Hartzell v. Vigen

Bartholomew, J. This action is based upon a promissory note executed by the defendant Vigen in favor of the defendant Rustad. The note represented a portion of the purchase price of a certain tract of land in Cass County, and, concurrently with the execution of the note, Rustad executed a contract for the sale of said land to the defendant Vigen. It is alleged in the complaint that Rustad sold and transferred the note to plaintiff, and Rustad was made party defendant, and as to him a decree is asked confirming in plaintiff all Rustad’s rights under the contract of sale, — 121 — which, it is claimed, passed to the plaintiff by the purchase of the note, and as incident thereto. Both defendants answered, denying plaintiff’s ownership of the note. This was the only issue tried below, and defendants prevailed. Plaintiff brings the case into this court. We learn from the record that the plaintiff claims the ownership of the note by virtue of a purchase at execution sale in Hennepin County, in the State of Minnesota, which execution was issued upon a judgment entered in the District Court of said county, in an action brought by one McKindly against the defendant Rustad. A duly authenticated transcript of the entire record in that case was offered in evidence by appellant, and, on objection, was excluded. From that record we learn that Rustad was not a resident of the State of Minnesota when sued there, but was a resident of this state. There was no personal service of summons, .but service by publication was made, or, at least, attempted. There was no appearance, and judgment was taken by default. A writ of attachment was issued about the time of the commencement of the action, and a garnishee summons served upon the Washington Bank of Minneapolis. The disclosure of the garnishee showed that the bank held Rustad’s note for over $9,000, on which over $7,000 remained due and unpaid, and that as a collateral to this indebtedness, the bank held notes belonging to defendant Rustad to the amount of about $22,000. Such subsequent proceedings were had in the case that all the collateral notes remaining in the hands'of the garnishee.after the indebtedness of Rustad to the garnishee was satisfied were sold on execution issued upon the judgment in favor of McKindly and against Rustad, and plaintiff herein became the purchaser at the execution sale. His title is assailed upon grounds which go to the jurisdiction of the District Court of Hennepin County, in the State of Minnesota, to enter any judgment against the defendant Rustad. By stipulation in this case the statutes of Minnesota, as published in 1894, are to be treated as in the record. The first attack upon the judgment, and the one chiefly relied upon, — 122 — related to an alleged defect in the affidavit for publication of summons. Section 5204 of said Minnesota statutes specifies the cases wherein service may be made by publication, and what the affidavit must contain, and, among others, it provides:- “Third. When the defendant is not a resident of the state, but has property therein, and the court has jurisdiction of the subject of the action.” In the case under consideration the affidavit omitted the words “of the subject,” making the allegation in that behalf read simply, “And the court has jurisdiction of the action.” It is conceded that, in order to confer jurisdiction in this class of cases, all the statutory provisions relating to the publication of summons must-be substantially complied with in every particular. Appellant insists that there was substantial compliance in this case, and that, for the purpose of this particular statutory provision, the two phrases, “jurisdiction- of the subject of the action,” and “jurisdiction of the action,” are identical in meaning, and have reference only to the cause of action or controversy between the parties. Respondents insist upon a very different construction. They urge that all actions against nonresidents, where personal service within the state cannot be made, -are, in their essential nature, actions in rem, and not in personam, and that the subject of the action is the res, which must be some specific property,-which has been- seized under a writ of attachment and brought under the control of the court, so it may by proper order be applied to the satisfaction of any judgment that plaintiff may obtain in the case. This, of course, requires that a writ of attachment be issued, and property seized thereunder, in every case under this subdivision, before an affidavit for publication of summons can properly be made. It is conceded by respondents, for the purposes of this point, that this was actually done in the Minnesota case. On the other hand, it is conceded by appellant that the jurisdiction must come through the allegations of the affidavit. It thus becomes necessary for us to place a construction upon the subdivision of the ■ Minnesota statute above quoted. It would have afforded us immediate relief could we have found a con — 123 — struction of the language by the very able Supreme Court of that state. But the point seems not to have been raised there. Indeed, the authorities bearing directly upon the- point are very few, and not always satisfactory. We have; however, the same statute in this state, borrowed, as was the Minnesota statute, from the New York Code of Civil Procedure of 1849. It must be conceded, in discussing this proposition, that to construe the words “subject of the action” to mean specific property that has been seized in the action, would be, perhaps, in the interests of an orderly and logical practice; that it would more nearly assimilate actions of this- character to actions- purely in rem\ .that it would more certainly give to the words the same meaning that was given to them in chancery actions at and prior to the time they were first applied to law actions. But these considerations are entirely inadequate to influence a court, unless it be reasonably certain that such was the meaning given to the words by the legislature when it used them. In Kansas the statute specifically provides that in this class of cases the affidavit for order of publication shall show that property of the defendant has been seized under attachment or some provisional ■ remedy. See § 4155, Gen. .St. 1889, and the Kansas decisions there annotated. No doubt this is a wise provision, but it is not reached by construction. Service of publication is of comparatively recent origin. It was not known at common law. There an absent defendant was compelled to appear by means of the writ of distringas, requiring the sheriff to seize a certain amount of his property, and this was repeated again and again, even to the extent of outlawry, if necessary.' In England, in 1832, by statute, service by publication was authorized in certain cases in chancery. See 1 Dániell, Ch. Prac. p. 449 et seq. Similar statutes existed in New York and perhaps in other states. ' But service by publication in a law action was unknown in New York until the adoption of the Code of Civil Procedure of 1849, containing the provisions under' discussion. It will be instructive to; discover the-construction put upon it at its first appearance. The case of Hulbert v. Insurance — 124 — Co., 4 How. Prac. 275, was decided in 1850, and it was held that it was not necessary that an attachment should accompany the service of summons, but that it might be served afterwards. It is not clear, however, that this particular statute was in the mind of the court when the ruling was made. Nor do we find any authoritative utterance upon the point in New York until 1858. At that time a rule of court was adopted, known as “Rule 25,” which provided that “in actions for the recovery of money only, when the summons has been served by publication, no judgment shall be entered unless the plaintiff, at the time of making application for judgment, shall show by affidavit that an attachment has been issued in the action and levied upon the property belonging to the defendant.” If the statute required that property should be attached before the affidavit for an order for publication could be made, and that such affidavit should in effect so state, then it was entirely incompetent for the.court to declare by rule that it should be sufficient if property had been attached before the application for judgment. Hence, this rule is a deliberate declaration of the judges that the statute did not so require. In fact, the rule was announced because the opposite view prevailed. It had been held in New York, as it was subsequently held in other states, that under this statute it was competent to enter a personal judgment against a nonappearing defendant, served by publication only, and upon such a judgment general execution might be issued, under which any property in the state belonging to the defendant could be seized and sold. See Force v. Gower, 23 How. Prac. 294; Jarvis v. Barrett, 14 Wis. 642; Stone v. Myers, 9 Minn. 313, (Gil. 287;) Cleland v. Taveernier, 11 Minn. 194, (Gil. 126.) Under the New York rule of court this could not be done. No judgment could be entered unless property of the defendant had been attached at the time of the application for judgment. But the fact that so many able courts, acting under this identical statute, held that no attachment whatever was necessary in the case, would seem to be almost .conclusive against respondents’ position that an attachment is absolutely — 125 — essential before publication of summons. And the rule of court, as we understand it, was not based upon the (theory that the statute required any attachment. It was based upon and foreshadowed those great principles enunciated and elucidated in 1877 by the Supreme Court of the United States in the case of Pennoyer v. Neff, 95 U. S. 714, — a case to be hereafter further noticed. In the case of Whitehead v. Railway Co., 18 How. Prac. 218, this same language, but in another provision, was under discussion. That action was brought in 1859 under § 427 of the code then in force, specifying the cases in which the action might be brought against a corporation. The second subdivision provided: “By a plaintiff not a resident of this state where the cause of action shall have arisen, or the subject of the action shall be situated within this state.” The defendant’s property had been seized under a writ of attachment, and the question arose on motion to discharge the attachment, on the ground that the action could not be maintained under the statute'. It was conceded that the plaintiff was a non-resident, and that the cause of action did not arise in the state. Hence the only question to be determined was whether or not the subject of the action was situated in the state. There, as here, it was earnestly contended that the subject of the' action was the property which had been seized under the writ. But the court said, at page 233: “What is the subject of the action? Not certainly, the title to the property attached, for the plaintiff asserts no such title here. He claims the right to have that property appropriated to the payment of an alleged debt due him from the defendant. But this right is neither questioned nor questionable, if his right to maintain this proceeding is conceded. The subject of the action is the claim therein asserted by him, and the satisfaction of which he seeks out of the property attached, which he concedes to belong to the defendant. See the opinion of Hand, J., in the case of the President, etc., of Bank of Commerce v. Rutland & W. R. Co., 10 How. Prac. 8. On the argument the plaintiff referred to the case of Ready v. Stewart, 1 Code R. (N. S.) 298, as sustaining the — 126 — position in question. But I do not so understand the opinion of the learned'judge who delivered the opinion in that case. He says the term ‘subject of the action’ relates to the nature of the action, or the ‘thing’ sought to be obtained by the judgment to be given, but not at' all to the ‘person of the defendant.’ The learned judge was commenting upon the third subdivision of § 135 of the code, which requires that, in the case of a nonresident defendant who has property in the state; and the action arises on contract, the court should have jurisdiction of the subject of the action. Now, the thing-sought to be obtained by the judgment was the establishment of the claim asserted in the action. The idea that the learned judge was combating was, as I understand his language, simply that the term ‘jurisdiction of the subject of the action’ did not -mean jurisdiction of the defendant.” In this language is contained a suggestion that is not always kept in view. It is as. to the difference between, the terms “jurisdiction of the- subject of the action” and “jurisdiction of the action.” The latter, in its usual acceptance, means complete jurisdiction,— jurisdiction both of the. subject of the action and of the parties to the action. Hence, the terms are not synonymous, and cannot be used interchangeably. The former may exist, and the latter not. But the latter cannot exist without the former, since it necessarily includes the former. Now, the affidavit under consideration declared that the court had “jurisdiction of the action,” which necessarily included the jurisdiction of the subject of the- action. That much the statute required it -to contain, and the fact that it contained something more, which the statute did not require, does not affect its efficiency as an affidavit under the statute. In the light of the above quotation from 18 How. Prac.,we wish to discuss another position maintained by respondent with much confidence. Subdivision 5 of the section of the Minnesota statute, providing cases in which service may be made by publication, reads: ■ “When the subject of the action'is real or personal property in this state, and the defendant has or claims a lien or interest therein,” etc. Here, it is urged, it is ■ clear that the — 127 — subject of the action is specific tangible property, and that the same words used in another portion of the same section must have the same meaning. But wherein lies the difference? In cases arising under subdivision 3 there is no controversy concerning the attached property. Plaintiff, by attaching it, declares it to be the property of the defendant, and he can reap-a benefit from it only in case it is the property of the- defendant. Both parties are interested in declaring it to be defendant’s property, and controversy is impossible. In cases arising under subdivision 5, the whole controversy centei's on 'the property. Each party claims title or intei'est thei'ein, each adverse to .the other. Every issue pi'esented by the pleadings relates to the property. It is the thing about which the conti'ovei'sy arises,' just as the conti'ac.t is the thing about which the conti'ovei'sy arises under subdivision 3. But, were this otherwise, we could concede that a phrase used in chancery pi'oceedings, in actions relating - exclusively to specific property, and seeking specific relief, .must be given the same meaning when used in law actions, based on contract, and seeking a money judgment only. Again, it is urged that, if the term “subject of the action” means the conti'oversy involved, then the term had no place in the statute, because it was also necessary to state that the action ai'ose on contract, and, as courts of general jurisdiction had juidsdiction of all actions on contract, it was entirely unnecessaiy after stating that the action arose on contract, to also state that the court had jurisdiction of the controversy. Granting this to be so, equally unnecessary expressions are frequently found in the statutes. But we think the premise unsound. Without having examined in detail as-to the constitution of the courts in New York when the statute was adopted, there were at least the Supreme Court, the superior court of the City of New York, and the coui't of common pleas for the City and County of New York, all of which had jurisdiction in all or- some cases arising on conti'acts, but their jurisdiction was not entirely concurrent. And in Minnesota, when .the statute was adopted, the District Courts were without jurisdiction -in certain, cases — 128 — arising on contracts, the jurisdiction of Justice Courts being exclusive where the amount in controversy did not exceed $100. See Castner v. Chandler, 2 Minn. 86, (Gil. 68.) The same is true now. See § 5, Art. 6, Const. Minn. These facts render the provision strictly necessary. The case of Pennoyer v. Neff, 95 U. S. 714, furnishes the groundwork for much of the respondents’ contention in this case. But no point was decided in that case that can aid respondents. The facts were that the state court of Oregon had rendered a personal judgment against a nonresident nonappearing defendant, served by publication only. A general execution was issued upon the judgment, and certain lands of the execution defendant were sold, and the purchaser put in possession. Subsequently an action was brought in the Federal Court by the execution defendant against the purchaser to regain possession. The case turned upon the validity of the judgment in the Oregon state court. In the Federal Supreme Court the case received exhaustive consideration, and it was authoritatively announced that no state court had the power to enter a personal judgment against a nonappearing nonresident defendant, served by publication only. These principles, there announced, and which are now universally accepted as sound, rest upon the broad grounds that every sovereign state possesses exclusive jurisdiction over persons and property within its territory, and may properly determine for itself the status and capacity of its inhabitants, and may prescribe all rules for the acquirement and transfer of property, and for the execution and enfoixement of contracts, within such territory; but that the writs and processes of a state court can. have no extraterrorial force or binding effect. They cannot reach beyond the territorial lines of the state where issued, and directly affect persons or property in another state. It being certain, then, that no valid judgment in personam could be rendered in the case, it followed that no valid judgment whatever could be rendered, unless it was in the nature of a judgment in rem. But, to authorize a judgment in rem, some process of the court must have — 129 — been'served upon the res, and it must have been brought within the direct control of the court, so that the judgment could direct its final disposition. The court declares that a judgment cannot occupy the uncertain position of being valid in case property of the defendant is subsequently seized in the state, or, failing in that, forever remain invalid, and that a judgment, if void when rendered, will forever remain void. This unanswerable argument leads inevitably to the conclusion that, in all actions against nonresident nonappearing defendants, served by publication only, property of the defendant must be seized before any valid judgment can be rendered. As said by the court in that case, the jurisdiction to investigate the controversy depends upon jurisdiction over property. There is no jurisdiction in personam, and, unless there is jurisdiction in rem, the action must go down. The learned counsel admit that it is only by inference that Pennoyer v. Neff, can assist respondents in this case. But it is argued that, by the commencement of an action against an avowed nonresident, no personal judgment is expected, and that, while the action is begun in personam, it is necessary for the plaintiff to at once proceed as in an action in rem\ and admiralty works are cited to show that, in actions strictly in rem, the first step is to seize the property to be affected. But this was not an action in rem. It was begun as an action in personam, and no one could say that it would be anything but an action in personam until there had been completed service, and the time for answering had expired. The law could not compel defendant to come in and defend, but it had extended to him every opportunity to do so that it could, and no one was warranted in saying that he would not do so until, by his failure, he so declared. As said in Cooper v. Reynolds, 10 Wall. 308, and quoted with approval in Pennoyer v. Neff: “But if there is no appearance of defendant, and no service of process upon him,,the case becomes, in its essential nature, a proceeding in rem!' But what obligation rested upon plaintiff to invoke the jurisdiction in rem until it was — 130 — certain that jurisdiction in personam would not be acquired? True, when that time arrives, he must invoke the jurisdiction i?i rem, or suffer his action to fail. But we perceive no reason why he should sooner do so. But, lastly, upon this point, it is urged — and there is reasoning arguendo in Pennoyer v. Neff, that suggests this line of argument —that the law assumes that property is in the possession of the owner, either va. personam or by agent, and that, hence, he will have actual notice of its seizure, and can rush to its defense; but that a statute that requires only that property should be seized before judgment would be satisfied with a seizure one hour before judgment, and thus property would be taken without giving the owner any opportunity to be heard, or, in other words, “without due process of law.” We think this reasoning places undue stress upon the fact of seizure, and loses sight of the effect of substituted service. Such service the law authorizes and recognizes. It will sustain no personal judgment, — can serve as the basis of no personal liability; but for all other purposes it is effective. The law is careful to conserve the rights of nonresident defendants. It provides that notice shall be published for a specified time, usually six weeks, and in the newspaper in the proper jurisdiction most likely to give defendant notice. It requires a copy of the summons and complaint to be sent to him when his address is known. All this is not mere idle form. It serves a .substantial purpose. It is the theory of the law that notice of the pendency of the action ■ is thus brought to the defendant, and only by the grace of permissive .statutes is he permitted to deny it. And, when notice is thus received, he may be justified in disregarding it, so -far as incurring any personal liability is concerned; but he is not justified in treating it as an entirely unwarranted, assumption of- power by a foreign court. He is bound to know the law, and he is bound to know that, if he have property in the jurisdiction, it can and will be seized in the action, unless he appears and incurs the liability of a personal judgment. It is, in effect, a modified form of the — 131 — old writ of distringas. A nonresident defendant, so served, is not compelled to appear; but he refuses at the risk of having his property seized and appropriated, not for the benefit of the state, as in the old writ, but for the benefit of the plaintiff. The writ of attachment, when used against a nonresident, is not necessarily or ordinarily used for the same purpose that it serves in case of a resident defendant personally served. There its object is to secure an insecure or jeopardized claim. But it may be that a personal judgment against the nonresident would be perfectly good, and all'that plaintiff could desire. He uses the attachment to force the nonresident defendant either to submit to the chances of a personal judgment or suffer his property to be appropriated. It is the substituted service that gives notice of the pendency of the action, and that notice is a direct challenge to the defendant to appear and protect his property; if any he have in the jurisdiction. He has ample time. There is no legal harship. The New York rule of court did not require any specified time before judgment at which property should be seized. Neither does Pennoyer v. Neff, nor any other adjudicated case. McKinney v. Collins, 88 N. Y. 216, is also relied upon by respondents. There is language in that case which, standing alone, and disconnected with the facts, would strongly support respondents’ contention. The cáse, fia all its essential features, was a duplicate of Pennoyer v. Neff. The court followed that case, and went no further; but, in the opinion, the statutes of New York relating to publication of summons and the jurisdiction acquired thereby were discussed at length, and reasoning used which would seem to indicate that the attáched property was the subject of the action. But the question was not in the case, and we do not think it was in the mind of the able jurist who wrote the opinion, because, after discussing the statutes and the New York decisions, none of which fairly met the point, he says: “Tthink, however, that the understanding of the courts having jurisdiction over such questions must be deemed to be expressed in the rule adopted by the judges, in 1858, when —making provision for carrying the statutes above referred to — 132 — into effect, and not enacting any new law, for this was beyond their power — they provided by rule 25 that,” etc.; quoting the rule already set out in this opinion. It seems clear that the writer did not intend to give the statute any construction that would violate that rule. Thus viewed, the opinion is in entire harmony with what we have said. That such was the view of the decision taken by the court itself, see dissenting opinion of Earl, J., in Bryan v. Publishing Co., (N. Y. App.) 19 N. E. Rep. 827. The only case we find, since Pennoyer v. Neff, where the points here raised were squarely decided, is Bank v. Jacobson, (S. D.) 66 N. W. Rep. 453; and that case is directly against respondents, and in full accord with what we have said. The statute in question has been in force for nearly 50 years. It has been in practically universal operation in the United States for more than a quarter of a century, yet no court of last resort has even given it the construction contended for by respondents, so far as our investigation can discover. The .general, and, we believe, almost uniform, practice has been the other way. Property rights had been everywhere founded upon this practice. However desirable the practice contended for by respondents might be, it must come, if it come at all, from the legislature. Courts cannot, at this late day, torture it out of the existing statute. • One more point is presented in the brief. It is this: Granting the sufficiency of the affidavit for publication, it is contended that the record offered in evidence shows that no property of the defendant was in fact seized before the entry of judgment. The basis of the claim is the fact that the attachment was by garnishment, the garnishee summons being served upon a bank. The disclosure of the garnishee, made before judgment, showed that it held a large amount of notes belonging to the defendant, and which had been transferred to it by the defendant as collateral to his indebtedness to the bank, which at that time amounted to about one-third of the face value of the collateral notes. Section 53x2 of the Minnesota statute reads: “No person or corporation — 133 — shall be adjudged a garnishee in either of'the following cases, viz: First. By reason of any money or any other thing due to the defendant, unless, at the time of the service of the summons, the same is due absolutely, and without depending upon any contingency.” It may be conceded that, under this provision, no judgment could at that time have been entered against the garnishee, requiring it to deliver the notes or any part thereof. But that was not the question. Was there any property of the defendant within the jurisdiction of the court? In other words, had the court jurisdiction in reml If so, it had jurisdiction to render a judgment, to the satisfaction of which the. property then before the court might ultimately be applied. We think this is reasonably clear. The defendant owed the notes subject to the lien of the garnishee. Or, to put it more favorably .for respondents, the defendant’s interest in the notes was an equity of redemption. But, under § 6842, Gen. St. Minn., an equity of redemption is clearly property, and, being property, is subject to levy. Whatever steps it may be necessary to take in order to realize upon the property cannot affect the validity of the levy. The court has the power to make all necessary orders to that end, as was in fact done in this case. We think the court had full jurisdiction to render a valid judgment i?i rem. It follows that the record of the judgment of the District Court of Hennepin County, Minn., when offered in evidence, was not vulnerable to the objections urged. Its rejection was error, which necessitates a new trial in the case, and it is so ordered. Reversed. Wallin, C.-J.,_concurs.