Amdt5. Founding Era to 1945 on Personal Jurisdiction

Fifth Amendment:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Prior to ratification of the Fourteenth Amendment and the Supreme Court’s 1877 decision in Pennoyer v. Neff, a defendant that objected to the plaintiff’s state court exercising personal jurisdiction over him would typically wait to object to such exercise of jurisdiction until the plaintiff sought to have the defendant’s state court recognize and enforce the first court’s judgment.1 State (and, in some cases, federal)2 courts considering whether such judgments were enforceable would resolve such jurisdictional challenges on the basis of general, customary law principles derived from English common law and international law addressing the recognition of foreign judgments rather than by applying the federal Constitution.3 However, in Pennoyer, the Supreme Court stated that the Fourteenth Amendment’s Due Process Clause imposes constitutional limits on state courts’ exercise of personal jurisdiction over nonresident defendants.4 Pennoyer converted the issue of personal jurisdiction into a question of federal constitutional law, allowing a party to obtain direct review of a state court’s judgment in a federal court that was not bound to apply state statutes or judicial precedent when deciding whether the issuing court had personal jurisdiction over the parties.5

In Pennoyer, the Court indicated that, absent a defendant’s consent, a state court’s jurisdiction generally extends only to persons or property within its territory.6 The Court grounded this “physical presence” approach in principles of federalism: each state of the union is a coequal and independent sovereign in the federal system, and thus possesses exclusive authority over persons and property within its domain.7 Although the Court’s decision in Pennoyer addressed personal jurisdiction over natural persons or people, the Court’s early jurisprudence following the 1877 case established that state courts could potentially exercise jurisdiction over foreign corporations doing business in the state because the law presumed that those corporations had implicitly consented to personal jurisdiction, or could be deemed “present” within the state, based on their in-state activities.8

The Pennoyer Court’s “physical presence” test established the constitutional foundation for strict limits on state courts’ authority to exercise in personam jurisdiction over a nonresident defendant—that is, to render judgments concerning that defendant’s personal rights and obligations.9 Thus, for example, service upon a defendant by publishing notice of the lawsuit in a newspaper circulating in the forum state was insufficient to confer jurisdiction on a court to adjudicate the personal liability of a defendant who had left the state and did not intend to return.10 Nevertheless, even in the absence of a nonresident defendant’s physical presence or consent, courts could still attain jurisdiction over the defendant indirectly through the attachment (i.e., seizure) of the defendant’s property interests within the forum and the provision of notice to the defendant.11 In particular, a state court could exercise in rem jurisdiction12 over a nonresident defendant’s property interest in the state in order to adjudicate all of the rights or claims in a piece of property.13 It could also exercise quasi in rem jurisdiction14 over a nonresident defendant by adjudicating a plaintiff’s claim to the property in relation to the defendant or to satisfy the claims of its own citizens against the defendant personally.15 However, judgments resting upon the exercise of in rem or quasi in rem jurisdiction would not personally bind the defendant to an extent greater than the value of the property.16

Stephen E. Sachs, Pennoyer Was Right, 95 TEX. L. REV. 1249, 1270 (2017). back
Id. at 1279. back
Id. ( “The Constitution’s role here was largely indirect—letting defendants remove their cases into federal court or challenge enforcement through diversity suits.” ). In the 1851 case D’Arcy v. Ketchum, decided prior to Pennoyer, in which an individual sought to enforce a New York judgment in a Louisiana federal court, the Supreme Court stated that “countries foreign to our own disregard a judgment merely against the person, where he has not been served with process nor had a day in court,” and that such proceedings are “deemed an illegitimate assumption of power, and resisted as mere abuse.” 52 U.S. (11 How.) 165, 174 (1851). back
Pennoyer v. Neff, 95 U.S. 714 (1878) ( “Since the adoption of the Fourteenth Amendment to the Federal Constitution, the validity of such judgments may be directly questioned, and their enforcement in the State resisted, on the ground that proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law.” ), overruled in part by, Shaffer v. Heitner, 433 U.S. 186 (1977). back
Sachs, supra note 1, at 1253, 1288 ( “The Fourteenth Amendment remade this picture simply by changing the route for appeal. A judgment without jurisdiction was void; its execution took away property (or, less commonly, liberty) without due process of law. That turned the presence or absence of jurisdiction, full stop, into a matter of constitutional concern.” ). back
Pennoyer, 95 U.S. at 720 ( “The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in every other forum . . . [an] illegitimate assumption of power, and be resisted as mere abuse.” ); id. at 722 ( “[N]o State can exercise direct jurisdiction and authority over persons or property [outside of] its territory.” ). The Pennoyer Court recognized that a tribunal had authority to exercise personal jurisdiction over a non-resident served with process while in the forum. Id. at 724 ( “Where a party is within a territory, he may justly be subjected to its process, and bound personally by the judgment pronounced on such process against him.” ) (internal citations and quotation marks omitted). See also Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) ( “Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant’s person.” ); McDonald v. Mabee, 243 U.S. 90, 91 (1917) ( “The foundation of jurisdiction is physical power.” ). back
Pennoyer, 95 U.S. at 722 ( “[E]very state possesses exclusive jurisdiction and sovereignty over persons and property within its territory . . . . The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others . . . . [N]o tribunal established by [a state] can extend its process beyond that territory so as to subject either persons or property to its decisions.” ). back
Shaffer v. Heitner, 433 U.S. 186, 201 (1977) ( “[The Pennoyer] opinion approved the practice of considering a foreign corporation doing business in a State to have consented to being sued in that State. This basis for in personam jurisdiction over foreign corporations was later supplemented by the doctrine that a corporation doing business in a State could be deemed ‘present’ in the State, and so subject to service of process under the rule of Pennoyer.” ) (internal citations omitted). See also, e.g., Int’l Harvester Co. v. Kentucky, 234 U.S. 579, 586 (1914) ( “This course of conduct of authorized agents within the state in our judgment constituted a doing of business there in such [manner] that the Harvester Company might be fairly said to have been there, doing business, and amenable to the process of the courts of the state.” ); Lafayette Ins. Co. v. French, 59 U.S. (18 How.) 404, 408 (1856) ( “Now, when this corporation sent its agent into Ohio, with authority to make contracts of insurance there, the corporation must be taken to assent to the condition upon which alone such business could be there transacted by them; that condition being, that an agent, to make contracts, should also be the agent of the corporation to receive service of process in suits on such contracts.” ). back
Hanson v. Denckla, 357 U.S. 235, 246 n.12 (1958) ( “A judgment in personam imposes a personal liability or obligation on one person in favor of another.” ); Pennoyer, 95 U.S. at 727. back
McDonald, 243 U.S. at 92 ( “[I]t appears to us that an advertisement in a local newspaper is not sufficient notice to bind a person who has left a state, intending not to return.” ). back
Pennoyer, 95 U.S. at 723 ( “But as contracts made in one State may be enforceable only in another State, and property may be held by non-residents, the exercise of the jurisdiction which every State is admitted to possess over persons and property within its own territory will often affect persons and property [outside of] it.” ). back
In Rem Jurisdiction, Black’s Law Dictionary (10th ed. 2014) (defining “in rem jurisdiction” as a “court’s power to adjudicate the rights to a given piece of property, including the power to seize and hold it” ). back
Hanson, 357 U.S. at 246 n.12 ( “A judgment in rem affects the interests of all persons in designated property.” ). back
Quasi-in-rem Jurisdiction, Black’s Law Dictionary, supra note 12 (defining “quasi-in-rem jurisdiction” as jurisdiction “over a person but based on that person’s interest in property located within the court’s territory” ). back
Hanson, 357 U.S. at 246 n.12 ( “A judgment quasi in rem affects the interests of particular persons in designated property.” ). See also Pennoyer, 95 U.S. at 723 ( “Every State owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens.” ); id. at 728 ( “[T]he jurisdiction of the court to inquire into and determine [the defendant’s] obligations at all is only incidental to its jurisdiction over the property.” ). For example, in Harris v. Balk, the Supreme Court held that a Maryland court had properly exercised quasi in rem jurisdiction over a North Carolina resident (Balk) who owed a debt to a Maryland resident (Epstein) because Epstein could attach the debt of a third party (Harris) that was owed to Balk while Harris was physically present in Maryland. 198 U.S. 215, 223 (1905). Harris was eventually overruled by Shaffer v. Heitner, 433 U.S. 186 (1977). See id. at 216–17 (holding that a state court could not exercise quasi in rem jurisdiction over a nonresident defendant by attaching the defendant’s property interests in the state without inquiring separately into whether these property interests and any other connections between the defendant, forum, and litigation established sufficient minimum contacts to satisfy the first prong of the International Shoe test). back
See Pennoyer, 95 U.S. at 723–24 (stating that a judgment resting on in rem or quasi in rem jurisdiction binds the defendant only to the extent of the property’s value). As discussed below, the Court subsequently held that a tribunal may not exercise quasi in rem jurisdiction over a nonresident defendant by attaching the defendant’s property interests in the state without inquiring separately into whether these property interests and any other connections establish sufficient contacts between the defendant, forum, and litigation. Rush v. Savchuk, 444 U.S. 320, 328 (1980) ( “We held in Shaffer that the mere presence of property in a State does not establish a sufficient relationship between the owner of the property and the State to support the exercise of jurisdiction over an unrelated cause of action. The ownership of property in the State is a contact between the defendant and the forum, and it may suggest the presence of other ties. Jurisdiction is lacking, however, unless there are sufficient contacts to satisfy the fairness standard of International Shoe.” ) (citing Shaffer v. Heitner, 433 U.S. 186, 209 (1977)). As a result, it appears that plaintiffs rely upon quasi in rem jurisdiction instead of in personam jurisdiction in some cases in which a state’s “long-arm statute” does not provide for the exercise of in personam jurisdiction over the defendant. See Michael B. Mushlin, The New Quasi In Rem Jurisdiction: New York’s Revival of a Doctrine Whose Time Has Passed, 55 Brook. L. Rev. 1059, 1063 (1990) ( “Courts have explained that the new theory of quasi in rem jurisdiction is necessary to fill gaps in the state’s long arm statute.” ). back