Whitehead v. Buffalo & Lake Huron Railway Co.

18 How. Pr. 218

• Court: New York Supreme Court
• Decided: November 15, 1859
• Status: Published

Opinion

By the court—Greene, P. J.

The only question, which I deem it necessary to decide on this motion is, whether, conceding the defendant to be a foreign corporation, it is liable to be sued, or rather to be proceeded against under our statutes, which provide for the appropriation by judicial proceedings of the property of such corporations situated in this state, to the payment of their debts. There are a few elementary propositions material in the consideration of this question, which need only to be stated.

First. No valid judgment in personam, or which, proprio vigore, creates or declares an obligation to pay money or perform any legal obligation, can be pronounced by any judicial tribunal, until it has first obtained jurisdiction over the party against whom the judgment is pronounced bjr the ordinary process of the common law, or in the equivalent language of our state and federal constitutions, “ by due process of law."

Second. A corporation can have no local habitation beyond the territorial boupds of the government, by whose laws it was created, and hence no jurisdiction in invitum of it, a quasi corporation., can be obtained in a country, subject to any other government. But,

Thirdly. All property within the jurisdiction of any government is necessarily subject to the control of its laws, and may rightfully be appropriated by those laws to the payment of the debts of its owner, at such times and upon such conditions as may, by such government, in the exercise of a reasonable discretion, be deemed just. And as this right, as well as the manner of exercising it, depends upon the laws of the country where the property is situated, it must be exercised in' all respects in subjection to those laws. The true points of inquiry, therefore, are: to what extent do the laws of this state subject foreign corporations to proceedings in its courts for that purpose, and by whom and for what causes may such proceedings be instituted-?

' Prior to the adoption of the Code, the Bevised Statutes provided that suits brought in the supreme court, by a resident of this state, against any corporation created by the laws of any other state, &c., for the recovery of any debt or damages, might be commenced by attachment. (2 R. S. 457,157.) Until the enactment of this statute, it seems to have been' conceded, that under our laws no proceedings could be taken against foreign corporations, except in cases where they appeared voluntarily, or in other words, that our courts had no common law jurisdiction over such corporations, and could acquire none without their'consent. (See opinion of Sill, J., in Hulbert agt. The Hope Mutual Ins. Co., 4 How. P. R. 276; Matter of McQueen and others agt. The Middletown Manufacturing Co., 16 John. R. 5, and 1 R. S., p. 163, § 23, § 21, p. 162, and § 1, p. 157.) In the case last cited, it was held, that the provisions of the act under which the case arose applied to natural persons only. (Opinion of Spencer, J., pages 6 and 7.) The Code as first enacted (Laws of 1848, chap. 379, p. 497) contained no provision for the commencement of " actions ” against foreign corporations. By an act passed March 15th, 1849 (Laws, ch. 107, p. 142), the 15th section of the Bevised Statutes, above cited, was amended, so as to provide that suits might be brought in the supreme court and court of common pleas, in the city of Uevv-York, against any corporation created by the laws of any other state, &c., for the recovery of any debt, &c., arising upon contract made, executed and delivered within this state, or upon any cause of action arising therein, that such suits might be commenced by complaint and summons, together with an attachment as then provided by law, and that such complaint and summons might be served in the manner provided by sections 113 and 114 of the Code of Procedure. By a subsequent act passed' April 11th, 1849 (Laws, chap. 438, p. 613), the Code was revised and amended, “so as to read,” as provided by the latter act. By this act, several new sections were added to the Code, among them were sections 227 to 243 inclusive, and section 427. By the latter section it was provided that an action against a corporation created by the laws of any other state, &c., might be brought in the supreme court, the superior court, or court of common pleas of the city of bTew-York, in the following cases :

1st. By a resident of the state, "for any came of action.”

2d. By a plaintiff not a resident of this state, when the cause of action shall have arisen, or the subject of ike action shall be situated within this state.

This section has remained unchanged until the present time. Section 227 provided that, in an action for the recovery of money, an attachment might be issued as a security for the satisfaction of such judgment as the plaintiff might recover, among other cases, where the action was against a corporation created by the laws of any other state, &c.

The following sections to 243, inclusive, prescribe the proceedings upon such attachment. These sections, with the exception of certain amendments to sections 227, 229 and 241, which in no way affect the question under consideration, remain as they were originally enacted. Sections 134 and 135, in the act of 1849, which are substituted for sections 113 and 114, in the Code of 1848, and which contain amendments, which need not be here noticed, prescribe the manner of serving the summons in all cases.

By act passed July 10th, 1851 (Session Laws of 1851), the Code was again amended. By that act sections 134 and 135 were amended in the following particulars, supposed to be material to the question under consideration:

By the first subdivision of section 134 of the Code, as amended in 1849, as by the same subdivision of the correBponding section (113) of the Code of 1848, it was provided, that if the suit was against “ a corporation,” the summons should be served by delivering a copy thereof to the president or other head of the corporation, secretary, cashier or managing agent thereof. By the amendment of 1851, the following clause was added to the first subdivision of section 134:

“ But such service can be made in respect to a foreign corporation only, when it has property within this state, or the cause of action arose therein.”

Section 135 of the Code, as amended in 1849, provided, that when the. person, upon whom the service was to be made, could not be found in the state, the court or a judge might grant an order, that the service be made by the publication of the summons among other cases, “ when the defendant is a foreign corporation.” By the amendment of 1851, it w_as provided that service by publication might be made “ when the defendant is a foreign corporation, and has property within the state, or the cause of action arose therein.”

It is conceded that this action is not brought “ by a resident of this state, nor upon a contract made, executed or delivered within this state.”

It follows, therefore, that neither the provisions of the Revised Statutes above cited (2 R. S. 459, § 15), nor the amendment of that section adopted in 1849 (Laws of 1849, ch. 107, p. 142), have any application to this case, and if this proceeding can be sustained at all, the authority for it must be found in the provisions of the Code. The provisions of section 427 have been quoted, and they seem to me decisive of this question. That the courts of this state have no common law jurisdiction over or power to render judgments in personam against foreign corporations is clear, both upon principle and authority. (See the cases above cited, and Brewster agt. The Michigan Central Railroad Co., 5 How. P. R. 183.) The proceeding against a foreign corporation, though termed an " action ” against it, is merely a proceeding in rem, or a quasi proceeding in rem, the object and sole effect of which are to appropriate its property, within the jurisdiction of the court, to the payment of the debts of the corporation. That proceeding’ can be instituted only by the persons and for the causes prescribed by the statutes of the state. (Case agt. Ohio Insurance Co., 2 C. R. 82.) The section last cited provides that this proceeding or “ action ” hia)'- be instituted by a resident of this state, for any cause of action, and by a plaintiff not a resident, when the cause of action shall hace arisen, or the subject of the action shall be situated within this state. We have seen that the plaintiff is not “ a resident of this state.” It is admitted by the affidavits on both sides, that the contract, upon which the action is brought, was executed, and that the breach of it, for which the damages are claimed, took place in Canada. There can, therefore, be no pretence that the cause of action “ arose in this state.” I think it is equally clear that “ the subject of the action ” was not situated within this state. What is the subject of the action ? Hot certainly the title to the property attached, for the plaintiff asserts no such title here;. he claims the right to have that property appropriated to the payment of an alleged debt due to him from the defendant. But this right is neither questioned nor questionable, if his right to maintain this preceding is conceded. The subject of the action is the claim therein asserted by him, and the satisfaction of which he seeks out of the property attached, which he concedes to belong to the defendant. (See the opinion of Hand, J., in the case of The Bank of Commerce agt. The Rutland and Washington Railroad Co., 10 How. P. R. 8.) On the argument, the plaintiff referred to the ease of Ready agt. Stewart (1 C. R. N. S. 298), as sustaining the position in question.

But I do not so understand the opinion of the learned judge who delivered the opinion in that case. He says the term, “ subject of the action,” relates to the nature of the action, or the “ thing ” sought to he obtained by the judgment to be given, but not at all to the “person of the defendant.” The learned judge was commenting upon the 3d subdivision of section 185 of the Code, which requires that, in the case of a nonresident defendant, who has property in the state, and the action arises on contract, the * court should have jurisdiction of the subject of the action. Now, the thing sought to be obtained by the judgment was, the establishment of the claim asserted in the action. The idea that the learned judge was combatting was, as I understand his language, simply that the term, “jurisdiction of the subject of the action,” did not mean jurisdiction of the defendant.

It was also urged on the argument, on the authority, I suppose, of a suggestion of Justice Hand, in the case above cited, that the amendment of sections 134 and 135, limiting the service of summons, as in those sections prescribed, to cases where the cause of action arose in the state, or the defendant had property therein, is to be construed as modifying section 427, so as to make a foreign corporation liable to an action, whenever it has property in the state. This 'construction would create a direct repugnancy between the sections in question. This consequence should, and I think may be avoided by limiting the provisions o'f each section to the apparent object of the section. Section 427 specified the cases in which actions might be brought against foreign corporations, and sections 134 and 135 prescribed the manner of serving the summons in certain classes of cases, without regard to the right to maintain the action in any particular case. The object of these sections, I apprehend, was to provide for a service in all cases, where, assuming the right to institute an action, such service would be of any utility to the party ; and while it may be difficult in all cases, and especially in cases like that now under consideration, to perceive a perfect adaptation of all the provisions of these sections to. this object, I think it would be still more difficult to give them the effect of enlarging the pro visions of another section in which the right to maintain this class of actions is plainly defined, and as plainly limited. In short, the authority to maintain these actions is given by section 427, and the practice in them, so far as thé service of the summons is concerned, is regulated by sections 134 and 135, and' this, I think, is the only effect of these sections in such cases.

It is settled by well-considered authorities, that proof of jurisdictional facts is not essential to establish the regularity of the service of a summons upon a foreign corporation. The attachment may be issued at the time of issuing the summons, or “ at any time afterwards.” (Hulbert agt. The Hope Mutual Insurance Company, above cited, and Bates agt. The New-Orleans, Jackson and Great Northern Railroad Co., 13 H. P. R. 516.) The corporations proceeded against by summons before the issuing of an attachment may, on motion, contest these facts, and the plaintiff may, on a motion to set aside the service of the summons, produce the proof necessary to show his right to proceed against the corporation and thus sustain his proceedings. {Cases above cited.)

It is not until the plaintiff procures his attachment, which is to operate upon the property of the corporation, and which effects and eventually consummates the whole object of the proceeding, that the plaintiff is bound to prove the acts upon which jurisdiction to entertain the proceedings depends.

As the plaintiff in this case was not a resident of the state, and as the cause of action did not arise, and the subject of it is not situated within this state, it follows that the court has no jurisdiction of the proceeding.

And the order to discharge the attachment must be affirmed with $10 costs.

Marvin, Grover and Davis, Justices, concurring.