Court Opinion

ID: 8301322
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:13:11.315183+00
Date Added: 2024-06-11T10:16:20.188114
License: Public Domain

Mr. Justice Fancher
delivered a dissenting opinion as follows:
I cannot give assent to the proposition that the Texas defendant can be brought before the court by publication in this ease. The insurance company is a nonresident corporation. It is before the court by service of process upon its agent in this State by *536virtue of a statute on tlie subject. The nonresident defendant lias sueli right in tlie policy of insurance, or in tlie subject of litigation that it cannot be taken away from her unless the court can gain jurisdiction over her person.
The principle is well settled by all the courts in this country that no effective personal judgment can be rendered in one State against a nonresident defendant who is not 'personally served with process and does not appear. Pennoyer v. Neff, 95 U. S., 714, 24 L. Ed., 565; Cooper v. Reynolds, 10 Wall., 308, 19 L. Ed., 931; St. Clare v. Cox, 106 U. S., 350, 1 Sup. Ct., 354, 27 L. Ed., 222; Freeman v. Alderson, 119 U. S., 185, 7 Sup. Ct., 165, 30 L. Ed., 372. All the authorities upon tlie subject of substituted process against a nonresident defendant recognize the right to affect his property, and in this manner bring him before the court, but only to the extent of his property situated within the jurisdiction of the court. The right to summon a party from his distant place of abode and compel him to submit to an adjudication of matters in another State lies only in the right to seize and affect his property located in the State. The law goes no further than this, and this far only upon the presumption that it is supposed a party will look after his property, and, when that is seized by the law, he is bound to take notice. '
Tlie case of Selig v. Hamilton, 234 U. S., 658, 34 Sup. Ct., 926, 58 L. Ed., 1523, discussed in the opinion of the majority, does not violate the principle above *537stated. That was a case affecting the right of a stockholder in a corporation and subjecting him to assessment for payment of debts and aróse under the Minnesota statute upon that subject. The corporation was properly before the court, and, of course, all matters affecting the corporation as such, and its property, consequently its stockholders, to the extent of their stock, could be adjudicated. It was held that the statute provided reasonable regulations for enforcing liability assumed by those who became stockholders under the laws of Minnesota. The assessment as to the amount thereof against the stockholders, including the propriety and necessity for same, might be made effective against nonresident stockholders, as well as those who were resident, after proper notice by publication or otherwise, as directed by the court. And in fixing the amount of such pro rata liability of stockholders the court would consider the expenses of the receivership,, the amount of corporate assets available, the parties liable as stockholders, the nature and extent of such liabilities, considering the probable solvency or insolvency of the stockholders, and expenses in levying the rate upon all the parties. It was expressly held that in determining these matters the judgment of the court was not in the nature of a personal judgment, but the stockholders were deemed to be represented by tlie corporation itself, which was before the court. This upon the principle of the obligation assumed by virtue of the relationship of the stockholders to it. However, in order to give the stock*538holder the right to make any personal defense, this course of procedure did not preclude him from showing he was not a stockholder, or not a holder of as many shares as was alleged, or that he had a claim against the corporation, or any other defense personal to himself. In bringing the corporation before the court, the stockholders were necessarily before the court, inasmuch as the several shares owned by the stockholders compose the corporate body. The right to bring the stockholder before the court in the first instance, however, is upon the logical basis that, being a mere shareholder in the corporation, he was presumed to be represented by the general corporate body, and he was before the court upon the same principle that a nonresident may be brought before the court in any other action to the extent that he has property subject to seizure within the jurisdiction of the court.
The New Jersey case of Amparo Mining Company v. Fidelity Trust Co., 74 N. J. Eq., 197, 71 Atl., 605, cited in the majority opinion, likewise falls within the same rule. The court had the corporation before it, the stock of which was owned in part by the nonresident corporation sought to be brought before the court as a defendant. It was held that the stock of the corporation before the court could be ordered before it at any time. Manifestly this was true, since the stock is but a share in the concern itself which was before the court. Having the corporation before the court, it had the several shares within its control. These *539shares had been issued in the State of New Jersey, and the principal corporation was a resident of that State, and was before the court of the State of' its ■ residence.
I do not consider the case of Wilcox v. Morrison, 9 Lea, 700, as authority here. It seems clearly distinguishable to my mind. The judgment in Tennessee was against a resident of Tennessee. Wilcox, the judgment creditor, had transferred this judgment to a trustee in Virginia. Afterward Wilcox sought in equity to assert his rights to this Tennessee judgment' on the ground that the Virginia debts had been settled, and it was held he could bring before the court the nonresident trustee to whom the judgment had been assigned. This was correct upon the principle that the nonresident trustee would have notice of matters concerning this judgment just as he would be presumed to look after property in Tennessee. His rights under the judgment could only be asserted here, and he was forced to take notice that the court of equity, having power to control this, judgment, was asserting this power. It was very much ás if he were a party to the judgment sought to be affected, because that judgment had been assigned to him by the plaintiff.
I do not regard the matters affecting this Texas defendant in the present case as coming within that large class of cases which are not strictly actions in rem, but are often spoken of as actions quasi in rem. These actions quasi in rem only seek to subject certain property of the owner to the discharge of the claim *540asserted, such as attachment cases, actions for the enforcement of mortgages and other liens, and all other proceedings having for their sole object the sale or other disposition of the property of the defendant to satisfy the demands of the plaintiff. They differ, among other things, from actions which are strictly in rem, in that the interest of the defendant is alone sought to be affected so that citation to him is required, and the judgment therein is only conclusive between the parties.
The State has power over property within its limits owned by nonresidents, and it is by virtue of this ownership that tribunals can inquire into the nonresident’s obligations to its citizens. The inquiry in such cáse can only proceed so far as may be necessary for the disposition of the property. If the nonresident possesses no property within the State, there is nothing upon which its tribunals can act. Pennoyer v. Neff; Freeman v. Alderson, supra.
Now in the present case, as I view it, the Texas defendant has no property within this State. She is not a stockholder of the insurance corporation. She has no such Interest in the affairs of the corporation as that she will be presumed to take notice of anything respecting the court’s action as to the liability of the insurance company.
It is said that the res is before the court in this case. To my mind, no res is here. The claim is not the res. The action is entirely personal. Suit upon the subject-matter of this litigation might be brought *541in any State so far as the insurance company is concerned, where it might be served with process through its proper agents. The Texas defendant might bring her suit involving her rights in any court in any State having such jurisdiction. Furthermore, the property of the insurance company is not before the court, nor involved in the suit. Then upon what principle must she take notice of a suit against the corporation here in Tennessee ? The policy of insurance is like a note. It is not property. It is only the evidence of the obligation. The obligation itself is like a thing in the air which may fly anywhere. The suit is to change or declare a liability of the insurance company personal in its nature. Can it be that a nonresident having an interest in that contract must take notice of the proceeding and appear because the insurance company is before the court? Suppose this action had been brought in any other of the many States where the insurance company, no doubt, does business and has agents; will Mrs. Young, the nonresident having an interest in the obligation of insurance, be forced to take cognizance and appear, upon mere constructive notice? We think not.
It was suggested in argument that under modern insurance the policy holder lias a right to share in certain surplus arising from the earnings on money paid in by the policy holder as premiums in excess of the amount necessary to carry the actual risk. If this be so, it is still a personal relationship arising from the contract of insurance, the main feature “of which *542is the insurance, not as an investment or shareholder in the company, but to indemnify the holder against the loss. But, if the policy holder, under modern insurance, has certain rights in the earnings of the company, this suit is not to change or affect the status of policy holders in general upon the principle that they hold a position analogous to stockholders. In point of fact, such policy holders do not stand in such relationship that a suit against the company will authorize the court to deal with them upon the grounds held in Amparo Mining Company v. Fidelity Trust Co. and Selig v. Hamilton, supra, that, having the corporation before the court, the shares therein are subject to its orders. This is not a suit to change the relationship of the shareholders to the corporation. It is a suit entirely of a personal nature and involving the rights under one policy alone.
The publication has its office, but it does not give actual notice. The party sought to be brought before the court in reality is before the court by the publication, not alone, but in conjunction with the assertion by the court of control over the property or res within its jurisdiction.
Webster defined “due process of law” in his argument in the Dartmouth College Case as “a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial.” Within that fundamental right, how can it be said that a court proceeds to hear and give trial when no actual personal notice is given, and when no property of the *543defendant is affected within the control of the court, which will afford presumptive notice?
The whole proposition reduces to the question of notice. I am 'unable to see how notice can be had as here attempted, within the rules governing the action of courts exercising power only within a given jurisdiction, within which the defendant does not’ come. I therefore respectfully dissent from the opinion of the majority on this question, believing the chancellor was correct sustaining the demurrer of the insurance company.-