National Broadway Bank v. . Sampson

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This action was brought in aid of an attachment issued against the property of the Bennett Manufacturing Corporation, which was organized under the laws of and whose principal place of business was in the state of Massachusetts. It was based upon the provisions of the Code of Procedure relating to attachments and to actions to recover attached demands, and was instituted in pursuance of leave by the Supreme Court granted under the provisions of section 677. The summons in the present action was personally served in this state upon the defendants Eugene H. Sampson, Charles E. Sampson and the defendant bank, so that the court obviously acquired jurisdiction herein of the persons of such defendants. The defendant bank was made a party defendant in this action on the ground that it was an attachment creditor and refused to join as plaintiff. The defendants Eugene H. and Charles E. Sampson were made parties defendant on the theory that they or the firm of which they were general partners were indebted to the Bennett corporation, and that such debt had been properly attached under and by virtue of attachments which were issued in actions brought by the plaintiff and defendant banks against the Bennett Manufacturing Corporation. Thus, although there is no question as to the court's jurisdiction in this action of the person of the defendant Charles E. Sampson, against whom alone the judgment was directed by the trial court, yet, a more serious question is whether, when this action was tried, there existed any valid lien upon or attachment of the debt which the firm of O.H. Sampson Co. formerly owed to the Bennett corporation.

The grounds upon which the respondent seeks to uphold the decision of the learned Appellate Division which reversed the judgment against the defendant Charles E. Sampson, and which are controverted by the appellants, are: 1. That the indebtedness of the firm of O.H. Sampson Co., or the liability of the defendant Charles E. Sampson therefor to the Bennett Manufacturing Corporation had no situs within the state of New York, and that the service of copies of the warrants of attachment upon Eugene H. Sampson did not constitute a levy upon the indebtedness of the firm as against the non-resident partners, nor afford a basis for a recovery in this action against the defendant Charles E. Sampson; 2. That the liability of the non-resident defendant Charles E. Sampson to the Bennett Manufacturing Company, a foreign corporation, not being within the state, the court had no jurisdiction to attach it at the suit of the Central National Bank, and that the service upon him of a copy of its warrant of attachment was ineffectual for that purpose; 3. That the indebtedness of the firm of O.H. Sampson Co. to the Bennett Manufacturing Corporation had its situs in the state of Massachusetts, and having been impounded by a court of that state before the alleged levies, was not subject to attachment here; and 4. That the notice accompanying the warrants of attachment was insufficient.

We shall discuss only the first two of these propositions, as with our views they are decisive of the case, thus rendering a consideration of the questions of the effect of the appointment of receivers of the Bennett corporation in the state of Massachusetts, and of the sufficiency of the notices accompanying the warrants of attachment, wholly unnecessary.

In discussing these propositions it should be borne in mind that no question is involved as to the jurisdiction of the court of the person of the defendant Charles E. Sampson in the case at bar. Conceding, as claimed by the appellants, that each partner owed all the debts of the firm, and that the service of a copy of the warrants of attachment upon Eugene H. Sampson, one of the partners residing in this state, effected a legal attachment upon the debt owing by him as such partner to the Bennett corporation, the question is whether such attachment rendered the defendant Charles E. Sampson liable therefor in this action, and also whether such liability was effected by the service of such warrant upon him when he was a non-resident and only temporarily within the state. Thus, the first inquiry is: Did the service of the warrants of attachment upon Eugene H. Sampson, one of the partners, constitute a levy upon or attachment of the indebtedness owing by that firm so as to bind his copartner, who was a non-resident, and thus make him personally liable therefor? To charge Charles E. Sampson by virtue of such service involves the conclusion that the attachment not only created a lien upon the indebtedness of Eugene H. Sampson as a member of the firm, but also created a liability therefor against each of the non-resident members of that firm as well. We think no such liability as against the defendant Charles E. Sampson or the other non-resident members of the firm resulted from such service of the attachment.

Although it be admitted that the debt owing the Bennett corporation by Eugene H. Sampson, a resident of this state, had its situs here and was subject to attachment, yet the fact that the debt of Eugene was attached cannot be held to have operated as an attachment of the debt of Charles or to have in any way made him liable therefor in this action.

Attachment suits are in the nature of actions in rem, and are especially so when they proceed without jurisdiction of the person of the debtor in the attachment suit. No state can subject to its laws either real or personal property which is out of its jurisdiction. It is fundamental that in an attachment proceeding the res must be within the jurisdiction of the court issuing the process in order to confer jurisdiction. (Plimpton v.Bigelow, 93 N.Y. 592, 596.) In discussing the question involved in that case Judge ANDREWS said: "In the case of tangible property, capable of actual manucaption, it must have an actual situs within the jurisdiction. But credits, choses in action and other intangible interests are made by statute susceptible of seizure by attachment. The same principle, however, applies in this case as in the other, the res, that is the intangible right or interest, to be subject to the attachment must be within the jurisdiction. * * * Where the defendant, who owns a credit, is within the jurisdiction, there is no difficulty through proceedings in personam in reaching and applying it in discharge of his debt to the plaintiff. But where he is out of the jurisdiction, and the debt or duty owing to him, or the right he possesses exists against some person within the jurisdiction, attachment laws fasten upon that circumstance, and by notice to the debtor or person owing the duty or representing the right, impound the debt, duty or right, to answer the obligation which the attachment proceeding is instituted to enforce. In the case supposed the debt, duty or right, for the purpose of attachment proceedings is deemed to have its situs or locality in the jurisdiction." But where neither the debtor nor the creditor resides in the state the rule is otherwise. Thus, in that case, which related to the stock of a corporation, it was said: "It seems impossible to regard the stock of a corporation as being present for the purpose of judicial proceedings, except at one of two places, viz., the place of residence of the owner, or the place of the residence of the corporation. * * * We are, therefore, of the opinion, that the fundamental condition of attachment proceedings, that the res must be within the jurisdiction of the court in order to an effectual seizure, is not answered in respect to shares in a foreign corporation by the presence here of its officers, or by the fact that the corporation has property and is transacting business here."

In Douglass v. Phenix Ins. Co. (138 N.Y. 209, 219) the same judge said: "But it is a fundamental rule that in attachment proceedings the res must be within the jurisdiction of the court issuing the process, in order to confer jurisdiction. (Plimpton v. Bigelow, 93 N.Y. 593.) In the case of movables their seizure under the attachment shows that their actual situs is within the jurisdiction. But in respect to intangible interests, debts, choses in action, bonds, notes, accounts, interests in corporate stocks and things of a similar nature, the question whether the res is within the jurisdiction of the sovereignty, where the process is issued, is not so readily determined. The general rule is well settled that the situs of debts and obligations is at the domicile of the creditor. But the attachment laws of our own and of other states recognize the right of a creditor of a non-resident to attach a debt or credit owing or due to him by a person within the jurisdiction where the attachment issues, and to this extent the principle has been sanctioned that the laws of a state, for the purposes of attachment proceedings, may fix the situs of a debt at the domicile of the debtor. (Embree v. Hanna, 5 Johns. 101;Williams v. Ingersoll, 89 N.Y. 508, 526.) * * * If the laws of Massachusetts go to the extent claimed, and assume to authorize attachment proceedings to seize a credit owing to a resident of this state, when neither the debtor nor creditor are within the jurisdiction, this state is not, we think, bound to recognize them."

That case was followed by the Appellate Division in Carr v.Corcoran (44 App. Div. 97, 99) where it was expressly held that an attachment of a debt could only be effected as against the creditor by service upon the debtor when he was domiciled within the state; that in such case the res of the debt was at the domicile of the debtor, and that the court could not obtain jurisdiction by service upon a non-resident debtor who at the time was temporarily sojourning here. "The debtor being a non-resident and the creditor being a non-resident, there would be nothing for the court to take hold of."

The principle applicable to the question of jurisdiction of the person and of the res is briefly stated by Judge O'BRIEN inWard v. Boyce (152 N.Y. 191, 196) as follows: "If the proceedings involve the determination of the personal liability of the defendant, he must be brought within the jurisdiction by service of process within the state, or voluntary appearance. If it be a proceeding in rem the res must have been seized or attached, or at least must be within the jurisdiction." This was cited with approval by this court in Bank of China v. Morse (168 N.Y. 458, 481).

In this case the court issuing the attachments never acquired jurisdiction of the Bennett corporation, the creditor, and, hence, if it obtained any, it must be upon the ground that the debt to that company had an actual situs in this state. If Charles E. Sampson had been a resident of the state, then, within the principle which obtains under the attachment laws, the debt owing by him to the Bennett corporation might have been attached and it would be valid. But that was not the situation. Charles E. Sampson was a non-resident of this state, and his liability as a member of the firm of O.H. Sampson Co. to the Bennett corporation existed or had its situs only at his place of residence. While it is true that he still owed the debt when temporarily within this state, yet, as it was contracted in Massachusetts, was owing by him, a resident of that state, and as the creditor was also a resident there, it is quite impossible to see how the debt had any situs in this state even under the rule relating to attachments. If his debt had an actual situs, it certainly was not migratory, and, therefore, as to him, it might not be attached in any state or jurisdiction where he might sojourn temporarily or in which one of his partners might reside. It seems clear that a debt, to be subject to attachment, must have a situs somewhere and can be impounded only in the jurisdiction where such situs exists, which is clearly where either the creditor or debtor resides. The laws relating to attachments do not authorize a proceeding in this state to seize a credit owing to a resident of another state, where neither the creditor nor the debtor is a resident here. Nor, as we have seen, could the state make a debtor a resident by so declaring, when such was not the fact. If, under the circumstances of this case, it could be properly said that the situs of the debt owing by Charles E. Sampson was in this state and that it could be attached here, it would follow that it had no actual situs anywhere, but was transient, following the person of the debtor and could be attached in any state or country where the debtor might be temporarily found. Such a principle would give rise to most embarrassing conflicts of jurisdiction, would lead to great confusion and uncertainty, and greatly prejudice the rights of creditors. It is doubtless true that if the attachment suit of the defendant bank had been an ordinary action by which the bank had sought a recovery against the defendant Charles E. Sampson upon some personal liability, the service in this state would have been sufficient to confer jurisdiction. But that was not the character or purpose of that suit, as he was in no way indebted to the plaintiff in that action. Its purpose was to attach the debt owing to the Bennett corporation, which was clearly a proceding in rem, and, hence, the res must have been within the jurisdiction of the court to render it effective. The only jurisdiction acquired by personal service upon Charles E. Sampson was jurisdiction of his person. But that gave the court no jurisdiction as to the debt, the situs of which was within the state of Massachusetts.

Under the principle of the authorities bearing upon this question, we are of the opinion that by the service of the attachment upon Eugene H. Sampson the court acquired jurisdiction of the debt or liability of the firm of O.H. Sampson Co., only so far as he was personally liable therefor as a member of that firm. In other words, the debt or liability owing or incurred by him as such partner was the only liability attached, and such service did not give jurisdiction over the debt so as to render Charles E. Sampson liable therefor. Hence, the court had no jurisdiction to attach such debt as against the latter and make him liable therefor. Therefore, it follows that the plaintiff bank was not entitled to recover against the defendant Charles E. Sampson, and the judgment awarded against him was properly reversed.

Under the principles of the cases cited we are also of the opinion that in the case of the Central National Bank the court in which the attachment suit was instituted acquired no jurisdiction of the debt owing by Charles E. Sampson to the Bennett corporation or his liability therefor as a member of the firm of Sampson Co. by service upon him in this state, as the situs of that debt or liability was not here but in the state of Massachusetts where he resided, and, consequently, as against him, it could not be attached here so as to render him liable therefor. If these conclusions are correct it follows that the judgment directed by the trial court was properly reversed and the order of reversal should be affirmed. The order should be affirmed and judgment absolute granted in favor of the defendant Charles E. Sampson against the appellants upon their stipulation, with costs to him in all the courts.

PARKER, Ch. J., GRAY, BARTLETT, VANN, CULLEN and WERNER, JJ., concur.

Order affirmed, etc.