First National Bank of Broken Bow v. Bank of Horatio

Decision Date26 November 1923
Docket Number15
Citation255 S.W. 881,161 Ark. 259
PartiesFIRST NATIONAL BANK OF BROKEN BOW v. BANK OF HORATIO
CourtArkansas Supreme Court

Appeal from Sevier Chancery Court; James D. Shaver, Chancellor affirmed.

Judgment affirmed.

Abe Collins and John C. Head, for appellant.

1. There was no venue in Sevier County in this case, as against appellant. The proceeding must of necessity be in rem where there is no jurisdiction of the person, and in order to bind the property, it is necessary that it be found in the jurisdiction of the court. C. & M. Dig., § 6269; Id. § 502; Id. § 1164-1174; 72 Ark. 322.

2. It was error to permit appellant to appear specially and file the motion to quash the service, and then, without disposing of the motion, render judgment by default against it. 4 Ark 526; 5 Ark. 193; 17 Ark. 454; 6 Ark. 552. It is error to render judgment by default where issues remain undisposed of. 23 Ark. 18; 42 Ark. 268; 8 Ark. 502; 25 Ark. 622; 24 Ark. 569; 25 Ark. 105.

The situs of the property involved was in Oklahoma. The action was in personam, and therefore the chancery court had no jurisdiction either of the person of appellant or of the subject matter of the action. 60 S.W. 485; 36 S.W. 16; 133 N.Y.S. 482; 66 S.E. 567; U. S. Adv. Opinions, 1921-22, p. 280. The situs of the action was at the domicile of the appellant. 71 N.E. 111; 104 Am. St. Rep. 560. As to the lack of jurisdiction in the chancery court here, see 95 U.S. 727; 169 U.S. 243, 42 L. ed. 733; 11 S.Ct. 960; 21 C. J. 150; 9 How. 336, 13 L. ed. 164; 40 Am. Dec. 111; 19 Am. Dec. 755; 97 A. 337; 8 N.W. 804; 50 Am. Dec. 666; 6 Am. Dec. 88; 31 N.W. 210; 8 S.W. 295; 150 N.W. 476; 158 P. 587. The statutes of Arkansas do not confer jurisdiction in rem in actions of cancellation or rescission, but provide to the contrary. C. & M. Digest, § 6269; Id. 6270; 90 Ark. 44, 117 S.W. 754; 143 Ark. 539, 220 S.W. 819; 34 Ark. 399; 26 Ark. 124; 4 Ark. 197; 6 C. J. 33; 15 C. J. § 90; 215 U.S. 1; 30 S.Ct. 3, 54 L. ed. 65; 25 Am. Rep. 416; 12 Am. Rep. 291; 14 Am. Dec. 543; 177 S.W. 66; 21 C. J. 149, § 130; 95 U.S. 727; 119 U.S. 185, 30 L. ed. 372. Jurisdiction to render a judgment in rem inheres only in the courts of the State which is the situs of the res. 16 Pet. 25, 10 L. ed. 873; 22 N.J.Eq. 115; 27 Ark. 482; 47 Ark. 254; 16 So. 606; 43 L. R. A. 403; 166 P. 176; 150 P. 1070; 169 P. 727.

E. K. Edwards, for appellee.

1. The decree was regular on its face, and recites jurisdictional facts, among others, that appellant had been constructively summoned. So, the question as to giving judgment without disposing of the motion to quash passes out, for the recitals of the decree must be taken as true. 77 Ark. 497; C. & M. Digest, § 6239; 63 Ark. 513; 106 Ark. 95. Moreover, appellant abandoned or waived the motion by failure to insist upon a ruling by the court.

2. It was the fund of which the certificates of deposit were the evidence that was involved in the litigation and not the certificates, and that fund was on deposit in the appellee bank. The jurisdiction was therefore in the chancery court here, and not in the Oklahoma court. 22 Ark. 391; 133 Ark. 289; 55 Ark. 445; C. & M. Digest, § 6297. This was not an action purely in personam. Plaintiff sued out a writ of injunction and had it served upon appellee, impounding the money or deposits in its hands. This constituted an action quasi in rem, i. e., a proceeding against a person in respect to the property. 146 Ark. 417; 1 R. C. L. § 13; 1 C. J. 1041, § 17; 10 N.E. 160; 164; 1 C. J. § 171.

3. Under the statute, C. & M. Dig., § 6266, under which appellant has elected to proceed, appellant was not entitled to a judgment over against appellee. When the court rendered judgment in favor of the plaintiff below, it had the power to enforce its decree and order appellee to pay over the fund involved to plaintiff. 128 Ark. 353; 131 Ark. 144. And afterwards, proceeding under the statute, supra, it could, as it did, adjudge the plaintiff and her bond, to make restitution, but it had no power to extend that judgment against a third party, or that the appellant should have restitution from a co-defendant in the original action. C. & M. Dig., § 6261; 123 Ark. 523.

HUMPHREYS, J. MCCULLOCH, C. J., and SMITH, J., dissent.

OPINION

HUMPHREYS, J.

This suit was instituted in the chancery court of Sevier County on March 12, 1921, by Zilphie Gilmore against appellant, appellee and G. S. Gilmore, her husband, to cancel an assignment of two certificates of deposit to the First National Bank of Broken Bow, an Oklahoma corporation, one of which had been issued to her and the other to her husband by the Bank of Horatio, an Arkansas corporation, and to collect the deposit. She alleged that she deposited $ 300 in the Bank of Horatio for which the certificates were issued, and that she was induced to sign them to the First National Bank of Broken Bow, in payment of her husband's indebtedness to it, through the false representation that her husband had committed a felony by trading certain property which he had mortgaged to it, when, in truth and fact, said bank had consented for him to trade the property. Ancillary to this suit, an injunction was obtained impounding the fund evidenced by the certificates in the Bank of Horatio. S. G. Gilmore and the Bank of Horatio were personally served with summons, and the First National Bank of Broken Bow was constructively served by delivering a copy of the complaint, with summons attached to it, in the manner provided by § 1157 of Crawford & Moses' Digest.

The Bank of Horatio answered, admitting the deposit of the fund and the issuance of the certificates, offering to pay the fund to the party adjudged to be lawfully entitled thereto.

The First National Bank of Broken Bow entered its appearance specially for the purpose of filing a motion to quash the service, but never obtained a ruling thereon. At the October term, 1921, of the court, the cause was submitted upon the pleadings and testimony, from which the court found that the Bank of Horatio and G. S. Gilmore had been personally served, and that the First National Bank of Broken Bow had been constructively served; that the assignment of the certificates had been induced through fraud, and for that reason the title thereto had not passed, and that the plaintiff, Zilphie Gilmore, was the owner of them, and ordered the payment of the fund evidenced by the certificates to said plaintiff, upon execution of the bond to the nonresident defendant, the First National Bank of Broken Bow, in the manner provided and for the purpose specified in § 6266 of Crawford & Moses' Digest. The bond was executed and the money paid to plaintiff in accordance with the decree of the court.

On the fifth day of April, 1922, appellant presented its motion, answer, and cross-bill under the authority of § 6266 of Crawford & Moses' Digest, to obtain a retrial of the cause upon its merits. The pleading filed by the appellant denied the material allegations in the complaint of Zilphie Gilmore, and alleged that the assignment of the certificates was voluntary on her part; "that the decree entered October 25, 1921, was void and constituted no authority to the Bank of Horatio to pay this money to plaintiff; that personal service had not been obtained upon this bank; that this court had no jurisdiction over the certificates of deposit, said certificates being outstanding negotiable instruments out of the jurisdiction of this court, the situs thereof being in Oklahoma; that said certificates were not impounded and held under any writ of garnishment or attachment of this court, and that plaintiff and the First National Bank of Broken Bow were at all times during the progress of this suit residents of Oklahoma." The prayer was that the judgment be set aside, and that it have judgment over against the Bank of Horatio.

The Bank of Horatio answered, in substance, that the First National Bank of Broken Bow was constructively summoned; that the decree ordering it to pay the fund over to Zilphie Gilmore was not void, but, on the contrary, was regular and valid.

The cause was again heard upon the pleadings and testimony, which resulted in a finding that the assignment of the certificates was not induced through misrepresentations, but was voluntarily made, and a decree against Zilphie Gilmore and her bondsmen for the amount of the deposit, from which no appeal was prosecuted; also a finding that the First National Bank of Broken Bow was not entitled to recover from the Bank of Horatio, and a consequent decree dismissing its cross-complaint against said bank. Appellant has appealed from the decree dismissing its cross-complaint against appellee, and that branch of the case is before us for trial de novo.

Appellant contends for a reversal of the decree upon the ground that the situs of the action was at Broken Bow, Oklahoma the place of appellant's residence. In other words, it contends that the action was strictly in personam, and that the chancery court of Sevier County, Arkansas, had no jurisdiction to render a judgment affecting a fund...

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