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larly be there. But if a state in which the house of J. P. Morgan is doing business decides to endow it with legal personality, it may certainly do so. If judgment be given against the new entity, against what property may it be enforced? Evidently it is enforceable against the property within the jurisdiction actually engaged in the business, such as office furniture, cash in hand, and securities employed as collateral. But can the plaintiff go further and attach the property of J.P. Morgan not actually being used in the business at the present moment? It is thought that he may. Where an individual engages in business, his relation to that business is different from his relation to a partnership of which he is a member, or to a corporation in which he invests. In each of the latter two cases a definite sum is generally laid aside as capital with which to carry on the business. This sum may not be reduced without considerable formality. In the case of the individual, except occasionally as a matter of bookkeeping and then without further significance, no distinction is made between property to be used in the carrying on of his business and that to be used for his other activities. He puts money into the business and takes it out as circumstances demand. Thus, in a sense, it may be said that all the property owned by J. P. Morgan personally is, as a matter of fact, as it is as a matter of law, the capital of the house of J. P. Morgan. In other words, the whole property of the individual in this case is the property of the group entity known as the house of J. P. Morgan and it is subject to execution on a judgment against that entity. When a man is carrying on several enterprises which he is really desirous of isolating, he incorporates them. Unless he does so, it may be said that they constitute a unit only separated so far as convenience demands, the capital and labor of each flowing into the other whenever desirable. A law subjecting the whole of an individual's property to execution under a judgment against his business should not be held unconstitutional. The capital of his business is admittedly subject to execution under such a judgment, and the test laid down for determining that capital cannot be said to be an unfair or unreasonable one, because in the great majority of cases the individual's property is the capital of his business, and in those few cases in which this might not be true, it would as a practical matter be impossible to distinguish the individual's property from the capital of his business. Allowing the judgment to be taken against the
individual directly, is merely a matter of procedure and cannot affect the substantial rights of the parties. Pennoyer v. Nef 105 has not concluded this reasoning, because the statute in that case was not restricted to individuals engaged in business within the state. Indeed, as we have seen, the opinion of the court specially excepted such a case from its decision.
The courts have not yet expressly formulated this theory, although it has been the basis of several decisions. For a time it appeared to be the theory adopted by the British judges in drawing up their rules under the Judicature Act of 1873. Rules of the Supreme Court, Order IX provides:
“When one person carrying on business in the name of a firm apparently consisting of more than one person shall be sued in the firm name, the writ may be served at the principal place within the jurisdiction of the business so carried on, upon any person having at the time of service the control or management of the business there, and subject to any of the rules of the Supreme Court, such service shall be deemed good service on the person sued.” Order XVI provides (section 8):
Any person carrying on business in the name of a firm apparently consisting of more than one person may be sued in the name of such firm.”
In O'Neil v. Clason 106 the Divisional Court upheld service on the manager of the business of a resident of Germany not then within the jurisdiction, doing business under the name of Clason & Co. Since the court had no jurisdiction over the non-resident, this decision interpreted the rules as recognizing the personality of a man's business apart from himself. Unfortunately, some seventeen years later the case was overruled by the Court of Appeal in St. Gobain v. Hoyermann 107 where the rules were interpreted to cover only a resident doing business under a firm name. But as Dicey points out, the question is not yet free from doubt in England.
In Alaska Commercial Co. v. Debney,108 the United States Circuit Court of Appeals for the Ninth Circuit committed itself to the same theory, by enforcing a judgment obtained in Canada against a defendant residing in the United States upon service on the agent in
108 46 L. J. Q. B. (N. s.) 191 (1876).
144 Fed. 1 (1906).
charge of his business in Canada, without in any way raising the question of defendant's consent to the service. As the Canadian court did not have jurisdiction of the defendant but only of his business, the decision recognizes the possibility of the business constituting a legal personality distinct from its owner.
Guenther v. American Steel Hoop Co.109 is probably the leading American case. The facts are the same as those in the English case, but the statute is in the ordinary American form. It is as follows: 110
"In actions against an individual residing in another State or a partnership, association, or joint stock company, the members of which reside in another State, engaged in business in this State, the summons may be served on the manager, or agent of, or person in charge of such business in this State, in the county where the business is carried on, or in the county where the cause of action occurred.” The court, in the most carefully reasoned opinion on the subject, proceeding from the dictum of Mr. Justice Field in Pennoyer v. Neff,111 seems to feel that the question of discrimination under the comity clause is the only one involved. But it recognizes that the judgment given in Kentucky does not necessarily have to be given full faith and credit abroad in such states as do not possess statutes similar to the Kentucky one. Such states have not recognized a legal personality similar to that created by the Kentucky statutes, and hence there is no defendant amenable to their courts against whom the judgment might be enforced. The court in Johnson v. Westerfield 112 dealt with an individual engaged in interstate commerce in the same way, and correctly so. The fact that the individual is engaged in interstate commerce cannot affect the question before Congress has taken action. In Indiana we have a decision of the highest court in Edwards v. Van Cleave,113 supporting a judgment rendered against a non-resident individual doing business within the state based on service upon his agent in charge. Green v. Snyder 114 and Carpenter v. Laswell 115 are exactly in point.126
109 116 Ky. 580, 76 S. W. 419 (1903). 110 Ky. CIVIL CODE, sec. 51, subsec. 6. 111 Cited supra.
143 Ky. 10, 135 S. W. 425 (1911). 47 Ind. App. 347, 94 N. E. 596. 114 Tenn. 100, 84 S. W. 808 (1905).
23 Ky. L. 686, 63 S. W. 609 (1901). 116 Adams Express Co. v. Crenshaw, 78 Ky. 136 (1879); Crane v. Hall, 165 Ky. 827, 178 S. W. 1096 (1915); Rauber v. Whitney, 125 Ind. 216, 25 N. E. 186 (1890); Behn 2. Whitney, 125 Ind. 599, 25 N. E. 187 (1890), are all cases containing dicta supporting the principal cases, but being partnership cases are not in point. Probably they are wrongly decided where the judgment is not limited to firm assets.
The only decision squarely holding a statute of this type unconstitutional when applied to non-resident individuals is Cabanne v. Graf 117 decided by the Supreme Court of Minnesota in 1902. The court very properly pointed out that the defendant in that case had never consented to submit himself to the jurisdiction of the Minnesota courts. But it then went on to beg the question by assuming that Pennoyer v. Neff 118 had concluded it when that case settled that a personal judgment could not be given against a person over whom the court had no jurisdiction. There are, however, several cases not themselves in point containing dicta, founded principally on the comity clause, denying the constitutionality of similar statutes.119
So far we have been discussing the right of a state to give a personal judgment against a group or individual residing abroad. If this right is conceded we can secure a judgment enforceable not merely against property now within the state but against any property subsequently brought in, thus making it practically impossible to do business within the state until the judgment is satisfied. As a remedy for the plaintiff, this is immensely superior to leaving him to bring separate quasi-in rem actions against each piece of property brought in. How far the judgment would be enforceable in a state other than that in which it was rendered would depend on the law of that state. If the state in which it was sought to enforce the judgment recognized the personality of the group or entity against which the judgment had been rendered, the judgment would come within the guaranty of the full faith and credit clause. If the state recognized no such personality, of course it would be justified in refusing to enforce a judgment running against someone who could not be brought before its courts. 120
William F. Cahill. NEW YORK CITY.
117 87 Minn. 510, 92 N. W. 46 (1902).
95 U. S. 714 (1877). 119 Caldwell o. Armour, 1 Pen. (Del.) 545, 43 Atl. 517 (1899); Brooks v. Dun, 51 Fed. 138 (1892); Aikmann v. Sanderson, 122 La. 265, 47 So. 600 (1908); Flexner v. Parson, 268 Ill. 435, 109 N. E. 327 (1915), are all partnership cases in which judgment was not restricted to partnership assets and hence properly set aside. In Moredock v. Kirby, 118 Fed. 180 (1902), the state code did not allow judgments against citizens except on personal service. See note 67, supra.
120 Flexner v. Parson, 268 Ill. 435, 109 N. E. 327 (1915).
STATUS OF STATE MILITIA UNDER THE HAY BILL
NOTE in the HARVARD LAW REVIEW for December discussed A
under the above caption the questions involved in the recent case of Sweetser v. Emerson and, going farther, examined into the scope and constitutional basis of the Federal authority over the National Guard assumed by the Hay Bill. Rather strangely, the discussion passes over sub silentio the many obviously questionable means of "federalization,” and out of all the new Federal powers exerted by the Bill selects as constitutionally deficient the one which seems authoritatively established beyond doubt or criticism, namely, the power to draft the National Guard, or organized militia, of the several States into the Federal Army. Though the argument fails to recognize, indeed denies, the basis of such Federal authority, more strangely still it proceeds to sustain it, extraconstitutionally as it were, by resort to a theory that is destructive of all balance between the Nation and the States.
That theory, as unnecessary as unsound, merits here a moment of consideration. The proposition is that Congress is without power to provide for drafting the organized militia into the Army of the United States, because such is not one of the constitutional purposes for which the militia may be called into the Federal service. But sanction is sought for legislation thus assumed to be unconstitutional in the acceptance by the States of the Federal pecuniary aid appropriated on condition of State compliance; and thus, it is said, "the States will waive their right to object to the action of Congress under the terms thereof," and, as for the individual members of the Guard, their enlistment oath to defend the United States and obey the orders of the President "would seem to constitute an express waiver of their constitutional right to object to draft for other than the constitutional specified purposes.” Poise is likely to be lost in contemplating a statement like this:
“Congress accomplishes this result (that is, using the militia for an assumed unconstitutional purpose) by using its constitutional power to organize the militia to abolish the constitutional limitations placed