Smetal Corporation v. West Lake Investment Co.

172 So. 58, 126 Fla. 595, 1936 Fla. LEXIS 1663

• Court: Supreme Court of Florida
• Decided: April 16, 1936
• Status: Published

Opinions

Brown, J.

This is an appeal from a final decree of the Circuit Court of Broward County, which dismissed an amended bill, brought within six months after the rendition of a tax lien foreclosure decree, seeking to review and have set aside said foreclosure decree for error apparent on the record, and also to impeach the foreclosure decree for fraud in its procurement.

A bill of review, or a bill strictly in the nature of a bill of review, cannot be filed without first obtaining the permission of the Court. In so far as the bill in this case sought a review of the foreclosure decree for alleged error apparent on the record, the above rule would apply. An original bill to impeach a forrfier decree for extrinsic fraud in its proy curement is an independent bill and can be filed without first obtaining the permission of the Court. Gamble v. Gamble Holding Corporation, 162 So. 886. But in this case, the plaintiff below, after first obtaining leave of the Court, filed an amended bill, which permission in effect complied with the rule in so far as it was a bill of review. However, in so far as it was a bill of review, for errors alleged to appear in the record of the proceedings, the sub ject matter had already been substantially incorporated in a special appearance and motion to vacate, attacking the jurisdiction of the court over the plaintiff as defendant in the original foreclosure suit, on the ground that plaintiff had not followed the proper procedure for obtaining substituted service, and that service by publication had not been shown to be authorized, nor had due diligence been shown. On this motion the court below had, after hearing and argument, ruled adversely to the then defendant, the plaintiff in the suit now before us, and no appeal was taken from that order, thus rendering the matters raised by the motion res judicata. See Allison v. Handy-Andy Community Stores, 106 Fla. 274, 143 So. 263. Such remedy by motion is available in cases of this kind. Sawyer v. Gestason, 96 Fla. 6, 118 So. 57; Gibbs v. Ewing, 94 Fla. 236, 113 So. 747.

In so far as the amended bill may be considered as a bill brought for the purpose of impeaching the foreclosure decree on the ground of fraud in its procurement, its allegations of specific facts are hardly sufficient to sustain the general allegations of actual as distinguished from constructive fraud. The specific facts as alleged go to show that if the plaintiff in the foreclosure suit had exercised a reasonable degree of diligence in making inquiries, it would not have been able to find that the defendant in that suit, the plaintiff here, had a complete set of officers and an office for the transaction of business located in the City of Miami in the adjoining County of Dade, as shown by annual reports on file with the Secretary of State, made under Chapter 14677, Laws of 1931.

In support of this contention, it is alleged that plaintiff in the foreclosure suit only applied to the Secretary of State to ascertain whether or not the defendant corporation • had complied with Sections 4257 and 4259 of Comp. Gen. Laws (requiring corporations to designate an office or place of business, or agent for the service of process), to which inquiry the reply was in the negative, and a certificate in due form made by the Secretary of State to that effect, was filed in the cause, whereas if the plaintiff in foreclosure suit had asked the Secretary of State to furnish it the names of the officers of the defendant corporation it could have obtained them, as this information was on file in the Secretary of State’s office, as above set forth, by reason of reports filed under said Chapter 14677, which requires corporations to file annual reports and pay annual stock taxes, which annual reports shall give the names and addresses of their officers and of their resident agent upon whom process may be served.

The Sheriff’s return, made under Section 4256 C. G. L. was to the effect that the officers and agents of the defendant corporation were “unknown.” This has been held sufficient under that section to form a basis for constructive service. Fowler v. Chillingworth, 113 So. 667, 94 Fla. 1. If false, there was a remedy on the Sheriff’s bond. Lewter v. Hadley, 68 Fla. 131, 66 So. 567. If the application or effect of Section 4256 C. G. L. has been to some extent repealed or modified by the Act of 1927 above referred to, as to service of process upon corporations which have complied with the provisions of that Act (now Sections 4257 and 4259, Comp. Gen. Laws), it could hardly be contended that Section 4256 has been repealed or modified, as respects the clause here in question, in so far as it affects corporations which have not complied with the provisions of the later Act of 1927, now appearing as Sections 4257 and 4259 C. G. L. But complainant in the- foreclosure suit, appellee here, claims that it complied fully, with both statutes and that the service by publication was justified under either or both.

Section 4261 C. G. L., being Section 5 of Chapter 11892 of the Acts of 1927, provides inter alia that where a corporation has failed to comply with certain requirements of Section 4257 or of Section 4259, and there shall be filed in any pending cause a certificate of the Secretary of State that the place of business or domicile of said corporation, or agent upon whom process may be served, has not been designated under either of said sections, the clerk of the court, if the court has a clerk, and if not, the judge thereof, shall make an order of publication as therein prescribed. In this case, the complainant in the foreclosure proceeding complied with the statute by filing a certificate of the Secretary of State, which I think meets the requirements of the statute, and the Circuit Judge himself made the order of publication. The certificate and order of publication were both filed on the same day. The Judge’s order was dated the day before the date of filing, but I think the presumption should be indulged, in favor of the validity of the court’s order, that the certificate had been filed with or presented to the Judge on or before the signing of the order of publication, as both the certificate and order were filed in the clerk’s office on the next day after the order was signed.

It is also contended by appellant that the Circuit Judge had no authority under the statute to make the order, as his court has a clerk. But surely the Judge of a court of general jurisdiction has the power to make an order which the clerk, a ministerial officer, has the power to make.

However, these procedural questions were raised by the motion which the appellant filed in the original suit, and were decided adversely to appellant, and are now res judicata.

Indeed, said motion, in general terms, charged both the complainant in foreclosure and the sheriff with lack of due diligence in that complainant failed to make sufficient inquiry before resorting to substituted service, and in that the sheriff likewise failed so to do before making his return on the summons that the officers of the appellant corporation were unknown. The motion referred to covered in brief form most of the grounds set out in the bill to impeach the decree, though the latter goes into more detail on some points, and adds some new allegations, and charges that such alleged lack of due diligence amounted to, or was the result of, fraud.

As the statute of 1927 (Sec. 4257, et seq., C. G. L.) authorizes service by publication upon corporations which have not complied therewith,'and as the certificate of the Secretary of State filed in court under Section 4261 C. G. L. showed that the appellant corporation had not so complied, appellee was, by the express language of the statute, at least prima facie entitled to obtain constructive service by publication upon appellant as therein provided, without making inquiry for information filed under Chapter 14677, and, publication having been made in accordance with said statute (See 4261 C. G. L.), appellee was also prima facie entitled under the language of the statute to the decree pro confesso which followed. See Section 4262 C. G. L.

While the statute of 1927, under which constructive service was obtained, says nothing on the subject, we are nevertheless satisfied that no person or corporation is entitled to resort to that statute to obtain substituted service upon a corporation which has not complied with the statute, when he knows, or in the exercise of reasonable diligence could have known, that personal service upon such defendant could be obtained. Any other construction would render the statute unconstitutional. Service by publication by one party upon another should never be resorted to in any case where by the exercise of reasonable diligence actual personal service can readily be secured.

In McDaniel v. McElvy, 91 Fla. 770, 108 So. 820, this Court, speaking through Mr. Justice Strum, said:

“While allegations of a categorical nature which follow the words' of the statute are sufficient as a predicate for the issuance of the order of publication, the chancellor is not thereby precluded from requiring appropriate proof of those allegations, as of any other allegations, as a prerequisite to the entry of a decree. What and how much evidence the court shall require to satisfy it-upon the question of due diligence in these matters rests largely with the court granting the order. Extraordinary steps to ascertain the whereabouts of the party are not required. But judgments which exclude persons from any interest in or lien upon land should not be rendered without actual notice, when by the exercise of reasonable diligence actual notice can be given. Reasonable diligence in such matters is an honest effort, and one appropriate to the circumstances, to ascertain whether actual notice may be given, and, if so, to give it. Such effort, however; need not embrace a search in remote parts of the State (Jacob v. Roberts, 223 U. S. 261, 32 S. Ct. 303, 56 L. Ed. 429); and it is not essential that all possible or conceivable means should be used. But. the effort should usually extend to inquiry of persons likely or presumed to know the facts sought.” * * * .

“From these cases, and others to like effect, we conclude that in suits of this nature, where personal service cannot be effected after the exercise of reasonable diligence and an honest and conscientious effort to do so, appropriate to the circumstances, a reasonable method of imparting notice by publication which affords the defendant reasonable opportunity to receive the notice and present his defense, having reference to the character of the- suit, and .the probable place of residence of the defendant, is due process of law, provided the requirements of the statute be strictly followed.”

See also Minick v. Minick, 111 Fla. 469, 149 So. 483; Balian v. Wekiwa Ranch, 97 Fla. 180, 122 So. 559; State, ex rel. Woods-Yound Co., v. Tedder, 103 Fla. 1083; 138 So. 643; Sharman v. Bayshore Investment Co., 99 Fla. 193, 126 So. 282.

It is also alleged that at the time the foreclosure suit was begun, there was conspicuously placed on the front of the dwelling on said lot, a sign, which in bold and legible lettering recited that the premises were for sale, and gave as the name of the agent for the owner thereof Investment & Management Corp., 139 N. E. First Street, Miami, Florida. That if inquiry had been made at the office of said agent corporation, so named on the sign, appellee could have ascertained that the directing officer of said corporation was also an officer of appellant, Smetal Corporation, the owner of the property, and that said agent’s' address was likewise the office address of the owner corporation. This allegation in the opinion of the majority of the Court was sufficient of itself to-authorize the vacation of the prior decree on the ground that resort to constructive service was not justified, because of neglect to make due and reasonable inquiry.

It is further alleged that the order of publication was published in a paper published at Pompano, which, among the newspapers published in the county, was a relatively obscure one, and which could have been selected for no other purpose than to further the intent of the plaintiff in the foreclosure proceeding that the pending'of the suit should not come to the attention of Smetal Corporation.

To sustain the sufficiency of a bill to impeach a decree on the ground that it was procured by actual fraud, the allegations of fact must be of a clear, unequivocal and convincing character. Indeed, this rule applies whenever fraud is made the basis of relief prayed or defense set up. But in so far as the bill was based on a constructive fraud, that is failure on appellee’s part to use reasonable diligence to ascertain the officers or agents of the corporation and their whereabouts before resorting to constructive service by publication, especially in failing to make the inquiry indicated by the sign on the house, the bill had equity. In this case most of the allegations, except this one, based on lack of proper inquiry and errors in procedure in the foreclosure case, had really been foreclosed by appellant’s motion, which was filed in the original suit in the court below, and appellant’s failure to appeal from the adverse ruling thereon, but the one allegation above referred to, when considered in all its connections, was enough to call for vacation of the prior decree.

I am authorized to- say that Mr. Chief Justice Whitfield concurs in the views hereinabove expressed.

The views of Mr. Presiding Justice Ellis are expressed in his separate opinion, which is concurred in by Mr. Justice Terrell.

The result is that a majority of the Court are of the opinion that in view of the particular facts of this casé, as made by the allegations of the bill, the bill had equity, and that the order dismissing the same for want of equity was erroneous.

Reversed and remanded.

Whitfield, C. J., and Ellis and Terrell, J. J., concur. Buford and Davis, J. J., dissent.