Egley v. T.B. Bennett & Co.

• Decision Date: 25 June 1924
• Docket Number: No. 24723.,24723.
• Citation: 144 N.E. 533
• Court: Indiana Supreme Court
• Parties: EGLEY v. T. B. BENNETT & CO.

144 N.E. 533

EGLEY

v.T. B. BENNETT & CO.^*

No. 24723.

Supreme Court of Indiana.

June 25, 1924.

Appeal from Circuit Court, Wells County; Frank W. Gordon, Judge.

Action by T. B. Bennett & Co. against Noah Egley. Judgment for plaintiff, and defendant appeals. Transferred from Appellate Court under Burns' Ann. St. 1914, § 1394; Acts 1901, c. 247, § 10. Reversed with directions.

Superseding opinion of Appellate Court (139 N. E. 385).

Leonard, Rose & Zollars, of Ft. Wayne, and Simmons, Dailey & Simmons, of Bluffton, for appellant.

Breen & Morris, of Ft. Wayne, for appellee.

EWBANK, J.

[1] A corporation, having its principal office in Illinois, prepared for execution a 90-day note payable to itself by way of completing a contract with a citizen of Indiana, and sent it to him at Ft. Wayne, Ind., for his signature, and he signed it at his home in that city, exactly as prepared by the payee, and deposited it in the mail, addressed to the payee at a post office in Illinois, where it was received in due course. Being so signed and mailed in Indiana, in the exact form as prepared and tendered by the other party to the contract, the note was thereby executed in the state of Indiana. Equitable Life, etc., Soc. v. Perkins, 41 Ind. App. 183, 187, 80 N. E. 682;Swing v. Marion Pulp Co., 47 Ind. App. 199, 203, 93 N. E. 1004.

The note, as so prepared by the payee and signed by the maker, was dated at Flanagan, Ill., where the payee was engaged in business, and was made payable at that place. It contained a recital that-

“I hereby irrevocably make any attorney at law my attorney for me and in my name to appear in any court of record, in term time or vacation, at any time hereafter to waive service of process and confess a judgment on this note in favor of the payee, his assigns or the legal holder, for such sum as shall then appear to be due, including an attorney fee (as stated) *** to release all errors *** and to consent to immediate execution on such judgment.”

Four months later, being four weeks after the note matured, the payee corporation filed in the circuit court of Livingston county, Ill., where the city of Flanagan is located, being a court of record, exercising general jurisdiction, its complaint on the note. No process was issued, and the maker of the note (appellant), who remained all the time in the state of Indiana, had no notice or knowledge of the proceeding until months afterward. But without any other authority than the clause above quoted from the note, an attorney at law appeared and confessed judgment in his name for the full amount of the principal, interest, and attorney fees called for by the note, together with costs, and executed in his name a release of all errors and a waiver of the right of appeal, and consented that execution might issue immediately, which action on the part of the attorney was authorized by a statute of Illinois as to such notes when governed by the law of that state. The corporation then brought suit on the foreign judgment in the court below, which made a special finding of facts, on which is stated conclusions of law to the effect that appellee was entitled to recover the full amount of the Illinois judgment, with costs, holding that the “full faith and credit” clause of the federal Constitution (section 1, art. 4; section 18, Burns' 1914) prohibited a collateral attack in this action upon the judgment on which such action was founded.

The only question presented by this appeal is whether or not the judgment entered in the circuit court of Livingston county, Ill., is a valid judgment by a court that had jurisdiction to render it, to which the courts of this state are bound to give full faith and credit; and, as incidental thereto, the question whether a court of that state, without the issue or service of process, could acquire jurisdiction of a citizen of Indiana, residing in Indiana, by virtue of the agreement made in Indiana, purporting to authorize such action as above set out.

[2] It has been decided many times that a contract made in advance of the coming into existence of a cause of action, to the effect that something else than an adjudication by a court having jurisdiction of the parties and the subject-matter shall be final and conclusive on the parties if and when such cause of action shall arise, is contrary to public policy and void, as in effect undertaking to oust the courts of jurisdiction. Kistler v. Indianapolis, etc., R. Co., 88 Ind. 460, 464;Louisville, etc., R. Co. v. Donnegan, 111 Ind. 179, 187, 12 N. E. 153;Supreme Council v. Forsinger, 125 Ind. 52, 56, 25 N. E. 129, 9 L. R. A. 501, 21 Am. St. Rep. 196; McCoy v. Able, 131 Ind. 417, 423, 30 N. E. 528, 31 N. E. 453; Ditton v. Hart, 175 Ind. 181, 193, 93 N. E. 961;Maitland v. Reed, 37 Ind. App. 469, 471, 77 N. E. 290.

[3] The law of Indiana does not permit an action other than an agreed case to be commenced without the issue and service of process, unless in case where the defendant acknowledges service by indorsement on the process, or voluntarily appears. Sections 317. 318, Burns' 1914; sections 314, 315, R. S. 1881. And attorneys are expressly forbidden by statute in Indiana to consent to the entry of a judgment by confession against a debtor unless upon written authority to do so, including an affidavit of the party that the debt is owing. Section 615, 1004, Burns' 1914; sections 588, 969, R. S. 1881. The entry of judgment without the issue of service of process or notice to the debtor, by authority of a stipulation in the contract claimed to have been breached, is not authorized by the common law, and can only be done, if at all, by virtue of a statute. A. B. Farquhar & Co. v. Dehaven, 70 W. Va. 738, 75 S. E. 65, 40 L. R. A. (N. S.) 956, Ann. Cas. 1914A, 640;Mason v. Ward, 80 Vt. 290, 67 Atl. 820, 130 Am. St. Rep. 987;Hamilton v. Schoenberger, 47 Iowa, 385; Stretch v. Hancock, 2 N. J. Law, 207; Carlin v. Taylor, 75 Tenn. (7 Lea) 666; 1 Black on Judgments, § 50; 3 Blackstone Com. 396, 397.

In Farquhar & Co. v. Dehaven, supra, after stating that the judgment on which the execution in question was issued had been entered by the clerk of a circuit court, without the issue or service of process, upon a note in the form commonly used in another state, which contained a warrant of attorney to confess judgment for “the above-named sum with costs of suit,” the Supreme Court of Appeals of West Virginia said on page 742 (75 S. E. 66):

“The case we have here, on the motion to quash, is one of collateral attack, and to sustain the motion and reverse the judgment below we must hold the judgment void upon its face. Is it so void? As already indicated, the question must be answered practically upon the common-law rules and principles. We have no statute in any way governing the subject, except section 43, c. 125, of the Code, providing for a confession by defendant in vacation in the clerk's office. What then is the common law applicable to the case.”

And, after reviewing the authorities, it continues on page 744 (75 S. E. 67):

“So according to these authorities the warrant of attorney, in use at common law, was confined to the confession of judgments, in the three ways enumerated by Blackstone, in a pending suit; that is, by answering nihil dicit, cognovit actionem, or non sum informatus. And, as Mr. Black says, judgments by confession of defendant or on his warrant of attorney, without the institution of an action, derive all their efficacy from positive or statute law. And judgment in the clerk's office, as Mr. Minor says, was never contemplated at the common law. Such warrant of attorney was usually given by the defendant to the plaintiff, by way of security, on compromising an action; and it authorized the attorney to whom it was directed to appear for the defendant, and to receive a declaration in an action to be brought against him, and thereupon confess the same in the manner already indicated. Tidd's New Pract. (Ed. 1837) 275; 1 Tidd's Pract. (Ed. 1828), pp. 590, 606; 2 Chitty Gen'l Pract. 333.”

On page 745 (75 S. E. 68):

“Let us see how this question has been viewed in the other states than Virginia. In Vermont, the Supreme Court says: ‘Judgments on confession without antecedent process have no basis other than the statute, and a full compliance with the statute is necessary to their validity, and the provisions authorizing them are to be strictly construed.’ Mason v. Ward, 80 Vt. 290, 67 Atl. 820. In Iowa, in response to the contention that the statute there, regulating confession of judgment, was merely cumulative of the common-law remedy, the court said: ‘We do not think this position is correct.*** So far as we are advised it has never been the understanding of the profession nor of the business community in this state that warrants of attorney to confess judgment had any place in our law. A confession of judgment pertains to the remedy. A party seeking to enforce here a contract made in another state must do so in accordance with the laws of this state. Parties cannot, by contract made in another state, ingraft upon our procedure here remedies which our laws do not contemplate nor authorize.’ Hamilton v. Schoenberger, 47 Iowa, 385. In New Jersey the entry of judgment by a justice on a judgment note without process or proof was declared illegal. That court said: ‘The defendant must be brought into court in the usual way, and the same proceeding had, as in other cases of written contracts.’ Stretch v. Hancock (N. J. L.) 1 & 2 Pennington Rep. 151. In Tennessee, in Carlin v. Taylor, 75 Tenn. 666, the Supreme Court held that no judgment could be confessed in that state by an attorney, on a judgment note like the one involved here. And in Kansas and Missouri, such notes are condemned, and the practice of employing them repudiated on principles of public policy, and as giving to the defendant no day in court, and as permitting the defendant to bargain away his right to be heard in court,...