Brophy v. Kelly

¶27GRUBB, District Judge

¶28(after stating the facts as above). 1. The bill assails, the judgment because, as it alleges, the district court of Dallas county did not acquire jurisdiction of the defendant Brophy or of his land; he being a nonresident of Texas and personally served in the state of his residence, Illinois, and'the land involved not being situated wholly or partly in Dallas county, in which county the suit was brpught. As to defendant Brophy, it is contended that the judgment was void, whether the action be one in personam or one in rem. It is also alleged that the defendant Brophy was deprived of due process of law by being deprived of his land under the judgment, because the Texas statute, under which service was obtained, failed to afford reasonable time for appearance and answer by a nonresident defendant when personally served beyond the limits of the state. The statute provided that the citation should be served ten days before the return term, and answer was required to be made by the defendant on or before the second day of the return term, and before the call of the appearance docket on said second day. Revised Statutes Texas, art. 1263.

¶29[1] It is not contended by the appellee that service by personal citation upon a nonresident defendant under article 1230 'of the Revised Statutes of Texas, outside the limits of the state, would be a sufficient predicate for a personal judgment against him. Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565. No personal judgment was rendered against defendant Brophy in that case, and the only question is whether such service is effective to sustain a judgment foreclosing a vendor’s lien; the land being situated within the jurisdiction of the court.

¶30Constructive service may' be a sufficient foundation for a judgment or decree in rem. So personal service upon a nonresident defendant, when he is out of the state, in which the suit against him is pending, may avail to support a judgment in that state, if its effect is limited to property of his within the jurisdiction of the court. This is as true of actual service upon a nonresident when out of the state of the forum, as it is of constructive service upon a nonresident. A suit may be one in rem either by virtue of its purpose being to enforce an. existing lien *25or foreclose an existing mortgage on property of the nonresident defendant, situated within the state of the forum, or because of the creation in the suit itself by attachment or other process of a legal lien on the property of the nonresident defendant found within the jurisdiction of the court.

¶31In the case of Roller v. Holly, 176 U. S. 398-405, 20 Sup. Ct. 410, 412 (44 L. Ed. 520) the Supreme Court said:

“The substance of these cases is that if the plaintiff be in possession, or have a lien upon land within a certain state, he may institute proceedings against nonresidents to foreclose such* lien or to remove a cloud from his title to the land, and may call them in by personal service outside of the jurisdiction of the court, or by publication, if this method be sanctioned by the local law. In suits for the foreclosure of a mortgage or other lien upon such property, no preliminary seizure is necessary to give the court jurisdiction. The cases in which it has been held that a seizure or its equivalent, an attachment or execution upon the property, is necessary to give jurisdiction are those where a general creditor seeks to establish and foreclose a lien thereby acquired.”

¶32That the suit in the district court of Dallas county and the judgment rendered therein are to be construed, so far as they affected the defendant Brophy, as being in rem only, is apparent from the fact that no relief against Brophy was obtained, except an order for the seizure and sale of his land. That service by personal citation upon a nonresident defendant, in the state of his residence, is sufficient to support a judgment in rem, foreclosing a lien on his land situated within the state of the forum and within the jurisdiction of the court, is the holding of the case of Roller v. Holly, supra. That case also holds that article 1230, Texas Revised Statutes, the one relied on by appellee in this case, applies to suits for the foreclosure of1 liens or mortgages on lands, as construed by the courts of Texas, a construction adopted by the Supreme Court in that case.

¶33The appellant, however, contends: (1) That the land being in a county different from that in which the suit was brought and the judgment obtained, and the Texas statute requiring suits for foreclosure of liens on land to be brought in the county where the land was located, partly or wholly (Revised Statutes Texas, art. 1194, subd. 12), the district court of Dallas county had no jurisdiction of the rem, and, having no jurisdiction of the person of the defendant Brophy, was without jurisdiction altogether; and (2) that article 1230, Texas Revised Statutes, providing for service on- nonresidents, allowing the citation to be returnable at a term to be held within ten days after service, the Texas law requiring the defendant to answer on or before the second day of the term makes it possible that a nonresident defendant have but 12 days in which to appear and answer the citation, which might be an unreasonably short time, depending upon the distance the residence of the defendant is from the place of trial, and that the statute, for this reason, deprives nonresident defendants of due -process, and is violative of the fourteenth article of amendment to the federal Constitution for that reason. -

¶34[2] 2. The district court of Dallas county is by the Constitution and laws of Texas vested with general original jurisdiction in all suits for the enforcement of liens on lands (Constitution of State of Texas, art. *265, § 8; Revised Statutes of Texas 1895, art. 1098), where the amount in controversy exceeds the sum of $500. Article 1194, subd: 12, Texas Revised Statutes, provides that a suit for the foreclosure of a mortgage or other lien may be brought in the county in which the property subject to such lien or a portion thereof may be situated. Is the effect of the latter statute to deprive the district courts of jurisdiction of the subject-matter of suits to enforce liens on lands situated in counties other than that of the forum, or merely to provide for the venue, giving the defendant a privilege to be sued only in the county of his residence, or that in which is situated property against which a lien is sought to be enforced, a privilege which he may insist on or waive, as he sees fit, and which he waives by permitting a default to go against him? That the latter is the correct rule is apparent from the Texas cases we quote from.

¶35■ In De La Vega v. League, 64 Tex. 205-215, the Supreme Court of Texas said, with reference to subdivision 14 of the same section, which limits the venue in actions for the recovery of lands, to remove incumbrances, to quiet title, and to prevent waste, to the county in which the land or a part thereof lies:

“Our statutes in force at the time the reconvention was filed provided that suits for the recovery of land should be brought in the county where the land or a part thereof is situated. This is one of the exceptions to the general rule requiring suits to be brought in the county of the defendant’s residence. This requirement is not a matter that affects the jurisdiction of the district courts over the subject-matter of controversies about the title or possession of lands. Every district court in the state has cognizance of such suits; the requirement as to the county in which the suit may be brought is a mere personal privilege granted to the parties, which may be waived like any other privilege of this character.”

¶36In the case of Dittman v. Iselt, 52 S. W. 96, the Texas Court of Civil Appeals said:

“It is well settled that the requirement that suits for the recovery of lands should be brought in the county where the land, or a part thereof, may be situated, is not a matter that affects the jurisdiction of district courts over the subject-matter of controversies about the title or possession of lands. The requirement is one of personal privilege merely, and, when the parties were once in court, any matter arising out of the subject-matter of the suit could be litigated.”

¶37In the case of Wolf v. Sahm, 55 Tex. Civ. App. 569, 120 S. W. 1114—1116, the same court said:

“It is true that while article 1194 of the Revised Statutes of 1895 prescribes that suits concerning lands shall be brought in the counties where the lands are situated, still district courts have the power to try such suits regardless of the county in which the land is located, and the statute referred to merely secured to a defendant a personal privilege to be sued in a particular county. It is also true that the general rule is that the privilege referred to is waived when a defendant files a plea to the merits before asserting his privilege to be sued in another county..”

¶38In the case of Houston Oil Co. v. Bayne (Tex. Civ. App.) 141 S. W. 544, the same court reapplied the principle decided in the case of De La Vega v. League, supra, to a case in which a judgment was entered against nonappearing unknown heirs, upon constructive service by posting and publication. The court said:

*27“We are of the opinion, however, that the general rule announced by the authorities, and above stated, applies to this case. The presumption is that the court obeyed the plain command of the statute, and appointed an attorney ad litem to represent the defendants, and they are bound by his waiver of objections to the venue.”

¶39There is no reason for the drawing of a distinction between subdivision 14 and subdivision 12 of article 1194, in this respect. Each relates to the venue in suits concerning lands, and fixes the venue in the county where.the lands are situated. However, in the case of Cavanaugh v. Peterson, 47 Tex. 206, the Supreme Court of Texas said:

“The statute provides for a mortgage on land to be foreclosed in the county where the land is situated. It does not follow, from that, that a judgment of foreclosure would be void, if it was foreclosed in another county; the district court having general jurisdiction of the subject-matter—the debt, and the mortgage to secure it. That judgment, being rendered in Harris county, was binding, and, not being appealed from or set aside, was conclusive, as between the parties to it, to the full extent of what was decreed.”

¶40The same principle has been announced by the Texas courts in the cases of Ryan v. Jackson, 11 Tex. 400; Morris v. Runnells, 12 Tex. 175; Bonner v. Hearne, 75 Tex. 247, 12 S. W. 38; Walker v. Stroud (Tex. Sup.) 6 S. W. 206; and Fairbanks v. Blum, 2 Tex. Civ. App. 479, 21 S. W. 1009.

¶41Appellant contends that article 1903, Texas Revised Civil Statutes, does not apply to nonresident defendants. It, however,' applies only to a plea of privilege based upon the residence of a defendant in a county of the state other than that in which he is sued, and does not attempt, to prescribe the form of such a plea, where it is based upon the ownership of lands, which are affected by a suit, which is pending in a county, other than that in which the lands are located. It cannot be inferred, from the absence of legislation prescribing the form of such a plea of privilege, that no such plea in such cases is recognized in Texas, especially in view of the express authorities cited, which sustain the right to file it in cases of like character. Where the basis of the privilege is the locality of the land, about which the suit relates, the place of residence of the defendant, whether within or without the state, becomes immaterial.

¶42We think the fact that the land involved in the suit in Dallas county was in Hidalgo county -was a matter of affirmative defense by the defendants in that suit, which might be waived, and which was waived by the defendant Brophy by permitting a default to be taken against him, and'by the defendant Kelly by entering a voluntary appearance and consenting to the entry of the judgment in that cause.

¶43[3] It is contended that Kelly collusively consented that the suit might be brought in Dallas County. It is apparent that an agreement on Kelly’s part with Campbell, the plaintiff in the suit, could not have prevented Kelly’s codefendant Brophy from pleading his privilege to be sued only in the county where the land was located. Brophy was deprived of,,the opportunity of setting up this defense, because he defaulted, and not because of Kelly’s agreement with plaintiff. Kelly was responsible as indorser on the note to the holder of it, and had a legitimate interest in seeing that it was paid by the maker, and if his *28interest, in this respect, was subserved by consenting to the jurisdiction of the Dallas county court over him, his codefendant had no’ground of complaint. Nor was he entitled to complain of Kelly’s act in appearing voluntarily at the return term, and consenting to the judgment, for the same reason. However, the plaintiff Qampbell could have taken final judgment against Brophy’s land at the return term, in the absence of Kelly’s appearance and consent by dismissing against Kelly. So that Kelly’s appearance and consent only had the effect of enabling the plaintiff Campbell to obtain a judgment at that term against Kelly as well as against Brophy’s land. This was not a matter in which Brophy had an interest or of which he was entitled to complain.

¶44[4] 3. It is also contended that article 1230, Texas Revised Statutes, when considered in connection with article 1263, fails to furnish nonresident defendants, personally served beyond the limits of the state of Texas, due process of law, in that the period between the service of. personal' citation and the time required of the defendant to appear and answer may be unreasonably short, if the citation is served within the nearest day possible to the return term. The period would then be 12 days. The appellant relies upon the case of Roller v. Holly, 1176 U. S. 398, 20 Sup. Ct. 410, 44 L. Ed. 520. In that case the Supreme Court held that a nonresident defendant, who was called upon to answer a suit pending in Texas, while he himself was in Virginia, within 5 days of date of service of citation, was not furnished due process of law, and was entitled to have a default judgment rendered on such service set aside for that reason. It is quite clear from the opinion of the court that an interval of 20 days between service and return day would not have been held to be unreasonable. In this case, the appellant was served with the citation January 9, 1911, in Elgin, Ill., and was not required to appear or answer until the day succeeding the first Monday in February. This was in excess of 20 days. The period between service and return day for answer, under the Texas statutes, might have been as short as 12 days. The contention is that as to some nonresident defendants such an interval might be too short, to afford due process, and that, if the statute permits of such a contingency, it must be declared invalid, even though appellant had ample time after service to plead in the case in which he was defendant.

¶45We think the case of Tyler v. Judges of Court of Registration, 179 U. S. 405, at page 409, 21 Sup. Ct. 206, at page 208 (45 L. Ed. 252), answers this contention adversely to the appellant, deciding that a federal court will not strik.e down a state statute as unconstitutional because not affording due process of law in the matter of notice at the instance of a defendant who concededly had ample notice of fhe pendency of the suit against him. In that case the Supreme Court said:

“In the case under consideration the plaintiff in error is the owner of a lot adjoining the one which is sought to be registered, and the only question in dispute.between them relates to the location of the boundary line. In his petition he does not set forth that he made himself a party to the proceedings before the court of registration, and his name does not even appear in the list of those who are required to be notified, or elsewhere in the proceedings before the court. In the assignment of error he complains only of the unconstitutionality of the statute, in that it deprives persons of property without due process of law. In his brief his first objection to the validity of the act is *29that the registration, which deprives all persons, except the registered owner, of interest in the land, is obtained as against residents and known persons only by posting notices in a conspicuous place on the land and'by registered letters, and as against nonresidents and unknown persons by publication in a newspaper; and that the rights of the parties may be foreclosed without actual notice to them in either case, and without actual knowledge of the proceedings. His second objection to the validity of the act is that the registration of dealings with the land after the original registration would, in certain cases, have the effect of depriving the registered owners of their property without due process of law. His objections throughout assume that he has actual knowledge of the proceedings, and may make himself a party to them and litigate the only question, namely, of boundaries, before the court of registration. In other words, he is not affected by the provisions of the act of which he complains, since he has the requisite notice. Other persons, whether residents or nonresidents, whose rights might be injuriously affected by the decision, might lawfully complain of the unconstitutionality of an act which would deprive them of their property without notice; but it is difficult to see how the petitioner would be affected by it. … It may well have been thought that, to avoid the necessity and expense of appearing before an unconstitutional court and defending his rights there, he had sufficient interest to attack the law, which lay at the foundation of its proposed action; but to give him a status in this court he is bound under his petition to show, either that he has been, or is likely to be, deprived of his property without due process of law, in violation of the fourteenth amendment; and, as no such showing has been made, we cannot assume to decide the general question whether the commonwealth has established a court whose jurisdiction may, as to some other person, amount to a deprivation of property.”

¶46Upon the authority of this case, we decline, at thé instance of appellant, who had ample and -timely notice of the pendency of the Dallas county suit, to decide the general question as to whether article 1230 is a violation of the fourteenth amendment, because of its possible failure to furnish another person, in another case, reasonable notice and opportunity to appear and defend.

¶47This results in a denial to appellant of the relief prayed for by him, so far as it relates to the judgment of the district court of Dallas county. We reach this conclusion with less reluctance, since the only defense to the action on the note that we understand from the record the appellant would or could interpose, if afforded an opportunity, is that it was transferred to plaintiff by the payee and endorser Kelly, in violation of his agreement with appellant, an agreement which was found by the district judge not to have been made, in which finding we concur.

¶48[5] We come then to the other branch of relief prayed for by appellant, namely, the setting aside of the sale made under the judgment.

¶49It is conceded by the appellant that the sale was made in pursuance of an order of sale, issuing upon the judgment, and was regularly advertised, and was conducted by the sheriff of Hidalgo county, as a judicial sale at public outcry. The appellant claims that the sale was fraudulent as to him, because there was a collusive agreement between the plaintiff in the judgment, Campbell-, and the purchaser, Kelly, as to the bidding; because of the announcement at the sale that there were certain liens on the property, made either, by the sheriff or by Campbell or Kelly, no explanation having been given that these liens were subsequent to that under which the sale was had; and because the property was sold for a grossly inadequate price.

¶50*30The evidence showed that Campbell, the plaintiff in execution, went to Edinburgh, where the sale was to occur, to look after his interest at the sale; that, at Kelly’s request, the sale was continued to a later hour, to enable Kelly to reach Edinburgh and bid on the land; that Kelly came to Edinburgh prepared to bid $3,000, which was the approximate amount due on the judgment for the land; that before the bidding commenced Kelly told Campbell that he would pay Campbell the difference between the amount due on the note and judgment and what he (Kelly) might bid in the land for; that Campbell said what he wanted was his money .and not the land. This is Kelly’s own testimony. The land was knocked down to Kelly after Campbell had stopped bidding, there being no bidders other than Kelly and Campbell, for $676. That amount was insufficient to pay the judgment in favor of Campbell to satisfy which the land was sold. Campbell, however, was protected as to the unpaid balance by Kelly’s agreement to- pay it to him, though the property sold for less. Kelly did pay Campbell the difference between what was due on the judgment, and the amount of his bid and took a transfer of the note, on which the judgment was based, from Campbell, crediting it with the amount of his bid. A sheriff’s deed was made on the date of the sale to Kelly. It seems clear that Campbell’s interest in bidding was taken away by his foreknowledge that he would get his money from Kelly, without requiring Kelly to bid the amount due on the judgment, as he was prepared to do, if necessary. Instea'd of the judgment being satisfied in full by the land sold, as it would have been in the absence of such an understanding, it was satisfied only to the extent of $676, leaving to Campbell or to his transferee, Kelly, the power to collect the balance from the appellant Brophy by execution against his other property.

¶51Again, it is quite clear that an announcement was made at the sale by either Kelly or Campbell or the sheriff in their presence and with their acquiescence that there were liens on the land to a person, who was present at the sale, and displayed enough interest in the sale to make the inquiry. There was a prior lien-in favor of the Bedell Moore estate of about $9,000, but the payment of this had been assumed by Kelly, in his trade with Brophy. There was another purchase-money note for $15,000 of Brophy’s, held-by Kelly or his transferee; but the lien of this note was postponed by Kelly’s agreement with Campbell to the lien of the note, which was the basis of the judgment under which' the .sale was made. No explanation of the status of the liens was vouchsafed the inquirer. The amount of the liens was such as to destroy his interest in the property, if his statement is to be credited. He made no bid at the sale, thus leaving the competition altogether between Campbell and Kelly. The partial information furnished the possible bidder was misleading, and calculated to induce a withdrawal of interest. It was made by or in the presence and with the apparent acquiesence of Campbell and Kelly. We do not think they are in a position to say that appellant has not shown the solvency or capacity 'of the inquirer to purchase, after having discouraged his bid.

¶52The property sold for $676, subject to a lien of $9,000 or $10,000. The record shows it to have been worth $35,000 or more.

¶53In view of the facts attending the sale, as stated, and the inadequate *31price realized for the property sold, we have reached the conclusion that the sale was collusive and fraudulent as to appellant Brophy and should be set aside, and the sheriff’s deed declared to be null and void, leaving the property to be resold under another order of sale to be issued upon the judgment. The following authorities support this conclusion: Byers v. Surget, 60 U. S. 303, 15 L. Ed. 670, and Graffam v. Burgess, 117 U. S. 180, 6 Sup. Ct. 686, 29 L. Ed. 839.

¶54The equities as between the parties will also be conserved by this course. If the sale is permitted to stand, the appellant Brophy will have lost the land he purchased from Kelly, without opportunity to redeem it from the sale. For this land, he paid Kelly $5,200 in cash and executed two notes, one for $2,525 and one for $15,000. The smaller note is' still outstanding against him, except for the credit of $676, the amount realized from the land at the sale. The second note for $15,000 is also still outstanding against him and in the hands of a possible innocent holder for value, with no notice of any equities between Kelly and appellant. Against these obligations, Brophy has nothing. The inequity of this situation needs no enlargement.

¶55The decree of the District Court is reversed, and the cause remanded to that court, with directions to there enter a decree, setting aside the sale of the land by the sheriff of Hildago county to the appellee Kelly, and declaring the sheriff’s deed to Kelly null and void, but without prejudice to the right of the appellee Campbell to sue out another order of sale on the judgment in'the district court of Dallas county, and in pursuance of it to readvertise and resell the land, if he is so advised. The costs in this court and in the court below to be taxed against the appellees and defendants.