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This has been held by the supreme court of the state to apply to all sales, whether valid, voidable, or void. But, to start a statute of limitations, there must be some one against whom time can run. This is not denied by defendant's counsel, but they urge the administrator was such person, and that it made no difference that in the particular instance he was the person to sue and to be sued. I am not inclined to adopt quite so refined and abstract a view. It would virtually deny relief, and it is easily conceived that the bond of the administrator would be no adequate substitute. Time had not, therefore, run against Margaret Gray Dickinson; and, because it had not, it was necessary to pass on the validity of the probate proceedings and sale. These being valid, it follows that the bill of complainants must be dismissed.
CENTRAL TRUST CO. OF NEW YORK v. CHATTANOOGA, R. & C. R. CO. (MILLER & GARMONY, Interveners).
(Circuit Court, E. D. Tennessee. S. D. July 11, 1895.)
1. RECEIVERS-EXEMPTION FROM GARNISHMENT.
Thugh a receiver appointed by a court of equity is by statute exempt from garnishment in his own state the federal courts of another state will not refuse to entertain garnishment against him on a petition properly presented by citizens within the jurisdiction, when no objection to the jurisdiction on other grounds exists.
2. SAME-EFFECT OF STATE LAWS.
A state law exempting a receiver appointed by a court of equity from garnishment applies to the state courts only, and has no extraterritorial force.
Independently of statute, a receiver is not subject to garnishment except by consent of the court appointing him.
Garnishment is a form of attachment, and property cannot be made subject thereto unless it is within the jurisdiction of the court.
5. SAME-PERSONAL SERVICE.
Attachment in the form of garnishment cannot be maintained in the United States courts without personal service on the principal defendant, or his voluntary appearance.
6. RECEIVERS OF FEDERAL COURTS-GARNISHMENT PROCEEDINGS.
Garnishment proceedings are not suits against the receiver for "any act or transaction of his," within the meaning of judiciary act of March 3, 1887, as corrected by Act Aug. 13, 1888 (25 Stat. 433), allowing receivers of federal courts to be sued for such acts in carrying on the business connected with the property, without leave of the appointing court.
7. SITUS OF DEBT.
For the purpose of jurisdiction, the situs of a debt or other chose in action follows the domicile of the creditor.
8. JURISDICTION OF FEDERAL COURTS-EFFECT OF STATE STATUTE.
Rev. St. § 915, providing that in the United States courts plaintiff shall be entitled to remedies by attachment or otherwise against defendant's property similar to those allowed to the state courts by the state laws, does not confer on the United States courts jurisdiction of suits by foreign attachment, or jurisdiction over a nonresident not served with process, though state courts have such jurisdiction under state laws.
9. GARNISHMENT JURISDICTION-NONRESIDENT PARTIES.
Where both the garnishee and the principal debtor are nonresidents, and the debt is payable in the state of their residence, there is no property
within the state subject to attachment in garnishment proceedings in either the state or United States courts.
10. SAME-RAILROAD COMPANY AS GARNISHEE.
Such rule applies to garnishment of the wages due by a foreign railroad corporacion to its employés, also residents of another state, under contract of employment made in such state, and is not affected by the fact that such corporation, without being incorporated in the state, extends its line therein, and is subject to suit by process on its local agents.
11. SAME-CLAIM FOR WAGES.
In the absence of contract to the contrary, a debt for wages due from one nonresident to another nonresident living in the same state is payable by legal implication in such state, and is not subject to garnishment in another state.
Action by the Central Trust Company of New York against the Chattanooga, Rome & Columbus Railroad Company, in which a receiver was appointed. Petition in intervention by Miller & Garmony to attach by garnishment proceedings the wages of certain employés of such receiver.
T. P. Chamlee, for interveners.
CLARK, District Judge. This case is now before the court on intervening petition by Miller & Garmony, creditors of certain employés of the receiver of defendant company, appointed in the cause, with power, among other things, to operate the railroad. The defendant company is a corporation organized under the laws of the state of Georgia, with its line of railway extending a short distance into the state of Tennessee, so as to reach the city of Chattanooga. The receiver was appointed in the United States circuit court at Atlanta, Ga., where the principal case is pending, and the same person was appointed under an ancillary bill filed in this court. The petition seeks to attach by garnishment the wages due said employés, the statutory ground for attachment being alleged, namely, nonresidence of all the defendants, except one, as to whom the case is dismissed. The receiver, as well as the employés, are citizens and residents of the state of Georgia, and interveners citizens and residents of the state of Tennessee. The laborers whose wages are sought to be reached are employed and paid in the state of Georgia. The receiver answered the petition, showing wages due the nonresidents, and the amount thereof. No personal service was had on the other nonresident defendants, and no substituted service has been resorted to, and none could be, in a case like this, as will hereafter more fully appear.
Under the statutory law of Georgia, receivers appointed by a court of equity are not subject to garnishment, and laborers' wages are wholly exempt from liability to garnishment. These are the undisputed facts, and the case therefore turns on questions of law. It is insisted that, as the receiver is exempt from suit in his own state, and must account to the court having jurisdiction of the principal case, a suit such as this should not be entertained by this court. I have no doubt, however, of the right and jurisdiction of this court to hear and adjudicate upon all claims of the kind here in issue, when properly presented by citizens within the jurisdiction, when no objection to jurisdiction on other grounds
exists. This court would so control all suits as not to interfere with the proper jurisdiction and proceeding in the principal case, nor with the proper discharge of his duties by the receiver under order of the court in that case. On suggestion, any difficulty of that kind would be promptly obviated. And the statutory exemption from garnishment by the receiver, I think, is applicable to the state courts only, aside from its want of extraterritorial force. Independently of statute, the receiver is not subject to garnishment, except by consent of the court appointing him. High, Rec. (3d Ed.) § 151, and cases. It is argued, however, that by the judiciary act of March 3, 1887, as corrected by the act of August 13, 1888 (25 Stat. 433),1 receivers of a railway company, appointed by a court of the United States, may be garnished in a state court, and Irwin v. McKechnie (Minn.) 59 N. W. 987, is cited as sustaining this position, and the supreme court of Minnesota does so hold. The garnishment suit here, however, being in the court appointing the receiver, and not in a state court, the bearing of that case on the question is not really very material, and the act of congress has been construed otherwise, and this question otherwise settled for this circuit. In a case before both circuit judges for this circuit and District Judge Barr, it was, upon full consideration, held that a garnishment proceeding was not within the terms of the act of congress (Central Trust Co. of New York v. East Tennessee, V. & G. Ry. Co., 59 Fed. 523), and this case was approved on the same point in Comer v. Felton, 10 C. C. A. 28, 61 Fed. 731, by the circuit court of appeals. There are jurisdictional objections, however, of serious import, and these are now to be examined, and in this inquiry into jurisdiction the court is not limited by the formal issues or argument.
The garnishee, as well as the principal debtors, being nonresidents, and the debts payable in another state, the question arises, has the court jurisdiction (there being no personal service) by seizure of property of the nonresident? In considering this question, it is to be constantly borne in mind that garnishment is a form of attachment. As was said by Maxwell, C. J., in Insurance Co. v. Hettler, 37 Neb. 849, 56 N. W. 711:
"Garnishment is an attachment by means of which money or property of a debtor in the hands of third parties, which cannot be levied upon, may be subjected to the payment of the creditor's claim. To subject the property to attachment it must be within the jurisdiction of the court; otherwise it would be powerless to condenin it, order a sale, and apply the proceeds to the payment of the judgment in favor of the creditor."
This is clearly the nature of garnishment on attachment in this state. Mill. & V. Code, §§ 4219, 4222; Caruth. Hist. Lawsuit, § 85. And in regard to an attachment, and in a case involving the attachment law of this state, the supreme court of the United States, in Cooper v. Reynolds, 10 Wall. 318, said:
"Its essential purpose, or nature is to establish, by the judgment of the court, a demand or claim against the defendant, and to subject his property lying within the territorial jurisdiction of the court to the payment of that demand."
1 The act provides that a receiver of a federal court may be sued for "acts or transactions of his" in carrying on the business in connection with the property, without leave of the appointing court.
And in the absence of personal service on the defendant within the jurisdiction the court said:
"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. Now, in this class of cases, on what does the jurisdiction of the court depend? It seems to us that the seizure of the property, or that which, in this case, is the same in effect, the levy of the writ of attachment on it, is the one essential requisite to jurisdiction, as it unquestionably is in proceedings purely in rem. Without this, the court can proceed no further; with it, the court can proceed to subject that property to the demand of plaintiff. If the writ of attachment is the lawful writ of the court, issued in proper form, under the seal of the court, and if it is by the proper officer levied upon property liable to the attachment, when such writ is returned into court, the power of the court over the res is established.”
And in the subsequent case of Pennoyer v. Neff, 95 U. S. 723, the court, through Mr. Justice Field, announced the rule as follows: "It is in virtue of the state's jurisdiction over the property of the nonresident situated within its limits that its tribunals can inquire into that nonresi-dent's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the nonresident have no property in the state, there is nothing upon which the tribunals can adjudicate. These views are not new. They have been frequently expressed, with more or less distinctness, in opinions of eminent judges, and have been carried into adjudications in numerous cases."
This doctrine is now firmly established. Hart v. Sansom, 110 U. S. 151, 3 Sup. Ct. 586; Arndt v. Grigg, 134 U. S. 316, 10 Sup. Ct. 557; Grover v. Machine Co., 137 U. S. 287, 11 Sup. Ct. 92; Wilson v. Seligman, 144 U. S. 44, 12 Sup. Ct. 541; Scott v. McNeal, 154 U. S. 34, 14 Sup. Ct. 1108; Goldey v. Morning News, 156 U. S. 518, 15 Sup. Ct. 559; Fitzsimmons v. Johnson, 90 Tenn. 416, 17 S. W. 100.
This result of the adjudged cases is to be recognized in considering the jurisdiction and validity of proceedings of this kind, and it is to be observed that the principles announced are general in application to all courts, state and federal, for, as will be seen further on, the courts of the United States, in the exercise of original jurisdiction, are more restricted in such cases, and the mere seizure of property of a nonresident is not sufficient to enable them to assume jurisdiction. It is not to be overlooked that attachment and garnishment suits against nonresidents alone are now being considered, and that the remedy is in this country a statutory one, analogous to the custom of foreign attachment, and is not a remedy belonging to the common law. It being essential that, in the absence of personal service within the jurisdiction, an actual seizure of, or levy on, property of the absent defendant within the jurisdiction be had, and that until this is done the jurisdiction is not established, and no substituted service authorized, the question of the situs of the property or res is one of paramount importance. This inquiry could present no difficulty in respect to real estate, and little or none in regard to tangible personal property having an actual situs. But, for the purpose of jurisdiction, the situs of a debt or other chose in action is a question upon which there is a diversity of judicial opinion. There is, of course, no actual visible, and only a legal or constructive, situs. Does the debt follow the creditor and his
domicile or the debtor and his domicile? The legal title and right are clearly in the creditor, and, by analogy to the principle that constructive possession is with the rightful owner, we should expect that the chose in action, particularly a debt, follows the person of the creditor. And such is the established rule. Tappan v. Bank, 19 Wall. 490; Kirtland v. Hotchkiss, 100 U. S. 491; State Tax on Foreign-Held Bonds, 15 Wall. 300; Cannon v. Apperson, 14 Lea, 555; Mayor of Gallatin v. Alexander, 10 Lea, 475; Douglass v. Insurance Co., 138 N. Y. 209, 33 N. E. 938; Insurance Co. v. Hettler, 37 Neb. 849, 56 N. W. 711; Railroad Co. v. Dooley, 78 Ala. 524; Railroad Co. v. Smith (Miss.) 12 South. 461; Railroad Co. v. Chumley, 92 Ala. 317, 9 South. 286; Railroad Co. v. Maggard (Colo. App.) 39 Pac. 985; Railway Co. v. Sharitt (Kan. Sup.) 23 Pac. 430, 19 Am. St, Rep. 145, and note. In State Tax on Foreign-Held Bonds, supra, the question depended upon the situs of debts due from a corporation of Pennsylvania, in the form of bonds, secured by mortgage upon property situated in that state, to nonresidents. The argument was that the situs was with the debtor corporation. court (page 319) said:
"Corporations may be taxed, like natural persons, upon their property and business. But debts owing by corporations, like debts owing by individuals, are not property of the debtors in any sense. They are obligations of the debtors, and only possess value in the hands of the creditors. With them they are property, and in their hands they may be taxed. To call debts property of the debtors is simply to misuse terms. All the property there can be, in the nature of things, in debts of corporations, belongs to the creditors, to whom they are payable, and follows their domicile, wherever that may be. Their debts can have no locality separate from the parties to whom they are due. This principle might be stated in many different ways, and supported by citations from numerous adjudications, but no number of authorities, and no forms of expression, could add anything to its obvious truth, which is recognized upon its simple statement."
The decision of the supreme court of Pennsylvania was rested in part upon the view that, the bonds being secured by mortgage on property within the state, fixed their situs there, and the court (page 323) replied to this suggestion as follows:
"Such being the character of a mortgage in Pennsylvania, it cannot be said, as was justly observed by counsel, that the nonresident holder and owner of a bond secured by a mortgage in that state owns any real estate there. A mortgage being there a mere chose in action, it only confers upon the holder, or the party for whose benefit the mortgage is given, a right to proceed against the property mortgaged, upon a given contingency, to enforce by its sale the payment of his demand. This right has no locality independent of the party in whom it resides. It may undoubtedly be taxed by the state when held by a resident therein, but when held by a nonresident it is as much beyond the jurisdiction of the state as the person of the owner."
In Railroad Co. v. Dooley, already referred to, the garnishee was a corporation organized under the laws of Kentucky, and its employé was a citizen of the same state, employed and paid there. The company operated a line of railroad through Alabama, and had an office and agent at Mobile, though this fact and the character of the agency and agent's duties did not distinctly appear in the record. Jane Dooley, a resident of the state of Alabama, brought suit by attachment in the court of Alabama on a debt due from the v.68F.no.7-44