Gates v. Bucki

SHIRAS, District Judge, (after stating the facts.) By the first error assigned it is inf,ended to present the jurisdictional! question, whether, under the provisions of the act of congress of August 13,1888, read in connection with section 8 of the act of March 3,1875, — 964 — a suit to foreclose a mortgage on realty can be brought in the federal court of the district wherein the land is situated, if neither party to the suit is a resident of that district, but if they are in fact citizens of different states. As we construe the record submitted to us, this question is not involved in the present appeal, and cannot be considered by this court. By the second division or count of the plea filed by appellant in the circuit court this question of jurisdiction was made an issue in the case, but it does not appear that it has yet been passed upon by that court. The record shows that on the 16th of June, 1892, the appellant, Gates, filed a plea in the case, presenting questions of jurisdiction and practice, and on the same day the appellee, Bucki, filed an application for an injunction restraining Gates from further prosecuting the suit in the Jefferson county' circuit court as against him. The record further recites, under date of Juné 17, 1892, that “now, on this day comes on to be heard the application of the complainant for an injunction to restrain the defendant, Ferdinand Gates, from applying to the circuit court of Jeffemon county for an order enjoining the complainant and his solicitors from the further prosecution of this suit, * * * and the cause is submitted to the court on the bill of complaint and the amendments thereto, and on the pleas of the said Ferdinand Gates, and, the court being sufficiently advised in the premises, it is considered and decreed that the said Gates, his attorneys and solicitors, be forever enjoined from applying to the said circuit court of Jefferson county for an injunction restraining the plaintiff and his solicitors from the prosecution of this suit.” From this recital it would appear that the only matter submitted to the circuit court was the application for the writ of injunction, yet, if the statement that the cause was submitted to the court on the bill and the pleas thereto is to be construed to mean that the entire cause was submitted, it certainly does not appear that the-circuit court has as yet passed upon the jurisdictional questions presented by the pleas filed by the defendant, Gates. The only decision given and order made is that Gates is enjoined from applying to the circuit court of Jefferson county for an injunction restraining the plaintiff, Bucki, from the prosecution of the suit in the federal court. The effect of the order was to leave Bucki free to prosecute the foreclosure proceedings without hinderance, but no progress was made in these proceedings, nor did the circuit court take any action therein. There can be no doubt that the foreclosure suit is still pending in the circuit court, and that no appealable order or decree has been rendered therein, save the order allowing the writ of injunction. When the circuit court passes upon the jurisdictional questions presented by the pleas filed by the defendant, Gates, for aught we know the ruling may be in his favor. If the bill should be dismissed for want of jurisdiction, then the appeal would be to the supreme court, and not to this court. If the plea .to the jurisdiction should be overruled, then the case must proceed to a final decree on the merits before any appeal could be taken on the jurisdictional ques965 lion, it being then open to the (hiendan!,, Gates, to go to the supreme court on the single question of jurisdiction, or to bring the entire case before this court. McLish v. Roff, 141 U. S. 661, 12 Sup. Ct. Rep. 118. The only question brought before this court by the appeal taken in the case is as to the propriety of the granting of the writ of injunction that was ordered on the 17th of June, 1892, in respect to which interlocutory order an appeal was permissible under the provisions of section 7 of the act of March 3, 1891, creating this court. In support of the position of appellant that it was error to grant the writ, it is contended, in the first instance, that the record on which the application for the issuance of the writ was based shows upon its face the fact of the pendency of the prior proceedings brought in the state court attacking the validity of the mortgage sought to be foreclosed, and therefore the United States court should have declined to take jurisdiction of the foreclosure suit. On part of the appellee it is contended that the pendency of an action in the state court, even if between the same parties, and for the like purpose, is not cause for abating an action in the federal court, because the courts are created by different sovereignties. That this is the general rule in regard to actions pending in courts of different jurisdictions is well settled. Stanton v. Embry, 93 U. S. 548; Gordon v. Gilfoil, 99 U. S. 168. When the jurisdiction of the courts, iu cases between the same parties, involving the game issues and seeking identical remedies, is dependent upon personal service of the original process upon the defendant, had within the limits of the territorial jurisdiction of the courts, then it is possible to proceed with each case-without bringing about an unseemly conflict of jurisdiction. In some cases each court can proceed to final judgment without conflict. In others the first judgment rendered may be available to tbe prevailing party as a plea'in bar to tbe action still pending. When, however, the proceedings are in rem, or are of that kind wherein jurisdiction is based solely upon tbe possession or control of property, and in which the final judgment of the court can only be enforced against, the property taken into the possession or under the control of the court, then a different rule applies. When, by the issuance and levy of preces», or the filing of a bill in equity, property, either real or personal, is brought in custodia legis, the control arid jurisdiction over the same is exclusively with the court which thus acquires legal possession thereof. To sustain the jurisdiction created by the seizure of the property, the possession and right of control must be continued, not only until final judgment is pronounced, but in some cases until that judgment is satisfied. If it was permitted to one court to seize upon or subject to its jurisdiction property already within the custody of another court, it could in this way terminate the jurisdiction of the other court, but iu turn it would be subject to the same liability, and by such a system of capture ami recapture both courts might be disabled from reaching a final judgment, or from enforcing it against the property in dispute. Hence the rule is well settled that, so long as property — 966 — is in the custody of one court, it cannot be reached or be taken away by process from another court, created by a different sovereignty. Peck v. Jenness, 7 How. 612; Taylor v. Carryl, 20 How. 583; Freeman v. Howe, 24 How. 450; Watson v. Jones, 13 Wall. 679; Stout v. Lye, 103 U. S. 68. This principle is very clearly stated in Covell v. Heyman, 111 U. S. 176, 182, 4 Sup. Ct. Rep. 355; in whiph case Mr. Justice Matthews, speaking for the court, said: “The forbearance which courts of co-ordinate jurisdiction, administered under a single system, exercise towards each other, whereby conflicts are avoided, by avoiding interference with the process oí each other, is a principle of comity, with perhaps no higher sanction than the utility which comes from concord; but between state courts and those of the United States it is something more. It is a principle of right and of law, and, therefore, of necessity. It leaves nothing to discretion or mere convenience. Those courts do not belong to the same system, so far as their jurisdiction is concerned, and, although they coexist in the same space, they are independent, and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes into its jurisdiction a specific thing, that res is as much withdrawn from the judicial power of the other as if it had been carried physically into a different territorial sovereignty. To attempt to seize it by a foreign process is futile and void. The regulation of process, and the decision of questions relating- to it, are part of the jurisdiction of the court from which it issues.” When, therefore, by the levy of process either mesne or final, or by the beginning of proceedings in rem or quasi in rem, property, either real or personal, has been brought witliin the custody or control of a court of the one system, such property cannot be subjected to the process, nor he brought within the control, of a court of the other system, and the light which the latter court would otherwise have to seize the property or to found jurisdiction on the possession or control thereof is placed in abeyance, and cannot be exercised until the court having the control and custody of the property parts with the same. Buck v. Colbath, 3 Wall. 334. Applying these well-settled rules to the facts of this case, what is the result? It appears on the record that on the 25th of December, 1890, Ferdinand Gates brought in the state court his action at law against "Victor and Adolph Meyer, and caused a. writ of attachment to be issued and levied on the realty known as the “Corinne Place.” On the 6th of January, 1891, having obtained judgment in the action at law, Gates filed in the state court a. bill in equity to set aside and cancel the mortgage previously executed upon the attached property by one of the judgment debtors. The proceedings in equity were ancillary to the action at law, and were in fact merely to aid in the enforcement of the lien created by the levy of the attachment. By the proceedings thus instituted, the state court was charged with the duty and clothed with the jurisdiction to hear and determine the question whether the deed and mortgage executed on the attached realty were or were not valid as against the attaching creditor. It is said in argument that the state court did not acquire jurisdiction over the property in the equity proceedings, because, up to the time of the bringing of the foreclosure suit in the federal court, Charles L. Bucki, who claims to be the sole owner of — 967 — the bonds secured by the mortgage, had not been made a party to the suit in equity in tlie state court. There are several sufficient answers to this. The jurisdiction of the state court is primarily based upon the levy of the attachment in the action at law. It was the levy of process on the property which conferred jurisdiction, and not sit vice of process on persons who might have interests therein. The institution of auxiliary proceedings in equity enabled that court, to deal with the property, and to adjudicate all conflicting interests that > .‘..lit be asserted to the property, and which were necessary to be '¡card and determined in order to enforce the lien of the attachment. To that end the state court had the power to cause all persons who "were known to assert, claims to the realty to be made parties to that proceeding. When the bill in equity was first filed, the defendants therein were Victor Meyer, the grantor in the alleged fraudulent conveyance, Adolph Meyer, and the Farmers’ Land & Loan Company, the granice in tlie deed attacked; and subsequently, when it appeared that Evelyn K. Meyer and Charles L. 1 ’ucki Knight be interested in tlie question of the validity of the deed and mortgage, it was ordered that they be made parties defen dant. The mere fact that before this order was made by tlie state court I>ucki had tiled in the federal court; a bill of foreclosure did not; affect nor defeat the right of the state court to proceed with the cause pending before it, nor with the right to make I’.ucki a party to that; proceeding. It thus appears that when the bill of foreclosure was filed in the federal court by ('liarles L. Pue-ki the property included in the deed and mortgage sought to be foreclosed was then in the control and possession of the state court., and was being" dealt with in a proceeding in equity, brought expressly for the purpose of determining whether the conveyance under which It ucki claimed a lien upon I he properly was void as against, the attaching creditor. Xo fact is shown upon the record which in any way impeaches the jurisdiction of the state court over the property affected by the conveyance sought; to be avoided, nor over the question of the validity of the conveyance nor over the rights and interests of the parties now or hereafter brought into the casi», so far, at least, as such rights are affected by the disposition of the property in dispute. It cannot be questioned that by the levy of the writ of attachment, and the institution of the proceedings in equity to settle tlie title to the attached property, the jurisdiction of the stale court over the realty became of the nature of jurisdiction in rem. Cooper v. Reynolds, 10 Wall. 308; Pennoyer v. Neff, 95 U. S. 714; Mohr v. Manierre, 101 U. S. 417; Heidritter v. Oil-Cloth Co., 112 U. S. 294, 5 Sup. Ct. Rep. 135. It follows, therefore», that, this property, being thus in tlie custody of the state» court; in proceedings intended to affect the title anel control the» dispeisition of the same, the property was few* the timo, being withdrawn from the jurisdiction of the federal court, anel when thee foreclosure suit, Was fileid in that cemrt it could not anel did not binel e>r reach the properly, because the same was not, then within the plane of federal jurisdiction. That the facts dis — 968 — closed in this record bring the case clearly within this rule so often enunciated by the supreme court of the United States, is made apparent beyond cavil if we assume that each court should proceed to judgment in the.case pending before it. If in the suit in equity in the state court it should be adjudged that the conveyance of the property to the Farmers’ Land & Loan Company was fraudulent and void as against the attaching creditor, and the attached property should be sold under judicial process, a title would then accrue to the purchaser at that sale. If in the suit in the United States circuit court a decree of foreclosure should be granted, and a sale should be had, and a deed in pursuance thereof be made, another title to the property would be created, in form at least, and thus a conflict of right and title would be created. These antagonistic titles could not both be valid. One must be paramount and superior to the other in the sense that it would convey the property and settle the ownership thereof; and the other title would be without validity, being wholly nugatory and void. The test of superiority would be the" question of jurisdiction over the propertv. Both cases are in the nature of proceedings in rem, and jurisdiction is dependent upon the fact of control over the property; ‘ and under the facts disclosed on the record before us it is entirely clear that the res is in the possession, and therefore within the jurisdiction of the state court, and, of necessity, is without the jurisdiction of the federal court. We do not hold that the bill for the foreclosure of the mortgage might not be filed in the federal court during the pendency of the proceedings in the state court. The .latter do not contemplate the foreclosure of the mortgage, even if the state court should sustain the validity thereof, and should set aside the attachment levy. Eo good reason is now perceived why it was not open to Bucki to file the bill in question, as it might, ' under some circumstances, be necessary to do so in order to prevent the running of the statute of limitations. When, however, the bill was filed, it did not affect the property then in custodia legis by reason of the proceedings already pending in the state court, and therefore the federal court could not rightfully interfere with the case pending in the state court. The right of the federal court to proceed against the mortgaged property under the bill of foreclosure is in abeyance so long as the state court has the custody of the property, but when such custody ceases by act of the state court, and the property ceases to be in custodia legis, then the jurisdiction of the federal court may attach, and the foreclosure suit may be proceeded with. If the judgment of the state court sustains the valid- ‘ , ity of the mortgage, then its judgment will be in aid of, rather than a bar to, the foreclosure proceedings; but, if its judgment is against the validity of the mortgage, then the same may be made a bar to the foreclosure suit. This, however, is not a question that we are necessarily called upon to decide finally at the present time. Assuming that the bill for foreclosure was properly filed in the United States court, the question is whether the writ of injunction was rightfully granted under the facts appearing on the record at the time the same was granted. The application for the issuance of the — 969 — writ prayed “for an injunction restraining the said Gates from the further prosecution of said suit as against the complainant;” (hat is, an injunction was asked to restrain Gates from making Bucki a party to the suit in the state court, brought to determine the validity of the mortgage. It has been already shown that the state court has exclusive jurisdiction of the realty and of the proceedings to determine the validity of the mortgage, and that court had the right to cause to he made parties to that suit all persons interested in or asserting claims to the property under the mortgage executed by Victor Meyer. It was not for the United States circuit court to dictate to the state court as to who should or who should not be made a party to the proceedings pending before it, and therefore ib was, we presume, that the federal court did not grant a writ to the effect asked for by the applicant. Tbe writ actually granted was to the effect that Gates and his attorneys -were forever restrained from applying to the state court for an injunction restraining Bucki from the prosecution of the suit for the foreclosure of the mortgage pending in the federal court. On behalf of the appellee it is argued that the courts of the United States will not suffer state courts to interfere with the exercise of their proper jurisdiction, and will proceed against the party seeking to malee such use of the state courts, either by injunction or for contempt; and in support of this doctrine counsel for appeliee cite the cases of French v. Hay, 22 Wall. 250, and Dietzsch v. Huidekoper, 103 U. S. 494. The principle that a court which has rightfully taken jurisdiction over a subject-matter of litigation, and has adjudicated the rights of the parties, is hound to secure to the prevailing party the fruits of tbe litigation, and to that end, when necessary, by injunction or other-wise, may restrain the other party from attempting to evade or escape the effect of the judgment by bringing proceedings in other courts, according to the ruling of the supreme court of the United States in the cases last cited, and subject to the limitations therein contained, is, in its application, not confined to courts of the United States, - hut embraces also the courts of the several slates. It is just as much the duty and the right and within the power of (be state courts to secure to litigants therein the full benefit of the judgments therein pronounced as it is in like circumstances the duty of the federal court to extend protection to litigants within its jurisdiction. Upon the face of the record in this case it appears that the state court has jurisdiction in the suit brought toi determine the validity or invalidity of the conveyance of the realty from Meyer to the Farmers’ Land & Loan Company, and to that suit Bucki is made a party, and the way is open to him to appear in that suit, and to contest the claim of Gates that the conveyance is void as against him. If, upon such appearance and contest, it is decided that the conveyance is valid, then Bucki can proceed with the foreclosure suit in the federal court, and the decree of flu; state court will estop Gates from asserting in the federal court that the mortgage is void. On the other hand, if it is adjudged in the state court that the conveyance is invalid, then such decree will bar the right of Bucki to proceed with the foreclosure proceedings. In that event Gates will — 970 — have the right to enforce his lien by attachment, merged into the judgment, by a sale of the realty free and clear from the incumbraoce attempted to be created by the conveyance to the Farmers’ Land & Loan Company, and it will be the duty of the state court to enforce and protect Ids rights in this particular. If Bucld does not appear in the equity proceedings pending in the state court, still that court, having possession of the realty, has the right to deal with the property, and can, so far as it is concerned, determine the validity of all claims or liens belonging to the persons made parties to that suit, whether served personally or constructively. It thus appears that when the foreclosure bill was filed in the court below the realty included in the mortgage was in the custody of the state court, and that court, in the due exercise of its rightful jurisdiction, was proceeding to decide the question of the validity of the conveyance from Meyer to the Farmers’ Land & Loan Company, including the. mortgage thereby created. What steps should be taken and what process should be issued in connection with the proceedings be'fore it is primarily for that court to determine, and we fail to find in the record before ns any ground upon which to base the right to issue the writ of injunction which was in fact granted by the court below. It is not made to appear that the circuit court has now, or at present can obtain, jurisdiction to proceed with the ^foreclosure suit, as the property, which is the subject-matter of “the proceeding, is without the jurisdiction of the federal court. Under these circumstances, the right to decree a foreclosure of the mortgage and a sale of the realty therein described is in abeyance, and cannot be made effectual against property which is not subject to the jurisdiction of the court. The federal court is not, therefore, possessed of'any control or jurisdiction over the realty described in the mortgage which authorizes it to enjoin the litigants in the state court from applying to that court for such relief as that court may deem is equitable and necessary. It follows that the order appealed from, granting the writ of injunction in question, must be and is reversed, at cost of appellee.