Neilson v. Title Guaranty & Surety Co.

McBRIDE, J. This appeal involves the validity of the judgments obtained by plaintiff and the Title Guaranty & Surety Company (which for convenience we hereafter designate as “the surety company”) — 273 — against Masters. If the judgments obtained through service by publication are valid, the appellants must prevail here. If they are void, neither plaintiff nor the surety company has through them any standing to contest the claims of the respondents. The validity of the various claims of defendant Moody and of the intervener representing the estate of L. M. Bates and the intervener Daniel Kern, will be discussed later. It is to be regretted that consideration of space in the reports renders it impracticable to set forth the contentions of the parties at greater length. 1, 2. Are the judgments above referred to valid? The attack upon them is collateral, and unless they are wholly and absolutely void, they must be upheld, so far as this proceeding is concerned: Moore Realty Co. v. Carr, 61 Or. 34 (120 Pac. 742). It may be premised that a judgment obtained by publication is a proceeding in rem, and before a valid order of publication can be made, there must be a seizure by-attachment of property of the defendant. The action must be upon a contract express or implied. There must be property of the defendant which is subject to attachment and actually attached. Where either of these requisites is lacking the judgment is absolutely void: Pennoyer v. Neff, 95 U. S. 714 (24 L. Ed. 565, see, also, Rose’s U. S. Notes). 3. It seems clear that the claim of Masters against the town of Bainier was not of a character subject to attachment. It was a claim for damages arising out of the negligent failure of the town to levy an assessment to obtain funds wherewith to pay Masters for his work and expenditure incurred in the completion of a street paving contract. It was an action ex delicto, and not ex contractu: Little v. Portland, 26 Or. 235 (37 Pac. 911). — 274 — 4. Neither was the claim which was the subject of the action brought by the surety company against Masters of such a character that an attachment would lie under Section 296, Or. L. It was a liability the amount or extent of which was not fixed, but' contingent upon the circumstance that litigation might arise in the future and that the surety company might be compelled to incur expense and suffer pecuniarily by reason of such litigation. It was not a “ contract for the direct payment of money”: Ancient Order of Hibernians v. Sparrow, 29 Mont. 132 (74 Pac. 197, 101 Am. St. Rep. 563, 1 Ann. Cas. 144, 64 L. R. A. 128); Hurd v. McClellan, 14 Colo. 213 (23 Pac. 792); Trepagnier v. Rose, 18 App. Div. 393 (46 N. Y. Supp. 397). This reasoning applied with equal or greater force to the claim of plaintiff Neilson. These claims being unliquidated, contingent and uncertain in amount, and the action being to recover damages in tort for breach of conditions rather than upon contract, the action cannot be said to be one to recover upon “an actual bona fide existing debt due. and owing from the defendant to the plaintiff.” “The legal acceptation of debt is, a sum of money due by certain and express agreement: as, by a bond for a determinate sum; a bill or note, a special bargain; or a rent reserved on a lease; where the quantity is fixed and specific, and does not depend upon any subsequent valuation to settle it”: 3 Blackstone, 154. Schouler considers this definition too narrow, but does not differ from Blackstone in respect to the necessity that the demand be liquidated. In Section 354 of his work on Personal Property he says: “A debt, as one readily gathers from its Latin derivation, is something owed. The person to whom — 275 — it is owed is the creditor the person owing it is the debtor. ‘The legal acceptation of debt is,’ says Blackstone, ‘a sum of money dne by certain and express agreement: as, by a bond for a determinate sum; a bill or note; a special bargain; or a rent reserved on a lease; where the quantity is fixed and specific and does not depend upon any subsequent valuation to settle it.’ But perhaps the words ‘certain and express’ here used are rather too strong; for the creation of a debt may be proved by any circumstances which raise an agreement by implication; and in a less technical sense the word ‘debt’ may sometimes be popularly used to denote any claim for money, or any kind of a just demand. But we properly use the word ‘debt’ as denoting in law that money is owed; also that the money is owed by virtue of some agreement or contract between the parties; also that a fixed and specific amount is due, and not something to be ascertained by valuation hereafter.” The rulings of the courts are as various as the statutes and sometimes divergent in the construction of the same statute. Instead of employing the words of our statute, “an actual existing bona fide debt,” etc., many statutes read, “all debts, dues and demands,” or similar comprehensive language is used; and under such statutes attachments even in cases of personal torts have been sustained. It is sometimes difficult to draw the exact line between actions ex contractu and actions ex delicto, as not infrequently a cause of action will contain some element of both. But in the instant case a discussion of the nature of the actions brought against Masters by plaintiff and the surety company is in fact academic. Ever since the luminous opinion of Mr. Justice Field was rendered in Pennoyer v. Neff, supra, the courts of this country have acquiesced in the doctrine that there can be no valid service of summons by pub — 276 — lication, upon a nonresident, without a contemporaneous seizure of his property; that the proceeding is in rem against that property; and that a judgment without such seizure is void. This being the case, and being satisfied that there was not and could not have been a valid attachment of Masters’ claim for damages against the town of Rainier, further discussion of the nature of the appellants’ claims against Masters is rendered unnecessary. It follows that because at the commencement of the litigation there was no property of Masters which was subject to attachment, the judgments of plaintiff and the surety company are absolutely void, and those parties are in no position to contest the disposition of the fund existing by reason of the judgment of Masters against the town of Rainier. 5. It .is further contended on behalf of appellants that even if their judgments are void, they are entitled to the possession of the warrants which are the subject matter of this suit, by reason of an agreement made in writing by Roscoe C. Nelson, attorney for Masters in his suit against the town of Rainier. At the risk of being somewhat tedious we reproduce the letter of Mr. Nelson, which is addressed to Messrs. Norblad & Hesse and Mr. Fred W. Herman, attorneys for the town of Rainier, who were contemplating an appeal from the decision of the United States District Court in the mandamus proceeding wherein the town was directed to issue a warrant in favor of Masters for the amount of his judgment, and which decision was later affirmed by the United States Circuit Court of Appeals: Symons v. United States ex rel. Masters, 252 Fed. 109 (164 C. C. A. 221). The letter follows: — 277 — “Gentlemen: “Confirming my conversation with Mr. Hesse to-day, with regard to matters incident to the judgment in the case of Masters v. City of Rainier and the mandamus proceedings to enforce issuance of a warrant covering said judgment, I beg to state my willingness as attorney for Charles Masters to permit you in lieu of filing a supersedeas in connection with your appeal in the mandamus case, to cause the recorder and the mayor of the city of Rainier to issue to me as attorney for Charles Masters three (3) warrants covering the sum of said judgments, principal and interest, in the following amounts: One warrant for $4,426.15, One in the sum of 6,704.25, and One in the sum of 2,049.95. “These warrants are to be presented to the treasurer of the City of Rainier and by him endorsed or certified in the customary manner showing the presentation to him and the nonpayment thereof due to lack of funds for such purpose. The treasurer is thereupon to transmit the said warrant to Mr. Geo. H. Marsh, clerk of the United States District Court for the District of Oregon, to be held by him pending the outcome of the appeal in the mmidamus case. In the event of the affirmance of the District Court judgment the said warrants are to be delivered to me, and in the event of the reversal the said warrants are to be returned to the treasurer of the City of Rainier. “It is further understood that you are to procure from the treasurer of the City of Rainier a letter addressed to me as attorney for Charles Masters certifying that he has made a notation on his official records of the presentation of the said warrants and that the deposit thereof with the clerk of the United States District Court shall in nowise affect their priority of payment over any warrants issued or presented subsequently to the presentation to him of these warrants, in other words, that after the payment by bim as treasurer of the City of Rainier of — 278 — warrants issued and presented to him prior to the issuance and presentation of these warrants, he will withhold the distribution of funds otherwise applicable to these warrants and will not make any payments out of the general fund of the City of Rainier to any holders of warrants issued subsequently to these warrants. “I agree in consideration of the foregoing that in the course of your appeal from the mandamus judgment I will make no suggestion in or out of the record to the appellate court that the warrants have been actually issued so as to make the judgment of the appellate court a moot one and no advantage shall be taken of this stipulation in that regard. “I further agree that in the event of the affirmance of said mandamus judgment I will not negotiate any of said warrants without the written consent submitted to you of William Neilson or his attorneys, and the Title Guaranty & Trust Co. or its attorneys, but will hold said warrants for the protection of the city of Rainier against liability on certain judgments rendered against it in certain proceedings in the circuit court of the state of Oregon for the county of Multnomah in favor of the said Neilson and the said [Title] Guaranty & Trust Co. until the rights of the said Neilson, Title Guaranty & Trust Co., Charles Masters and other conflicting claims shall have been determined by decree of court or by agreement among the parties. “I reserve the right, however, by and with the written consent of said Neilson and Title Guaranty & Trust Co. through their respective attorneys, to transfer the said warrants or any of them to A. H. McCurtain or to any other person with the proviso that such individual shall hold same as substitute trustee subject to all of the conditions hereinbefore imposed upon me with regard to the holding and ultimate disposition of the said warrants. “Tours very truly, “(Signed) Roscoe C. Nelson. “RCN/MW.” — 279 — 6. There is nothing in this letter beyond an agreement on the part of Nelson to act as trustee or stakeholder of the warrants until conflicting claims to them should be settled, and that has been done in this suit. It gave the appellants here no right to the possession of the warrants until all claims against the fund they represented had been adjudicated. If Mr. Nelson had attempted to do more than this, it would have been beyond his authority as attorney for Masters in the proceeding against the town of Rainier: Kelsay v. Taylor, 56 Or. 13 (107 Pac. 609); Weeks on Attorneys, § 219 et seq. In view of the invalidity of the judgments of plaintiff and the surety company, neither is in a position to raise the question of the estoppel of Moody and Howard to claim as partners with Masters in the Rainier Street contracts, by reason of their having permitted him to sue in his own name and by reason of diverse citizenship; and a discussion of that question here would be merely academic. The decree of the Circuit Court is affirmed, and the respondents will recover from plaintiff and the surety company their disbursements on this appeal. Aeeirmeu. Burnett, C. J., and Johns and Harris, JJ., concur.