Smetal Corporation v. West Lake Investment Co. , 126 Fla. 595 ( 1936 )

West Lake Investment Company, a corporation, obtained a final decree in the Circuit Court for Broward County against Smetal Corporation, a Florida corporation, on February 8, 1934, in a suit by the West Lake Company to "foreclose a tax deed" which had been issued to it for a certain lot in Hollywood Lakes Section in Broward County. The lot, prior to the issuing of the tax deed, was the property of the Smetal Corporation.

The decree was for the sum of $489.31, and costs. The order of sale was published for three weeks and on March 6, 1934, the Special Master reported that the land had been sold to the West Lake Company for the sum of $650.00. On the same day an order was made confirming the sale and Master's deed was executed to the West Lake Company. So at the conclusion of that procedure the West Lake Company had both a tax deed and a Master-in-chancery's deed based upon the tax deed to the lot in Broward County.

On May 3, 1934, two months and twenty-five days after the final decree, the Smetal Company exhibited its bill in the Circuit Court for Broward County against the West Lake Company to invalidate the orders and decrees of the Circuit Court in the tax deed foreclosure suit. The grounds urged were that the court was without jurisdiction to enter the orders and decrees, and that the proceedings adopted by the complainant West Lake Company in that case constituted a fraud upon the court and the Smetal Company.

The bill of complaint is a prolix document of many unnecessary but nevertheless related allegations of fact. The substance of them is that the Smetal Company is a Florida corporation with its principal office and place of business in Miami, Dade County, Florida; that no service of process in the tax deed foreclosure suit was made on it; that the orders and decrees in the case rested upon an unauthorized substituted service of process by publication; that the Smetal Company had no notice of the suit and knew nothing of the proceedings until after the execution of the Master's deed when the same was exhibited to the Smetal Company's tenant who was in possession of the land and who was requested by the West Lake Company to vacate and surrender possession to it; that the requirements of Chapter 11829, Laws of 1927, Section 4261 C.G.L. 1927, were not observed in obtaining the order for substituted service of process upon the Smetal Company in the following particulars: (a) no certificate of the Secretary of State was filed at the time when the order of publication was made; (b) that the order was made by the Judge instead of by the Clerk of the Court; (c) no other statute than the one mentioned exists in the State under which service of process by publication could be obtained upon the Smetal Company; that the failure to obtain service of process upon it was due to the failure of the West Lake Company to make "a reasonable, conscientious or honest attempt" to obtain personal service upon the Corporation through its officers; that information sufficient to advise the West Lake Company of the names and addresses of the officers or agents of the Smetal Company upon whom service of process could have been made to bind the Corporation could have been easily obtained; that a sign was at the time of the commencement of the suit located conspicuously on the lot on which a two-story dwelling was built which sign in bold and legible letters advised all persons that the property was for sale by the owners and gave the name of the agent and its address in the City of Miami; that such address was also the office address of the Smetal Company and that of the vice-president, who was active in the management of the Company's business affairs; that the president of the Corporation also resided in Miami and had an office at the same address, and that the vice-president was the resident agent of the Corporation and appointed for the purpose of accepting service of process upon the Company.

Other allegations were made which tended to show that the West Lake Company by its agents pursued the course it did relying upon a strict technical failure of the Smetal Company to comply with the requirements of Chapter 11829, supra, in order to gain the advantage which obtaining a decree of foreclosure upon the tax deed without notice to the Smetal Company would bring by enabling the West Lake Company to secure a valuable property worth about twenty-six hundred dollars for the sum of about six hundred dollars; that such course was pursued with intention to defraud the Smetal Company, obtain the decree by fraud in not revealing to the court the knowledge which the West Lake Company had of the Smetal Company, its place of business, officers and agents and persons residing in Florida upon whom service of process would bind the Company; that the West Lake Company's request of the Secretary of State for the certificate required under Chapter 11829, supra, was so framed as to direct that officer's attention only to the provisions of said Chapter 11829 and to certify that the Smetal Company had not under the provisions of that chapter designated an agent or officer upon whom service of process in this State might be made to bind the Smetal Company and they had deliberately ignored the provisions of a later statute, Chapter 14677, Laws of 1931, which required all corporations to file with the Secretary of State on July 1st of each year the names of its officers and their post office addresses, the home office of the corporation, and the "name and address of the resident agent upon whom service of process may be made" with which Act the Smetal Corporation had complied.

Many other allegations evidentiary of the alleged deliberate purpose of the West Lake Company to obtain the decree of foreclosure by fraud and deceit perpetrated both upon the court and Smetal Company were made which it is unnecessary here to repeat.

The West Lake Company in May, 1934, interposed its answer in which it incorporated a motion to dismiss the bill. On May 31, 1934, Smetal Corporation filed its amended bill in which it amplified with great particularity the substance of the allegations contained in the original bill. A motion to dismiss the amended bill was granted by the chancellor from which order Smetal Corporation appealed.

I think the order should be reversed not only because the West Lake Company did not strictly follow the procedure prescribed by Chapter 11829, supra, to obtain a valid order of publication of service, but also because the Corporation complainant in the foreclosure proceedings did not maintain clean hands in the matter of substituting publication of service for personal service of the summons in chancery upon the Smetal Company. In other words, according to the allegations of the amended bill admitted by the motion to dismiss the complainant pursued a devious and deceptive course in order to defeat the right of the Smetal Company to be brought into court by the orderly process of a writ duly served upon it, whereby its day in court would be certainly secured, and because the court was without jurisdiction to enter the orders and decrees because it had not acquired jurisdiction of the Smetal Company.

Notice to a party whose rights are to be affected by judicial proceedings is an essential element of due process of law. Riverside Dan River Cotton Mills v. Menefee, 237 U.S. 189,35 Sup. Ct. Rep. 579, 59 L. Ed. 910; Simon v. Southern R. Co.,236 U.S. 115, 35 Sup. Ct. Rep. 255, 59 L. Ed. 492; Iowa Cent. R. Co. v. State of Iowa, 160 U.S. 389, 16 Sup. Ct. Rep. 344,40 L. Ed. 467.

That doctrine is too firmly embedded in American and English jurisprudence to require citation of authority. The same doctrine applies to corporations. 14 a C.J. 800; Sharman v. Bayshore Inv. Co., 99 Fla. 193, 126 South. Rep. 282; 21 R.C.L. 1334.

The complainant in the tax deed foreclosure proceeding relied upon the terms of Chapter 11829, supra, to substitute service of process by publication for the actual notice of the pendency of the action to which the Smetal Corporation would be entitled had it complied with the statutory requirements as to the designation of a person upon whom process may be served. It is undoubtedly true that domestic corporations may be subject to reasonable rules and regulations in that regard, yet they should not be deprived of their property without due process of law. Statutes such as Chapter 11829, supra, are intended to substitute service of process by publication when no officer or agent of the corporation can be found in the State upon whom personal service of the process may be made to bind the corporation. Bernhardt v. Brown, 118 N.C. 700, 24 S.E. Rep. 527, 36 L.R.A. 402; Pinney v. Providence Loan and Inv. Co., 106 Wis. 396, 82 N.W. Rep. 308, 50 L.R.A. 577.

The statute, Chapter 11829, supra, virtually authorizes suit against a domestic corporation without service of process where the corporation fails to file its list of officers or names of agents upon whom service of process may be made, which is but another name for forfeiture or confiscation of the corporation's property. The constitutional guaranty that no State shall deprive any person of life, liberty or property without due process of law, U.S. Const. Amend., Art. XIV, Sec. 1, was intended to secure the individual from the arbitrary exercise of the powers of government unrestrained by the established principles of private rights and distributive justice. See United States v. Cox, 18 How. 15 L. Ed. (300 text) 299.

Mr. Justice FIELD said that "`due process of law'" means due process "which, following the forms of law, is appropriate to the case, and just to the parties to be affected. It must be pursued in the ordinary mode prescribed by the law; it must be adapted to the end to be attained; and wherever it is necessary for the protection of the parties, it must give them an opportunity to be heard respecting the justice of the judgment sought." See Hagar v. Reclamation Dist. No. 108, 111 U.S. 701, 28 L. Ed. 569,4 Sup. Ct. Rep. 663, text 667.

So in line with such conception of the fundamental law of due process this Court has held that constructive service statutes must be strictly complied with before the Court can acquire jurisdiction through it over the defendant who by such method is directed to appear; that if personal service could be effected by the exercise of reasonable diligence substituted service is unauthorized. The plaintiff should employ reasonably the knowledge at his command; should exert an honest and conscientious effort to acquire information necessary to enable him to effect personal service. See West 132 Ft., et al., v. City of Orlando, 80 Fla. 229, 91 South. Rep. 369; Mabson v. Mabson,104 Fla. 162, 140 South. Rep. 801; Palatka Bldg. Loan Assn. v. Levey, 109 Fla. 293, 147 South. Rep. 212; McDaniel v. McElvy, 91 Fla. 770,108 South. Rep. 820; Tibbetts v. Olson, 91 Fla. 824,108 South. Rep. 679.

It would seem to follow therefore in the light of the law's carefully chartered course to protect a person against the deprivation of his property without due process of law, that is to say, without affording him an opportunity to be heard respecting the judgment to be entered that one who relies upon a statute which substitutes service by publication for personal or actual service of the process upon the defendant, should follow the strict letter of the statute in order that its enlivening spirit should also be observed.

The complainant did not do that in this case. When the order of publication was made there had not been filed in the cause a certificate of the Secretary of State that the place of business or domicile of the Corporation had not been designated under either Sections 1 or 3 of the Act, Chapter 11829, supra, but a certificate was filed after the order was made that the Corporation had not filed in the office a certificate in "`compliance with either Section 4257 or 4259 of the Compiled General Laws of the State of Florida, 1927, relative to designating an office or place of business or domicile for the service of process and naming an agent to accept service.'" That was not equivalent to a statement that the "place of business or domicile of said Corporation has not been designated either under Section 1 or Section 3 of the Act. The certificate was merely the Secretary's conception of what constituted a compliance by the Corporation with the terms of the Act.

What the statute required was a certificate that the "place of business or domicile of the Corporation has not been designated." A definite, certain and unqualified statement of a fact, not the Secretary's conception of what constituted a failure to comply with the law. Again, the order of publication was made by the Judge of the Court, although there was a Clerk. The statute requires the Clerk of the Court in which the cause shall be pending to make the order against the Corporation, and if there should be no Clerk, that is, if the Court have no Clerk, then the Judge shall make the order.

We have nothing to do with the reason of the statute, which required the Clerk to make the order and if there should be no Clerk, then the Judge should make it. It is sufficient that the Legislature required it, and as that drastic remedy was sought against the corporation which could have been served with process, which had designated a place of business, names of officers and agent upon whom process might be served, and that information was on file in the office of Secretary of State filed under the provisions of a later Act, Chapter 14677, Acts of 1931,supra, the strict letter of the statute, Chapter 11829, supra, should in the spirit of the Act and justness of the judgment sought, have been followed.

In addition to all of this, according to the allegations of the bill, the complainant West Lake Company knew that the Smetal Corporation was a domestic Corporation; that its principal place of business was in Miami; the names of its officers and places of address of both the Corporation and its officers and the name of the person which the Corporation had designated to accept service or could have acquired with very little effort such information. It sought rather to invoke a technical penalty against the Smetal Corporation and jeopardize its constitutional right to due process, to the end that the complainant by concealing the information which it possessed, or could have easily obtained, further its financial interests at the cost of the defendant.

So I am of the opinion that the order dismissing the bill should be reversed.

TERRELL, J., concurs.