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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 affixing 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 February 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 property is 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 sufficient 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 immaterial," 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.
The res was thereby drawn into the exclusive jurisdiction and dominion of the United States; and, for the purposes of that suit, it was at the same time withdrawn from the jurisdiction of the courts of New Jersey. Any proceeding against it, involving the control and disposition of it, in the latter, while in that condition, was as if it were a proceeding against property in another state. It was vain, nugatory, and void, and as against the proceedings and judgment of the district court of the United States, and those claiming under them, was without effect.
In this aspect, the case is directly within the rule of decision established in Wiswall v. Sampson, 14 How. 52. That was a controversy as to the title to real estate, one party claiming under a sale upon execution issued on judgments rendered in the circuit court of the United States, the property being at the time of this sale in the possession of a receiver of a state court, under whose subsequent decree and sale the defendant claimed title. It is a significant fact, in that case, that, at the time of the appointment of the receiver by the state court, the executions upon the judgments had been issued and levied, and were a subsisting lien upon the premises. It was said in that case by Mr. Justice NELSON, delivering the opinion of the court: "It has been argued that a sale of the premises on execution and purchase occasioned no interference with the possession of the receiver, and hence no contempt of the authority of the court, and that the sale, therefore, in such a case should be upheld. But, conceding the proceedings did not disturb the possession of the receiver, the argument does not meet the objection. The property is a fund in court to abide the event of the litigation and to be applied to the payment of the judgment creditor who has filed his bill to remove impediments in the way of his execution. If he has succeeded in establishing his right to the application of any portion of the fund, it is the duty of the court to see that such application is made. And, in order to effect this, the court must administer it independently of any rights acquired by third persons pending the litigation. Otherwise the whole fund may have passed out of its hands before the final decree, and the litigation become fruitless." And the conclusion was: "It is sufficient to say that the sale under the judgment, pending the equity of the suit, and while the court was in possession of the estate, without the leave of the court, was illegal and void." And the same conclusion must prevail here, for, although the sale under the judgments in the state court was not made until after the property had passed from the possession of the district court by delivery to the purchaser at the sale under the decree, yet the initial step on which the sheriff's sale depended—the commencement of the proceedings to enforce the mechanic's lien, asserting the jurisdiction and control of the state court over the property sold-took place when that property was in the exclusive custody and control of the district court; and, by reason of its prosecution to a sale, was an invasion of the jurisdiction of that court. No stress is laid on the fact that notice of the proceeding by affixing a copy of the summons upon the building, which was required by the statute, could only be made by an actual entry by the sheriff upon the property, to that extent disturbing the possession of the marshal, because the same result, in our opinion, would have followed if no such notice had been required or given. The substantial violation of the jurisdiction of the district court consisted in the control over the property in its possession, assumed and asserted, in commencing the proceedings to enforce against it the lien claimed by the plaintiffs in those actions, prosecuting them to judgment, and consummating them by a sale. The principle applied in Wiswall v. Sampson, ubi supra, must be regarded as firmly established in the decisions of this court. It has been often approved and confirmed. Peale v. Phipps, 14 How. 368; Hagan v. Lucas, 10 Pet. 400; Williams v. Benedict, 8 How. 107; Pulliam v. Osborne, 17 How. 471; Taylor v. Carryl, 20 How. 583; Yonley v. Lavender, 21 Wall. 276; People's Bank v. Calhoun, 102 U. S. 256; Barton v.
Barbour, 104 U. S. 126; Covell v. Heyman, 111 U. S. 176; S. C. 4 SUP. CT REP. 355.
But it is to be understood, as a qualification of what has been said, that we do not mean to decide that the plaintiffs in the actions in the state court might not, without prejudice to the jurisdiction of the district court, commence their actions, so far as that was a step required by the mechanics' lien law of New Jersey, for the mere purpose of fixing and preserving their rights to a lien: provided, always, they did not prosecute their actions to a sale and disposition of the property, which, by relation, would have the effect of avoiding the jurisdiction of the district court under its seizure. That was the course, under similar circumstances, adopted and sanctioned by the supreme judicial court of Massachusetts in Clifton v. Foster, 103 Mass. 233, where a petition to enforce a mechanic's lien, which, by statute, it was necessary to file within a fixed time in order to preserve it, was permitted to be filed after the property, by the bankruptcy of the owner, had passed into the custody of the district court; but all further proceedings thereon were stayed to await the action of that court in the bankruptcy proceedings, on the ground that such seasonable filing was necessary to keep the lien alive, and that, without further proceedings, it could not be construed as an encroachment upon the jurisdiction of the bankruptcy court. The distinction seems to us reasonable and just, and is supported by the decisions in Williams v. Benedict, 8 How. 107, and Yonley v. Lavender, 21 Wall. 276. In conformity with it, we refrain from pronouncing the proceedings in the state courts of New Jersey invalid, so far as they do not affect the legal title of the purchaser at the marshal's sale to the premises in controversy. We decide, not that they are invalid for the purpose of declaring and establishing the lien, but that they are not good for the purpose of enforcing it, as was attempted, by a sale and conveyance of the premises in controversy. This view, though decisive of the case and resulting in the affirmance of the judgment of the circuit court, proceeds upon assumptions the most favorable which can be indulged to the plaintiff in error. It is merely an application of the familiar and necessary rule, so often applied, which governs the relation of courts of concurrent jurisdiction, where, as is the case here, it concerns those of a state and of the United States, constituted by the authority of distinct governments, though exercising jurisdiction over the same territory. That rule has no reference to the supremacy of one tribunal over the other, nor to the superiority in rank of the respective claims in behalf of which the conflicting jurisdictions are invoked. It simply requires, as a matter of necessity, and therefore of comity, that when the object of the action requires the control and dominion of the property involved in the 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. It was in accordance with this principle that, in Pulliam v. Osborne, 17 How. 471, this court confirmed the legal title of land to a purchaser under an execution upon *judgment rendered in the state court, because first actually levied as against one claiming under an execution out of the district court of the United States, which had a priority of lien by reason of having been first issued.
We therefore now determine that the plaintiff in error does not hold the legal title of the premises in controversy, as against the defendant in error, claiming under the marshal's sale and the decree of the district court; and we decide nothing beyond that. The other questions argued at the bar— whether the forfeiture decreed by the district court operated to transfer the whole title of the premises against all claimants; whether, if it operated only upon the interest of the owner at the time the alleged offenses were committed, subject to all valid liens then existing, nevertheless, those liens were transferred to the proceeds of the sale, and the claimants were bound at their peril to intervene in their own behalf in that proceeding; or whether the sale, as
made, passed the legal title, subject to all existing liens, including those sought ineffectually to be enforced by the proceedings under which the plaintiff in error claims; and whether, in that event, these may be enforced against the land or present owners, and if so, in what mode-we have passed by without considering, as not necessary to the decision of the case.
The judgment of the circuit court is accordingly affirmed.
(112 U. S. 276)
EXCHANGE NAT. BANK OF PITTSBURGH, PA., v. THIRD NAT. BANK OF THE CITY OF NEW YORK.1
(November 24, 1884.)
1. BANKS AND BANKING-NEGLIGENCE-COLLECTION OF Drafts.
A bank in Pittsburgh sent to a bank in New York, for collection, 11 unaccepted drafts, dated at various times through a period of over three months, and payable four months after date. They were drawn on "Walter M. Conger, Sec'y Newark Tea Tray Co., Newark, N. J.," and were sent to the New York bank as drafts on the tea tray company. The New York bank sent them for collection to a bank in Newark, and, in its letters of transmission, recognized them as drafts on the company. The Newark bank took acceptances from Conger individually, on his refusal to accept as secretary, but no notice of that fact was given to the Pittsburgh bank until after the first one of the drafts had matured. At that time the drawers and an indorser had become insolvent, the drawers having been in good credit when the Pittsburgh bank discounted the drafts. Held, that the New York bank was liable to the Pittsburgh bank for such damages as it had sustained by the negligence of the Newark bank.
2. PRACTICE-FINDING OF CIRCUIT COURT-DAMAGES-REMANDING CASE FOR NEW TRIAL. The circuit court having, on a trial before it without a jury, made a finding of facts which did not cover the issue as to damages, and given a judgment for the defendant, this court, on reversing that judgment, remanded the case for a new trial, being unable to render a judgment for the plaintiff for any specific amount of damages.
In Error to the Circuit Court of the United States for the District of New Jersey.
John R. Emery and Thos. N. McCarter, for plaintiff in error. A. Q. Keasbey, for defendant in error.
BLATCHFORD, J. The Exchange National Bank of Pittsburgh, Pennsylvania, brought this suit against the Third National Bank of the city of New York, in the circuit court of the United States for the district of New Jersey, to recover damages for the alleged negligence of the defendant in regard to 11 drafts or bills of exchange indorsed by the plaintiff to the defendant for、 collection. The suit was tried before the court without a jury. It made as special finding of facts and rendered a judgment for the defendant, to review" which the plaintiff has brought this writ of error.
The facts found are these, in substance: The drafts were drawn by Rogers & Burchfield, at Pittsburgh, to the order of J. D. Baldwin, and by him indorsed, on "Walter M. Conger, Sec'y Newark Tea Tray Co., Newark, N. J.," and were discounted before acceptance, by the plaintiff, at Pittsburgh, for the drawers. They bore different dates, from June 8, 1875, to September 20, 1875, and were in all other respects similar except as to the suis payable, and in the following form:
PITTSBURGH, June 8, 1875.
"Four months after date, pay to the order of J. D. Baldwin ten hundred and forty-two 75-100 dollars, for account rendered, value received, and charge to account of ROGERS & BURCHFIELD.
"To Walter M. Conger, Sex'y Newark Tea Tray Co., Newark, N. J.”
1 S. C. 4 Fed. Rep. 20.