Opinion ID: 1729898
Heading Depth: 1
Heading Rank: 1

Heading: state court jurisdiction

Text: The question then to be determined in the outset is, whether or not the Federal Court, having first acquired jurisdiction of the subject-matter and the parties, had exclusive jurisdiction, so that the Chancery Court of Mississippi had no jurisdiction to try the case filed in the State Court. The conflict in jurisdictions of the Federal and State Courts under our system of government had given rise to considerable controversy in the various opinions of courts, both of the states and of the Federal jurisdictions. It is pointed out in 21 C.J.S., Courts, section 522 (1940) at p. 791 that: The courts of the United States and the courts of the various states are independent of each other, except as judgments of state courts are subject to review by the federal supreme court, as indicated in the C.J.S. title Federal Courts §§ 238-271 ... So ordinarily the pendency of a suit in a federal court is not a bar to a suit in a state court involving the same controversy, and vice versa. However, the two courts are not foreign to each other; they form one system of jurisprudence, which constitutes the law of the land, and should be considered as courts of the same country, having jurisdiction partly different and partly concurrent, and as a matter of comity one of such courts will not ordinarily determine a controversy of which another of such courts has previously obtained jurisdiction... . (Hn 1) As a general rule, the grant of jurisdiction to the Federal Courts does not of itself imply that the jurisdiction is to be exclusive. (Hn 2) So, where a right of action, given by a statute of the United States, is an advancement of the common-law right, existing independently of the relation of Congress in pursuance of the powers delegated by the Constitution of the United States, the concurrent jurisdiction of the State Court is not taken away. (Hn 3) Also, where the State Courts have long enjoyed jurisdiction over the subject-matter of an action, jurisdiction is not withdrawn by federal statute unless such an intention is distinctly manifested. The author sets out in the textbook, Moore's Federal Practice, 1 A, 2d Edition, section 0.221 (1965) at pages 2605, 2606, the following: Where the federal and state courts have concurrent jurisdiction, as, for example, in diversity and general federal question cases, actions in personam may proceed concurrently. In other words, as stated in some of the cases, `the rule ... has become generally established that where the action first brought is in personam and seeks only a personal judgment, another action for the same cause in another jurisdiction is not precluded.' Kline v. Burke Construction Co., 260 U.S. 226, 230, 43 S.Ct. 79, 67 L.ed. 226, 24 A.L.R. 1077 (1922); Equitable Life Assur. Soc. of the U.S. v. Wert, 102 F.2d 10 (C.C.A. 8th, 1939); Byrd-Frost, Inc. v. Elder, 303 U.S. 647, 58 S.Ct. 646, 82 L.ed. 1108 (C.C.A. 5th 1937), 93 F.2d 30 (1938). This textwriter also points out in section 0.222 at pages 2607-2610, inclusive, that: In addition to the situation previously discussed, where two in personam suits may proceed concurrently, two actions may proceed without interference where one is in rem and the other is in personam, for irreconcilable conflict arises only when both actions seek to dispose of the same res. Thus, where the state court has control of the administration of a decedent's or a ward's estate, an action in personam may be instituted in the federal court, the requirements of federal jurisdiction being satisfied, to establish the validity and amount of a claim against the estate, since the federal court's action in no way interferes with the state court's control of the res. ... ... Generally, in all cases where the federal action is in personam or partly so, even though it includes in rem issues which partly overlap the prior jurisdiction of state courts, `the federal court should proceed to grant any relief appropriate under the pleadings which will not interfere with the specific properties which have been brought within the jurisdiction of the state courts.' Therefore, subject to the rule that one court, federal or state, shall not disturb the possession and control of specific property which is within the prior jurisdiction of the other court, one court may properly adjudicate rights in property in the possession of the other court and may render any judgment `not in conflict with that court's authority to decide questions within its jurisdiction and to make effective such decisions by its control of the property.' In United States v. Klein, (303 U.S. 276, 281, 58 S.Ct. 536, 82 L.ed. 840, 1938) a leading case in point, the question was whether a judgment of a Pennsylvania court, rendered under authority of a state statute and affirmed by the state Supreme Court, declaring an escheat to the state of money which had been deposited in the Treasury of the United States, was an invasion of federal sovereignty and the prior jurisdiction of the federal court which had disposed of the fund. In an earlier federal action brought by secured bondholders to compel payment of the bonds, plaintiffs had obtained a decree in behalf of themselves and other bondholders similarly situated, the money was paid into court, and the part of the money belonging to bondholders who had made no claim and could not be found had eventually been (re)covered into the federal Treasury. After the lapse of years the Pennsylvania courts declared the money so deposited to be escheated to the state. It was held that there was no conflict with federal authority; that the state decree was merely an adjudication upon the title of the absentees, which was not prohibited, and that the decree was not founded on possession and did not purport to disturb the possession of the Treasury as depository, which it could not do, and that the question of possession would be open for decision whenever application was made to the federal court for payment over of the fund. (Citation supplied.) The same principle was approved and applied by the Supreme Court in the decision of Fischer v. American United Life Insurance Company. (314 U.S. 549, 62 S.Ct. 380, 86 L. ed 444, 1942, re'g  C.C.A. 8th, 1941, 117 F.2d 811) (Citation supplied.) The appellant contends that it is well-settled that where an action is quasi in rem, the court having jurisdiction, first attached, has jurisdiction to proceed to the exclusion of all other courts. It is contended that the case of Donovan v. Dallas, 377 U.S. 408, 84 S.Ct. 1579, 12 L. ed 2d 409 (1964), and the case of Princess Lida of Thurn v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.ed. 285 (1938), settled the issue here involved in favor of Koehring. The facts in the Donovan case are as follows: The City of Dallas, Texas, owned Love Field, a municipal airport, and forty-six citizens brought a class suit in a Texas court to restrain the City from building an addition to the runway to the airport, and from issuing and selling municipal bonds for that purpose. The case was tried and summary judgment was given for the City. On appeal, the Texas Court of Civil Appeals affirmed. The Supreme Court of Texas denied review, the United States Supreme Court denied certiorari. Later, one hundred and twenty Dallas citizens, including twenty-seven of the plaintiffs in the earlier action, filed another action in the U.S. District Court for the Northern District of Texas seeking similar relief. The complainants sought an injunction against the construction of the runway, issuance of bonds, and payment of bonds already issued. The City filed a motion to dismiss, and an answer to the complaint in the Federal Court. At the same time, the City applied to the Texas Court of Civil Appeals for a writ of prohibition to bar all plaintiffs in the case in the U.S. District Court from prosecuting their case in that court. The Texas Court of Civil Appeals Denied relief, holding that it was without power to enjoin litigants from prosecuting an action in the Federal Court, and that the defense of res judicata on which the City relied could be raised and adjudicated in the United States District Court. On appeal from the mandamus order, the Supreme Court of Texas took a different view, however, and held it was the duty of the Civil Court of Appeals to prohibit the litigants from further prosecuting in the U.S. District Court, and stated that a writ of mandamus would issue should the Court of Civil Appeals fail to perform the duty. The U.S. District Court, in an unreported opinion, dismissed the case pending there. One of the petitioners in the Federal Court excepted to the dismissal and appealed to the U.S. Court of Appeals for the Fifth Circuit. The Texas Court of Civil Appeals cited Donovan and the other complainants for contempt. Donovan was sentenced to twenty days in jail. Donovan served the sentence and the Supreme Court granted certiorari to review the State Supreme Court's judgment directed to the Civil Court of Appeals to enjoin petitioners from prosecuting their action in the Federal Court, and granted certiorari to review the Civil Court of Appeal's judgment conviction of contempt. The Court held that: We think the Texas Court of Civil Appeals was right in its first holding that it was without power to enjoin these litigants from prosecuting their federal-court action, and we therefore reverse the State Supreme Court's judgment upsetting that of the Court of Appeals. We vacate the later contempt judgment of the Court of Civil Appeals, which rested on the mistaken belief that the writ prohibiting litigation by the federal plaintiffs was `valid.' 377 U.S. at 411-412. The Court then said: Early in the history of our country a general rule was established that state and federal courts would not interfere with or try to restrain each other's proceedings. That rule has continued substantially unchanged to this time. An exception has been made in cases where a court has custody of property, that is, proceedings in rem or quasi in rem. In such cases this Court has said that the state or federal court having custody of such property has exclusive jurisdiction to proceed. (Princess Lida v. Thompson, 305 U.S. 456, 465-468.) In Princess Lida this Court said `where the judgment sought is strictly in personam both the state court and the federal court, have concurrent jurisdiction, may proceed with the litigation at least until judgment is obtained in one of them which may be set up as res judicata in the other.' Id. p. 466. See also Kline v. Burke Construction Co., 260 U.S. 226. 377 U.S. at 412. The opinion of the Court then pointed out: But plaintiffs in the second suit chose to file that case in the federal court. They had a right to do this, a right which is theirs by reason of congressional enactments passed pursuant to the congressional policy. And whether or not a plea of res judicata in the second suit would be good is a question for the federal court to decide. While Congress has seen fit to authorize courts of the United States to restrain statecourt proceedings in some special circumstances, it has in no way relaxed the old and well-established judicially declared rule that state courts are completely without power to restrain federal-court proceedings in personam actions like the one here. It does not matter that the prohibition here was addressed to the parties rather than to the federal court itself. For the heart of the rule declared by this Court is that: `... where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right cannot be arrested or taken away by proceedings in another court....' (Emphasis supplied.) 377 U.S. at 412. In the case of Pennsylvania General Casualty Company v. Pennsylvania, ex rel., Schnader attorney general, 294 U.S. 189, 55 S.Ct. 386, 79 L.ed. 850 (1934), the United States Supreme Court said: Where the judgment sought is strictly in personam, for the recovery of money or for an injunction compelling or restraining action by the defendant, both a state court and a federal court having concurrent jurisdiction may proceed with the litigation, at least until judgment is obtained in one court which may be set up as res judicata in the other. See Buck v. Colbath, supra, (3 Wall. 342, 18 L. ed 260); Kline v. Burke Constr. Co., 260 U.S. 226 ... But if the two suits are in rem or quasi in rem, requiring that the court or its officer have possession or control of the property which is the subject of the suit in order to proceed with the cause and to grant relief sought, the jurisdiction of one court must of necessity yield to that of the other. To avoid unseemly and disastrous conflicts in the administration of our dual judicial system, see Peck v. Jennes, 7 How. 612, 625; and to protect the judicial processes of the court first assuming jurisdiction ... the principle applicable to both federal and state courts is established that the court first assuming jurisdiction over the property may maintain and exercise that jurisdiction to the exclusion of the other. This is the settled rule with respect to suits in equity for the control by receivership of the assets of an insolvent corporation. (Emphasis supplied.) In the case of Wells v. Helms, 105 F. Rep.2d 402 (1939), the United States Circuit Court of Appeals, Tenth District, pointed out that: It is well settled that where two actions involving the same cause of action are pending in a state and a federal court, and are within the concurrent jurisdiction of each, both actions, in so far as they seek relief in personam, may proceed at the same time and when one action has gone to judgment, that judgment may be set up in the other action as res judicata. 105 F.2d at 404. Kline v. Burke Construction Company, 260 U.S. 226, 230, 43 S.Ct. 79, 67 L.ed. 226, 24 A.L.R. 1077 (1922), gives this exposition: ... a controversy is not a thing, and a controversy over a mere question of personal liability does not involve the possession or control of a thing, and an action brought to enforce such a liability does not tend to impair or defeat the jurisdiction of the court in which a prior action for the same cause is pending. Each court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court. Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res judicata by the court in which the action is still pending in the orderly exercise of its jurisdiction, as it would determine any other question of fact or law arising in the progress of the case. (Hn 4) Thus it is seen that exclusive jurisdiction vests in the court first acquiring jurisdiction in in rem and quasi in rem cases but not in in personam cases. The question then resolves itself into the query as to what is meant by the expressions in personam, in rem and quasi in rem jurisdiction. In 20 Am.Jur.2d, Courts, section 118 (1965), at page 473, we find the following language: The distinction between jurisdiction in personam and jurisdiction in rem, which to some extent is covered also in other articles, runs through numerous cases, mostly in connection with the doctrine, established by the United States Supreme Court in the case of Pennoyer v. Neff, (95 U.S. 714, 24 L. ed 565) that a state court can acquire jurisdiction in personam over a defendant only if process has been served on him in person in the state to which the court belongs, unless he has voluntarily submitted himself to the court's jurisdiction, some later cases noting a tendency to deviate from strict application of the doctrine of Pennoyer v. Neff, notably through use of the `minimum contracts' test.' (Emphasis and citation supplied.) Section 119, 20 Am.Jur.2d, Courts (1965) at pages 473, 474, 475 states: A decision in personam imposes a responsibility or liability upon a person directly and therefore binds him personally with regard to every property he possesses, even that over which the court has no jurisdiction in rem, and which its decision may therefore not directly affect. On the other hand, a decision in rem does not impose responsibility or liability upon a person directly, but operates directly against that particular thing which is called the res, irrespective of who is the owner or possessor thereof, and irrespective of whether the owner is subject to the jurisdiction of the court in personam. ... ... Jurisdiction in rem is right where the decision sought is of a nature to directly affect real property. A court of one state has no jurisdiction to establish, to pass, or to quiet title to real property situated in another state, or to make any other decision directly affecting real property located in another state, or the title to that real property. A decision in personam may be rendered by the court of a state with regard to a res which is not situated within the state if the decision merely obliges a person subject to its jurisdiction in personam to dispose of the res, or to refrain from disposing of it, in the manner prescribed by the decision... . (Emphasis supplied.) Section 120, 20 Am.Jur.2d, Courts (1965) at pages 475, 476, states: According to certain judicial opinions, the classification of jurisdiction as in personam or in rem is not comprehensive enough, and therefore a third category, jurisdiction quasi in rem, has been added. The courts seem not to be in harmony, however, as to the exact meaning of that term and its proper application. Jurisdiction quasi in rem has been said to be neither strictly in personam nor strictly in rem. The term is frequently used to designate an action in personam where a res is indirectly affected by the decision. But sometimes proceedings affecting a status or relation, for instance a marital status, are referred to as proceedings quasi in rem. (Emphasis supplied.) The facts in the case at bar on the question now being discussed have been previously studied and a very comprehensive opinion has been written on this subject. See Dunn v. Stewart, 235 Federal Supplement 955 (1964). In that case the Court said: The record before this Court in this case, as it relates to the case in the Chancery Court of Hinds County, Mississippi, demonstrates that the Chancery Court action, being between a Mississippi corporation and a Wisconsin corporation, then contending that it was not doing business in Mississippi, was fully removable. The presence of the attachment defendants in nowise affected removability. Cramer v. Phoenix Mutual Life Ins. Co. (CA 8), 91 F.2d 141, cert. den. 302 U.S. 739, 58 S.Ct. 141, 82 L.Ed. 571, rehearing den. 302 U.S. 778, 58 S.Ct. 263, 82 L.Ed. 602. Having elected not to remove or attempt to remove the Chancery Court action, Koehring Company should now be estopped in equity to assert that any irreparable injury occurred to it because discovery procedures available in the Chancery Court of Mississippi were not as efficacious as procedures which would have been available in the Federal forum. A deliberate examination of the pleadings in Civil Action No. 5911 (formerly Civil Action No. 3175), and in the State Chancery Court proceeding No. 60,068, discloses that both suits, insofar as the Defendant Koehring Company is concerned, were in personam actions. Only a money judgment was sought as to them. Black's Law Dictionary, 4th Ed. 899; 21A Words & Phrases, pp. 278-287; Ravesies v. Martin, 190 Miss. 92, 199 So. 282, 285. The Chancery Court attachment proceedings, appurtenant to the principal litigation there and the Chancery attachment proceedings in the U.S. District Court, involved one common attachment defendant, Dalrymple Equipment Company, Inc., a Delaware corporation qualified to do business in the State of Mississippi. Attachments in Chancery in the State of Mississippi are unique proceedings in the field of attachment law in the sense that the service of the attachment defendant does not bring any fund into the possession, custody or control of the Court, no monies are paid into the registry of the Court, and no bond is required. Mississippi Code 1942, §§ 2729-2734. Garnishment will not lie against the attachment defendant at the initiation of the action. As the Supreme Court of Mississippi pointed out in Gulf Refining Co. v. Mauney, 191 Miss. 526, 3 So.2d 844, the Chancery attachment defendant occupies no security position at all; `(h)e is simply a defendant with all the rights and privileges as such and should simply be summoned to answer the suit as any other defendant is summoned.' The distinctions between Mississippi Chancery attachments and attachments at law are also discussed in Mid-South Paving Co. v. Trinidad Asphalt Mfg. Co., 197 Miss. 751, 21 So.2d 646, 647. Sequestration, injunction and delivery to the Plaintiff under bond are all permissible under the Chancery attachment statutes, but none of these procedures were requested or accomplished in either suit. Under the laws of Mississippi, Koehring Company could have entered a special appearance in the Chancery Court to challenge the jurisdiction acquired by attachment. It chose not to do so but defended generally, thus granting to the Court general jurisdiction of the person. Mobile & Ohio R. Co. v. Swain, 164 Miss. 825, 145 So. 627. When it made this election it made the issue of any quasi in rem proceedings as to Dalrymple Company mainly moot. Cf. Pennoyer v. Neff, 95 U.S. 714, 725, 24 L.Ed. 565. In no sense had any fund been taken into the hands of the U.S. District Court in Mississippi by making Dalrymple an attachment defendant. When Dalrymple Company's answers are considered together, they disclose that on the three separate dates on which statements of account between Dalrymple Company and Koehring Company were made, a different set of debt relationships existed on each occasion. Obviously, no funds were actually frozen in Dalrymple Company's hands. The attachment did not create any conflict between the concurrent State and Federal jurisdictions. Byrd-Frost, Inc. v. Elder, supra, is completely analogous to the proceedings here involved. Dalrymple Company's answer in the Chancery Court advances the plea to that court that it has already been attached in the Federal Court proceedings and a certified copy of the Complaint in the Federal Court action is made an exhibit to Dalrymple's answer in the Chancery Court. Thus, if any funds had been taken into custody by the Federal Court proceeding, the Chancery Court, after this notice, would have been bound not to deal with these funds. This Court, of course, must presume that the Chancery Court of Hinds County would take no proceedings which would in any way affect property which was in fact already seized under the proper processes of the U.S. District Court. Rather, the presumption is that the Chancellor would deal correctly with any such claim when, as and if he would take steps to possess or control any part of the attachment subject matter. Douglas v. New York, N.H. & H. Railroad Co., 279 U.S. 377, 49 S.Ct. 355, 73 L.Ed. 747; Harrison v. NAACP, 360 U.S. 167, 79 S.Ct. 1025, 3 L.Ed.2d 1152. Judge Griffith, in his Mississippi Chancery Practice, original volume, section 484 (1925), at page 516 points out: The proceeding is one primarily in rem ; and in order to give jurisdiction in chancery by attachment against a non-resident there must exist the following factors: (1) The non-residence of the debtor; and, (2) either (a) that he owns lands in this state, or (b) that there are effects belonging to him in the hands of a person in this state, or (c) that there is some person in this state indebted to the said non-resident debtor, and (3) the issuance of the proper process against the land, or effects, or debt, as provided by the statute, so as to bring the res under the control of the court; and it is well settled that when the jurisdictional facts do not exist the proceedings must be dismissed, even though the non-resident defendant has appeared, provided that in his appearance he raise at the outset the defect as to jurisdiction, and thus does not waive it... . And moreover, when the jurisdiction is based upon the ground that there is a resident defendant who has in his hands effects of, or is indebted to, the non-resident debtor, not only must the resident defendant be such a person as may be joined, but actually he must be made a co-defendant to the suit... . It will be noted that our attachment proceeding set out in Mississippi Code Annotated section 2729 (1956) ends with the following sentence: The court shall give a decree in personam against such nonresident, absent or absconding debtor if summons has been personally served upon him, or if he has entered his appearance. (Emphasis supplied.) (Hn 5) From the foregoing facts and authorities, we have reached the conclusion that the Federal District Court in Oklahoma only had in rem jurisdiction over the debt owed by Dalrymple to Koehring. Thus, the Federal Court could enjoin the attempted proceedings in the Mississippi Chancery Court only insofar as the dual proceedings to affect the res as to the Dalrymple debt  allegedly within the jurisdiction of the Federal Court. The Mississippi Chancery Court decree, however, was a personal judgment against Koehring; it in no way affected Dalrymple's debt to Koehring and the res held in the jurisdiction of the Federal Court. It appeared, therefore, the Mississippi judgment is not affected by the Federal injunction and prior proceedings in the Federal Court. At this point, it should be again noted that the defendant Koehring chose to answer in the State Court, and made no effort to transfer the case to the Federal Court, as was pointed out by Judge Mize in his opinion in Dunn v. Stewart, supra . In fact, no point was made by Koehring that the complainant Hyde had filed the case in the Federal Court (except in his answer) until pleadings had been filed after the decree had been finally entered by the Chancery Court. It follows that the State Court had jurisdiction to hear and determine the issue joined between the appellant Koehring Company and Hyde Construction Company, Inc., appellee. Particularly in view of the fact that the State Court did not attempt to adjudicate or interfere with the res involved in the jurisdiction of the Federal Court and between the parties in that court. We are of the opinion, therefore, that the assignment of error on this point is not well-taken. By way of emphasis, we also point out that we have consistently held, as a matter of comity, that Mississippi would recognize injunctions issued by another state against its citizens to prevent them from bringing suit in Mississippi to avoid the law of that state. Fisher v. Pacific Mut. Life Ins. Co., 112 Miss. 30, 72 So. 846; Equitable Life Assur. Soc. of the U.S. v. Gex' Estate, 184 Miss. 577, 186 So. 659. The injunctions discussed in these cases are, however, injunctions issued by foreign states, and against persons and corporations subject to their jurisdictions. Moreover, these injunctions are against the individuals and not the courts. 43 C.J.S. Injunctions § 50 (1945). (Hn 6) We recognize that the Federal Court, however, has power to enjoin state court proceedings to protect its jurisdiction over the res. 28 USC § 2283 (Stay of State court proceedings); De Korwin v. First National Bank of Chicago, 136 F. Supp. 720, (ND Ill. 1955), 235 F.2d 156 (1956); Alabama Vermiculite Corp. v. Patterson, 149 F. Supp. 534 (WD SC 1955). (Hn 7) This power, however, does not warrant a Federal Court in enjoining state proceedings, in personam or otherwise, that do not interfere with the Federal Court's in rem jurisdiction. Albuquerque National Bank v. Citizens National Bank of Abilene, 212 F.2d 943 (CA 5th 1954). (Hn 8) Although it may be said that our Mississippi courts have historically recognized the restraining orders of courts of other jurisdictions which have been brought to their attention by way of proper plea, as in the instant case, it is apparent that the trial court cannot be criticized, and certainly not censured, for failing to have recognized an alleged injunction (by way of comity) since the trial court was not properly notified of the federal injunction until after it had rendered its final decree. We are of the opinion that the parties herein should not have been permitted to experiment with the court, and that the trial court acted properly in refusing to recognize (by way of comity) the information that an injunction had been issued against some of the parties in the Federal Court of Oklahoma.