SINGLE V. SCOTT PAPER MANUF'G CO.
sought, citizens of different states, and of necessity it must be held that this court cannot take jurisdiction thereof. The case is therefore remanded to the state court, at cost of the defendant.
SINGLE v. SCOT'.r PAPER MANUF'G CO. et al. (Circuit Court, N. D. Ohio, W. D. May 11, 1893.) No. 1,136.
FEDERAl, COURTS-JURISDICTION-NoNRESIDENT PARTIES-SERVICE BY PUB' LICATION.
Under Rev. St. § 738, which provides for serving nonresident de fendants by pulJlication "in a suit in equity to enforce any legal or equitable lien or elaim agaiI1st real ,n° personal property within the district where the suit is brought," such a suit is maintainable in a circuit court when the parties are eitizens of different states, although of them resides in the district where suit is brought. In determining whether a suit to enforce specific performance of a contract to convpy lands is a suit to enforce an "equitable claim" to real estate, within the meaning of Hev. St. § 7:38, the comt may take into consideration the relief prescribed by the statE, statute:.; in favor of parties having the right to pnforce such contracts; and in Ohio, wllPre the statutps provide for constructive service on nonresidents, and also deelare that if a judgnwnt ordering a COllYey:mce is not cOlllplied with the judgment its",lf shall operate as a conveyance, such a suit is an "equitable claim," and falls within the section.
SAME-SUITS FOR SPECIFIC PEHFORMANCE 01-' CONTHACT TO CONVEY LANDbTATE
In such a case a federal circuit court, in Ohio, may acquire jurisdiction by constructive service, under se tion 738, and has authority to enter a jUdgment providing that, if the convpyance thereby ordpred is not complied with within a time named, the judgment itself shall operate as a conveyance.
In Equity. Ruit by J olm Single, a nonresident, against the Scott Paper Manufacturing' Company and others, also nonresident"!, to enforce specific performance of a contmct to convey real est.ate. Heard on motion to dismiss the bill for want of jurisdiction. Denied. r.ev. St. § 738, provides as follows:
"'Vhen any defendant in a suit in equity to enforce any legal or equitable lien or elaim against real or personal property within the district where the suit is brought is not an inhabitant of, nor found within, the said district, and does not voluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant to appeal', plead, answer, or demur to the complainant's bill at a certain day therein to be designated; and tile said order shall be served on such absent defendant, if practi' able, wherever found, or, where such personal service is not practicable, shall be published in such manner as the court shall direct."
King & 'Dracey, for compIainant. Brown &. Tyler and Reeve & Rob)", for defendants. RICKS, District Judge. On the 17th of February, 1893, the com· plainant filed his bill in equity in this court, alleging that the defendant, by Clarence W. Scott, its president, direcoor, and duly·
autholized agent, acting for the defendant oorporation,. for himself, and for Sadie E. Scott, Joe O. Sterling, and Clarence W. Scott, into a written contraot by which he obligated the defendants, upon c.ertain payments to be made by the comp.lainant, and certain conditions to be performed by the complainant, ,to convey to said complainant c Il·tain valuable real estate situated in the division· and district 3Jfoil'C'said. Complainant alleges full performance of all the conditions upon his part, and a. tender in lawful money of the United States, and of promis'S()ry and t.he mortgages to secure the same, in exact eompliance with the conditions of said oontract, and avers thaJt the defendants refused to make conveyance ,and title of said property 3:S they were obligated to do under said contract, and still refuse so to do. O()mplainant further avers that under said contract he entered into pOSSC'lSSiOD of said premises, spent a lairge sum of money in making valuable improvements thereon, has made contracts for other valuable irupl"ovements still being made 11wreon, and that defendants had full knowledge of his possession, and of the valuable improvements so being made, and ,allowed complainant to proceed in his said improvements without any dissent or notice to him of their intention not to perfDO:'1ll. and abide by the contract acool'ding to its terms. Thereupon the complainant made proper affidavit under secticJU 73S of the Revised Statutes of the United States, and a,sked for' an order for service upon the defendants, who were nonresidents of the division and district aforesaid. order was made pursuant to the statute. The residence of said defendants is fully set ont in said affidavit and order, and by the return of the Unit,ed States marshal for the eastern district of Michigan, in which district the defendants reside. it appeaIT's that personal service of said order was made upon the Soott Manufaeturing Company, by deliverimg, personally, to Sadie E. S('lott, secretary 01' said company, a copy of said order, and personal service was further made upon each of the defendants except Clarence W. Scott, and Cla;r>ence W. Scott, trnstee. 'The latter ·being absent from the distriet, service was made upon him by leaving a proper certified copy of said order oat his dwell· ing place, with Sadie E. SCOltt, his wife,-an adult person, and a member of his :family. The defendants, having entered a special appearan,cefor the sale purpose of determining the question of the jurisdiction of the court, move to vacate and set aside the order heretofore made fOol' service upon said defendants, "for the reason that said O()urt has no jurisdiction of tlJi,s cause, or of the persons of said named defendants." An elaborate brief is filed by couns·el for the defendants, in wh.ich they oontend that the court has no jurisdiction of this cause because said section 738 of the Revised 'Statutes, by virt·ue of the net of oongress of March 8. 1887, as amended by the act of August, 1888, is but a part of said act. and that "any suit comTlJ.enc:ed in any circuit court of the United State's to any legal or equitable lien upon * * * real estate or property within the district," Under said section, can only be "commenced" when the Gourt, under seetion 1 01' said ad, acquires jurisdiotionbyreason of personal servic.e upon some one of the
BINGLE V. SCOTT PAPER MANUF'G CO.
defendants interested in such real estate or property referred to in said section. The complainant in this case is a nonresident of this district, and is a citizen of the state of New York. The defendants, who claim an interest and title to the real estate in controversy, are all residents and citizens of the state of Michigan. The property in dispute lies wholly within the western division of this distric:t. The question, therefore, presented, is whether this court, in a suit in which neither the plaintiff nor the defendants reside in the district, but are citizens of different states, can acquire jurisdiction, and determine controversie,s between the parties, whc>n the real estate in controversy lies wholly within the jurisdiction of the court. Under the last act of congress above referred to, it i,s well settled that, whoce the jurisdiction of the court depends upon diverse citizenship of the parties, either the plaintiff or the defendant must be a resident and citi2ien of the district. Counsel for the defendants contend that, inasmuch as neither the plaintiff nor the defendants are citizens of this district, the suit cannot be said to be "commenced," under section 738, because the court has no personal jurisdiction over either of the parties. And they contend, further, that a lien or equitable claim to real estate in this district cannot be enforced under said section unless either the plaintiff or the defendants are citizens of the district. In this contention, I think, oounsel are wrong. Section 738 was originally the eighth section of the act of :March 3, 1875. It was incorporated into the Revised Statutes as section 738. Section 739 specially provides as follows:
"Except in the cases provided in the next three sections, no person shall be arrested in one district, for trial in another, in any civil action before a circuit or district court; and except in the said cases, and in the cases provided by the preceding section, [which is section 738,] no civil suit shall be brought, before either of said courts, against an inhabitant of the United States, by any original process, in any other district than that of which he is an inhabitant, or that in which he is found, at the time of serving the writ."
We therefore have in this section a legislative construction of section 738, and that construction is that a suit could be "commenced" in a district !in which the rreal estate concerned was situated, without reference to whether the defendants could be personally served in the district or not. Personal service of process w:as not, therefore, essential to give the court jurisdiction under section 738, as section 8 of the act of March 3, 1875. As that section remains in force by special provision of the act of August, 1888, the legislative construction placed thereon also stands. It is sufficient, therefme, to give the court jurisdiction, if the real estate involved is within this district, and 'the partie.<;; are citizens of different states. I find nothing in the opinicms of the court in Smith v. Lyon, 133 U. S. 315, 10 Sup. Ct. Rep. 303, or in Ames v. Holderbaum, 42 Fed. Rep. 341, inconsi'stent with this conclusion. The next important question to determine is whether a bill for a specific performance constitutes a "legal or equitable lien upon, or claim to, or to remove an incumbrance or lien or cloud upon a title to real or personal propel'ty." In determining this question we are
authorized-to consider the relief prescribed by the statutes of Ohio to parties having a right to insist upon a. specific performance of 'a contracUx)oOD\'ey real est<1te in that state; for the supreme court of the United States has expressly declared, in the case of Holland v. Challen, 110 U. 8. 15, 3 Sup. Ct. Rep. 495, that while"The state legislatures certuinly have no authority to prescribe the forms and modes of'proceeding in the courts of the United States, but having <reated a right, and at the same time prescribed a remedy to enforce it, if the remedy prescribed is sul'stantially consistent ,vith the ordinary modes of proceeding on the chancery side of the federal courts, no reason exists why it should not be purslwd in the same form as in the state court. On the con,trary, propriety and convenience suggest that the practice should not materially differ, whel'() titles to lands are the subjects of investigation, and such is the constant course of the federal courts."
Again, the same court, in the case of Arndt v. Griggs, 134 U. So 316, 10 Sup. Ct. Rep. 557, decided that"A state may provide by statute that the title to real estate within its limits shall be settled and determined by a suit in which the defendant, being a llonresident, is brought into COUIt by publication. The well-settled rules .that an action to quiet title is a suit in equity, that equity acts upon the person, and that the person is not brought into court by service by publication alone, do not apply when a state has provided by statute for the adjUdication of titles to real estate within its limits, as against nonresidents who are brought into court only by publiclltion."
In discussing this case, Judge Brewer says:
"The question is not what a court of equity, by virtue of its general powers, and in the absence of a statute, might do; but it is, what jurisdiction has 11 state over titles to real estate within its limits, and what jmisdiction may it give by statute to its own courts to determine the validity and extent of the claims of nonresidents to such real estate'! * * * So it has been hpld, repeatedly, that tire procedurc established by the statute in this respect is binding upon the f('deral courts."
Further on, in referring to the case of Clark v. Smith, 13 Pet, 195, that learned justice quotes from that case, approvingly, as follows:
"A state has an undoubted power to regulatp and protect individual rights to her soil, and declare what shall form a cloud over titles; and, having so declared, the courts of the United States, by removing such clouds, are only applying a new practice to a new equity created by the legislatul'l', having its origin in the peculiar condition of the country. 'rhe state legislatures have no authority to prescribe forms and modes of proceeding to courts of the United States, yet, having created a right, lwd at the same time prescribed the remedy to enforce it, jf the remedy prescribed is substantially (onsistent with ordinary modes of proceeding on the chancery side of the federal courts, no reason exists why it should not be pursued in the same form as in the state court. In the case before us, the proceerling, tho:rgh special in its form, is, in its nature, but the appliC>ltioIl of a well-known chancery remedy. It acts upon the land, and may be conclusive as to the title of a citizen of another state,"
In the case of Boswell's Lessee v, Otis, 9 How. 336, although the judgment in that case was held to be void, yet, with reference to the jurisdiction of the court in a case for specific performance of a contract alone, the supreme court said:
"Jurisdiction is acquired in one of two modes: First, as against the person of the defendant, by service of process; or, secondly, by a procedure
SCOTT PAPER MANUF'G CO.
against the property of the defendant within the jurisdiction of the court. In the latter case the defendant is not personally bound by the judgment, beyond the property in question; and it is immatt'rial whether the proceeding against the property be by an attachment, or bill in chancery. It must be sUbstantially a proceeding in rem. A bill for the specific execution of a contract to convey real estate is not strictly a proceeding in rem, in ordinary cases; but where such a procedure is authorized by the statute on publication. without p"rs('nal service of process, it is substantially of that character."
From these decisions of the supreme court it is clear that the circuit courts of the Lnited States, sitting in Ohio, exercising their general equity jurisdiction in a suit prcperly instituted, would rightfully enforce any additional remedies given under Ohio laws, so as to grant proper relief to a complainant asking for the specific performance of a contract to convey real estate lying in that state. It is further equally clear that if the laws of Ohio provide a remedy through which the performance of such a contract can be enforced, as against a nonresident, then such an existing contract in Ohio is an equitable "claim" to real estate, which this court may enforce, or an "incumbrance or cloud upon a title to real property," which this court may remove, under the provision of the United States statute to which reference has heretofore been made. The statutes of Ohio which enlarge the remedies of the complainant in this case are not essential to give the court jurisdiction originally. This court acquires jurisdiction because the complainant is a nonresident of Ohio, and a citizen of Kew York; because the real property to which he asserts an equitable claim lies wholly within this district; and hecause section 738 of the Revised Statutes of the United States specially prescribes the proceedings by which this equitable elaim may be asserted. If there were doubts as to whether, under the general equity rules and principles administered by this court, aided by the provisions of section 738, the defendants could be brought within the jurisdiction of the court without personal service, the authority of the court to entertain such jurisdiction, and administer the relief sought, is made more certain and effective by reason of the Ohio statutes. Section 5024, Rev. St. Ohio, authorizes an action to compel the specific performance of a con· tract for the sale of real estate. Section 5048 provides for con· strnctive servicp in such cases. Section r>318 provides that,when a party ag-ainst whom a judgment or a com'eyance * * * is rendered does not comply therewith by the time appointed, such judgment shall have the same operation and effect, and be as available, as if the conveyance * * * had been executed conformably to such judgment. Oonsidering these statutory provisions in the light of the principles announced in the case of Boswell's Leesee v. Otis, above quoted, our jurisdiction in this case seems clear. If the complainant shall establish the allegations of his bill by proper evidence, and show that the contract set forth was properly executed by persons duly authorized, and that he is entitled to a specific execution of said contract, this court will have jurisdiction
to order the defendants, within a time named, to make such con· !f they fail to do so, and are beyond the jurisdiction of the court, .80 that personal enforcement of the order will be impossible, the decree may provide that, on a failure on their part to comply with the order of the court, the decree, in and by itself, may divest the defendants of all title in said property, and vest the same in the complainant. The equities of the case, so far as the allegations of the bill are concerned, are all with the complainant. It presents aca.se where the court ought to retain jurisdiction, if it can rightfully do so, because the relief sought is just and equitable, in the highest degree. I am therefore of the opinion that this court has jurisdiction over the property involved in this controversy, and over the defendants, so far as they have any claim or title to said property; that this proceeding is substantially a proceeding in rem; and that the general powers conferred upon this court, as a court of equity, under the constitution and laws of the United States, are so enlarged, and made more effective, by the statutes of the state of Ohio, as that, upon final hearing, if the complainant shall establish his right to relief, full and adequate protection can be given him to enforce the specific execution of the contract set out in his bill.
WOOLWORTH v McPHERSON.
(Circuit Court, S. D. New York. May 6, 1893.) 1.
'V. & M. executed the following agreement: "St. Joseph, Missouri, February 1st, 1881. The undersigned have this day formed a partnership for the transaction of a general book and stationery business, * * * M. . to be guitrantied $2,000 per annum, same to be and to come out of his half of the profits; but, should the one-half profits not amount to $2,000 in the year, ·he shall not be held for any deficiency in the salary account. In consideration of the guaranty of $2,000 per annum toM., he shall give his entire time, during reasonable business honrs, to the business of the firm,' and W. shall not be held to give the same any more time than he may chance. * * * This agreement to run one year from this date." Helri, that it was a copartnership agreement, and that the supposition of M. that the contract guarantied him a salary of $2,000 a year,and half the profits above that sum, but that he should not be liable as partner for any losses in business, was a mistake of law, for which .he was not entitled to relief.
Ina suit by W. against M. growing out of a fol'mer partnership be-tween them, an order of dismissal' was entered, pursuant :to the following writing addressed to plaintiff's solicitor: "Yon will please enter an order in this cause discontinuing the same upon the paymeut by the defendant of tlle costs therein. Yours; etc., W. Agreed to.. Mt Held that. as this writing was informal, and contained nopr6mise by' either party to the other, and defendant's signature was presumably merely for the protection . of the clerk, the writing did Dot constitute such a contract or memorandum thereof that defenda.nt. would. be preventc'd in a subsequent suit from showlug by other evidence that the order was entered pursuant to an agreement releasing him from all liability in consideration of the payment of the costs and certain services which he was to render to plaintiff.
PARTNERSIJIP-CONSTHUCTION OF AR!'ICLES.
2. PAROL EVIDENCE-CONTRACT.