitioners’
assumptions” that the system will not work, when the appropriate
presumption is that it will. ‘‘[I}t is presumed that the jury will be
true to their oath and conscientiously observe the instructions of
the court...’’, United States v. Sorcey, 151 F.2d 899, 903
(7th Cir.), cert. denied, 327 U.S. 794 (1945), and ‘‘we cannot
presume that a trial will proceed other than fairly in any federal
forum in which venue exists.’ Chicago, R.I. & P.Ry. v. Igoe,
15. Petitioners’ conclusions of juror prejudice would require acceptance of
the following assumptions: (1) that Austin jurors will be aware that a Texas
domiciliary finding will affect Texas inheritance tax revenues (2) in a large
amount (3) so that they will each benefit (4) by a maximum of $6.02; (5) that
Austinites have immense pride in their heritage as Texans and (6) would be
proud to consider Howard Hughes a fellow Texan; (7) that the venire lived in
Austin five to eight years prior to trial (when the prior publicity occurred), (8)
read the Austin newspapers then, (9) read the Hughes articles in the news-
papers, and (10) remembered what they said; (11) that because of all of the
above, the jurors will be unable to view the evidence impartially and (12) that the
judge will be unable to ferret out those jurors who are unable to act impartially.
Obviously, this amazing string of assumptions and inferences cannot suppor’
a change in venue.
-42-
212 F.2d 378, 382 (7th Cir. 1954), cert. denied, 350 U.S. 822
(1955). Accord, Patterson v. Louisville & Nashville R.R.,
182 F.Supp. 95 (S.D. Ind. 1960).
Petitioners’ view of the interest of justice is unduly weighted
with self-interest. The trial of this case could well last several
months, which will work an extraordinary hardship on the jurors
selected to hear the case. As this Court has stated, ‘‘[j]jury duty is
a burden that ought not to be imposed upon the people of a com-
munity which has no relation to the litigation.’’ Gulf Oil Corp.
v. Gilbert, 330 U.S. 501, 508-509(1947); Flintkote Co. v.
Allis-Chalmers Corp., 73 F.R.D. 463 (S.D.N.Y. 1977). It is
not in the interest of justice to saddle the citizens of Denver with
the time-consuming and expensive burden of this trial."°
Aside from their comments on the interest of justice, Petitioners
do not even mention the factors which govern a transfer sought
under 28 U.S.C. §1404(a). Although ‘‘venue is primarily a mat-
ter of convenience of litigants and witnesses,’’ (Denver & Rio
Grande Western R.R. v. Brotherhood of R.R. Trainmen,
supra, 387 U.S. at 560), Petitioners do not address these con-
cerns. The reason for that omission, of course, is that the tradi-
tional considerations under section 1404(a) point directly to Austin
as the appropriate forum for this litigation.
A trial in this case will involve three sets of litigants: Petitioners
respondents White and Bullock, and the Estate
administrators. The lawyers for the Estate are located in Houston,
Texas, as are the tens of thousands of documents in the Estate's
possession relevant to the domicile question. (J.A.
16. The four concurring Justices who suggested this interpleader action
presumably felt that the jurors in either Texas or California could hear this case
with due impartiality. The concurring opinions never mention the prospect—let
alone the necessity—of joining the heirs as claimants in order to make available
an alternative, ‘‘neutral’’ forum. In fact, if the Eleventh Amendment does not
bar such interpleader actions, venue in most future domicile cases would be laid
in a claimant state by necessity. For example, if someone dies leaving his or her
entire estate to his or her spouse, and two states claim to be the domiciliary
State, it is highly likely that the spouse would reside in one of those two
Claimant states. In such case, even under Petitioners’ expansive joinder argu-
ment, the only permissible forums would be in the claimant states.
-43-
139-140). Given this three party setting, a trial in Austin would be
convenient for two of the three groups of parties. A trial in Los
Angeles would be relatively convenient for Petitioners, and very in-
convenient for the other parties. And a trial in Denver would be ex-
tremely inconvenient for all of the parties and their attorneys, and
would cause litigation costs to skyrocket. See L.A. Coliseum v.
NFL, supra, 89 F.R.D. at 501; Altman v. Deramus, 342
F.Supp. 72, 76 (S.D.N.Y. 1972); Mobil Oil Corp. v. W. R.
Grace & Co., 334 F.Supp. 117, 124 n. 5 (S.D. Tex. 1971).
‘Thus, unlike the usual transfer motion, where the
court is asked to balance an increase in costs for one
party against a significant decrease in the costs of
another, the transfer requested here would result in
greatly increased costs for every party to the
suit.’ (L.A. Coliseum v. NFL, supra, 89 F.R.D. at
501)
The convenience of witnesses is often considered the most im-
portant factor governing transfer. See L.A. Coliseum v. NFL,
supra, 89 F.R.D. at 501; Saminsky v. Occidental
Petroleum Corp., 373 F.Supp. 257, 259 (S.D.N.Y.
1974). While the great majority of the witnesses who testified at
the prior Texas domicile trial reside in Texas, California, or Nevada,
only two of those seventy-three witnesses reside in
Colorado. Because of the age and health of many of the witnesses
who knew Hughes in his earlier, less reclusive days, a trip into the
high altitude of Denver would not only be vastly inconvenient, but
perhaps dangerous. In this case, Denver would be a terribly in-
convenient and expensive forum for all concerned.
Finally, because a plaintiff's choice of forums is strictly limited
by applicable venue provisions—here, by 28 U.S.C.
§1397—courts have often stated that the plaintiff's ultimate selec-
tion of venue should not be lightly disturbed. See, e.g., Nor-
thern Acceptance Trust 1065 v. Gray, 423 F.2d 653, 654
(9th Cir.), cert. denied, 398 U.S. 939 (1970); 1 Moore's
Federal Practice 40.145{5] at 1616 (2d ed. 1980).
-44-
The Texas taxing officials have already expended a vast amount
of time, and not an insubstantial amount of money and personal ef-
fort, litigating the issue of Hughes’ domicile in state court. The
Estate, which selected Austin venue, also incurred large litigation
expenses during the Texas trial. Only Petitioners, who sat on the
sidelines watching that initial fray, have yet to make significant
outlays for litigation expense. Not surprisingly, it is Petitioners
who now seek a transfer which will drastically increase litigation
costs for all parties. The expenditures made during the prior Texas
trial are due in no small measure to Petitioners’ failure to assert any
domicile claim with respect to Hughes until the very eve of the
Texas trial. If relitigation of the domicile issue is to occur, with the
attendant waste of most of the expense of the prior trial, venue of
that relitigation should be laid in Austin, with the enormous sav-
ings of time and money that an Austin trial will mean to the Texas
officials. And, of course, the concomitant savings in litigation ex-
pense by the Estate will benefit all parties, as it will increase the
corpus of the estate upon which taxes may be assessed.
The District Court evaluated all of the factors appropriate under
section 1404(a), and the evidence adduced with respect to those
factors. In its discretion, the District Court correctly determined
that Austin, Texas is the most appropriate forum for this
case. That decision was a wise one, and certainly not an abuse of
the District Court’s discretion. The Court of Appeals affirmed that
ruling. These decisions should not be reversed, and transfer of
this case should not be ordered.
45-
CONCLUSION
If the Eleventh Amendment is found to bar this action, these
disputes between the Hughes estate and state taxing officials
should be resolved in state court. However, if this action can pro-
ceed consistently with the Eleventh Amendment, statutory in-
terpleader jurisdiction is present, the proper parties have already
been joined, and venue of the case is now properly laid.
DATED: September 30, 1981.
Respectfully submitted,
MARK WHITE
Attorney General of Texas
GILBERT J. BERNAL, JR.
Assistant Attorney General
Chief, Taxation Division
Post Office Box 12548
Austin, Texas 78711
RICK HARRISON*
PATTON G. LOCHRIDGE
McGINNIS, LOCHRIDGE & KILGORE
900 Congress Avenue
Austin, Texas 78701
(512) 476-6982
DAVID DEADERICK*
GIBBINS, BURROW, WASH
& BRATTON
Post Office Box 1452
Austin, Texas 78767
(512) 474-2441
Attorneys for Respondents
° WHITE and BULLOCK
*Counsel of Record
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.