Barnett v. Chicago & Lake Huron Railroad — 11 N.Y. Sup. Ct. 114

Majority

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GEORGE W. BARNETT, Respondent, v. THE CHICAGO AND LAKE HURON RAILROAD COMPANY, Appellant.

Headnote

Non-resident corporation—process, how served upon—effect of judgment against— 2 R. S., 458, 459.

At common law, process against a corporation must be served on its head or principal officer, within the jurisdiction of the sovereignty where the artificial body exists.

A judgment recovered in an action commenced against a foreign corporation under the provisions of the Revised Statutes (2 R. S., 458,459; Laws 1842, chap. 197) binds only the property of the corporation within this State, and has no extraterritorial force.

Under the statutes of this State, service within this State on the proper officer of a foreign corporation, is equivalent to personal service on a non-resident natural person. If such personal service cannot be made, service may be- made by publication against corporations in the same cases in which it can be made against non-resident individuals.

The provisions of the Code in respect to the “provisional remedy” of attachment, and to the entering of judgment, apply alike to non-resident individuals and to foreign corporations.

Effect of judgment against a non-resident corporation which has no property within this State discussed.

Appeal from an order denying a motion made on behalf of the defendant (counsel appearing for that purpose only) to set aside the service of a summons in this action, which was served in the city of New York on the president of defendant. The cause of action was alleged to have arisen in this State. The motion was

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.made on affidavits showing that the defendant was a foreign corporation, and had no property and no officers or agencies in this State. The motion was denied.

Sinnott & Meyer, for the appellant.

A corporation has no legal existence out of the boundaries of the sovereignty by which it was created. (Angell and Ames on Corp., § 104, p. 79, and cases there cited; 1 Black, 286 .) It follows inevitably that a corporation cannot be served personally outside of the State giving it its existence; hence that the courts of this State cannot acquire jurisdiction of the person of a foreign corporation, unless by voluntary appearance. ( 18 How. Pr., 218 ; Brewster v. Michigan Central R. R. Co., 5 id., 183; Howell v. Chic. and No. West. Railway Co., 51 Barb., 378 ; Bates v. N. O., J. and Grt. Nor. R. R. Co., 4 Abb. Pr. [N. S.], 72; 30 Barb., 164 .) To make a judgment valid, it is necessary that the court rendering it should have jurisdiction of the subject-matter, and, in addition thereto, either of the person or of the property of the defendant. (Thompson v. Whitman, 18 Wall., 157 , and the cases there cited; D'Arcy v. Ketchum, 11 How., 165 ; Knowles v. Gas-light and Coke Co., 19 Wall., 58 .)

Robert Sewell, for the respondent.

At common law, jurisdiction over a foreign corporation could not be acquired by the service of process upon an officer thereof, outside of the State which gave it existence. In M'Queen v. Middletown Manufacturing Company,^[10] the rule of the common law is thus stated by Spencer, J.: “ The process against a corporation must be served on its head or principal officer, within the jurisdiction of the sovereignty where this artificial body exists. If the president of a bank of another State were to. come within this State, he would not represent the corporation here ; his functions and his character would not accompany him when he moved beyond the jurisdiction of the government under whose laws he derived this character.” Consequently, the court in that ease set aside an attachment on the ground that a statute which authorized

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attachments against the estates of non-resident debtors, generally, did not apply to foreign corporations. The same principle has been decided in numerous cases.^[10] It is, however, within the competency of the legislature to authorize suits against foreign corporations. The Revised Statutes gave such authority and prescribed the manner in which it should be exercised,^[11] This proceeding it is true was substantially in rem. The judgment in it bound only the property of the corporation within this State, and it had. no «^«-territorial force. I never heard the validity of this legislation called in question, and it was not disputed on the argument of this case. An attempt was made to show that, while the legislature had power to authorize a suit against a foreign corporation in rem, it had none to authorize one in personam. But no good reason for such a distinction was stated, or has ever been brought to my knowledge. If the legislature has power to authorize any.suit, they may prescribe what kind and the mode of procedure in it. There is nothing constitutional or fundamental in the method of procedure in an action. The legislature might have provided that the suit under the Revised Statutes might be commenced by summons, with publication of notice, and have directed that the property might be seized only after a judgment had been entered, and then by execution thereof. Or the attachment might have been made a mere incidental remedy in the suit. In short, the mode and order of procedure might have been changed without changing the nature and effect of the judgment. The presence of property in the State was necessary to uphold the validity of the proceeding, only because the legislature had made it so. The only question, therefore, is whether the proceeding in this case is authorized by the Code. This court has held, on two occasions at least, that it is;^[7] and we think these decisions are correct. The successive amendments to the Code demonstrate the intention of the legislature on this subject very clearly. That statute, in 1849, authorized a suit against a foreign corporation, by a resident of the State, for

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any cause of action.^[10] Section 427 has never been changed. The Code of 1848 also enacted that all actions should be commenced by summons,^[11] and prescribed the mode of service on individuals and on corporations;^[7] on the latter by delivering a copy to the president or secretary, etc.; but, by section 135 it was enacted, that if the person on whom service is to be made cannot be found within the State, publication should be made, in cases against foreign corporations as well as non-resident individuals. The condition on which publication is required is in each case the same, namely, that theperson to be served cannot be found within the State. The same statute authorizes attachments to be issued against foreign corporations as well as individuals, but does not require an attachment to be issued as an element of jurisdiction. The attachment, however, can be issued only in an action.^[8] In 1851, section 134 of the Code was amended by the provision that service should not be made on a foreign corporation unless it had property within the State, or the cause of action arose therein ; and although section 135 was also amended at the same time, yet, when these facts existed, the mode of service of a foreign corporation was left the same as before. By the act of April 10th, 1855,^[9] the legislature took another step in advance, and authorized service to be made on agents of foreign corporations, or persons who acted as such, when such corporations were doing business in this State. In 1859, a decisive amendment was made to section 134 of the Code, by enacting that service may be made upon a foreign corporation, not only when it has property within this State, or the cause of action arose therein, but when such service shall be made within this State personally, upon the president, secretary, or treasurer thereof. There has been no change in the law, in respect to publication, since the amendment of 1859. The history of the legislation on this subject, therefore, demonstrates the intention of the law makers to have been, to make service within the State on the proper officer of a foreign corporation, equivalent to personal service on a non-resident natural person. If the non-resident individual, or the proper officer of the foreign corporation is within the State, the mode of service is the same; and publication is not required in either case.

‡ ‡ Sec. 134.

§ § Sec. 227.

|| || Page 470.

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If not in the State, and such service cannot be made, there must be publication in both cases ; and jurisdiction is thereby acquired, if either the individual or the corporation has property in the State, or the cause of action arose therein. So, too, the provisions of the Code, in respect to the “ provisional remedy ” of attachment, and to the entering of judgment, apply alike to non-resident individuals, and to foreign corporations; not the slightest distinction is made between them.

What the effect of a judgment, recovered according to law, against a foreign corporation which has no property in this State, may be, it seems to me, is an inquiry which has no bearing on the case. “ It would operate on nothing in the State,” as was said by Judge Roosevelt ;^[10] but I am not certain that “ it would be regarded by nobody out of it.” It is not necessary that a judgment should be universally binding to give it validity in the State where it was recovered. There is some reason for saying that such judgment ought to be universally binding.^[11] A large number of foreign corporations have, in fact, migrated into this State, and established offices here. They make contracts here. Why should not those contracts be enforced here? If the corporation makes the contract by its officers, it ought to be amenable to the jurisdiction of the courts of the place where the contracts are made; and that can be accomplished only by allowing a service thereof on its officers. It is only by such a service that jurisdiction of a corporation can be acquired anywhere; and if it can thus be acquired in one place, I am at a loss to perceive why it may not in any other.

Without adverting to the decisions on this subject, cited on behalf of the defendant, I will only repeat that I think the cases decided in the first and fourth departments, before cited, are sufficient authority for the conclusion that the order appealed from should be affirmed.

Present— Gilbert and Tappen, JJ.

Order affirmed, with ten dollars costs.

* 30 Barb., 171 .

† † See 41 Geo., 661-670; Const. U. S., art. 4, § 1.

Footnotes

* 16 Johns., 5 .
* Nash v. The Rector, etc., 1 Miles, 78; Dawson v. Campbell, 2 id., 171; Clark v. N. J. S. Nav. Co., 1 Story, 531 ; Lafayette Ins. Co. v. French, 18 How. (U. S.), 404; Peckham v. North Parish, etc., 16 Pick., 286 .
† † 2 R. S., 458, 459; Laws 1842, chap. 197.
‡ ‡ Prouty v. Mich. S., etc., R. R., Co., 4 N. Y. S. C., 230, and Ives v. The Memphis, El Paso and Pacific R. R. Co., Fourth Dep., April, 1874, not reported.
* Sec. 427; see, also, Laws 1849, chap. 107.
† † Sec. 127.