Atlantic Seaboard Natural Gas Co. v. Whitten , 315 Pa. 529 ( 1934 )

Argued April 9, 1934. On November 18, 1932, Mrs. Esther Ellen Whitten, appellant, owned a tract of land in Oswayo Township, Potter County. She was a nonresident of Pennsylvania, her habitation being Honolulu. Mrs. Whitten received at the latter place a cable from the appellee, the Atlantic Seaboard Natural Gas Company, asking her for her "best cash price" for a gas lease on her Oswayo farm. On November 19th, she cabled that her price was $1,000. On the same day the gas company by cable accepted the offer. On December 1, 1932, Mrs. Whitten received the lease submitted by the gas company and also a check for $1,000. She refused to sign the lease. The gas company filed a bill of complaint setting forth the facts and praying (1) that a decree be made directing specific performance by Mrs. Whitten of the agreement of leasing; (2) that a decree be made directing that upon failure of Mrs. Whitten "to make and execute lease according to the decree first made that the prothonotary of the Court of Common Pleas of Potter County execute said lease as and for the respondent and in her stead and that the consideration therefor be deposited to her credit in The First National Bank of Coudersport, Pa., and the original check be cancelled."

Upon the application of the gas company, the court on December 12, 1932, made the following order: "That service of process be made of the within bill of complaint between The Atlantic Seaboard Natural Gas Company v. Esther Ellen Whitten of 28 B. Ilima Street, Honolulu, Hawaii, by an adult person and such service properly authenticated before an officer empowered of the laws of the United States to administer oaths in and for the County of Honolulu, Territory of Hawaii, and such bill of complaint is made returnable to the Court of Common Pleas of Potter County, sitting in equity sixty days from the date of service upon the respondent in said bill." The return of service was duly made on December 23, 1932, by the deputy high sheriff, of the Territory of Hawaii. Thereafter leave was granted by the court to counsel for Mrs. Whitten to appear de bene esse for the purpose of raising the question of jurisdiction of the court, and a rule was granted upon the plaintiff to show cause why the service of the bill of complaint and notice should not be set aside.

If this suit is in personam and not in rem, the extraterritorial service was invalid and must be set aside. "No form of constructive service can give a court power to make a binding decree in personam against a nonresident": Hughes v. Hughes, 306 Pa. 75, 158 A. 874. "Jurisdiction of property does not draw after it jurisdiction of the owner's person": GIBSON, C. J., in Steel v. Smith, 7 W. S. 447. "No man's right should be prejudiced by the judgment or decree of a court, without an opportunity of defending the right. This opportunity is afforded, or supposed in law to be afforded, by a citation or notice to appear, actually served; or constructively, by pursuing such means as the law may, in special cases, regard as equivalent to personal service": Hollingsworth v. Barbour et al., 4 Peters 466, 474.

"That equity acts in personam is one of the oldest maxims of equity and is a basic principle of equity jurisdiction. Its meaning is that equity deals primarily with the person, and usually only through him with the res": 21 C. J., section 183,

Decrees against persons directing them to take certain action in respect to property are generally regarded as decrees in personam. See Penn v. Baltimore, 1 Vesey, Sr., 444; Schmaltz v. York Mfg. Co., 204 Pa. 1, 53 A. 522; Massie v. Watts, 6 Cranch (U.S.) 146, and Pennoyer v. Neff, 95 U.S. 714.

It is stated in 23 L.R.A. (N.S.), page 1135: "The general principle is well settled, in the absence of any statutory modification, that a suit to compel the specific performance of a contract to convey real property is a suit in personam, and not in rem," citing Bethell v. Bethell, 92 Ind. 318; Davis v. Parker, 14 Allen 94; Close v. Wheaton, 65 Kan. 830,70 P. 891; Johnston v. Wadsworth, 24 Or. 494, 34 P. 13; Hearst v. Kuykendall, 16 Tex. 329; Morgan v. Bell, 3 Wn. 554, 16 L.R.A. 614, 28 P. 925.

"In order to enable the court to adjudicate where the subject-matter is within the jurisdiction and necessary parties are not, statutes have in certain cases created a jurisdiction, usually in form personal but actually in rem, and have provided for constructive service in such cases. There can be no valid constructive service without the direct authority of statute, except in certain ancillary and dependent suits or proceedings. Such statutes are always strictly construed, and will not be extended by construction so as to authorize or validate service in cases not falling within their terms": 21 C. J., section 367, page 358.

The only statute invoked by plaintiff as authority for the service made, and now challenged, is the Act of April 6, 1859, P. L. 387, but it is settled in this court that a decree against a defendant personally is not within the purview of that act, and where such decree is sought, the court has no authority under that act to direct service upon the defendant. See Vandersloot v. Pa. W. P. Co., 259 Pa. 99, 102 A. 422; Lunine v. Penna. Alcohol Permit Board et al., 305 Pa. 162,157 A. 470; Wallace v. United Electric Co. et al., 211 Pa. 473,60 A. 1046, and Coleman's App., 75 Pa. 441.

In Lebanon Valley Consolidated Water Supply Co. et al. v. Commonwealth Trust Co., 257 Pa. 284, 101 A. 639, this court held that where a bill in equity was filed in Lebanon County, and service was made on a corporation in Dauphin County, the bill praying that the defendant be directed to deliver to the plaintiff certain bonds secured by a mortgage upon lands in Lebanon County, under which the defendant was trustee, the service would have to be set aside as not being embraced in that part of the Act of 1859, providing for extraterritorial service where the suit concerns "any charge, lien, judgment, mortgage or encumbrance" upon lands, etc., within the jurisdiction of the court directing the service. In the opinion of the court below which was approved in a per curiam opinion of this court, appears the following language: ". . . . . . To say that because the bonds are secured by a mortgage, or because the value of outstanding bonds may be affected as long as a part of the bonds are unissued, their delivery or nondelivery concerns the lien of the mortgage which is given to secure the bonds, is placing a strained construction upon the plain language of the said act of assembly. The suit concerns the bonds alone and not the mortgage or the lien of the mortgage."

There is a close analogy between that case and the one now before us, for here the suit concerns the execution of a lease, as there the suit concerned the delivery of bonds. The lease if executed would have value because of certain interests it would convey in lands within the jurisdiction of the court directing the service of process; the bonds had value because they were secured by a mortgage on land within the jurisdiction of the court directing the service of process. To hold that the suit praying for the execution of a lease on Pennsylvania land by a nonresident is a suit concerning "any charge, lien, judgment," etc., upon lands, etc., within the jurisdiction of the court directing the service of process "is to put a strained construction" on the Act of 1859. "Service statutes are to be construed strictly": Hughes v. Hughes, supra.

There is a wide distinction between a course of judicial procedure, the object of which is to subject the res to the power of the State directly by the judgment or decree which is entered and a procedure which only affects or disposes of the res by compelling a party to the action to control or dispose of the res in accordance with the mandate or decree. The former is a proceeding in rem; the latter is a proceeding in personam. The suit before us is not specifically directed toward the res; it is directed toward the owner of the res. The status of the res is not in the slightest degree affected until after the suit against the owner is terminated adversely to the latter. Until that stage is reached the suit is entirely a proceeding between persons and not between a person and a certain piece of land as, for example, in condemnation or foreclosure proceeding.

In Hollingsworth v. Barbour, 4 Peters 466, 475, the point was made that a bill for a specific performance was a proceeding in rem. The opinion by Mr. Justice TRIMBLE in the court below, which was adopted by the Supreme Court of the United States, on that point is as follows: "The case under consideration is not properly a proceeding in rem; and a decree in chancery for the conveyance of land has never yet, within my knowledge, been held to come within the principle of proceedings in rem, so far as to dispense with the service of process on the party. There is no seizure nor taking into the custody of the court the land, so as to operate as constructive notice."

No one questions the right of a state to control all property within its territorial limits, but unless a state distinctly provides by statute a procedure whereby a service can be made on a nonresident owner in a suit whose purpose it is to compel the owner to take some affirmative action in respect to property within that state, no court in that state has any power to order such extraterritorial service of its processes. Actions whose object is the seizure and condemnation and sale of property are actions in rem. See Pennoyer v. Neff, 95 U.S. 714. In Boswell's Lessee v. Otis et al., 50 U.S. 336, 349, the Supreme Court of the United States, in an opinion by Mr. Justice McLEAN said: "The property of an individual is subject, in a certain sense, to the law of the state in which it is situated. It is liable for taxes and to such special proceedings against it as the law shall authorize. An attachment may be laid upon it, and it may be sold in satisfaction of an established claim. And the legislature may, perhaps, subject other lands to the payment of the judgment on the attachment after the sale of the lands first attached. But no such proceeding is authorized by the act under which this procedure was had. It is limited to the cases enumerated in the statute."

In the case before us there is no "established claim" against the nonresident defendant to be satisfied by seizure, sale, or conveyance of her land in Pennsylvania. The suit here is one to determine the respective personal rights and obligations of the opposing parties in the gas content of the land in Pennsylvania admittedly owned by this nonresident defendant. It is strictly a suit in personam and before any claim against the defendant can be established in the courts of Pennsylvania, i. e., before it can be adjudicated that the offer and acceptance pleaded constitute a binding contract sufficient to support a decree requiring the defendant to convey to plaintiff rights in the natural gas content of the former's land, she must be legally summoned to answer the claim by a valid process of the Pennsylvania court seeking to exercise jurisdiction over her. The processes of the Pennsylvania courts do not run to Honolulu or to any other place beyond the confines of Pennsylvania except as its statutes have provided for their so running in actions in rem. This is not an action in rem but one in personam.

The very decree prayed for shows that this proceeding is one in personam. The prayer is for a decree "directing specific performance by the respondent of the agreement of leasing." The alternative prayer is for a decree "directing that upon failure of the respondent to make and execute lease according to the decree first made that the prothonotary . . . . . . execute said lease." This alternative prayer helps plaintiff not at all, for the pleaded prerequisites to this secondary decree are (1) a valid decree of specific performance against the respondent, and (2) a failure on her part to comply with that decree. There can be no valid decree against the respondent until she is brought within the jurisdiction of the court by proper process.

Rules 86 and 87, cited in the opinion of the court below, are of no avail to plaintiff. Rule 86 refers to remedies on "final process to execute any decree," thereby presupposing the existence of a valid decree. There can be no valid decree against a party unless that party is properly before the court entering it. Rule 87 provides that when any act required to be done is not done, it may be performed by the prothonotary in the name of the delinquent party. Neither of these two rules touches the question presented here, which is: Did the court below acquire in this proceeding jurisdiction over a nonresident defendant?

Nor is this action "one brought to quiet title to land," as intimated by the court below. The title to the land is not in controversy. The bill casts no "cloud" on defendant's title, but expressly recognizes that title. It would indeed be anomalous if a bill in equity for the conveyance of an interest in a nonresident's land in Pennsylvania should in itself be construed as "a cloud on defendant's title," and this "cloud" could then be successfully pleaded by plaintiff as a warrant for extraterritorial service of process on a defendant. The case of Arndt v. Griggs, 134 U.S. 316, cited by the court below in its reference to "quieting title," fully recognizes the principle that equity acts in personam and that, in the absence of a statute, a court of equity cannot acquire jurisdiction on a nonresident defendant by publication or other extraterritorial service, but it holds that a state may provide by statute for the bringing before its courts a nonresident who has cast a "cloud" on the title to land within its jurisdiction. The pleadings here present no such case and no such statute is invoked. The only statute invoked as extending the radius of a Pennsylvania court of equity's processes is that of 1859, and, as already pointed out, this does not apply to suits in personam. There is no statute authorizing the service used and challenged here.

The assignments of error are sustained; the order of the court below is reversed; the service of the bill is set aside; appellee to pay the costs.