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.
