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creditor over the others, the conversion of notes into stock was to take effect only on the condition that all the creditors consented, and that the conversion was made within 10 days. This provision in the resolution was necessary to prevent a part of the creditors, after some had converted their notes into stock, from seizing the property of the company and applying it to the payment of their own debts, to the exclusion of other creditors. A large part of the creditors surrendered their notes and took stock in their stead. But this conversion was conditional, and the notes so exchanged were not canceled, because the conditions upon which the conversion was to take place were never complied with. Other holders of notes, among whom was Thackara, refused to convert their notes into stock, and thus the whole scheme fell through. The defendant Reed, who claims under Thackara, insists that all the creditors who surrendered their notes shall lose their debts, and that the notes held by Thackara shall take the entire property of the company:
Не thus insists upon a result which the resolution of the directors was cautiously framed to prevent. As soon as the 10 days prescribed by this resolution had expired, and it appeared that all the holders of notes secured by the mortgage of the mining company had not converted them into stock, those who had offered to convert were remitted to their rights as creditors of the company. A mortgage creditor, who had refused to convert, could not, by assuming that the property of the company was released from the mortgage, seize it for the satisfaction of his own debt to the exclusion of all the other mortgage creditors. By refusing to convert bis notes into stock, he left the notes of the other creditors, and the mortgage which secured them, in full force and effect. The contention of a creditor, who did not offer to convert, that the conditional offer of the other holders to convert is, in effect, a conversion and satisfies their notes, and leaves the property of the company unincumbered and liable to seizure, and applicable exclusively to the satisfaction of his claim, is without support in reason or justice.
It appears from the record that a number of the creditors of the mining company, who had surrendered their notes* conditionally, required the complainants Hare and Pugh, who were the mortgagees, to proceed to enforce the mortgage by suit to foreclose, and, in compliance with this demand, the present suit was brought. There is no ground upon which their right to the relief prayed can be denied. There no support for the contention of Reed that it was the duty of the holders of notes, who had offered to convert them into stock, to rescind, within a reasonable time, the contract of conversion, and that, by delaying to do so for three years, they had lost the right to rescind. The answer to this contention is that there never was any conversion of notes into stock, and no binding contract to convert. The most that can be claimed is that the holders of the notes secured by the mortgage offered to convert them upon the conditions expressed in the resolution. The conditions were never complied with. There was, therefore, no conversion and nothing to rescind. The conditional surrender of the notes secured by the mortgage did not cut off the right to foreclose the mortgage for their satisfaction. Howe v. Lewis, 14 Pick. 329; Davis v. Maynard, 9 Mass. 242; Stover v. Wood, 26 N. J. Eq. 417. The notes which were filed for conversion remained the property of their holders respectively, and the stock the property of the company. It does not appear that any holder of the notes had disposed of stock which he had received conditionally. If there is such a one he will be compelled to account for the stock. Those in whose names the stock still remains will be entitled to their notes and to the security for their payment afforded by the mortgage, and the mining company will be entitled to a retransfer of the stock.
It being clear that the notes held by the parties for whom the present suit to foreclose was brought have not been satisfied, the right of the complainants to maintain the suit is put beyond question. The sale upon the judg.
ment at law recovered by Thackara could not affect that right. It has been held by many courts that a mortgagee cannot, upon a judgment recovered for a debt secured by his mortgage, levy the execution upon the mortgaged property. Atkins v. Sawyer, i Pick. 351; Washburn v. Goodwin, 17 Pick. 137; Tice v. Annin, 2 Johns.*Ch. 125; Camp v.Coxe, 1 Dev. & B. 52; Waller* v. Tate, 4 B. Mon. 529; Powell v. Williams, 14 Ala. 476; Carpenter v. Bowe, 42 Miss. 28; Linville v. Bell, 47 Ind. 547. But whether this be the established rule or not, it requires no authority to show that a sale of the mortgaged premises upon a judgment recovered on a part of the notes secured by the mortgage does not preclude the holder of other notes secured by the same mortgage from proceeding to foreclose it. A sale on such a judgment could only affect the equity of redemption, and would leave the rights of the holder of other notes secured by the mortgage unaffected.
We are of opinion that the circuit court erred in dismissing the bill. Its decree must therefore be reversed, and the cause remanded for such further proceedings in conformity with this opinion as the case may require.
(112 U. S. 294)
HEIDRITTER 0. ELIZABETH OIL-CLOTH Co.1
(November 24, 1884.) 1. ACTION IN REM-CONSTRUCTIVE PROCESS-MECHANIC'S LIEN.
In a case where the owner and builder of a distillery are one person, and he is served with legal, not actual, process, by affixing a copy of the summons on the building and by publication for four weeks, according to the laws of New Jersey, he being presumably without the jurisdiction of the court, proceedings to enforce
a mechanic's lien are in the nature of proceedings in rem. 2 SAME-UNITED STATES COURT-SEIZURE BY MARSHAL-JURISDICTION OF State Court.
The seizure of premises by a United States officer as forfeited for offenses against the national laws, and the taking them into possession by the United States court to enforce and declare the forfeiture judicially, is a proceeding in rem, and for the
purpose of the suit the res is withdrawn from the jurisdiction of a state court. 3. SAME-JURISDICTION OF STATE COURT OVER PREMISES IN POSSESSION OF UNITED STATES
Whatever may be the validity of the proceedings in a state court against premises in the possession of the United States court, so far as they are directed to de claring and establishing a mechanic's lien, such proceedings are not good for the
purpose of enforcing such lien by a sale and conveyance of the premises. 4. SAME-CONFLICTING JURISDICTIONS-GENERAL RULE.
In the case of conflicting jurisdictions the rule is that when the object of the action requires the control and dominion of the property involved in litigation, that court which first acquires possession, or that dominion which is equivalent, draws to itself the exclusive right to dispose of it for the purposes of its jurisdiction. In Error to the Circuit Court of the United States for the District of New Jersey.
E. A. Day and John R. Emery, for plaintiff in error. John F. Dillon and J. T. Richards, for defendant in error.
MATTHEWS, J. This is an action of ejectinent for the recovery of certain real estate and the improvements thereon, situated in the City of Elizabeth, in* New Jersey, brought by the plaintiff in error against the defendant in error in the supreme court of that state, and removed thence into the circuit court of the United States on the ground that the case was one arising under the constitution and laws of the United States. The cause was submitted to the court, the intervention of a jury having been waived, and a judgment rendered for the defendant below. The facts appear by special findings of the court and bills of exception duly taken to its rulings. So far as material, they are as follows: Both parties claim title under Charles L. Sicher, who, being the owner
IS. C. 6 Fed. Rep. 138.
of the premises, commenced the erection thereon of a building which he subsequently used as a distillery. The plaintiff claims under a deed from the sheriff of Union county, in which the premises are situated, dated September 24, 1873, made to him as purchaser at a sale under two special writs of fieri facias, issued upon two judgments against Sicher: one in favor of August Heidritter for $1,711.22, signed June 14, 1873; the other in favor of Ferdinand Blancke for $272.95, signed June 18, 1873. The actions in which these judgments were severally rendered were commenced, one on February 21, 1873, the other on March 15, 1873. They were, in form, actions of assumpsit, the declarations in each, however, containing additional averments, showing that they were brought to enforce mechanics' liens upon the building and lot constituting the premises in controversy, according to the provisions of an act of the legislature of New Jersey of March 11, 1853, and the supple ments thereto, the premises being specifically described and the accounts for labor and materials on which the actions were founded being set out, in the one case beginning June 21, 1872, in the other, September 7, 1872. The respective claims for these liens had been filed, pursuant to the statute, in the office of the clerk of the county: one on February 21, 1873; the other on March 13, 1873.
This statute of New Jersey-Nixon, Dig. (4th Ed.) 571; Rev. N. J. 668 provided for the enforcement of the claim filed agreeably to its provisions upon any lien created thereby by suit in a court of the county where such building is situated, to be commenced by summons, in a prescribed form, against the builder and owner of the land and building,"containing a statement that the plaintiff claims a building lien for the amount set forth on the building and lands of the defendant described as in the claim on file. Two modes of service of this summons are specifically described in the act: one is called actual service, meaning thereby personal service on the defendant, or, if he cannot be found in the state, by affixing a copy thereof on such building, "and also by serving a copy on such defendant personally, or by leaving it at his residence ten days before its return." The other is styled legal service, which is, in case the defendant resides out of the state, by affixing a copy on such building and sending a copy by mail, directed to him at the post-office nearest his residence, or, in case his residence is not known to the plaintiff, then by affixing a copy to such building, and publishing it for four weeks in a newspaper circulating in the county. The judgment in the action, if for the plaintiff, in case the defendant has been actually served with the sum. mons, shall be general, with costs, as in other cases; but when only legal service of the summons has been made, judgment against the owner and also against the builder “shall be specially for the debt and cost to be made of the building and lands in the declaration described; and in case no general judgment is given against the builder, such proceedings or recovery shall be no bar to any suit for the debt, except for the part thereof actually made under such recovery." When the builder and owner are distinct persons, they may make separate defenses,—the former that he does not owe the money, the latter that the building and land are not liat to the debt; "and, in such case, it shall be necessary for the plaintiff, to entitle him to judgment against the house and lands, to prove that the provisions of this act requisite to constitute such lien have been complied with.” "When judgment is entered generally against the builder, a writ of fieri facias may issue thereon as in other cases; and when judgment shall be against the building and lands, a special writ of fieri facias may issue to make the amount recovered by sale of the building and lands; and when both a general and*special judgment shall be given, both writs may be issued, either separately or combined in one writ.” It is further provided that under such special fieri facias the sheriff shall advertise, sell, and convey said building and lot in the same manner as directed by law in case of lands levied upon for debt, and that the sheriff's deed shall convey to the purchaser the estate of the owner in the lands and in the buildings which he had at any time after the commencement of the building, subject to all mortgages and other incumbrances created and recorded or registered prior thereto. The building upon the premises in controversy was commenced June 25, 1872, from which time it is conceded the mechanics' liens dated, to enforce which the judgments were rendered.
It appears that the summons in the two cases was legally, but not actually, served upon Sicher, his residence not being known to the plaintiff, by aflixing a copy thereof to the building, and by a publication for four weeks of a copy. At the times when these claims for mechanics' liens were filed in the office of the county clerk, and when the actions were commenced to enforce them, the premises in controversy were in the actual custody and possession of the United States marshal for the district of New Jersey under the following circumstances. The building erected by Sicher on the premises in controversy was intended for and was used by him as a distillery, when, on January 24, 1873, they, with the contents of the building, were seized by the collector of internal revenue for the Third collection district of New Jersy, for a forfeiture incurred under the laws of the United States. On February 4, 1873, an information to enforce that forfeiture was filed in the district court of the United States for the district of New Jersey, and on February 5, 1873, process of attachment was issued to the marshal, who made return of the same on Feb ruary 19, 1873, that he had taken possession of the property therein named, including the premises in controversy. On February 25, 1873, a sentence of condemnation and forfeiture to the United States was passed, and a writ of execution ordered to issue to sell the same. On March 10th following that: writ was issued, and was returned June 9, 1873, by the marshal, with the indorsement thereon that he had sold the premises to one Edward G. Brown. The proceeds of the sale, after payment of costs, were ordered to be paid to the collector of internal revenue for the use of the United States, and the marshal, on May 29, 1873, executed and delivered a deed to the purchaser, conveying the lands and tenements in fee-simple. The sale took place on May 22, 1873. The defendants in error, by mesne conveyances, have acquired the title of the purchaser at this sale. *The information alleged violations of numerous sections of the internal revenue laws, which it is not necessary to mention further than to say that on its face it disclosed a case for a forfeiture under those laws of the property described in it, clearly within the jurisdiction of the court. The precise question thus arising is whether the plaintiff in error acquired the legal title to the premises in controversy, by virtue of the deed from the sheriff of Union county, and the judgments and proceedings on which it was based. These proceedings, so far as against the owner of the property they undertook to enforce the plaintiff's claim as a lien upon his interest in it, were in the nature of proceedings in rem, though not so, perhaps, in technical strictness, for they did not profess to conclude all the world. Such, particularly, was their nature, in the cases under consideration, where the owner and builder were one person, and he was served with process only constructively, not actually, being presumably without the jurisdiction of the court. It was declared so to be in Gordon v. Torrey, 2 McCarter, (15 N. J. Ch.) 112. "The proceeding in such cases," said Mr. Justice FIELD, delivering the opinion of the court in Pennoyer v. Neff, 95 U. S. 714-730, “though in the form of a personal action, has been uniformly treated, where 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. And the reason assigned for this conclusion has been that which we have already stated, that the 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 juris
diction over their property within its limits.” That jurisdiction is called into exercise judicially, and attaches, as elsewhere stated in the same opinion, (page 727,) “where property is once brought under the control of the court by seizure or some equivalent act. The law assumes that propertysis always in the possession of its owner in person or by agent; and it proceeds upon the theory that its seizure will inform him not only that it is taken into the custody of the court, but that he must look to any proceedings authorized by law upon such seizure for its condemnation and sale. Such service may also be suffi. cient in cases where the object of the action is to reach and dispose of property in the state, or of some interest therein, by enforcing a contract or lien respecting the same, or to partition it among different owners, or, where the public is a party, to condemn and appropriate it for a public purpose. In other words, such service may answer in all actions which are substantially proceedings in rem.”
In Cooper v. Reynolds, 10 Wall. 308-318, it is said by Mr. Justice MILLER, delivering the opinion of the court, that, in such cases, where there is no appearance of the defendant and no service of process on him, “the case becomes, in its essential nature, a proceeding in rem,” and that, (page 317,) “while the general rule in regard to jurisdiction in rem requires an actual seizure and possession of the res by the officer of the court, such jurisdiction may be acquired by acts which are of equivalent import, and which stand for and represent the dominion of the court over the thing, and, in effect, subject it to the control of the court." This may be by the levy of a writ, or the mere bringing of a suit. “It is imma rial," said this court, by Mr. Justice MCLEAN, in Boswell's Lessee v. Otis, 9 How. 336, “whether the proceeding against the property be by an attachment or bill in chancery. It must be substantially a proceeding in rem.
Indeed, so far as the proceedings in question sought to bind the land by enforcing the plaintiff's claim as a specific lien thereon, and to dispose of the premises in satisfaction thereof by a sale, they were substantially in rem, whether there was personal or merely constructive service of process upon the defendant owner. The kind of process and mode of service could be material only with reference to the nature of the judgment. He could be bound personally only by his coming or being brought personally within the jurisdiction of the court. But the land might be bound, without actual service of process upon the owner, in cases where the only object of the proceeding was to enforce a claim against it specifically, of a nature to bind the title. In such cases the land itself must be drawn within the jurisdiction of the court by some assertion of its control and power over it. This, as we have seen, is ordinarily done by actual seizure, but may be done by the mere bringing of the suit in which the claim is sought to be enforced, which may by law be equivalent to a seizure, being the open and public exercise of dominion over it for the purposes of the suit. When, however, the proceedings were begun for the enforcement of the mechanics' liens against the premises in controversy, by the issuing of the summons and the filing of the declaration, the property over which the state court sought to exert its jurisdiction was in the actual custody and possession of the district court of the United States for the district of New Jersey. It had been seized by an officer of the United States for an alleged offense against its laws. It was proceeded against as forfeited to the United States, and to declare and enforce that forfeiture judicially, it had been taken possession of by the court. This proceeding was undoubtedly in rem, and it is quite immaterial whether the law authorized an absolute forfeiture of the res, including all interests and estates in it, so as to overreach antecedent liens and adverse claims, or only of the actual interest of the owner charged with the violations of law at the time of the alleged offenses. In either view, and for either purpose, the court had taken possession of the property itself, and that possession was necessarily exclusive.