Delta Ins. & Realty Agency v. Fourth Nat. Bank

McGowen, J., delivered the opinion of the court. The Fourth National. Bank of Montgomery, Ala., exhibited its bill against the Delta Insurance & Realty Agency, S. S. Steele, and Gwin & Mounger in the chancery court of Leflore county, praying a cancellation of • an alleged void judgment against it theretofore rendered by said chancery court in favor of Gwin & Mounger, and to be relieved of the stay of an execution order entered by the circuit court of said county in favor of said insurance agency. The defendants interposed a demurrer which was overruled, and appeal is prosecuted here to settle the principles of the case. The essential facts are these: In 1917, the Delta Insurance & Realty Agency, domiciled at Greenwood in Leflore county, Miss., executed its three promissory notes dated at Montgomery, Ala., payable to the Fidelity Mortgage & Bond Company at the First National Bank at Montgomery, Ala., for five hundred dollars each or total of fifteen hundred dollars. These notes were indorsed by S. S. Steele. Afterwards, in due course, the Fourth National Bank of Montgomery, Ala., acquired these notes. On November 1, 1918, the Fourth National Bank brought suit on the first note then past due. On January 20, 1919, Steele and the Delta Insurance & Realty Agency, hereafter referred to as the agency, filed an affidavit that Gwin & Mounger, a law firm of Greenwood, — 869 — Miss., without any collusion, liad a claim to the suit then pending against it in the circuit court, and an order was entered requiring Gwin & Moungér to appear and contest with the bank said claim. Thereafter, on January 24th, Gwin & Mounger appeared in the circuit court and moved the court to transfer the cause to- the chancery court. In the meantime the other two notes had become clue, and suit had been entered by the Fourth National Bank of Montgomery, Ala., and the two suits having been consolidated, Gwin & Mounger entered their appearance and issue iv'as joined on Gwin & Mounger’s claim, and the whole matter was submitted to a jury, resulting in a verdict and judgment of the circuit court in favor of said bank for -the total amount of the notes and interest. After said judgment the defendant Steele and the agency filed a motion in the circuit court for a stay of execution as to said judgment, because of the pendency of an attachment suit in the chancery court of said county filed by Gwin & Mounger against Steele and the agency and Fidelity Mortgage & Bond Company, a nonresident, to whom the notes were executed, alleging that said mortgage company was indebted to Gwin &■ Mounger for professional legal services. This suit was filed by Gwin & Mounger in September, 1918. On November 10, 1919, Gwin & Mounger filed a supplemental bill in the chancery court, alleging that since the filing of their original bill against the Fidelity Mortgage & Bond Company and Steele and the agency, they had learned that the Fourth National Bank of Montgomery claimed to own the notes executed by Steele and the agency to the mortgage company, and prayed that the Fourth National Bank be made a party defendant by publication. In the meantime, the court having denied the defendants in the circuit court suit, Steele and the agency, a stay of execution, appeal was prosecuted to this court, and, on that appeal, this'court held that Gwin & Mounger — 870 — “were wrongly in the circuit court,” and that the motion of the defendants Steele and the agency should have been sustained, granting: them a stay of execution, reserving to the court .below the power to vacate the stay of execution in the event the suit in the chancery court should not be prosecuted with reasonable diligence, and entered such judgment here. In the chancery court proceeding the debtor, the mortgage company, and the Fourth National Bank were made parties by due publication, returnable to the March, 1920, term of the circuit court. We neglected to state that the judgment rendered by the circuit court against the agency, Gwin & Mounger, and Steele was entered at the May term, 1920.' Steele filed his answer, admitting an indebtedness to the mortgage company in the sum of fifteen hundred dollars, evidenced by the notes heretofore described, on March 26, 1920, in the chancery court, in response, to the attachment suit of Gwin & Mounger. On May 26, 1920 the agency, through its president, Steele, filed its answer admitting- said indebtedness to said bond company of the three notes mentioned. It will be noted that no suggestion of the pending suit, which ripened into judgment in the circuit court by the Fourth National Bank, was made to the chancery court by either Steele or the agency, and the pleadings were not changed after the rendition and the judgment in the circuit court against Steele and the agency. In October, 1920, the chancery court rendered its final judgment against the mortgage company, against Steele, and against the Fourth National Bank, the final judgment reciting that judgment was entered against the nonresident defendants, including the Fourth National Bank, upon decree pro confesso, but no relief was granted as against said bank by the chancery court. Appellee here, the Fourth National Bank, by their bill, insisted that they were in no wise proper parties to the chancery suit of Gwin & Mounger, and that a decree pro — 871 — confesso having been taken against them by default without any appearance on its part, that the decree is void as to it, and that it should have a decree declaring said judgment void, and relieving it from the order entered by this court directing a stay of execution, the resident attachment defendants having failed to make known to the chancery court before rendition of judgment upon their answer, that a judgment had been rendered in May, 1920, against these resident defendants. The jurisdiction of the chancery court to entertain the bill filed by Gwin & Mounger was purely statutory, the bill being filed and authorized by section 536 of the Code of 1906 (section 293, Hemingway’s Code), which is as follows: ’ “The chancery court shall have jurisdiction of attachment suits based upon demands founded upon any indebtedness, whether the same be legal or equitable, or for the recovery of damages for the breach of any contract, express or implied, or arising ex delicto against any nonresident, absent or absconding debtor, who has lands and tenements within this state, or against any such debtor and persons in this state who have in their hands effects of, or are indebted to, such nonresident, absent or absconding debtor. The court shall give a decree in personam against such nonresident, absent or absconding* debtor if summons has been personally served upon him, or if he has entered an appearance.” The jurisdiction of the court is purely statutory. See Scruggs v. Blair, 44 Miss. 406, and Statham v. N. Y. Life Insurance Co., 45 Miss. 581, 7 Am. Rep. 737. Although the appellee, the Fourth National Bank of Montgomery, Ala., was made a party to that suit, there was no relation of debtor and creditor existing between the complainants there, Gwin & Mounger, and said bank, and no relief prayed for as against them in said bill; and the theory upon which our state courts entertain jurisdiction is purely upon the statutory remedy pro — 872 — vided in the code section mentioned above, as against a nonresident agent who has property or effects in the state, and we have in this ease the defendant, the mortgage company, a nonresident, the res—the notes—executed and payable in the state of Alabama, the debtor of the mortgage company resided within the jurisdiction of the chancery court, the Fourth National Bank was a nonresident, having its domicile at Montgomery, Ala., and no sort of relation as debtor and creditor existed between the nonresident bank and Gwin & Mounger. The circuit court had jurisdiction of the subject-matter and of the parties, and rendered its final judgment adjudging that the nonresident bank was the owner of the notes and entitled to recover from Steele and the agency, the resident defendants, and, of course, held against Gwin & Mounger. We think that the decree pro confesso and the final decree as to the Fourth National Bank in favor of Gwin & Mounger was void, being upon constructive process. The statute conferring jurisdiction upon the chancery court in attachments makes no provision for the trial of a claimant’s issue, and for the trial of any issue except that raised by the attachment issue, and must depend upon the facts and conditions set out in the statute. When we consider that Gwin & Mounger represented the resident attachment defendants Steele and the agency-in the circuit court proceeding, and when we consider further that the agency and Steele, after judgment had been rendered against them on these notes by a court of competent jurisdiction, sat supinely by and made no effort to amend their answer so that the changed condition—that is, a valid judgment against them on the identical debt in favor of another, a nonresident, had been rendered and was in full force and effect—and that they permitted the chancery court decree to be entered against them under these circumstances in favor of Gwin & Mounger, we are at a loss to understand how appellants here — 873 — expect to uphold that judgment except by an enlargement of the statutory power, and by ingrafting provisions upon the statute as to nonresident claimants not now there, which manifestly could not be done. Klein v. French, 57 Miss. 662, Speed v. Kelly, 59 Miss., 47, and Cocke v. Brewer, 68 Miss. 778, 9 So. 823. In the latter case the court said: “In this condition of things the chancery court could not acquire jurisdiction of the nonresident defendants, by publication, so as to render a valid decree against them. Neither the person nor the res being in this state, its courts could acquire jurisdiction only by the appearance of a party. The decree rendered upon proof of publication, without the appearance of the parties, without jurisdiction, and must be reversed.” The announcement in the case of Cocke v. Brewer, 68 Miss. 775, 9 So. 823, we think is controlling here. The facts in that case were that Mrs. Brewer sold to Murphy a tract of land; he paid part cash and gave notes for the balance. These notes were made payable jointly to Mrs. Brewer and her husband, and were afterwards transferred to J. L. Cocke & Co., appellant, apparently by Mrs. Brewer’s husband without her knowledge, she really owning the notes. They were secured by a deed of trust on land in Mississippi within the jurisdiction of the chancery court. Cocke & Co. and Brewer were residents of the state of Tennessee. Murphy, the maker of the notes, and the trustee, were residents of Clay county, Miss., and Mrs. Brewei- was a resident of Marshall county, Miss., the land being in Clay county. In that case, after the maturity of the notes Mrs. Brewer filed her bill in Clay county where the land was, maiding Murphy, the maker of the notes, and G-erdine, the trustee, and also J. L. Cocke & Co., the holder of the notes, and A. V. Brewer, her husband, residents of Memphis, Tenn., defendants. The bill alleged that Mr. Murphy was ready to pay the notes, but was not willing to do so until after the court had determined whether — 874 — Cocke & Co.’s claim was adjudicated. In other words, all parties in interest were defendants. In the opinion in this case, Chief Justice Campbell said: “The real controversy is as to the right to the notes, and that is between the complainant and the nonresident holders of them. The adjudication of that controversy in favor of the complainant is a condition precedent to a decree for payment to her by the debtor. While the end sought is to enforce payment of the notes out of the lands, an essential to the attainment of that end is to award the ownership of the notes to the complainant. ‘ ‘ The thing’ in dispute was not in 'Mississippi, but in Tennessee. The debtor was here [in Mississippi], and the land on which the notes are charged by a deed of trust is here [in Mississippi], but the debt is where the creditor is, and that was Tennessee.” “Attachment being* a leg’al proceeding’, a court issuing the writ has no authority to compel a nonresident to appear and litigate'his right to the fund attached.” 6 Corpus Juris, p. 374. Also see Delta Insurance & Realty Co. v. Interstate Fire Insurance Co., 113 Miss. 542, 74 So. 420; Advance Lumber Co. v. Laurel National Bank, 86 Miss. 419, 38 So. 313. All the facts necessary to confer jurisdiction upon the chancery court must appear in a proceeding brought under our attachment statute. Mr. Justice Holden, in the case of Insurance & Realty Co. v. Fire Insurance Co., 113 Miss. 542, 74 So. 420, thus states the rule: “The basis of the jurisdiction of the chancery court in this case is statutory; and the court has no jurisdiction under the statute unless the following facts exist, viz., the absence of the debtor, the presence here of effects in the hands of resident persons belonging to him, or debts due to him by resident persons, or his having lands or tenants in this state. Section 536, Code — 875 — of 1906; Advance Lumber Co. v. Laurel National Bank, 86 Miss. 419, 38 So. 313. The above facts, or anyone of them might exist, and still the court would be without jurisdiction to proceed to judgment against the thing unless it be first brought under the- control of the court by proper process, against the land, or against the person having.the effects belonging to, or owing the debt to, the nonresident defendant.” It will be borne in rniiid that the question in the instant case is not as to the jurisdiction of the chancery court by the remedy of attachment as against the nonresident debtor with its resident debtor living within the jurisdiction of the court, but the effect is to compel a nonresident claimant actually holding a judgment of a court of competent jurisdiction of Mississippi, to the effect that he is the owner of the res and entitled to recover thereon, to appear upon constructive process and propound his claim in a chancery attachment proceeding. As we see it, the announcement of the United States supreme court in the case of Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565, has not been changed, and the reasoning there applies here. There can be no question as to the jurisdiction of equity, to relieve a complainant affected by a void judgment, and a stay of execution restraining him from proceeding with his valid judgment at law. We think the learned chancellor below properly overruled the demurrer in this case. Affirmed and remanded' with leave to appellants to file their answer within thirty days. Affirmed cmd remanded.