Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1878).

Facts Mitchell brought suit against Neff to recover unpaid legal fees. Mitchell published notice of the lawsuit in an Oregon newspaper but did not serve Neff personally. Neff failed to appear and a default judgment was entered against him. To satisfy the judgment Mitchell seized land owned by Neff so that it could be sold at a Sheriffs auction. When the auction was held Mitchell purchased it and later assigned it to Pennoyer. Neff sued Pennoyer in federal district court in Oregon to recover possession of the property, claiming that the original judgment against him was invalid for lack of personal jurisdiction over both him and the land. The court found that the judgment in the lawsuit between Mitchell and Pennoyer was invalid and that Neff still owned the land. Pennoyer lost on appeal and the Supreme Court granted certiorari. Issue Can a state court exercise personal jurisdiction over a non-resident who has not been personally served while within the state and whose property within the state was not attached before the onset of litigation? Holding and Rule (Field) No. A court may enter a judgment against a non-resident only if the party 1) is personally served with process while within the state, or 2) has property within the state, and that property is attached before litigation begins (i.e. quasi in rem jurisdiction). Since the adoption of the Fourteenth Amendment, the validity of judgments may be directly questioned on the ground that proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law. Due process demands that legal proceedings be conducted according to those rules and principles which have been established in our systems of jurisprudence for the protection and enforcement of private rights. To give legal proceedings any validity, there must be a tribunal with legal authority to pass judgment, and a defendant must be brought within its jurisdiction by service of process within the state, or by his voluntary appearance. The substituted service of process by publication in actions brought against non-residents is valid only where property in the state is brought under the control of the court, and subjected to its disposition by process adapted to that purpose, or where the judgment is sought as a means of reaching such property or affecting some interest therein; in other words, where the action is in the nature of a proceeding in rem. The Oregon court did not have personal jurisdiction over Neff because he was not served in Oregon. The courts judgment would have been valid if Mitchell had attached Neffs land at the beginning of the suit. Mitchell could not have done this because Neff did not own the land at the time Mitchell initiated the suit. The default judgment was declared invalid. Therefore, the sheriff had no power to auction the real estate and title never passed to Mitchell. Neff was the legal owner. Disposition Judgment for Neff affirmed.

Summary of International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). Facts International Shoe Co. (D, appellant) was a Delaware corporation with its principle place of business in St. Louis, Missouri. It had no offices in the state of Washington and made no contracts for sale there. International Shoe did not keep merchandise in Washington and did not make deliveries of goods in intrastate commerce originating from the state. International Shoe employed 11-13 salesmen for three years who resided in Washington. Their commissions each year totaled more than $31,000 and International Shoe reimbursed them for expenses. Prices, terms, and acceptance or rejection of footwear orders were established through St. Louis. Salesmen did not have authority to make contracts or collections. The state of Washington brought suit against International Shoe in Washington State court to recover unpaid contributions to the unemployment compensation fund. Notice was served personally on an agent of the defendant within the state and by registered mail to corporate headquarters. The Supreme Court of Washington held that the state had jurisdiction to hear the case and International Shoe appealed. Issue Did International Shoes activities in Washington make it subject to personal jurisdiction in Washington courts? Holding and Rule (Stone) Yes. Minimum contacts with the forum state can enable a court in that state to exert personal jurisdiction over a party consistent with the Due Process clause. A casual presence of a corporation or its agent in a state in single or isolated incidents is not enough to establish jurisdiction. Acts of agents of the corporation, because of the nature, quality, and circumstances of their commission, may be deemed sufficient. Consent may be implied from the corporations presence and activities in the state through the acts of authorized agents. The activities carried on by defendant corporation in Washington were systematic and continuous rather than irregular or casual. The defendant received the benefits and protection of the laws of the state and is subject to jurisdiction there. Relevant factors International Shoe had conducted systematic and continuous business operations in Washington. A large volume of interstate business for the defendant was created through its agents within the state and the corporation received the benefits and protection of Washingtons laws. International Shoe had established agents in the state permanently. Disposition Affirmed judgment for the plaintiff.

Mullane v. Central Hanover Bank & Trust Co Share on facebookShare on emailShare on print|More Sharing ServicesMore View this case and other resources at:

Citation. 22 Ill.339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950) Brief Fact Summary. Appellee, a bank located in New York, set up a trust covering 113 participants and sent notice by publication to all known and unknown beneficiaries regarding Appellees application for judicial settlement of the trust, as required under a New York statute. Upon first distribution of the trust, Appellee would mail notice to known beneficiaries that could benefit from the interest or principal. Appellant, guardian of the beneficiaries, appealed, arguing that notice by publication alone violated the beneficiaries due process rights under the Fourteenth Amendment. Synopsis of Rule of Law. Notice must be reasonably calculated under all the circumstances, to apprise interested parties of the action and give them an opportunity to object. Facts. Appellee, Central Hanover Bank & Trust, set up common fund pursuant to a New York statute allowing the creation of common funds for distribution of judicial settlement trusts. There were 113 participating trusts. Appellee petitioned for settlement of its first account as common trustee. Some of the beneficiaries were not residents of New York. Notice was by publication for four weeks in a local newspaper. Appellee had notified those people by mail that were of full age and sound mind who would be entitled to share in the principal if the interest they held became distributable. Appellant was appointed as special guardian and attorney for all persons known or unknown not otherwise appearing who had or might thereafter have any interest in the income of the common trust fund. Appellee was appointed to represent those interested in the principal. Appellant appeared specially, objecting that notice by publication, permitted under the applicable statute was inadequate to afford t he beneficiaries due process under the Fourteenth Amendment and that therefore jurisdiction was lacking.

Issue. Is notice by publication of a judicial settlement to unknown beneficiaries of a common trust reasonable notice under the due process requirements of the Fourteenth Amendment?

Held. First issue: Yyes. Second issue: Nno. Whether or not the action is in personam or in rem, the court can determine the interests of all claimants as long as there is a procedure allowing for notice and an opportunity to be heard. There has to be notice and opportunity for a hearing appropriate to the nature of the case. The claimants at issue could potentially be deprived of property here, as the proposed disposition cuts off their rights to sue for negligent or illegal impairments of their interests. In addition, the courts decision appoints someone who, without their knowledge, could use the trust to obtain the fees and expenses necessary for a sham proceeding. There need not be personal service because the state has an interest in settling trusts. Notice has to be reasonably calculated, under all the circumstances, to apprise interested parties of the pending action and afford them an opportunity to present their objections. You do not have to

notify all the beneficiaries when the trust concerns many small interests. Sending notice to most of them will protect their interests sufficiently. The New York Banking Law, however, that does not require notice to all persons whose whereabouts are known, violates the due process clause of the Fourteenth Amendment because contacting beneficiaries by mail at their last known address is not particularly burdensome. Dissent. Justice Burton: Omitted from casebook. Discussion. The majoritys opinion illustrates that notice by publication will not suffice only because it would be burdensome for the plaintiff to notify all parties involved. If the plaintiff knows of a way to contact the parties, then the plaintiff must bear that expense. Mailing notice to an address, if known, will suffice. Notice by publication will suffice only if there is no practical way of knowing the identity or location of the party.

Shaffer v. Heitner Share on facebookShare on emailShare on print|More Sharing ServicesMore View this case and other resources at:

Citation. 22 Ill.433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) Brief Fact Summary. Plaintiff stockholder brought a shareholders derivative action in Delaware state court against Defendants, corporations incorporated in Delaware with their principal place of business in Arizona, and corporate officers of the corporations (Defendants). Plaintiff moved to sequester Defendants property, which was stock in the company, located in Delaware as defined by the Delaware statute. Defendants moved to quash the summons and to vacate the sequestration order, arguing that both exercising personal jurisdiction and seizing Defendants property violated due process. Synopsis of Rule of Law. When the only contact the defendant has with the forum state is the location of property as defined by statute in the forum state, the forum lacks personal jurisdiction over the defendant unless the minimum contacts test of International Shoe is satisfied. Facts. Plaintiff, a stockholder for Greyhound Corp., a company incorporated in Delaware with its principal place of business in Arizona, sued Greyhound Corp., Greyhound Lines, Inc., (a subsidiary of Greyhound Corp.) and present and former officers of the two companies for violating duties to Greyhound Corp. by causing it to be liable for damages in an antitrust suit and a fine in a criminal contempt action in Oregon. Plaintiff filed a motion for sequestration of the officers stock. Under a Delaware statute, Delaware is the situs of all stock in Delaware corporations. The stock was seized. Defendants were notified by certified mail of the sequestration and notice was published in a Delaware newspaper. Defendants entered a special appearance so they could move to quash service of process and vacate the sequestration order. Defendant argued that the order violated due process and therefore the property could not be attached in Delaware. In addition, Defendants argued that they did not have the minimum contacts with Delaware required to establish jurisdiction under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In addition, Defendants argued that the sequestration procedures were inconsistent with the Sniadach cases (see Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969)). The Court of Chancery found for Plaintiff and the Supreme Court of Delaware affirmed the Court of Chancery. The Supreme Court of Delaware reasoned that the Sniadach cases involved default judgments and not compelling a party to appear. This court furthered reasoned that sequestration procedures help to adjudicate claims of mismanagement against Delaware companies, and do not cause permanent deprivation of property to their shareholders. Defendants appealed.

Issue. In order for the forum state to exercise in rem jurisdiction on a nonresident, must the nonresident have minimum contacts with the forum state such that the defendant has purposefully availed itself of the benefits of that states laws? If so, must the cause of action be sufficiently related to the contacts the nonresident has with the forum state?

Held. Yes to both. Judgment reversed. In rem is not a proceeding against the property, it is a proceeding against a persons interest in the property. You need to give an owner of property reasonable and appropriate notice of an in rem proceeding so that he or she recognizes that such a proceeding directly affects his or her interests. Having property in a state does not give the state jurisdiction over causes of action unrelated to the property unless the person also passes the minimum contacts test articulated in the International Shoe decision. If it is unconstitutional to exercise jurisdiction over the person directly then it should be unconstitutional to assert jurisdiction indirectly. Plaintiffs argument that Delaware has an interest in asserting jurisdiction over corporate fiduciaries is not established by Delaware law. Delaware law determines that it has jurisdiction over Defendants because Defendants property is in Delaware; and not due to their statu s as corporate fiduciaries. First, the statute authorizing jurisdiction does not specifically apply to stockholder derivative actions. Moreover, Plaintiffs inability to secure jurisdiction over seven of the defendants because they didnt have property in Delaware shows that there is no necessary relationship between corporate fiduciaries and stockholders. In addition, Plaintiff has not demonstrated that Delaware is a fair forum. Plaintiff must demonstrate more than the applicability of Delawares laws to the controversy to establish a basis for jurisdiction. Plaintiffs argument that Defendants have received benefits from Delaware laws only demonstrates that it would be appropriate for Delaware law to govern obligations between Defendant and stockholders. This argument does not require that Delaware be permitted to exercise jurisdiction, especially considering its lack of a long-arm statute. Concurrence. Justice Stevens: The majority should not broadly eliminate in rem jurisdiction by stating that there is no personal jurisdiction if the only contact the defendant has with the forum state is property located in the state. There are other means of acquiring jurisdiction over local actions that may be unintentionally limited by this broad language. Justice Brennan (concurring in part and dissenting in part): The Delaware sequestration statute embodies quasi in rem jurisdiction that is no longer valid. The parties did not make the minimum contacts test an issue so the court should not have decided this issue. There is no proper factual record for determining the level of contacts in this case. This is also a constitutional question, and this decision will reach to all the state statutes that permit quasi in rem action through sequestration of property. The general rule is that the forum state has jurisdiction over the directors and officers of a corporation chartered by the state in a shareholder derivative action. A states valid substantive interests are considerations in assessing the constitutionality of exercising jurisdiction. Delaware has interests in preventing local corporations from being victims of foreign stockholders and in regulating its own corporations. In addition, jurisdiction can be based on out-of-state acti vities that have foreseeable effects in the forum state. Delawares failure to express an interest in corporate fiduciaries does not pertain to the minimum contacts analysis. In addition, there was purposeful availment of the forums laws because the corporate officers entered business relationships with Greyhounds stockholders pursuant to the laws of Delaware. Discussion. As the concurring opinions illustrate, it is highly unlikely a court has personal jurisdiction over a non-resident defendant that is absent from the forum state when the only contact is property owned by the defendant located within the forum state. Even if the property is connected to the suit, minimum contacts must still be established in compliance with the International Shoe test.