OBER V. GALLAGHER, 93 U. S. 199 (1876)

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U.S. Supreme Court

Ober v. Gallagher, 93 U.S. 199 (1876)

Ober v. Gallagher

93 U.S. 199


1. In a suit brought by a citizen of Louisiana in the Circuit Court of the United States for the Eastern District of Arkansas to enforce a lien on lands situate within that district, one of the defendants, a citizen of Tennessee, was served with process in Arkansas. Held that under the Act of Feb. 28, 1839, 5 Stat. 321, such service brought him within the jurisdiction of the court.

2. A court which has acquired rightful jurisdiction of the parties and subject matter will retain it for all purposes within the general scope of the equities to be enforced.

3. The holder of a note which is secured by mortgage may proceed at law and in equity at the same time until he obtains actual satisfaction of the debt.

Thompson purchased from Fleming, Jan. 15, 1867, a plantation situated partly in Prairie County and partly in Pulaski County, Ark., at the price of $60,000, to be paid in ten equal installments, the first March 1, 1867, and the remainder annually thereafter. Notes, negotiable in form and expressing on their face that their consideration was the purchase of this plantation, were executed by Thompson to Fleming for the several installments, payable at the times agreed upon. On the same day, the date of the purchase, Fleming and his wife conveyed the property to Thompson by a deed in which, after a recital of the notes for the purchase money, was the following:

"But it is expressly agreed by the parties of the first and second part, that the said parties of the first part shall, and do hereby, retain a lien upon all of said lands for the payment of said ten promissory notes given for the purchase money, and when the same are fully paid off, said lien is to stand released and discharged."

This deed was recorded in Pulaski County Feb. 26, 1867. It was also duly recorded in Prairie County.

At the time of the purchase, Thompson was a citizen of Louisiana, and Fleming of Arkansas. The note falling due March 1, 1867, was paid Jan. 19, 1867, and on March 20, 1867, Fleming transferred all the other notes, by endorsement, to Gallagher, a citizen of Louisiana. Gallagher afterwards sued Thompson in the Fifth District Court for the Parish of Orleans, La., upon the note falling due March 1, 1869, and, June 7,

Page 93 U. S. 200

1869, recovered judgment thereon for $6,000 and interest from March 4, with costs. This judgment he has been unable to collect by execution or otherwise.

At the time of the purchase, there was also a judgment in the Prairie County Circuit Court of Arkansas against Fleming, in favor of one Embry, for $643.43 debt, and $63 damages, which was a lien upon the part of the plantation in Prairie County. An execution was issued upon this judgment April 29, 1867, levied May 14, 1867, on the lands covered by the judgment lien, and they were offered for sale by the sheriff, and struck off, Aug. 19, 1867, to one English, for $844.70. In pursuance of this sale, the sheriff conveyed them to English, Aug. 24, 1867, and, Feb. 29, 1868, English conveyed them to Ober, the appellant, to whom at the same time Thompson also conveyed them.

Gallagher afterwards, being a citizen of Louisiana, filed this bill against Ober, a citizen of Arkansas, and Thompson, then a citizen of Tennessee, in the Circuit Court of the United States for the Eastern District of Arkansas, setting forth the sale from Fleming to Thompson; the execution of the notes by Thompson to Fleming; the reservation of the lien in the deed from Fleming; the endorsement of the note falling due March 1, 1869, by Fleming to Gallagher; the judgment against Thompson thereon in the Fifth District Court for the Parish of Orleans; the judgment of Embry against Fleming; its lien; the sale and conveyance by the sheriff to English; and the conveyance by English to Ober -- substantially as above stated. The bill then alleges, in effect, that the purchase by English at the sheriff's sale was for the use of Thompson; that Thompson paid him the money he advanced to the sheriff; that the conveyance to Ober was for the benefit and at the request of Thompson; and that Ober at the time had full knowledge of all the facts. The prayer is that the property conveyed by Fleming to Thompson may be subjected, under the lien reserved in the deed, to the payment of the amount due upon the judgment in favor of Gallagher.

At the time of the commencement of this suit, Fleming as well as Thompson was a citizen of Tennessee. He was not made a party. Ober and Thompson were both served with process in Arkansas, Thompson having been found there at the

Page 93 U. S. 201

time, and they both demurred to the bill, assigning special cause as follows:

"1st, said bill shows that said Thompson is a nonresident of said district, and not within the jurisdiction of this court."

"2d, said complainant, as the assignee of the note named in said bill, did not take any lien, nor has he any under and by virtue of the assignment of said note."

"3d, said bill fails to show that John T. Fleming, the original holder and payee of said note, could have brought suit thereon in this court."

"4th, said bill fails to show that complainant has exhausted his remedies at law to collect the debt named in said bill."

"5th, the judgment exhibited with said bill rendered in the State of Louisiana merged the note named in the bill, and this court has no jurisdiction to enforce such judgment as a lien against the lands described in the bill, or to enforce it at all, until a judgment is rendered on the same in this court at law."

"6th, said complainant having elected to use said Thompson at law, he must abide such election, or show that he has used all remedy under such suit, but to no purpose, which said bill does not show."

This demurrer was overruled. Thompson elected to stand by his demurrer, but Ober answered, insisting that the title of English was superior to that of Fleming, and that he was a bona fide purchaser from English without notice. In this way, he claimed to hold the property in Pulaski County free from the lien reserved by Fleming. As to that in Prairie County, he insisted that the note due March 1, 1867, exceeded in amount the value of this part of the property, and that in equity it should be released from the lien.

After this answer, Gallagher, by consent, amended his bill by setting up his ownership of the other notes endorsed to him, and asking that "as to any of said notes that may be due at the time of rendering the final decree herein," he might have

"the same relief that he hath already in and by his original bill prayed, and that as to the remainder of said notes, the court may give him such relief as may tend to secure the payment of the same when they respectively fall due, without further litigation or delay."

At the time of filing this amendment,

Page 93 U. S. 202

it was agreed that the answer of Ober to the original bill should be taken as his answer to the amended bill; that Thompson should have the same benefit from his demurrer to the original bill that he would have if he had demurred to the bill as amended, and the cause was set down for hearing upon bill, amended bill, answer, and replication, with leave to both parties to take depositions.

The circuit court rendered a decree April 24, 1874, finding due to Gallagher, upon his judgment, and upon the notes then past due and unpaid, $49,903, establishing a lien in his favor upon the whole plantation in the hands of Ober, as security for the amount so found to be due, and ordering a sale, and an application of the proceeds to its payment. Further directions were also given in respect to the notes not then due.

From this decree Ober alone appeals.

Page 93 U. S. 203

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