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

Facts

• Neff (P) owned real property in Oregon

• Mitchell brought suit in Oregon to recover legal fees allegedly owed him by Neff.
• Neff, a nonresident, was served by publication; 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, the court ordered Neff’s land sold at a sheriff’s sale.
• Mitchell seized land owned by Neff so that it could be sold at a Sheriff’s 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 could not adjudicate the personal rights
and obligations between p and Mitchell.
• 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).
• Principle one: Every state possesses exclusive jurisdiction and sovereignty over persons
and property within its territory. Principle two: no state can exercise direct jurisdiction
and authority over persons or property outside of its territory. (well-established principles
of public law)
• However, the exercise of jurisdiction which every state possesses over persons and
property within it will often affect persons and property outside of it. A state may subject
property situated within it which is owned by nonresidents to the payment of the demands
of its own citizens.
• Substituted service by publication or by other authorized means may be sufficient to
inform the parties of the proceedings where the property is brought under the control of
the court or where the judgment is sought as a means of reaching such property or
effectuating some interest therein. Such service is effectual in proceedings in rem.
• It proceeds upon the theory that a seizure of the property will inform the owner that he
must look to any proceedings upon such seizure for the property’s condemnation or sale.
• But where the entire object of the action is to determine personal rights and obligations,
the action is in personam and service by publication is ineffectual to confer jurisdiction
over the nonresident defendant upon the court.
 • In an action to determine a defendant’s personal liability, he must be brough within the
court’s jurisdiction by service of process within the state or by his voluntary appearance.
Without jurisdiction, due process requirements are not satisfied.
• 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 court’s judgment would have been valid if Mitchell had attached Neff’s
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.