1. Under the law of Florida, an appeal to the state supreme
court, taken solely to review an interlocutory order overruling a
motion
Page 258 U. S. 113
to quash a pretended service by publication for want of
jurisdiction, does not operate as a general appearance. P.
258 U. S.
117.
2. By an arrangement between a corporation, its agent, and a
bank, purchasers of the corporation's shares were allowed to
discount their notes at the bank, the resulting credits were
transferred by the bank to the account of the agent in payment for
the shares, and negotiable certificates of deposit were issued by
the bank to the agent.
Held that the certificates of
deposit did not represent funds in the bank which, as
res,
could sustain service by publication upon a nonresident purchaser
of the certificates in suits brought by the shareholders in the
state court against such purchaser, the bank, the vendor
corporation, and its agent to have the proceeds of the notes
impressed with a trust in plaintiffs' favor and annul their
purchases and notes and the certificates on the ground of fraud in
selling the shares, and that judgments based on such service were
void. P.
258 U. S.
118.
26 F. 83 affirmed.
These were actions in the District Court for the Southern
District of Florida brought by the present respondents,
respectively, as indorsees of certificates of deposit issued by the
respective petitioners. The petitioners pleaded
res
judicata, based on judgments rendered by the Florida courts in
suits to which it had been sought to make the respondents parties
through service by publication. The district court held the service
valid and the judgments conclusive, but the circuit court of
appeals held otherwise, and its judgments, reversing those of the
district court, are here by certiorari.
Page 258 U. S. 114
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
These cases were argued and submitted together. They involve the
same questions of law, and the essential facts are the same in
each. Reference will therefore be made only to No. 76.
The First National Bank of Rome, Georgia, indorsee of five
certificates of deposit made by the Bank of Jasper, a Florida
corporation, sued the maker at law in the federal court for the
southern district of that state. The defendant pleaded in bar seven
decrees of the circuit court for Hamilton county, Florida, entered
in suits in which the Georgia bank had been named as one of the
respondents. The plaintiff replied that the suits in which these
decrees were entered were
in personam, that it was and is
a nonresident of Florida, had not been found within the state, and
had not appeared in those suits except specially to move to quash
the pretended constructive service upon it by publication, and that
the decrees are, as to it, of no legal effect. The district court
sustained the plea of
res judicata and entered judgment
for defendant. The judgment was reversed by the circuit court of
appeals.
See First National Bank of Rome v. First National Bank
of Jasper, 264 F. 83. The case comes here on writ of
certiorari. 254 U.S. 622. Whether on the facts hereinafter set
forth the state court acquired jurisdiction and the legal effect of
the decrees are the matters presented for our consideration.
The Rome Insurance Company of Georgia wished to raise capital by
selling shares of its stock. To aid it in so doing, the American
Bank & Trust Company, also of Rome, was appointed agent or
trustee. These two companies selected Jasper, Florida, as the field
of operations for the stock-selling campaign, and they secured the
Bank of Jasper as an ally. Then, to facilitate sales, the
Page 258 U. S. 115
three devised the following plan: purchasers of the stock were
enabled to discount at the Jasper bank their one-year notes for an
amount equal to the purchase price, giving the stock as collateral,
and the American Company, as trustee for the insurance company,
agreed to deposit with the Jasper bank an amount equal to each
discount, taking that bank's negotiable certificate of deposit in
the usual form, payable in one year, with interest at four percent.
Thus, the stock purchased was paid for, the Jasper bank made
discounts and received deposits, the insurance company raised
capital and had it paid up -- all without anybody's parting with a
cent in cash. Under this arrangement, many citizens of Jasper
bought stock in the insurance company. In time, their notes, and
likewise the corresponding certificates of deposit, matured. The
purchasers of the stock discovered that it was worthless, and that
they had been defrauded; the Bank of Jasper that it also had been
defrauded, and that its certificates of deposit had been
transferred to the First National Bank of Rome. There was default
on the certificates of deposit, and the First National Bank brought
this action against the Bank of Jasper in the federal district
court. But a few days before it did so, each purchaser of stock had
filed a bill in equity in the state circuit court against the
Jasper bank and the three Rome corporations. It is the final
decrees entered in these suits eighteen months later which are
pleaded in bar of this action on the certificates of deposit.
Each bill recited, in substance, the above facts and alleged
that the note given by the complainant was in the hands of the
Jasper bank, that the proceeds (of the discount) were deposited
with it, that the certificate of deposit issued to the American
Company covers such proceeds, and that they have ever since
remained in the bank. The bill prayed that these proceeds be
impressed with a trust in favor of the complainant, that the First
National
Page 258 U. S. 116
Bank of Rome be declared not to have any interest therein, that
the certificate of deposit, the note, and the contract to purchase
the stock be declared void, that the American Company, the
insurance company, and the Jasper bank be restrained from bringing
suit against the complainant, that the Jasper bank be restrained
from making any payment to the First National Bank out of the
proceeds of complainant's note, and that the latter bank be
restrained from withdrawing any part of such proceeds.
None of the three Rome corporations was domiciled or found in
the State of Florida. Constructive service by publication in a
newspaper was made under the Florida law. General Statutes, § 1866.
Then the three corporations entered their "appearance specially,
solely and only for the purpose" of moving to quash the service.
The motion was overruled. The defendants were given time to plead,
but did not do so, and again, appearing "specially, solely, and
only" for that purpose, entered their appeal to the Supreme Court
of Florida from the order overruling the motion to quash the
pretended service by publication, and, also appearing "specially,
solely, and only" for that purpose, they applied to the circuit
court for an order fixing the terms of the supersedeas on the
appeal. That the notice of this application given counsel for
complainant "shall in no sense operate as a general appearance" was
stipulated by them, and thereupon the order of supersedeas was made
and the required bond given. It was suggested in the supreme court
that the appeal operated as a general appearance, and therefore
rendered the question submitted moot, but the court did not pass
upon this objection. It declared that
"the purpose of the statute authorizing constructive service by
publication [is] to notify residents of the pending suit [in
equity] so that they may, if they care to do so, come into the
case, and, if the statute be followed, there is no right in the
nonresident to quash this notice; he has
Page 258 U. S. 117
his right, if not waived, to object should the court thereafter
commit an error against him;"
and it affirmed the order of the lower court.
Rome Insurance
Co. v. Corbett, 66 Fla. 438.
The three Rome corporations took no further part in the suits in
the state courts. But, in the circuit court, a decree
pro
confesso was entered as against all the respondents which
declared that the sale and purchase of the stock was void, that the
proceeds of the complainant's note
"included in said certificate of deposit No. 319 now held by the
First National Bank of Rome are hereby decreed to be impressed with
a trust in favor of the complainant and the same are adjudged to
belong to him,"
that the Bank of Jasper be enjoined from paying any part of
these proceeds to the First National Bank, and that the certificate
of deposit, "insofar as it covers and includes the proceeds derived
from the said note," was void. The Bank of Jasper insists that
these decrees are
res judicata of its alleged liability to
the First National Bank on the certificates of deposit: first,
because they are valid judgments
in personam against the
latter bank; and, secondly, because the certificates of deposit
represent the proceeds of the notes, and these proceeds were a
res within the jurisdiction of the court, and there was
thus jurisdiction
in rem to adjudicate the alleged
liability on the certificates of deposit.
The contention that the decrees constitute personal judgments
against the First National Bank rests upon the assertion that,
under the law of Florida, an appeal operates necessarily as a
general appearance, although the appeal is taken solely from an
interlocutory order asserting jurisdiction, and although in taking
it the appellant declares in terms that his appearance is special,
and solely for the purpose of the appeal. It may be assumed that,
if such were the settled law of Florida, it would be accepted by
this Court as controlling.
York v. Texas, 137 U. S.
15. But our attention has not been called to any
Florida
Page 258 U. S. 118
statute or rule of court or decision which so declares. There is
confessedly no statute or rule of court to that effect, and none of
the cases relied upon support the proposition that such is the
common law of Florida. This contention seems to have been made in
the equity suits here under consideration, but the supreme court
did not there pass upon the question.
Rome Insurance Co. v.
Corbett, supra, p. 439. It is clear that, in Florida, an
appearance entered in the trial court specially for the purpose of
moving to quash a summons does not operate as a general appearance.
Standley v. Arnow, 13 Fla. 361, 368, but that if, after
such a motion is made and overruled, the cause proceeds to final
decree, a defendant who prosecutes an appeal therefrom will be held
to have appeared generally. The appeal here in question was not
from a final decree. It was from an interlocutory order overruling
the objection to the jurisdiction. The right to review an
interlocutory order by a separate appeal is conferred broadly by §
1908 of the General Statutes of Florida, and there is nothing to
indicate that the right does not extend to orders concerning
jurisdiction. It certainly may not be assumed that the legislature
intended that exercise of the right conferred should operate as a
general appearance, and thus render moot a consideration of the
ruling alone sought to be reviewed. Moreover, in none of the cases
from the Supreme Court of Florida relied upon was it shown that the
appearance on appeal was in terms special and limited to the review
of the question of jurisdiction.
*
The contention that the proceeds of the discounts of the notes
constitute a
res within the state, of which
Page 258 U. S. 119
the certificates of deposit were merely evidence, rests upon a
misapprehension. No specific fund was ever set apart by the Jasper
bank. Its discounts resulted in general credits by the bank to the
makers of the notes. These credits were applied in making payment
for their stock. The payment was made by transferring to the credit
of the American Company the amount which stood to the credit of the
makers of the notes. The credits -- called deposits -- so
transferred became an indebtedness of the Jasper bank to the
American Company. That indebtedness, if it had rested in open
account, would have been property of the creditor within the state
of Florida. In an appropriate proceeding, it might have been
reached to satisfy a claim against its owner.
Pennington v.
Fourth National Bank, 243 U. S. 269. But
the suits in the state court were not proceedings of that
character. In them, the complainant asserted that, by reason of the
fraud alleged, the Jasper bank was indebted not to any of its
corespondents, but to the complainant. Moreover, there was no
indebtedness on open account to any of the Georgia corporations,
for this account had been closed by giving certificates of deposit,
and these had been transferred to the First National Bank. Such
certificates are merely promissory notes of the Jasper bank,
payable, like unsecured notes of individuals, out of general
assets. Like other notes, they are negotiable, and are payable only
upon surrender of the instrument properly indorsed. There is not
even an allegation either that the transfer to the First National
Bank had been made after maturity of the certificates or that the
indorsee took them with notice of the fraud.
As neither the certificates of deposit nor the holder thereof
were within the State of Florida, its courts could not -- in the
absence of consent -- acquire jurisdiction to determine the
liability of maker to holder.
Affirmed.
*
Tunno & Jessup & Co. v. Robert, 16 Fla. 738,
751;
Shrader v. Shrader, 36 Fla. 502, 518;
Wylly v.
Sanford Loan & Trust Co., 44 Fla. 818, 820;
Drew
Lumber Co. v. Walter, 45 Fla. 252, 255;
Rumeli v.
Tampa, 48 Fla. 112, 114;
Hayman v. Weil, 53 Fla. 127,
132;
Barwick v. Rouse, 53 Fla. 643, 646;
Busard v.
Houston, 65 Fla. 479, 482;
Henry v. Spitler, 67 Fla.
146, 150.