Source: https://supreme.justia.com/cases/federal/us/198/215/
Timestamp: 2019-04-26 05:42:25+00:00

Document:
As an individual's property, debt can be a basis for personal jurisdiction over an individual based on a quasi in rem theory.
Harris, a North Carolina resident, owed $180 to Balk, who was also a North Carolina resident. Meanwhile, Balk owed $344 to Epstein, a Maryland resident. When Harris was visiting Maryland, Epstein attached the debt that Harris owed to Balk as a partial payment of Balk's debt to Epstein. After Harris did not dispute this process, Epstein received judgment for $180, and Harris paid this amount. Balk later filed a claim to pursue the $180 that he was owed, but Harris noted that Epstein had received this amount through the Maryland case. Balk prevailed in the trial court because it ruled that Maryland lacked jurisdiction over Harris. This prevented it from attaching the debt due to Balk as long as Harris was only temporarily in Maryland and North Carolina remained the relevant location of the debt.
Wherever the person of the debtor can be found, the courts in that state have the authority to issue a writ of attachment and garnish the debt. The place where the debt was incurred or the nature of the debtor's presence in the state do not affect this authority or the obligation of the debtor to pay the debt. As long as process is personally served and the creditor could sue the debtor in a state, a court in that state has the power to collect the debt. These requirements were met by the Maryland court, and the plaintiff was aware of the Maryland action at the time, so he should have contested it if he did not want to be bound by it.
Personal service of process on a debtor allows a state to gain quasi in rem jurisdiction over the debt, although more complex issues may arise if the debtor is a multi-state corporation or an individual who leaves for another state or country.
As, under the laws of Maryland, the garnishee could have been sued by his creditor in the courts of that state, he was subject to garnishee process if found and served in the state, even though only there temporarily, no matter where the situs of the debt was originally.
Attachment is the creature of the local law, and power over the person of the garnishee confers jurisdiction on the courts of the state where the writ issues. A judgment against a garnishee, properly obtained according to the law of the state and paid, must, under the full faith and credit clause of the federal Constitution, be recognized as a payment of the original debt by the courts of another state in an action brought against the garnishee by the original creditor.
Where there is absolutely no defense and the plaintiff is entitled to recover, there is no reason why the garnishee should not consent to a judgment impounding the debt, and his doing so does not amount to such a voluntary payment that he is not protected thereby under the full faith and credit clause of the Constitution.
twice over, the failure on the part of the garnishee to give proper notice to his creditor of the levying of the attachment would be such neglect of duty to his creditor as would prevent him from availing of the garnishee judgment as bar to the suit of the creditor, and thus oblige him to pay the debt twice.
The plaintiff in error brings the case here in order to review the judgment of the Supreme Court of North Carolina affirming a judgment of a lower court against him for $180, with interest, as stated therein. The case has been several times before the Supreme Court of that state, and is reported in 122 N.C. 64, again, 124 N.C. 467. The opinion delivered at the time of entering the judgment now under review is to be found in 130 N.C. 381. And see also 132 N.C. 10.
process, which was issued to garnish the debt which Harris owed Balk. After his return, Harris made an affidavit on August 11, 1896, that he owed Balk $180, and stated that the amount had been attached by Epstein, of Baltimore, and, by his counsel in the Maryland proceeding, Harris consented therein to an order of condemnation against him as such garnishee for $180, the amount of his debt to Balk. Judgment was thereafter entered against the garnishee and in favor of the plaintiff, Epstein, for $180. After the entry of the garnishee judgment, condemning the $180 in the hands of the garnishee, Harris paid the amount of the judgment to one Warren, an attorney of Epstein, residing in North Carolina. On August 11, 1896, Balk commenced an action against Harris before a justice of the peace in North Carolina, to recover the $180 which he averred Harris owed him. The plaintiff in error, by way of answer to the suit, pleaded in bar the recovery of the Maryland judgment and his payment thereof, and contended that it was conclusive against the defendant in error in this action, because that judgment was a valid judgment in Maryland, and was therefore entitled to full faith and credit in the courts of North Carolina. This contention was not allowed by the trial court, and judgment was accordingly entered against Harris for the amount of his indebtedness to Balk, and that judgment was affirmed by the Supreme Court of North Carolina. The ground of such judgment was that the Maryland court obtained no jurisdiction to attach or garnish the debt due from Harris to Balk, because Harris was but temporarily in the state, and the situs of the debt was in North Carolina.
The state court of North Carolina has refused to give any effect in this action to the Maryland judgment, and the federal question is whether it did not thereby refuse the full faith and credit to such judgment which is required by the federal Constitution. If the Maryland court had jurisdiction to award it, the judgment is valid and entitled to the same full faith and credit in North Carolina that it has in Maryland as a valid domestic judgment.
The defendant in error contends that the Maryland court obtained no jurisdiction to award the judgment of condemnation because the garnishee, although at the time in the State of Maryland and personally served with process therein, was a nonresident of that state, only casually or temporarily within its boundaries; that the situs of the debt due from Harris, the garnishee, to the defendant in error herein was in North Carolina, and did not accompany Harris to Maryland; that consequently, Harris, though within the State of Maryland, had not possession of any property of Balk, and the Maryland state court therefore obtained no jurisdiction over any property of Balk in the attachment proceedings, and the consent of Harris to the entry of the judgment was immaterial. The plaintiff in error, on the contrary, insists that, though the garnishee were but temporarily in Maryland, yet the laws of that state provide for an attachment of this nature if the debtor, the garnishee, is found in the state, and the court obtains jurisdiction over him by the service of process therein; that the judgment, condemning the debt from Harris to Balk, was a valid judgment, provided Balk could himself have sued Harris for the debt in Maryland. This, it is asserted, he could have done, and the judgment was therefore entitled to full faith and credit in the courts of North Carolina.
proceed upon the theory that the situs of the debt is at the domicil either of the creditor or of the debtor, and that it does not follow the debtor in his casual or temporary journey into another state, and the garnishee has no possession of any property or credit of the principal debtor in the foreign state.
much bound to pay his debt in a foreign state when therein sued upon his obligation by his creditor as he was in the state where the debt was contracted. We speak of ordinary debts, such as the one in this case. It would be no defense to such suit for the debtor to plead that he was only in the foreign state casually or temporarily. His obligation to pay would be the same whether he was there in that way or with an intention to remain. It is nothing but the obligation to pay which is garnished or attached. This obligation can be enforced by the courts of the foreign state, after personal service of process therein, just as well as by the courts of the domicil of the debtor. If the debtor leave the foreign state without appearing, a judgment by default may be entered, upon which execution may issue, or the judgment may be sued upon in any other state where the debtor might be found. In such case, the situs is unimportant. It is not a question of possession in the foreign state, for possession cannot be taken of a debt or of the obligation to pay it, as tangible property might be taken possession of. Notice to the debtor (garnishee) of the commencement of the suit, and notice not to pay to his creditor, is all that can be given, whether the garnishee be a mere casual and temporary comer or a resident of the state where the attachment is laid. His obligation to pay to his creditor is thereby arrested, and a lien created upon the debt itself. Cahoon v. Morgan, 38 Vt. 236; National Fire Ins. Co. v. Chambers, 53 N.J.Eq. 468, 483. We can see no reason why the attachment could not be thus laid, provided the creditor of the garnishee could himself sue in that state, and its laws permitted the attachment.
"any kind of property or credits belonging to the defendant, in the plaintiff's own hands, or in the hands of any one else, may be attached, and credits may be attached which shall not then be due."
Sections 11, 12, and 13 of the above-mentioned article provide the general practice for levying the attachment, and the proceedings subsequent thereto. Where money or credits are attached, the inchoate lien attaches to the fund or credits when the attachment is laid in the hands of the garnishee, and the judgment condemning the amount in his hands becomes a personal judgment against him. Buschman v. Hanna, 72 Md. 1, 5-6. Section 34 of the same Maryland Code provides also that this judgment of condemnation against the garnishee, or payment by him of such judgment, is pleadable in bar to an action brought against him by the defendant in the attachment suit for or concerning the property or credits so condemned.
Supreme Court of Pennsylvania, per Agnew, J., in delivering the opinion of that court. The same principle is held in Wyeth Hardware &c. Co. v. Lang, 127 Mo. 242, 247; in Lancashire Ins. Co. v. Corbetts, 165 Ill. 592, and in Harvey v. Great Northern Ry. Co., 50 Minn. 405, 406-407, and to the same effect is Embree v. Hanna, 5 Johns. 101; also Savin v. Bond, 57 Md. 228, where the court held that the attachment was properly served upon a party in the District of Columbia while he was temporarily there; that as his debt to the appellant was payable wherever he was found, and process had been served upon him in the District of Columbia, the Supreme Court of the District had unquestioned jurisdiction to render judgment, and the same having been paid, there was no error in granting the prayer of the appellee that such judgment was conclusive. The case in 138 N.Y. 209, Douglass v. Phenix Ins. Co., is not contrary to this doctrine. The question there was not as to the temporary character of the presence of the garnishee in the State of Massachusetts, but, as the garnishee was a foreign corporation, it was held that it was not within the State of Massachusetts so as to be liable to attachment by the service upon an agent of the company within that state. The general principle laid down in Embree v. Hanna, 5 Johns. 110, was recognized as correct. There are, as we have said, authorities to the contrary, and they cannot be reconciled.
case had no 'special limitation or provision in respect to payment.' It was payable generally, and could have been sued on in Iowa, and therefore was attachable in Iowa. This is the principle and effect of the best considered cases -- the inevitable effect from the nature of transitory actions and the purpose of foreign attachment laws, if we would enforce that purpose."
The case recognizes the right of the creditor to sue in the state where the debtor may be found, even if but temporarily there, and upon that right is built the further right of the creditor to attach the debt owing by the garnishee to his creditor. The importance of the fact of the right of the original creditor to sue his debtor in the foreign state, as affecting the right of the creditor of that creditor to sue the debtor or garnishee, lies in the nature of the attachment proceeding. The plaintiff in such proceeding in the foreign state is able to sue out the attachment and attach the debt due from the garnishee to his (the garnishee's) creditor, because of the fact that the plaintiff is really, in such proceeding, a representative of the creditor of the garnishee, and therefore if such creditor himself had the right to commence suit to recover the debt in the foreign state, his representative has the same right, as representing him, and may garnish or attach the debt, provided the municipal law of the state where the attachment was sued out permits it.
It ought to be and it is the object of courts to prevent the payment of any debt twice over. Thus, if Harris, owing a debt to Balk, paid it under a valid judgment against him, to Epstein, he certainly ought not to be compelled to pay it a second time, but should have the right to plead his payment under the Maryland judgment. It is objected, however, that the payment by Harris to Epstein was not under legal compulsion.
Harris in truth owed the debt to Balk, which was attached by Epstein. He had, therefore, as we have seen, no defense to set up against the attachment of the debt. Jurisdiction over him personally had been obtained by the Maryland court. As he was absolutely without defense, there was no reason why he should not consent to a judgment impounding the debt, which judgment the plaintiff was legally entitled to, and which he could not prevent. There was no merely voluntary payment within the meaning of that phrase as applicable here.
appear in the action and show that the plaintiff's claim, or some part thereof, was not due to the plaintiff. The defendant in error, Balk, had notice of this attachment, certainly within a few days after the issuing thereof and the entry of judgment thereon, because he sued the plaintiff in error to recover his debt within a few days after his (Harris') return to North Carolina, in which suit the judgment in Maryland was set up by Harris as a plea in bar to Balk's claim. Balk therefore had an opportunity for a year and a day after the entry of the judgment to litigate the question of his liability in the Maryland court, and to show that he did not owe the debt, or some part of it, as was claimed by Epstein. He, however, took no proceedings to that end, so far as the record shows, and the reason may be supposed to be that he could not successfully defend the claim, because he admitted in this case that he did at the time of the attachment proceeding, owe Epstein some $344.

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