Amparo Mining Co. v. Fid. Trust Co.

• Decision Date: 13 April 1908
• Citation: 74 N.J.E. 197,71 A. 605
• Parties: AMPARO MINING CO. v. FIDELITY TRUST CO.
• Court: New Jersey Court of Chancery

71 A. 605

74 N.J.E. 197

AMPARO MINING CO.

v. FIDELITY TRUST CO.

Court of Chancery of New Jersey.

April 13, 1908.

Suit by Amparo Mining Company against the Fidelity Trust Company, executor, etc., of Edward M. Paxon. Defendant filed a plea to the jurisdiction of the court. Plea overruled.

French & Richards, for complainant.

Lindabury, Depue & Folkes, for defendant.

STEVENSON, V. C. The complainant is a New Jersey corporation, and the defendant is a corporation existing under the laws of Pennsylvania, in which state it has its office and conducts its business. The object of the bill is to establish title to 549,504 shares of the capital stock of the complainant, of the par value of $1 per share, which the defendant claims to own absolutely. The bill alleges that the defendant's testator acquired these shares of stock under such circumstances that his executor and trustee, the defendant, must be deemed to hold the same in trust for the complainant; that the sole interest of the defendant in these shares of stock is the right to hold them as security for the sum of $40,000 advanced by the defendant's testator in his lifetime, in the business of acquiring the shares as agent or trustee for the complainant. The bill shows that the shares of stock in question are what are commonly called "treasury stock"; i. e., stock once lawfully issued which may be held by or on behalf of the complainant and lawfully transferred at any time. The bill does not set forth a claim that the defendant is holding shares of slock which, upon payment of $40,000, should be surrendered for cancellation, or that upon such surrender the shares would ipso facto be retired. According to the allegations of the bill the shares will remain definite personal property belonging to the complainant in case its title to them shall be established, in this suit, having the same legal status as if they were shares of stock in some other New Jersey corporation.

The plea to the jurisdiction is substantially the same as that which was sustained in the case of Wilson v. American Palace Car Co., 65 N. J. Eq. 730, 55 Atl. 997. It sets forth, in effect, that the defendant is a Pennsylvania corporation not engaged in business in New Jersey, and without any office, agent, or place of business in New Jersey, and that it has been proceeded against as an absent defendant, under our statute, by publication and actual service of notice of the suit, and of the order requiring the defendant to appear and plead, answer or demur, to the bill of complaint, on or before a time stated. It is not suggested that ample notice of the existence of the suit and of its precise nature has not been given, and in fact the plea exhibits such an ample notice. The sole bar which the plea attempts to raise to the action is the same which was adjudged effective by the Court of Errors and Appeals in the American Palace Car Company Case above mentioned. In that case the plea was held good because the court found that the action was strictly in personam, and not either an action in rem or an action quasi in rem. It must be conceded that, if this present action is strictly in personam, the plea is good and must be sustained. It is obvious that the present action is not strictly in rem. The question which must determine the validity of this plea is whether or not this action belongs to that class of actions having some of the characteristics of an action strictly in personam, and some of the characteristics of an action strictly in rem, which of late years have been styled actions "quasi in rem." If this is an action quasi in rem, the plea is bad and must be overruled.

The principles which control the decision of the present case are all contained, I think, in the opinion of Vice Chancellor Stevens, in the case of Andrews v. Guayaquil, etc., Railway Co., 69 N. J. Eq. 211, 60 Atl. 568 (1905), in which case I understand the decree was affirmed by the Court of Errors and Appeals upon the Vice Chancellor's opinion. The same principles are again laid down and applied by Vice Chancellor Howell in the case of Sohege v. Singer Mfg. Co. (N. J. Ch.) 68 Atl. 64 (1908). It seems to me that these two recent decisions of this court control the present case, and necessarily lead to the conclusion that the defendant's plea to the jurisdiction should be overruled. The essential facts, the controlling facts, in these two cases in my judgment are the same as in the case at bar, so far as those facts fix the character of the actions as actions quasi in rem. Nevertheless, the abovementioned two cases certainly present facts not found in the present case, and the present case exhibits facts not found in either of those cases. It is argued on behalf of the defendant that, even although this court and the Court of Errors and Appeals have fixed the character of the Guayaquil, etc., Railway Company Case as an action quasi in rem, nevertheless the action set forth in the complainant's bill in this case is strictly in personam. It must be conceded that there is no decided case in New Jersey presenting precisely the same set of facts with which we have to deal in this present case, nor has my attention been called to any decision of any court in which the attempt is made to point out and define the essential characteristics of all actions quasi in rem. In endeavoring to determine whether the action disclosed by the bill of complaint is one strictly in personam or quasi in rem, it may be well to bear in mind the respects wherein that case differs from both the Guayaquil Railway Company Case and the Singer Mfg. Company Case. In the case at bar we have a sole complainant resident in New Jersey, and a sole defendant resident in Pennsylvania. Unlike the Guayaquil, etc., Railway Company Case the defendant has not in any way, directly or through an agent, instituted any action In New Jersey affecting the res which beyond all doubt is located in New Jersey. In the Guayaquil, etc., Company Case (and the same was true in the Singer Mfg. Company Case) the res was capital stock of a New Jersey corporation, but was not the capital stock of the complainant corporation, as counsel for the defendants have erroneously alleged in their elaborate and learned brief. But, further, in the case at bar no receivership is prayed for, and no party having the custody of the res is brought in as a defendant in order to subject the res to the control of the court. The situation seems to be analogous to one where a complainant in New Jersey, holding the possession of chattels, files a bill in this court to obtain equitable relief against a defendant not resident in New Jersey in respect of such chattels. This case will also, I think, appear on further consideration to be analogous to a suit in this court for divorce brought by a resident of New Jersey against his nonresident spouse.

The authorities which control this court indicate, I think, the following as the essential elements of an action quasi in rem: (1) A res located within the territorial limits of the state in such a way that the state can, if it see fit to do so, exercise absolute power to control and dispose of it; (2) a course of judicial procedure, the object and result of which are to subject the res to the power of the state directly by the judgment or decree which is entered, as distinguished from a course of procedure which only affects or disposes of the res by compelling a party to the action to control or dispose of the res, in accordance with the mandate of the judgment or decree; (3) a course of judicial procedure on its face directed specifically toward the res so as to disclose this res to the defendant when reasonably notified of the action. The failure to recognize this element, it seems to me, vitiates the argument contained in the minority opinion of Mr. Justice Hunt in Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565 (1878). A citizen of New Jersey, when notified that an action has been brought against him for the recovery of a money judgment in the state of Colorado, may elect to disregard the notice so received. He may prefer not to appear, and have his case tried under disadvantageous circumstances in a remote court, the result of which would be a judgment binding upon him. He may not know that he has any property situate within the jurisdiction of the Colorado court. The Colorado action out of which arose the case of Pennoyer v. Neff was not specifically directed toward the res, nor was any effort made to notify the defendant, the nonresident owner of the res, that any such res existed, or that the action had any relation to it. The course of procedure prescribed by the Colorado statute and pursued in the case above mentioned, in respect of the matters now under consideration, is analogous to a foreclosure suit brought in New Jersey against an owner of the equity of redemption residing in New York, in which the notice of the suit served or published merely states that an action in the Court of Chancery of New Jersey has been brought against the nonresident defendant, without further Informing him that the object of the action, as described in the bill of complaint, is to foreclose a mortgage on land belonging to the defendant and situate in New Jersey. An heir of the mortgagor residing in a foreign state may not have the slightest knowledge of the existence of the res of which he is the owner or part owner.

The notice to nonresident defendants prescribed by our chancery act (Laws 1902, p. 514, §§ 12, 13) is plainly intended to be a notice which shall apprise the defendant, not only that he is sued, but also of the nature of the suit, and such notice necessarily involves a disclosure of the res toward which the suit is directed. The statute (section 13) makes it the duty of the Chancellor to prescribe the exact form and scope of the notice by rule of court, and in the discharge of this duty the Chancellor has ordained that such notice shall state "the object...