First Trust Co. of St. Paul v. Matheson
| Decision Date | 16 December 1932 |
| Docket Number | No. 29083.,29083. |
| Citation | 187 Minn. 468,246 N.W. 1 |
| Parties | FIRST TRUST CO. OF ST. PAUL v. MATHESON et al. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Ramsey County; John W. Boerner, Judge.
Action by the First Trust Company of St. Paul, as trustee, against Martha M. Matheson and others. From an order granting defendants' motion to vacate substituted service of summons, plaintiff appeals.
Order reversed.
Kellogg, Morgan, Chase, Carter & Headley, of St. Paul, for appellant.
J. A. Mansfield, S. M. Bryan, and Godley & Olson, all of Minneapolis, for respondents.
Plaintiff appeals from an order granting a motion by defendants (appearing specially and only for the motion) vacating substituted service of summons.
July 1, 1921, Malcolm Matheson, now deceased, created an express trust, embracing personal property consisting mostly of government, municipal, and industrial bonds. June 14, 1923, that trust was abrogated and a new one substituted. Plaintiff is a Minnesota corporation, authorized to accept and administer such trusts. Since the first trust was created, and under the new trust of 1923, the securities have been and remain in the custody of the trustee in St. Paul. There both trusts have been administered. There the second trust, the subject-matter of this action, remains in the course of administration by plaintiff as trustee.
The trust property now consists, aside from a cash item, of unregistered bonds payable to bearer. Some are government bonds, foreign or domestic, and others the obligations of municipalities or private corporations. The trust instrument of June 14, 1923, after declaring that the trustee "shall hold, possess, care for and manage such securities," and directing investment and reinvestment of principal and collection of interest, provides that the net income shall go to the settlor, Matheson, during his life. Upon his death it was to be paid to his wife, Martha Marie Matheson, if she survived, until her death or remarriage. Other provisions providing for other contingent beneficiaries, and for the termination of the trust, need not be gone into.
The complaint avers that Matheson, then a resident of California, departed this life in May, 1931, leaving him surviving as his heirs at law defendants Martha M. Matheson, widow and first beneficiary of the trust, Hugh Malcolm Matheson, only child by said Martha M. Matheson; Robert H. Matheson, James K. Matheson, and Malcolm Matheson, Jr., his children by a former marriage. Martha M. Matheson is made defendant both as individual and administratrix of Malcolm Matheson's estate in California.
It is alleged that Malcolm Matheson, Jr., through counsel, claims that the trust indenture of 1923 is invalid; that in consequence the securities supposedly subject thereto are part of the estate of Malcolm Matheson, Sr.; that Malcolm, Jr., is threatening litigation to have it so adjudged; and "to compel the plaintiff individually to reimburse the estate of said decedent for any money or property paid or distributed under said trust indenture." Plaintiff also states that, since receipt of such notice and threats, it has for its own protection withheld all income, and must so continue until the issue is determined by a court of competent jurisdiction. Judgment is prayed establishing the validity of the trust; subject thereto, quieting in plaintiff title of the trust property, and excluding defendants from any and all right, title or interest therein except as granted by the trust indenture. There is the usual prayer for general relief.
The trust is express and authorized by statute, section 8090, subd. 5, Mason's Minn. St. 1927. If it is valid, the legal title of the property is in plaintiff as trustee. This is not one of the cases where, by statute (sections 8083, 8084, and 8093, Mason's Minn. St. 1927), the trustee does not get legal title.
Defendants are residents of California. Service upon them was by the substituted method authorized by a statute later considered. The order below is unaccompanied by anything to indicate the ground of decision. We take it that the action was considered, erroneously we think, one exclusively in personam, so that the substituted service was without effect.
1. Defendants' argument denies that state jurisdiction can grant plaintiff any relief. It is well, therefore, at the outset, and by way of orienting consideration, to recognize that sovereign power may lay hands on any and all persons or property within its territory. So where, as with us, the functions of sovereignty are departmentalized, it simply must be that, if a person or thing is within reach of legislative mandate or executive action, he or it must be within reach of the judiciary also. Chattels are as much subject to sovereign action, legislative, executive, or judicial, as real property. The latter, by immobility, is anchored in one jurisdiction. Personalty has no such anchorage. But that in no wise immunizes it from the action of any sovereign who can, in fact, lawfully lay hands on it.
The difference between realty and personalty in this respect is solely in differing fact attributes and not at all in subjection to or immunity from appropriate governmental action —legislative, executive, or judicial. Save as limited by the Constitution of the United States, Minnesota is an independent state with all powers of sovereignty. The dominion of any state over chattels having a situs within its borders is "complete." Green v. Van Buskirk, 7 Wall. 139, 19 L. Ed. 109. Never has there been legal thought otherwise, except as matter of comity and in recognition of the maxim "mobilia sequuntur personam." Of Roman birth, and so native to the civil law, it became naturalized in the common law. Always a fiction, never more, it has had force of law only through comity and because of necessity that states yield to each other in matters of jurisdiction wherever possible in order to reduce to a minimum the area of irreconcilable conflicts. Under compulsion of change, "the rule has yielded more and more to the lex situs, the law of the place where the property is kept and used." Swedish-American Nat. Bank v. First Nat. Bank, 89 Minn. 98, 94 N. W. 218, 222, 99 Am. St. Rep. 549. See, also, 5 R. C. L. 927, and 40 C. J. 1232, note 12.
The potent reach of sovereign jurisdiction to all property within its territorial limits, whether real or personal, takes characteristic hold in case of escheat when the decree of a state court as to property localized in its jurisdiction is binding against the world. Hamilton v. Brown, 161 U. S. 256, 16 S. Ct. 585, 40 L. Ed. 691. The executive invokes the law of escheat, but the courts determine whether it applies, and, if so, how, and by their judgments settle the succession, as they do under wills and statutes of descent. If there is bar to the action of either department, it is not of law, but rather and only of fact. Absence of situs within the jurisdiction no more obstructs one arm of government than another.
2. The next inquiry is whether there are means for exercising jurisdiction. With us, as in most states, substantive law is implemented with the procedural device of substituted service. Service of summons may be by publication or personally without the state in the cases enumerated in section 9235, Mason's Minn. St. 1927. One of them (subdivision 5) is "when the subject of the action is real or personal property within the state, in or upon which the defendant has or claims a lien or interest, or the relief demanded consists wholly or partly in excluding him from any such interest or lien." Explicitly providing for the exercise of jurisdiction over personal property, there is no room for negative or restricted interpretation. There is a similar act of Congress, section 57 of the Judicial Code (28 USCA § 118), providing that the United States District Courts may proceed in rem or quasi in rem by substituted service, personal, "if practicable," and, if not, then by publication. There is no longer question of the validity of such laws and the right they give to act, not on or against persons, but solely on or in respect to personal as well as real property and upon or against the interests of persons having or claiming such property or some right therein. Shepherd v Ware, 46 Minn. 174, 48 N. W. 773, 24 Am. St. Rep. 212; Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565; Arndt v. Griggs, 134 U. S. 316, 10 S. Ct. 557, 33 L. Ed. 918; Hamilton v. Brown, 161 U. S. 256, 16 S. Ct. 585, 40 L. Ed. 691; 15 R. C. L. 633.
Under such laws, the only question, the statute complied with, is whether in case of chattels the res is so localized—has such situs within territorial reach of the court—as to be subject to a proceeding in rem or quasi in rem. That question in respect to the subject-matter of plaintiff's trust, unregistered bearer bonds of the par value of upwards of $45,000, is the important one and remains for answer. Following the example of counsel, we ignore a cash item of $713.71.
Equity has the same power to quiet title to chattels as to real property. Lovell v. Marshall, 162 Minn. 18, 24, 202 N. W. 64; 51 C. J. 142. We hold that the involved bonds have a situs in Minnesota adequate, not to confer, but to enable our courts to exercise, that jurisdiction by a decree which will operate upon any interest that defendants have, or claim to have, therein. That will not be a judgment in personam, but only one quasi in rem. 3 Freeman Judgments (5th Ed.) § 1522; Freeman v. Alderson, 119 U. S. 185, 7 S. Ct. 165, 30 L. Ed. 372. The argument for defendants (who thus far have appeared specially and only for the purpose of the motion to quash the service) is that due process will be denied by a judgment attempting such relief. We hold that it will not. Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565.
Except for analogy, we are not concerned now with certificates of corporate stock, promissory notes payable to named payees, or...
To continue reading
Request your trial