Pennoyer v. Neff
94 U.S. 714, 722 (1878)

  • Neff owed Mitchell some money for legal services. When he didn’t pay, Mitchell sued in Oregon State Court.
  • Neff didn’t live in Oregon and never appeared at the trial. He probably didn’t even know it was going on.
    • Mitchell submitted an affidavit that Neff owned land in Oregon and lived in California but couldn’t be found.
    • In order to satisfy the requirement of service of process, Mitchell put an ad in a local newspaper saying he was suing Neff.
      • This is not a classic way to provide service of process. Normally you need to hand them the notice in person (although it varies from state to state). Service of Process is a requirement of jurisdiction.
  • Because Neff never showed up, Mitchell won (through a default judgment aka Federal Rule 55). The Court confiscated Neff’s land and sold it at auction to generate the money needed to pay Neff’s debt to Mitchell.
    • The land was conveniently bought by Mitchell, who in turn sold it to Pennoyer.
  • When he found out what happened, Neff sued Pennoyer in Federal Court to get his land back.
  • The Trial Court found for Neff. Pennoyer appealed.
    • The Trial Court found that the judgment in Mitchell v. Neff was invalid.
    • The Court decided that Mitchell had not done enough to find Neff. He did not provide service of process.
  • The US Supreme Court affirmed.
    • The US Supreme Court noted that Oregon law states that an action by a resident against an absent nonresident can result in seizure of property. That implies that in some cases, Oregon would have jurisdiction over nonresidents, which would violate the constitution.
    • However, Oregon law also states that no person is subject to the court “unless he appear in the court, or be found within the State or be a resident thereof, or have property therein, and in that last case, only to the extent of such property at the time of the jurisdiction attached.”
      • That means that Oregon is only claiming a limited jurisdiction over people that own property in Oregon, if the issue is related to the property.
        • That’s known as in rem jurisdiction.
    • In this case, Neff’s property was not attached, Oregon couldn’t claim jurisdiction based on the fact that Neff’s property was in Oregon.
      • Basically, the property was not in anyway involved in Neff’s debt, therefore, the fact that Oregon has jurisdiction over property has no bearing on this case, the case is against Neff only.
        • Since the suit was Mitchell v. Neff, not Mitchell v. Neff’s Land).
    • Since the Oregon never had jurisdiction to hear the case in the first place, the US Supreme Court did not bother to rule on the fact that Neff was never served. However, Neff had a strong argument to get the judgment overturned on that basis too.
      • The Court did mention that if local publication of process (like printing in a local newspaper) sufficed as notification, there would be massive fraud and oppression, since there is no way a nonresident could be expected to see the ad.
  • The basic take-home message from this case is that if you own property in a State, but don’t live in that State, you are under limited jurisdiction of that State. The State has jurisdiction over you in cases that involve the property (in rem jurisdiction), but they do not have jurisdiction over you personally (in personam jurisdiction).
    • If the legal fees Neff owed were somehow related to some issue regarding the property, and if Mitchell had attached the property at the original onset of the case, then this could have been an in rem case (or at least quasi in rem), and Oregon would have had jurisdiction.