Davison v. Circuit Court

WHITING, J. One Addie K. Davison brought an action in the circuit court of Kingsbury county against a large number of defendants, alleging in substance that she was a stockholder and otherwise beneficially interested in the Davison Realty Company, an Iowa 'corporation; that said corporation had formerly owned a large tract of land in Kingsbury county, as well as some other land; that it had sold all of its lands, taking in part payment therefor notes secured by mortgages on the real estate in Kings-bury county; that certain of the defendants who were managing officers of such corporation had distributed the said notes among the defendants who were stockholders in said corporation: and that such distribution was made for the purpose and with the intent of depleting the assets of said corporation and thus defrauding this plaintiff and depriving her of her just interests in the corporation. Besides the parties against whom the fraud was charged and the alleged beneficiaries of such fraud, there were made parties defendant the purchasers of said real estate, as well as certain parties to whom such purchasers had since resold such real estate and who, upon such resale, had assumed and agreed to pay the mortgage indebtedness. A receiver of such corporation, appointed by an Iowa court, was also named a party defendant. The defendants charged with the fraud were all nonresidents of this state, as were the defendants who purchased the land from the corporation. Two defendants who were purchasers upon the resale were residents of this state, and personal service of summons in said action was made upon them in this state. Another of the purchasers on such resale was a nonresident of the state. There were other parties to said action, but tlie}' are not parties to the present proceeding, and their relation to this matter is immaterial to any question now before us. Order for publication of summons was obtained as to all the nonresident defendants and service made in compliance with such order. The relief sought by the plaintiff in such action was that the court determine her interest in the said corporation; that it be adjudged that the [259] corporation was still the true and lawful owner of the notes and mortgages acquired by it upon the sale of said land; that the corporation’s title to such notes and mortgages be quieted; and that an equitable distribution of the property of said corporation be made to the stockholders. Those defendants who w.ere stockholders of said corporation, including those that were its managing officers and directors, entered a special appearance in said action and moved the dismissal thereof upon various grounds. The motion having been denied, such defendants procured from this -court a writ of certiorari directed to the circuit court, commanding it to make return to this court of its proceeding upon said motion to dismiss. It is upon the return of such writ that this matter is now before us, and the sole question to be determined is whether, under the facts pleaded', the circuit court has jurisdiction to grant any relief whatsoever. [1] Plaintiffs assert that the circuit court action was one brought under chaptei 81, Laws 1905 (§§ 2846-2855, Rev. Code 1919), which authorizes actions to determine interests in real property and to make unknown parties defendants and prescribes the method of acquiring jurisdiction as to such defendants; and they contend that, in so far as said statute purports to authorize a determination of interests in liens, such as mortgages, against real property, it is unconstitutional, because such provisions are not warranted by the title of said act. There is no merit in-this contention — the title is sufficiently broad, and, furthermore, inasmuch as ño unknown parties were made defendants in this action, no resort to such statute need be had to find authority for the bringing of such action. [2, 3] It is further urged that the complaint in the circuit court action showed affirmatively that the plaintiff in said action did not have an estate or lien upon or interest in the real property mentioned therein. Such plaintiff made no contention that she had any lien or interest in the real property. She alleged an interest in the assets of the corporation as a stockholder, and brought such action on behalf of the corporation, alleging that the corporation was the owner of mortgages against real property. We are not called upon to decide, in the present proceeding, whether the courts of this state, after determining the title to the [260] mortgages, would have jurisdiction to distribute the assets of the corporation among its "stockholders — the question before us is not whether certain of the reliéf sought is beyond the jurisdiction' of the trial court, but rather whether any of the relief sought is within such jurisdiction. [4] It was urged, upon the motion to dismiss, that the plaintiff and those defendants in such circuit court action who are parties to this proceeding, were'each and all nonresidents; that the subject of' said action, if there was any subject to such action, relates to a controversy over merely choses in action, and that it does not- appear that any of such choses in action are within this state. The land incumbered by said mortgages lies within this state, and the ownership of the liens created by said mortgages is a matter of proper determination by the courts of this state. No good reason has been suggested why, as between adverse claimants of ownership in and to a lien, courts should not have the power and jurisdiction to adjudicate such' ownership, and why such adjudication should not be binding upon parties thereto and upon all who might acquire title after the bringing of such action and the filing of a notice of lis pendens. Of course, if the notes secured by the mortgages were negotiable instruments and have passed into the hands of those who becáme holders in good faith and who were not made parties to the action to determine ownership of the liens, the judgment of the court, determining' such ownership, could not affect the rights of such' holders in and to such liens; but the question before us is not what the effect of the judgment of the -circuit court might be as to persons not parties to the action in said court, but merely as to the power of said court to adjudicate as between the parties to said action. Moreover, in this- case, at least two parties, through assuming the payment of the mortgage indebtedness, have become primarily liable therefor and have been personally served, 'thus giving to such court full jurisdiction to control their acts by means of restraining orders or injunctions. [5] It is further urged that the’ basis of the circuit court action was to obtain injunctive’ relief', which relief cannot be granted under service of summons by publication. The mere fact that the court might not be able, in case of nonappearance of said parties, to reach them through any writ issued by 'the [261] court, and therefore to restrain them in their action, would merely leave for determination, in other and proper proceedings, between the proper parties thereto, the legal effect of any purported transfer of the notes and mortgages, if such a transfer was attempted. [6] It is urged that no reason appeared, in the 'complaint in circuit court, why the receiver of the corporation would or should not bring said action. 'Such a question does not go to the-question of the jurisdiction of the circuit court, and therefore is not before us on this proceeding. The writ of certiorari is dismissed, at plaintiffs’ costs.