Ormsby v. Ottman, 950.

• Decision Date: 21 February 1898
• Docket Number: 950.
• Citation: 85 F. 492
• Parties: ORMSBY v. OTTMAN et al.
• Court: U.S. Court of Appeals — Eighth Circuit

85 F. 492

ORMSBY v. OTTMAN et al.

No. 950.

United States Court of Appeals, Eighth Circuit.

February 21, 1898

This is an appeal from a decree which dismissed a bill to foreclose a trust deed of certain real estate in the state of Nebraska given by Hamilton R. Ottman and Harriette L. Ottman, his wife, to the appellant, E. S. Ormsby, on October 6, 1888, to secure a promissory note for $4,000 and interest, made by Hamilton R. Ottman, and payable to the order of W. L Telford, which Telford indorsed, and sold to Calvin E. Hull on December 19, 1888. The appellees, George W. Dillard and Max Einstein, pleaded and proved in answer to this bill that on December 26, 1893, Ottman and his wife conveyed the mortgaged premises, subject to the mortgage, to Dillard; that they claimed, but Hull and his trustee, Ormsby, deny, that Dillard paid the balance due on the debt secured by the trust deed in April, 1894; that in a suit to quiet the title to the mortgaged premises and to remove the cloud of the trust deed in the district court of the county of Lincoln, in the state of Nebraska, in which George W. Dillard was the complainant and the appellants, E. S. Ormsby and Calvin E. Hull, were the defendants, and in which the summons was served on the appellants, who were nonresidents of that state, by publication only, a decree was rendered on November 15, 1894 to the effect that the trust deed was satisfied and canceled and that the title to the mortgaged premises was quieted in Dillard; and that on April 24, 1894, Dillard and his wife sold the premises for a valuable consideration, and conveyed them by a warranty deed to the appellees Max Einstein.

C. C. Flansburg, for appellant.

T. C. Patterson (B. S. Baker, on the brief), for appellee Einstein.

Before SANBORN and THAYER, Circuit Judges, and PHILIPS, District Judge.

SANBORN Circuit Judge, after stating the facts as above, .

Two questions are presented in this case: Was the decree of the district court of the state of Nebraska on November 15, 1894, against the trustee, Ormsby, and his cestui que trust, Hull, to the effect that the trust deed was paid and canceled, impervious to collateral attack, and fatal to their subsequent attempt to foreclose the trust deed in the federal court? If not, was the debt secured by that deed in fact paid? The appellant insists that the first question should be answered in the negative, (1) because the state court had no jurisdiction to render a decree removing the cloud of the lien upon the real estate evidenced by the trust deed without a personal service of the summons upon the parties interested therein; and (2) because, if it had such jurisdiction, the petition and affidavit for the publication of the summons were insufficient to invoke its exercise. It is conceded that a court of equity, without the aid of legislation enlarging its powers, has no jurisdiction to quiet the title to real estate, or to remove a cloud therefrom, without personal service of its process upon the interested parties against whom it renders its decree. Such a suit, under the old chancery practice, was a personal action, and the efficacy of the decree depended on personal service of the subpoena. It is equally well settled, however, that one of these United States has authority by the enactment of a statute to so enlarge the equity powers of the courts sitting within its limits as to confer upon them jurisdiction to adjudicate the titles and liens upon real estate within its borders as against nonresidents who are brought into court by publication only. The exhaustive and convincing discussion of this proposition and the critical review of the authorities in the opinion of the supreme court delivered by Mr. Justice Brewer in Arndt v. Griggs, 134 U.S. 316, 10 Sup.Ct. 557, have put this question at rest in this country, and left nothing further to be said upon it. Since that decision was rendered, the only question presented by a decree of the class under consideration here is: Did the state, by its legislation, confer the power upon the court to render its decree against those who were brought into it by publication only? The statutes of Nebraska which control the answer to this question in the case at bar are as follows:

'An action may be brought and prosecuted to final decree, judgment or order, by any person or persons, whether in actual possession or not, claiming title to real estate, against any person or persons, who claim an adverse estate or interest therein, for the purpose of determining such estate or interest, and quieting the title to said real estate. ' Comp. St. 1885, p. 483, c. 73, Sec. 57.

'All such pleadings and proofs and subsequent proceedings shall be had in such action no pending or hereafter brought, as may be necessary to fully settle or determine the question of title between the parties to said real estate, and to decree the title to the same, or any part thereof, to the party entitled thereto; and the court may issue the appropriate order to carry such decree, judgment or order into effect. ' Id. Sec. 58.

'Service may be made by publication in either of the following cases: * * * Fourth. In actions which relate to, or the subject of which is, real or personal property in this state, where any defendant has or claims a lien or interest, property in this state, where any defendant has or claims a lien or interest, actual or contingent therein, or the relief demanded consists wholly or partially in excluding him from any interest therein, and such defendant is a non-resident of the state or a foreign corporation. ' Code Civ. Proc. Sec. 77 (Comp. St. 1885, p. 637).

'Before service can be made by publication, an affidavit must be filed that service of a summons cannot be made within this state, on the defendant or defendants, to be served by publication, and that the case is one of those mentioned in the preceding section. When such affidavit is filed the party may proceed to make service by publication. ' Code, Sec. 78.

'A party against whom a judgment or decree has been rendered without other service than by publication in a newspaper, may, at any time within five years after the date of the judgment or order, have the same opened and be let in to defend; * * * but the title to any property, the subject of the judgment or order sought to be opened, which by it, or in consequence of it, shall have passed to a purchaser in good faith, shall not be affected by an proceedings under this section, nor shall they affect the title to any property sold before judgment under an attachment. ' Id. Sec. 82.

'When any judgment or decree shall be rendered for a conveyance, release or acquittance, in any court of this state, and the party or parties against whom the judgment or decree shall be rendered do not comply therewith within the time mentioned in said judgment or decree, such judgment or decree shall have the same operation and effect, and be as available, as if the conveyance, release or acquittance had been executed conformable to such judgment or decree. ' Id. Sec. 429b.

These are the very statutes which were before the supreme court in Arndt v. Griggs, supra. In that case it was held that a decree under these statutes, based upon publication of the summons against nonresident defendants, who claimed a title adverse to the complainant, was valid and conclusive. In view of this decision, it is conceded that the state court had jurisdiction to entertain the suit and to render the decree against the trustee, Ormsby, and his cestui que trust, Hull if they had or claimed an 'estate or interest' in the premises described in the trust deed. The contention is that they had a lien upon those premises, that this was neither an estate nor an interest, and that these statutes gave the state court no power to adjudicate that lien without personal service of the summons upon its holders. The controversy rages over the significance of the word 'interest' in the statute first quoted. The real question is whether the legislature, by the use of that word, intended to limit the power of the courts to the adjudication of adverse claims to the title only to real estate in the state of Nebraska, or to extend that power to the determination of all adverse claims against it, either by title or by lien. In support of the former construction the principles are invoked that a mortgage is a mere incident to the debt it secures (Daniels v. Densmore, 32 Neb. 40, 48 N.W. 906); that it is not a property in the thing mortgaged, nor does it constitute a right of action for it (Meany v. Head, 1 Mason, 319, Fed. Cas. No. 9,379; Ex parte Forster, 2 Story, 131, Fed. Cas. No. 4,960); that it is a mere lien or charge upon the real estate it describes for the security of the debt (Kyger v. Ryley, 2 Neb. 20, 27; Webb v. Hoselton, 4 Neb. 308, 318; Hurley v. Estes, 6 Neb. 386, 391; Davidson v. Cox, 11 Neb. 250, 9 N.W. 95; Sessions v. Irwin, 8 Neb. 5, 8; McHugh v. Smiley, 17 Neb. 620, 623, 20 N.W. 296); that upon the death of the mortgagee the debt and the lien which secures it do not descend to his heirs, but pass to his executor or administrator (Comp. St. Neb. 1885, p. 310, c. 23, Sec. 207); that covenants which run with the land do not pass to the mortgagee before foreclosure (Davidson v. Cox, 11 Neb. 250, 9 N.W. 95); that the lien of the mortgage is not subject to levy and sale on execution, and that for the purposes of taxation the situs of the note and of the lien secured by it is the residence of the owner of the note, and not the location of the real estate (Cleveland, P. & A.R. Co. v. Pennsylvania, 15 Wall. 300; City of Davenport v. Mississippi & M.R. Co., 12 Iowa, 539, 547). Our attention is called to the fact that in one or two instances in which courts were not...