Southern Bank & Trust Co. v. Folsom

75 F. 929, 21 C.C.A. 568, 1896 U.S. App. LEXIS 2079
CourtCourt of Appeals for the Sixth Circuit
DecidedJuly 8, 1896
DocketNo. 391
StatusPublished
Cited by16 cases

This text of 75 F. 929 (Southern Bank & Trust Co. v. Folsom) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Bank & Trust Co. v. Folsom, 75 F. 929, 21 C.C.A. 568, 1896 U.S. App. LEXIS 2079 (6th Cir. 1896).

Opinion

LURTON, Circuit Judge,

having made the foregoing statement of facts, delivered the opinion of the court.

1. The effect of the levy of the attachment issuing from the state chancery court, and the return of the writ into court, under the Tennessee statutes and decisions, was to place the attached laud within the control and possession of the state court. It was an actual seizure of the res, and thereby passed into the exclusive possession of the court', as fully as if a receiver had been appointed. Cooper v. Reynolds, 30 Wall. 308, 317. However defective the proceeding under which the attachment issued, it would not follow that the state court was without jurisdiction. The object of the bill was to subject the land attached as the property of the Magnatite Iron Company to the satisfaction of its debts. For this purpose the land itself was seized, and thus drawn within the jurisdiction of the court by this assertion of control and power over it. The validity of that act of power and authority could not be questioned by another court so long as the state court retained the possession thus acquired. The subsequent appointment of receivers by the federal court, and the direction that they should take possession of this land already within the possession of an independent court of co-ordinate jurisdiction, was without authority or warrant of law. While the proceedings in the state court were pending, it was wholly unjustifiable to seek to dispossess that court through the instrumentality of a proceeding in another court, intended to draw into question the validity or regularity of the proceeding in the state court. Shields v. Coleman, 157 U. S. 168, 15 Sup. Ct. 570.

2. The injunction restraining the execution of the decree of the state court was equally unwarranted, and was in violation of the provisions of section 720 of the Revised Statutes of the United States. That the land ordered to be sold was property of the suitor invoking the injunctive process of the United States court is no justification. The binding force of that very wise and conservative statute does not depend upon the real or ultimate rights of the respective claimants [932]*932of the property involved, or the regularity of the proceedings sought to be stayed. The statute prohibits any injunctive restraint upon the proceedings of a state court, and jurisdiction is not conferred by vigorous allegations touching the injustice or invalidity of the objectionable proceedings. Freeman v. Howe, 24 How. 450; Covell v. Heyman, 111 U. S. 176, 4 Sup. Ct. 355; Buck v. Colbath, 3 Wall. 334; Association v. Hurst, 16 U. S. App. 325, 7 C. C. A. 598, and 59 Fed. 1. In the latter case this court had occasion to consider and construe this statute and the cases cited above, and, touching them, said:

“The principle is that, in order to preserve the dignity and protect the effectiveness of the process of courts of concurrent jurisdiction, and to avoid unseemly conflicts between them, and between their respective executive officers, no remedy of an injrmetive or dispossessory character will be afforded by one court against the acts of the executive officers of the other court, when done under color of an order or process issuing from such other court, because it would have the inconvenient and anomalous effect to stay the proceedings in one court to allow another court to investigate the validity of acts done under such proceedings.1”

3. But assuming the appointment of receivers and the awarding of injunctive process to have been unwarranted, and that neither had the effect of dispossessing the state court of the possession' of the res, it does not follow that the question of the superiority of the lien thus acquired by Folsom over the rights of the mortgagee in the same land might not be drawn within the jurisdiction of the federal court by an ancillary proceeding, such as that now in question. The mortgagees were not parties to the state proceeding, and therefore not concluded by it, so far as their rights as mortgagees were affected thereby. If we assume that the decree of the state court was valid, and conclusive upon the Magnatite Iron Company and its vendee, the East Tennessee Mining Company, both of whom were parties to that decree, a mortgagee claiming under a mortgage made prior to that suit would not be concluded, so far as a priority over the mortgage was asserted, by virtue thereof. The mortgagee might have intervened in the chancery court suit, but was not obliged to do so. Whenever the property passed out of the control and possession of the state court, the mortgagee might contest the priority of the lien or title dependent upon the state proceeding. This might be done by proper ancillary proceedings in the pending foreclosure suit, wherein it was sought to sell the property mortgaged free from all liens and charges. Hassall v. Wilcox, 130 U. S. 493, 9 Sup. Ct. 590; Trust Co. v. Condon, 31 U. S. App. 387, 14 C. C. A. 314, and 67 Fed. 84; Compton v. Railroad Co., 31 U. S. App. 486, 15 C. C. A. 397, and 68 Fed. 263. The defect in the jurisdiction, as a consequence of the possession of the attached property by the state court, must be regarded as obviated by the subslitution of a bond for that property. This substitution was not objected to below, and is not a subject of complaint here. The record before us is an abbreviated one, and we assume that this substitution was by consent. The legal effect was to place the circuit court in complete and rightful possession of the property theretofore in the rightful control and possession of the state court, and worked an abandonment by Folsom of any right to proceed further in the execution of the state decree.

[933]*9334. This brings us to the consideration of the only material question in respect of the priority of Folsom’s lien. The ground upon which Ms right to subject the property involved to the satisfaction of his debt was that the conveyance by his debtor to the East Tennessee Mining Company had been improperly and illegally admitted to registration, and was therefore inoperative, under the Tennessee registration statutes, as to creditors of the vendor. No question is made as to the illegality of the acknowledgment of that deed, and its illegal registration is admitted. ’The contention of counsel for appellant is that Folsom’s debt was created after he had actual notice of the sale and conveyance, and that the deed, though unregistered, was operative as between the parties, and as to any creditor who extended credit with actual knowledge of the unregistered deed. The Tennessee statute on the subject of registration, so far as here involved, is found in sections 2887, 2890, Mill. & V. Code Term. By section 2887 it is declared that:

“All of said instruments símil Have effect between the parties to the same su’d their heirs and representatives without registration, but as to other persons not having actual notice of them, only from the noting thereof for registration on the books of the register, unless otherwise expressly provided.”

And by section 2890 it is provided that:

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Bluebook (online)
75 F. 929, 21 C.C.A. 568, 1896 U.S. App. LEXIS 2079, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-bank-trust-co-v-folsom-ca6-1896.