Hardin v. Union Trust Co. of Philadelphia, Pa.

• Decision Date: 21 October 1911
• Docket Number: 3,495.
• Citation: 191 F. 152
• Parties: HARDIN v. UNION TRUST CO. OF PHILADELPHIA, PA., et al. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

191 F. 152

HARDIN v. UNION TRUST CO. OF PHILADELPHIA, PA., et al. ^[1]

No. 3,495.

United States Court of Appeals, Eighth Circuit.

October 21, 1911

Eben W Martin and Norman T. Mason, for appellant.

Frederic H. Stillwagen, Porter, Foulkrod & McCullagh, and McLaughlin &amp Ogden, for appellees.

Before ADAMS and SMITH, Circuit Judges, and AMIDON, District Judge.

AMIDON District Judge.

Kirk G Phillips and Cordelia A. O'Donnell brought suit in the circuit court of Lawrence county, S.D., against the Branch Mint Mining & Milling Company and others, to foreclose two miners' liens for about $1,500 each upon the property here involved. To that suit the Union Trust Company of Philadelphia was made defendant as a subsequent lienholder it having a mortgage on the property to secure bonds aggregating $144,575. Pursuant to the state practice, jurisdiction of this defendant was obtained by service of a copy of the summons and complaint at Philadelphia. It never did business in South Dakota, had no agent there for the service of process upon it, and made no appearance in the action until after the final decree. James D. Hardin, the appellant here, was also a defendant. In his answer he set up by way of counterclaim a miner's lien for $378,867.72. No process or copy of his pleading or notice thereof was served upon the trust company. Numerous other lien claimants, either by answer or complaint in intervention, asserted miners' liens upon the property aggregating $7,149.27. In the final decree all these liens, except Hardin's, were established and adjudged to be concurrent liens upon the property prior and superior to the liens of Hardin and the Union Trust Company. Hardin, by stipulation, consented that the other miners' liens should be adjudged to be superior to his own. The decree continued the suit as to his claim. By supplemental decree his lien was established for the full amount, and it was adjudged to be prior and superior to the lien of the Trust Company's mortgage. The decree also contained the usual provisions for a sale of the property. Thereafter the Trust Company appeared specially in the suit for the purpose of the motion only, and moved the court to strike from its decree all reference to the Union Trust Company, and the priority of the lien of Hardin over the lien of its mortgage, for the reason that the court was without jurisdiction to pass on those questions. Upon a hearing this motion was granted and the decree modified accordingly. An appeal was taken by Hardin to the Supreme Court of the state to review this order.

That was the situation when the Union Trust Company commenced the present suit in the Circuit Court of the United States for the District of South Dakota to foreclose its mortgage. The Branch Mint Mining & Milling Company, Hardin, and others, were made defendants to the bill. In addition to the usual averments in a bill for the foreclosure of a mortgage, the complainant by way of anticipation alleged that the defendant Hardin had filed and claimed to have a miner's lien upon the property for the amount above stated, for work done and materials furnished to the Mining & Milling Company, but charged the fact to be that he had never furnished any work or materials as alleged in his claim of lien, but that the indebtedness, if any, underlying the claim, consisted of moneys loaned and advanced to the Mining & Milling Company under a written contract between it and Hardin, and that he was entitled to no lien under the statutes of the state therefor. It further alleged with great fullness the proceedings had in the state court for the establishment of Hardin's lien, and the decree entered thereon, and charged that by reason of the facts herein set forth the state court never acquired jurisdiction over the Trust Company with respect to Hardin's lien, and asked that the pretended lien, and the decree establishing the same, be adjudged to be null and void. Hardin alone answered this bill, not only challenging plaintiff's rights under its mortgage, but also claiming by way of affirmative relief the validity of his miner's lien and the decree of the state court foreclosing it. The cause was fully heard upon the pleadings and evidence, and the court entered a decree pursuant to the bill, adjudging the amount due upon the mortgage, and a sale of the property foreclosing the same. It further found and adjudged that Hardin had no miner's lien upon the property, and that the decree of the state court establishing the same and declaring its priority over the Trust Company's mortgage, was entered without jurisdiction, and was null and void. The present appeal is brought by Hardin to review that decree.

Before the decree was entered the defendant Hardin moved the court to suspend action in the cause until his appeal should be determined in the Supreme Court of the state. The court denied that application, and its ruling constitutes the question to which the greater part of the briefs and arguments have been devoted in this court.

We think the trial court violated that rule of comity which is indispensable to the harmonious working of the federal and state courts exercising jurisdiction in the same field. As already stated, the suit in the state court was for the foreclosure of miners' liens. By the local statute such liens are expressly made a first charge upon the property and all holders of such liens are required to be made parties and are permitted to share in the proceeds of the sale pro rata. The miners' liens being a first charge upon the property, it would be necessary that the holders of all subsequent liens and interests should be made parties to the suit, in order that their rights should be foreclosed. Such a suit brought the property into the custody of...