Shuford v. Anderson

• Citation: 352 F.2d 755
• Decision Date: 14 October 1965
• Docket Number: No. 7853.,7853.
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: A. Alex SHUFORD, Jr., Appellant, v. Roy G. ANDERSON, and Currier & Carlsen, Incorporated, a corporation, Appellees.

352 F.2d 755 (1965)

A. Alex SHUFORD, Jr., Appellant, v. Roy G. ANDERSON, and Currier & Carlsen, Incorporated, a corporation, Appellees.

No. 7853.

United States Court of Appeals Tenth Circuit.

July 27, 1965.

Rehearing Denied October 14, 1965.

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Jay L. Gueck, Denver, Colo. (Hindry, Erickson & Meyer, Denver, Colo., on the brief), for appellant.

Robert C. Hawley, Denver, Colo. (Hardin Holmes, William C. Jensen, Ronald S. Luedmann and Ireland, Stapleton, Pryor & Holmes, Denver, Colo., on the brief), for appellees.

Before PICKETT and HILL, Circuit Judges, and CHRISTENSEN, District Judge.

CHRISTENSEN, District Judge.

In this diversity suit the lower court held upon the face of the complaint that service of process could not be effected upon an absent but indispensable party defendant because the action was not one in rem within the contemplation of 28 U.S.C. § 1655.¹ From the order of dismissal for lack of venue entered by the district court on defendants' motions,² plaintiff-appellant, A. Alex Shuford, Jr., has taken this appeal.

The complaint in substance alleged: That Murphy-Lowell Co., a co-partnership, not a party herein, transferred to the defendant Roy G. Anderson the real property described in the complaint, all located within the State of Colorado, as security for financial aid and assistance; that thereafter the plaintiff Shuford and the defendant Anderson entered into an agreement as joint venturers whereby they agreed to jointly contribute financial assistance to Murphy-Lowell Co., and to Lowell-Murphy & Co., a corporation, another non-party; that the plaintiff and the defendant Anderson agreed to share in the profits or losses arising out of this agreement, "and further agreed that each would have a share in the securities given to either or both of them by the corporation and co-partnership as a consideration for their investments."³ That pursuant to this agreement the plaintiff Shuford delivered to defendant Anderson a check for $150,250.00, but that the said defendant wrongfully and fraudulently violated the terms and covenants of the agreement by applying the amount delivered to retiring a second mortgage owing against the said real property, and entering into an agreement to sell and selling the property to others without accounting to or recognizing the interest held by the plaintiff or the agreement entered into by the parties; that plaintiff is in need of discovery of the use made of said property together with a constructive trust; that the money furnished by plaintiff was used by the defendant Anderson to purchase a note secured by a deed of trust on the property which were by Anderson transferred to the co-defendant, Currier & Carlsen, contrary to the agreement between the parties; that such transfer was made without consideration and that the note and deed of trust now encumbering the property are held by Currier & Carlsen as trustee for plaintiff. Plaintiff prayed, among other remedies, for the enforcement of an equitable lien and a constructive trust, for the appointment of a receiver, and for general relief.

In addition to the allegations above mentioned, and more or less commingled therewith, the plaintiff further alleged in substance that the money was procured by the defendant Anderson from the plaintiff by means of false representations, that there had been a breach of a fiduciary relationship, that the defendant had no complete or adequate remedy at law, that there was a necessity of a tracing of all moneys spent and that a complete accounting between the parties was essential. It was further alleged that the defendants had been unjustly enriched in the sum of $150,250.00, and had received other property and securities rightfully belonging to the plaintiff. The prayer in the complaint also asked "for a complete adjudication of the rights of all of the parties to this action (and) for an order enjoining the defendants from acting in a manner inconsistent with the rights of the plaintiff in the real property", and a second claim asked for the appointment of a receiver to prevent waste of rents, issues and profits.

It was upon the basis of the allegations and demands for relief set out in the last paragraph, going beyond reference to the particular real property involved, that the lower court determined that the action was one in personam and not in rem. The court was of the view that essentially the action was one for the breach of an alleged agreement, or for an accounting, or at most for specific performance of a contract. It referred to the assertions that Anderson did not distribute the funds he received in accordance with the alleged agreement, had been "unjustly enriched" by the money, and had disposed of the property "to make execution unavailable", all of which suggested to the lower court that the plaintiff was seeking in personam relief. It was noted "that the plaintiff does not limit his prayer for relief to an adjudication of the rights * * * in specific property but seeks an adjudication of all rights of the parties", and the conclusion was reached that the action was not maintainable as one in rem in this venue under the provisions of Section 1655. Accordingly, the defendants' motions to dismiss the action were granted.

The complaint is not a model of clarity. Its claims and demands may have been excessively broad for the purposes of an action in rem or quasi in rem. Yet essentially it stated a claim to enforce a lien on or a claim to, or to remove an encumbrance against, the title of real property within the District of Colorado. Hence, venue was properly laid in that district and service of process upon the absent defendant as provided by Section 1655 was permissible.⁴ The requisite amount being in controversy, the court had jurisdiction on the ground of diversity of citizenship, plaintiff being a citizen of the State of North Carolina and the defendants being citizens of the State of California.

Except as otherwise provided by law, a civil action, jurisdiction of which is founded only on diversity of citizenship, must be brought in a district where all plaintiffs or all defendants reside. Without attempting to delineate the conceptual and developmental aspects of the problem apart from this statute,⁵ it is enough for our purposes to note that as to venue, it may be deemed "otherwise provided" with respect to venue if § 1655 applies, although by its terms the latter section refers merely to service of process.⁶

Prayers or demands going beyond in rem relief do not prevent the court from granting the relief to which a plaintiff is actually entitled.⁷ The inclusion of broader claims in a complaint does not of itself negate the right to rely upon § 1655 if the allegations actually set out among others the essential foundations of a civil action to enforce a lien upon or claim to real or personal property within the district and other allegations may be deemed incidental to such action.⁸ When a claim or lien is sought to be enforced against land within the district, the remedy for an indefinite statement of a claim on which relief may be granted is not dismissal, but the granting of a motion, if one is made, to make more definite.⁹ And the fact that to enforce a lien or claim against particular land inquiry must be made of accounts or relationships defining the extent of the lien or claim does not preclude an in rem action.¹⁰

Hence, apart from mere form or the nature of the evidence that may be necessary to establish the extent of the claim, the inquiry must be whether the complaint states substantially a claim to or lien against the real property situated in the district and specifically described, or whether essentially it comprises a claim merely in personam, with the status of the real property being a mere incidental inquiry.

In Massie v. Watts, 6 Cranch 148, 10 U.S. 148, 3 L.Ed. 181 (1810), Chief Justice Marshall said that "In a case of fraud, or trust, or of contract, the jurisdiction of a court of chancery is sustainable wherever the person be found, although lands not within the jurisdiction of that court may be affected by the decree". The defendants in reliance upon this language would dismiss this action as one of "fraud", "trust" or "contract" and hence not cognizable by § 1655. It is true that involved in that case was a breach of duty which amounted to a violation of an implied contract of the parties concerning the title to land; and it was held that the case was triable as one in personam in a jurisdiction other than the one in which the land was situated. Indeed, Massie has become the leading case to sustain in personam jurisdiction in equity for the purpose of compelling conveyances of land in foreign jurisdictions as a remedy for breach of contract or trust or for fraud, or to enjoin the commission of acts outside the territorial jurisdiction of the court in appropriate cases. But that a claim or lien cannot be prosecuted as an in rem or quasi in rem proceeding in reliance upon § 1655 or its statutory predecessors merely because such claim or lien is based upon contract, fraud or trust, has since never been suggested by the Supreme Court as far as we can discover; on the contrary, as we shall presently note, quite the contrary has been expressly held. Nor does the possible existence of in personam jurisdiction to compel specific performance or other appropriate equitable remedies in view of fraud, or a trust relationship as to real property where the parties are regularly before the court, necessarily preclude the right to proceed in rem to adjudicate liens or claims as to real property in the jurisdiction in which the property is situated.

In Walker v. Brown, 165 U.S. 654, 17 S.Ct. 453, 41 L.Ed. 865 (1897), the doctrine as expressed in Pomeroy was accepted that "every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property,...