Matz v. O'Connell, 3201

• Decision Date: 12 June 1963
• Docket Number: No. 3201,3201
• Citation: 155 So.2d 705
• Parties: Claude MATZ and Ruth S. Matz, his wife, Appellants, v. Stephen C. O'CONNELL and Broward National Bank of Fort Lauderdale, Florida, as Executors, etc., Appellees.
• Court: Florida District Court of Appeals

Page 705

155 So.2d 705

Claude MATZ and Ruth S. Matz, his wife, Appellants, v. Stephen C. O'CONNELL and Broward National Bank of Fort Lauderdale, Florida, as Executors, etc., Appellees.

No. 3201.

District Court of Appeal of Florida, Second District.

June 12, 1963.

Rehearing Denied July 17, 1963.

Norman C. Roettger, Jr., of Fleming, O'Bryan & Fleming, Fort Lauderdale, for appellants.

Harrison Griffin, of Kelley, Tompkins & Griffin, and C. L. Chancey, Fort Lauderdale, for appellees.

SMITH, Judge.

Claude Matz and Ruth S. Matz, his wife, appeal from a final judgment entered against them in a law action on a promissory note. Mr. and Mrs. Matz executed and delivered their promissory note for the sum of $76,230.00. The note was secured by a mortgage encumbering real property situated in Palm Beach County. After default, the holder of the note and mortgage instituted a foreclosure action in Palm Beach County, alleging that Mr. and Mrs. Matz were residents of Pennsylvania. Constructive service of process was obtained upon the Matzes in the manner provided by Chapter 48, Florida Statutes, F.S.A., but they did not appear in the foreclosure suit. A final decree of foreclosure was entered in the total sum of $86,929.16. The decree ordered the property sold by the clerk in the manner authorized by § 702.02, Florida Statutes, F.S.A. At the clerk's sale, the mortgaged property was purchased by a third party on his bid of $69,000.00. No objections were made to the sale, and the clerk issued a certificate of title to the purchaser.

After completion of the mortgage foreclosure, the holder of the note instituted the present action at law against Mr. and Mrs. Matz to recover the balance due on the promissory note. Upon the holder's death, the appellees were substituted as plaintiffs. The defendants were personally served, and after their Answer, the cause proceeded to trial without a jury. The defendants sought to introduce into evidence the testimony of expert witnesses relating to the fair market value of the mortgaged property which had been sold by the clerk in the foreclosure proceedings. Upon objection, the court refused to consider any such testimony, taking the view that § 702.02(5) Florida Statutes, F.S.A., ¹ established a conclusive presumption that the value of the mortgaged property sold by the clerk was the amount bid at the sale. The court entered judgment for the plaintiffs for the amount remaining payable on the promissory note after application of the proceeds received at the mortgage foreclosure sale, together with attorneys' fees. The defendants contend that the court erred in excluding their proffered testimony. We agree.

If the court had had personal jurisdiction of the defendants in the mortgage foreclosure proceedings, then the sale price of the property at the foreclosure sale would have been conclusive as to these parties on the question of the amount remaining payable on the promissory note. ² Section 702.02(5), Florida Statutes, F.S.A., enacted subsequent to the decisions cited, does nothing more than eliminate the necessity of a confirmation by the court of the sale where no objection thereto has been filed. Thus, by operation of the foregoing statute, where no objection is filed it is presumed conclusively that the sale price is adequate to support the title to the property in the purchaser, even without a confirmation of the sale by the court. We are not here concerned with whether the third party who purchased the property at the clerk's sale obtained unassailable title. Our specific question is whether the maker of a promissory note secured by a mortgage on realty is precluded from showing in an action at law to recover the balance due on the promissory note that, in a previous mortgage foreclosure and sale (to which proceedings the maker had been given only constructive service of process), the property sold was of greater value than the amount it brought at the mortgage foreclosure sale.

The question is answered, we believe, by determining the force and effect of a judgment obtained in an in rem proceeding. The effect of such a judgment is extensively treated in Pennoyer v. Neff, 1878, 95 U.S. 714, 24 L.Ed. 565, wherein it was held that:

'* * * [I]f there is no appearance of the defendant, and no service of process upon him, the case becomes in its essential nature a proceeding in rem, the only effect of which is to subject the property attached, to the payment of the demand which the court may find to be due to the plaintiff. That such is the nature of this proceeding in this latter class of cases is clearly evinced by two well established propositions: first, the judgment of the court, though in form a personal judgment against the defendant, has no effect beyond the property attached in that suit. No general execution can be issued for any balance unpaid after the attached property is exhausted. No suit can be maintained on such a judgment in the same court, or in any other; nor can it be used as evidence in any other proceeding not affecting the attached property; nor could the costs in that proceeding be collected of defendant out of any other property than that attached in the suit. Second, the court, in such a suit, cannot proceed, unless the officer finds some property of defendant on which to levy the writ of attachment. A return, that none can be found, is the end of the case and deprives the court of further jurisdiction, though the publication may have been duly made and proven in court.

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'* * * Process from the tribunals of one State cannot run into another State, and summon parties there domiciled to leave its territory and respond to proceedings against them. Publication of process or notice within the State where the tribunal sits cannot create any greater obligation upon the non-resident to appear. Process sent to him out of the State, and process published within it, are equally unavailing in proceedings to establish his personal liability.' (95 U.S. 714, 725-727.)

In considering the provisions of the Federal Constitution with reference to full faith and credit, the Supreme Court noted:

'* * * [T]he tribunals of one State have no jurisdiction over persons beyond its limits, and can inquire only into their obligations to its citizens when exercising its conceded jurisdiction over their property within its limits. * * *' (95 U.S. 714, 731.)

It was further noted that such judgments are without any binding force, except as to property or interests in property within the State, to reach and affect which was the object of the action in which the judgment was rendered, and which property was brought under control of the court in connection with the process against the person. The proceeding in such cases, though in the form of a personal action, has been uniformly treated (where personal service was not obtained and the party did not voluntarily appear) as effectual and binding merely as a proceeding in rem, and as having no operation beyond the disposition of the property or some interest therein. These principles are also well established by Florida precedent. E. g., Miller v. Griffin, 1930, 99 Fla. 976, 128 So. 416; Newton v. Bryan, 1940, 142 Fla. 14, 194 So. 282; Harris & Company Advertising, Inc. v. Republic of Cuba, Fla.App.1961, 127 So.2d 687; Berlanti Construction Co. v. Republic of Cuba, Fla.App.1962, 145 So.2d 256.

The question as to the force and effect of the statute and decisions with respect to the conclusiveness of the amount realized at the sale of the property, as consituting the fair value thereof, is analogous to the question of the jurisdiction and power of a court to enter a deficiency decree in a mortgage foreclosure action where only constructive service of process was obtained upon the maker of the note and mortgage. Although § 702.06, Florida Statutes, F.S.A., in effect states that in all suits for the foreclosure...