PJ study guide: Pennoyer v. Neff

What is personal jurisdiction?

Personal jurisdiction (PJ) refers to the power of a court to require a person to come there and defend themselves. When a court has personal jurisdiction over a person, it has the power to enter binding judgments that are enforceable in the courts of that state, as well as other states due to the Constitution’s “Full Faith and Credit” Clause. Traditionally, courts can also have “in rem” and “quasi in rem” jurisdiction over property located in a state.

The differences between SMJ, PJ, and venue

SMJ (subject-matter jurisdiction) exists when a court system has the power to hear a certain type of case, as measured by the nature of parties (diversity) or the nature of the controversy (e.g., federal question, patent, etc.). SMJ cannot be consented to or waived, and a court must raise the issue of SMJ sua sponte if SMJ appears to be lacking.

PJ (personal jurisdiction) gives a court power to enter a binding and enforceable judgment over a person or property. It is measured geographically, typically by state borders. Unlike SMJ, an objection to PJ can be waived and PJ can be consented to.

Venue is the determination of where within a court system a trial can take place. So the question of proper venue in Florida state courts would ask which of Florida’s trial court or courts could hear a case, and in federal court would be the question of which of the 94 federal district courts would be a proper place or places for trial.

To know which forum or fora may be proper you must consider all three: SMJ, PJ, and venue. Note that oftentimes a lawsuit can plausibly be filed in more than one court system, and in more than one place.

We will now turn to PJ, and to an early important case, Pennoyer v. Neff.

Why Pennoyer is important

In Pennoyer v. Neff, 95 U.S. 714 (1878), the Supreme Court laid down a framework of territorial personal jurisdiction (PJ) that measured personal jurisdiction by reference to state borders. Some parts of Pennoyer may still be good law, but much of it has been superseded by International Shoe v. Washington, 326 U.S. 310 (1945). But you can’t understand the modern cases without understanding what came before. Additionally, you have to know about Pennoyer because:

  • Even in the modern era, PJ is still measured via territory (typically states).
  • Some of the traditional bases of PJ noted in Pennoyer are or may still be good law (consent, waiver, domicile, and “tag” jurisdiction).
  • It is impossible to understand the problems that International Shoe tries to fix without first understanding the framework of Pennoyer.

Facts and result of Pennoyer

SUIT # 1: Mitchell v. Neff (Oregon state court filed 1865)

Mitchell gets a default judgment and then gets Neff’s land.

Pennoyer involves two lawsuits. In the first, Mitchell sued Neff in Oregon state court in 1865. Mitchell had been Neff’s lawyer and sued him for alleged non-payment of legal fees. Neff no longer lived in Oregon and was apparently now living in California. Since Neff lived out of state, the Oregon state court allowed Mitchell to “serve” Neff with notice of the suit by posting an advertisement in a local newspaper. This is called “substituted service by publication.” The notice is shown below. Unsurprisingly, Neff did not appear to defend himself and later, a default judgment of “less than $300” was entered against him in 1866.

PvN

The land transfers

What happened next was a land transfer that ultimately led to the case of Pennoyer v. Neff. With his default judgment in hand, plaintiff Mitchell forced a sheriff’s sale of Neff’s Oregon property, which Mitchell then purchased in apparent good faith. After buying Neff’s land, Mitchell then sold the property to Pennoyer. The land transfers look something like this:

NEFF == sheriff’s sale of land ==> MITCHELL == sale of land==> PENNOYER

SUIT # 2: Neff v. Pennoyer (Oregon federal court filed 1874)

For many years afterwards, Pennoyer used the land he bought from Mitchell. At some point, however, Neff learned that his land has been sold out from under him and he sued Pennoyer in federal court to get his land back.

Therefore, suit # 2 was Neff v. Pennoyer. It was filed in federal court and not state court. When the case went to the Supreme Court, it was captioned Pennoyer v. Neff because Pennoyer was the one seeking Supreme Court review.

The result

In Pennoyer v. Neff, the Supreme Court held that the Oregon state court in suit # 1 had lacked jurisdiction over Neff, which rendered void the subsequent sheriff’s sale of his land to Mitchell. That meant that Neff (the original landowner) got back his land. Why? There’s no reason to believe that Pennoyer bought from Mitchell in bad faith.

Here’s why. The void default judgment from suit # 1 meant that the sheriff’s sale to Mitchell was also void. So Mitchell never got good title to Neff’s land. That also meant that Pennoyer never got good title when he purchased the land from Mitchell. As the Latin maxim goes, nemo dat quod non habet. In English: you can’t give what you don’t have. For a more modern example, imagine that a stranger walks up to you and offers to sell you Brooklyn Bridge. If you pay him money, do you own Brooklyn Bridge? No, because he owned nothing and neither do you.

The legal stuff from Pennoyer v. Neff (U.S. 1878)

Traditional bases of in personam jurisdiction

In an 1878 opinion by Justice Fields, the Supreme Court of the United States (suit # 2) held that the Oregon state court (suit # 1) lacked jurisdiction over Neff and his land. Regarding Neff, the court obliquely noted that “in personam” jurisdiction over a person could exist if the person:

  • Was domiciled in the state
  • Was personally served with process in the state (“tag” or “transient” jurisdiction)
  • Consented to or waived jurisdiction

Note that domicile, tag jurisdiction, and consent/waiver remain valid “traditional” bases for PJ today. We’ll talk about them again later.

But for now, let’s keep our focus on the decision. Here, Neff was no longer domiciled in Oregon, having moved. Nor was he personally served with process in Oregon. (He instead received “substituted” service by publication.) Finally, Neff had never consented to nor waived jurisdiction. Because none of the existing bases for PJ were satisfied the court lacked PJ over Neff, rendering the sale of his land void. As the court said, “the personal judgment recovered in the State court of Oregon against the plaintiff herein, then a nonresident of the State, was without any validity, and did not authorize a sale of the property in controversy.” In other words, “The judgment, if void when rendered, will always remain void.” Since suit # 1 was void, the sheriff’s sale to Mitchell was unauthorized, and in turn, Pennoyer bought nothing.

In rem and quasi in rem jurisdiction over Neff’s land

What about the fact that Neff’s land was located in Oregon? The court noted that a state’s courts can have “in rem” or “quasi in rem” jurisdiction over a defendant’s property that is found in the state, but only if the property is timely and properly “attached” to the suit while the suit was proceeding. As the court said, the property must “once brought under the control of the court by seizure or some equivalent act.” Here, however, there was no attachment or seizure of Neff’s land during the suit. Instead, the land was not executed against until after the default judgment. Therefore, the court never obtained jurisdiction over the land. So the Oregon state court also lacked jurisdiction over Neff’s land.

The concept of “territorial” jurisdiction and the two “principles of public law”

The court in Pennoyer made it very clear that borders matter. For example, the court subtly addressed a hypothetical: what if Neff had been personally served with process in California? Would there have been PJ then? The answer: no. The court stated that personal service out of state would not change the result, holding that “Process sent to [Neff] out of the State, and process published within it, are equally unavailing in proceedings to establish his personal liability.” That meant that Neff would not be subject to PJ in Oregon even if he had been served personally in California!!!! 

That result seems odd at first blush: if Neff was personally served in Oregon, there would be PJ, but if he was personally served outside of Oregon, there would not be PJ. Why should the place of service matter? It’s a fair question. After all, if Neff were served personally while in California, he was still have actual knowledge of the suit. He could still go back to Oregon to defend or to hire another lawyer to defend him. So why do borders matter so much?

The answer boils down to two words: power and borders. Or put differently, the fact that state jurisdictional power would be constrained by state borders. In the opinion, Justice Fields held that the answer “would seem to follow from two well-established principles of public law respecting the jurisdiction of an independent State over persons and property” (emphasis added). Explaining these two principles (which stem from international law) he stated (emphasis added):

The several States of the Union are not, it is true, in every respect independent, many of the right and powers which originally belonged to them being now vested in the government created by the Constitution. But, except as restrained and limited by that instrument, they possess and exercise the authority of independent States, and the principles of public law to which we have referred are applicable to them. One of these principles is, that every State possesses exclusive jurisdiction and sovereignty over persons and property within its territory. As a consequence, every State has the power to determine for itself the civil status and capacities of its inhabitants; to prescribe the subjects upon which they may contract, the forms and solemnities with which their contracts shall be executed, the rights and obligations arising from them, and the mode in which their validity shall be determined and their obligations enforced; and also the regulate the manner and conditions upon which property situated within such territory, both personal and real, may be acquired, enjoyed, and transferred. The other principle of public law referred to follows from the one mentioned; that is, that no State can exercise direct jurisdiction and authority over persons or property without its territory. Story, Confl. Laws, c. 2; Wheat. Int. Law, pt. 2, c. 2. The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. ‘Any exertion of authority of this sort beyond this limit,’ says Story, ‘is a mere nullity, and incapable of binding such persons or property in any other tribunals.’ Story, Confl. Laws, sect. 539.

In sum, why did borders matter? Because the direct power of one sovereign (one State) does not extend outside of the borders of that state. So service outside Oregon did not matter.

Below is a table that summarizes what happened in the two lawsuits.

NEFF

=> sheriff’s sale => 

MITCHELL

= subsequent sale =>

PENNOYER
Neff was:

  • Client of attorney Mitchell
  • Original landowner
  • D in Oregon state court in Mitchell v. Neff
  • P in Oregon federal court in Neff v. Pennoyer
  • Winner before United States Supreme Court in Pennoyer v. Neff
Sheriff’s sale done to satisfy default judgment in Mitchell v. NeffLand purchased in that sale by Mitchell.

Note that Mitchell didn’t have to buy Neff’s land but he did. Does that sound suspicious? Consider that Mitchell probably knew that Neff no longer lived in California and wouldn’t appear to defend himself.

Important legal point: Because the default judgment in Mitchell v. Neff was “void,” the subsequent sheriff’s sale was a nullity and did not give good title to Mitchell.

Mitchell was:

  • Former lawyer to Neff
  • P in Oregon state court in Mitchell v. Neff
  • Purchaser of Neff’s land in sheriff’s sale
  • Seller of same land to Pennoyer
This was a typical conveyance of land from Mitchell to Pennoyer.

Important legal point: Keep in mind the maxim nemo dat quod non habet, which means that a seller cannot convey something it doesn’t own. Because the sheriff’s sale to Mitchell was void, that means that Pennoyer bought and owns . . . nothing.

Pennoyer was:

  • A purchaser of land from Mitchell
  • Likely a purchaser in good faith
  • D in Oregon federal court in Neff v. Pennoyer.
  • Loser before United States Supreme Court in Pennoyer v. Neff.
  • After Pennoyer v. Neff, he ended up losing the land he purchased from Mitchell

 

Posted Aug. 25, 2016