Pennoyer v. Neff

Facts:

Marcus Neff ("Neff"), a resident of California, hired John H. Mitchell ("Mitchell"), an Oregon lawyer. Mitchell subsequently sued Neff before a state court in Oregon to collect $300.00 in unpaid attorney's fees. Summons were served upon Neff by publication in an Oregon newspaper. Neff failed to appear in court to defend his interests. Consequently, the court rendered a default judgment against Neff. At the time the judgment was rendered, Neff did not own any property in Oregon. However, he was eventually granted a landholding in the said state. To satisfy the judgment, the court ordered the seizure and auction of the landholding owned by Neff. Sylvester Pennoyer won in the auction. Neff then instituted an action to recover his property before a federal court in Oregon on the ground that the state court did not acquire jurisdiction over him.

Issue:

Whether or not the state court acquired jurisdiction over Neff.

Held:

No. Since the suit is one in personam, the service of summons upon the defendant through publication is not enough for the state court to acquire jurisdiction over him. Moreover, the defendant's property must have been brought under court custody at the commencement of the suit.

Ratio Decidendi:

In rem and in personam suits distinguished; Substituted service by publication ineffective in actions in personam. Substituted service by publication is valid only in suits which are in rem in character, or those actions in which the jurisdiction pertains to the property. However, in suits which are in personam, or those actions which seek to determine only the personal rights and obligations of the defendant, substituted service by publication is ineffectual for any purpose. Legal processes within one state cannot be effective in another state. Neither service by publication within the state nor extra-territorial service will cure this.

Jurisdiction over a non-resident dependent on the presence of his or her property within the forum state. A state does not have jurisdiction over a non-resident who does not have any property within its territorial jurisdiction since the court's jurisdiction over the defendant is only incidental to its jurisdiction over the property. Hence, for a suit against a non-resident to prosper, he or she must have property within the forum state which must brought under the control of the court at the beginning of the suit. Otherwise, the judgment is void and cannot be rendered valid thought the subsequent acquisition of property within the forum state by the defendant. Furthermore, if the n0n-resident's property is not immediately seized, the defendant could easily frustrate the suit by disposing of the said property.