Reimers v. Seatco Mfg. Co.

• Decision Date: 08 October 1895
• Docket Number: 276.
• Citation: 70 F. 573
• Parties: REIMERS et al. v. SEATCO MANUF'G CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

70 F. 573

REIMERS et al. v. SEATCO MANUF'G CO. et al.

No. 276.

United States Court of Appeals, Sixth Circuit.

October 8, 1895

John J Reimers, doing business as John J. Reimers & Co., is a citizen and resident of Chicago, Ill. The Seatco Manufacturing Company is a corporation organized and existing under the laws of the state of Washington. The Michigan-Peninsular Car Company is a corporation of the state of Illinois, having an office and doing business in the state of Michigan, at Detroit. This was an action by Reimers against the Seatco Manufacturing Company to recover upon an express contract the sum of $2,364.64. The suit was begun in the circuit court of Wayne county, Mich., by the affidavit and writ of garnishment filed and served by the sheriff upon the Michigan-Peninsular Car Company. The affidavit averred that the latter company was indebted to the Seatco Manufacturing Company, and had credits of that company in its hands. True copies of the summons, affidavit in garnishment and writ of garnishment, with return of the service upon the writ, were served upon the Seatco Company at its office in Bucoda, in the state of Washington. The Michigan-Peninsular Car Company filed a disclosure under the garnishee statute of Michigan, in which it admitted that it was indebted in the sum of $3,135.06 to the Seatco Company; that this indebtedness was created by the purchase from the Seatco Company of certain lumber shipped from Washington; and that the purchase price of the lumber was to be paid by the garnishee defendant to the principal defendant in Bucoda Wash. The Michigan-Peninsular Car Company moved to quash the writ of garnishment. This motion was overruled in the Wayne circuit court. Thereupon the Seatco Company appeared specially, and moved to set aside the service and process on the ground that the court had no jurisdiction over it or the debt. Before the motion was passed on, the same defendant appeared specially, and filed a petition for removal of the cause to the circuit court of the United States for the Eastern district of Michigan. The order of removal was granted, and thereupon in the court below the motion to quash the writ and dismiss the suit for want of jurisdiction was heard. The motion was granted, the writ was quashed, and the suit dismissed for want of jurisdiction. The learned judge who presided in the court below reached this conclusion upon two grounds: First, that the debt sought to be attached was not within the jurisdiction of the Michigan courts, because the creditor, the debtor, and the plaintiff were all nonresidents of Michigan, and the debt was not payable in Michigan; and, second, that the requirements of the garnishee statute of Michigan as to process in such cases had not been complied with.

Bowen Douglas & Whiting, for plaintiffs in error.

Wells, Angell, Boynton & McMillan, for defendants in error.

Before TAFT and LURTON, Circuit Judges, and SEVERENS, District Judge.

TAFT Circuit Judge, after stating the facts, .

The question in this suit is whether, in a suit brought by a resident and citizen of Illinois against a resident and citizen of the state of Washington in the state of Michigan, a court of the latter state can acquire jurisdiction in rem to pronounce judgment against the nonresident defendant to the extent of a debt owed to the defendant by a corporation resident and citizen of Illinois doing business in Michigan, and liable by the laws of Michigan to the service of process in garnishment in that state. The question of jurisdiction is raised by the defendant against whom such a judgment is sought. It may be conceded that under the statutes of Michigan a corporation of another state which assumes to do business in Michigan subjects itself, through its agents in that state, to service of process by garnishment. But this does not determine the question whether a creditor of such a corporation is affected by this fact so that the debt owing is given a locality and situs within the state lines of Michigan such as to permit the courts of Michigan, under general principles of international law and the constitution of the United States, to seize the debt. The debt was not payable in Michigan, but in Washington. We conceive it to be well settled by authority that while, generally speaking, the situs of a debt is constructively with the creditor to whom it belongs, it is within the competence of the sovereign of the residence of the debtor, by reason of its control over its own residents, to pass laws subjecting the debt to seizure within its territorial sovereignty. We also conceive it to be well settled that, even if the debtor is not a resident of the sovereignty under which garnishment is attempted, such sovereignty still may subject the debt to its process and constructive seizure if the debtor is personally within the service of its process and the debt is payable within its territory. In either of the cases above mentioned, if a judgment is rendered against a garnishee for the debt thus constructively seized in favor of the plaintiff, the satisfaction of the judgment will be pro tanto a bar to a recovery against the garnishee on the original debt in any jurisdiction where the creditor seeks to recover it. But we are of opinion that a non-resident creditor cannot have his property in the debt seized in a state to which debtor may resort, not for purposes of residence, but merely for the purpose of doing business through agents, when the claim arose on a contract not to be performed within the state, and the debtor does not reside therein. But it is said that, if the debtor is a corporation, and seeks to do business outside of the state of its incorporation, the state to which it may send its agents for this purpose may impose any requirement whatever as a condition precedent to its doing business there, and, therefore, that it may require it to submit to judgment in garnishment for a debt owing by it to a nonresident, on the suit of a nonresident, though payable in another state. The right of a state to impose conditions upon foreign corporations doing business is not unlimited. In Insurance Co. v. French, 18 How. 404, Mr. Justice Curtis, speaking for the supreme court, said:

'A corporation created by Indiana can transact business in Ohio only with the consent, express or implied, of the latter state. Bank v. Earle, 13 Pet. 519. This consent may be accompanied by such conditions as Ohio may think fit to impose, and these conditions must be deemed valid and effectual by other states and by this court, provided they are not repugnant to the constitution or laws of the United States, or inconsistent with those rules of public law which secure the jurisdiction and authority of each state from encroachment by all others, or that principle of natural justice which forbids condemnation without opportunity for defense.'

In Southern Pac. Co. v. Denton, 146 U.S. 202, 13 Sup.Ct 44, it was held that the law which permitted a nonresident corporation to do business within its territory on condition that it should forfeit such permit if it removed a suit brought against it into the court of the United States held within the state was unconstitutional and void, and could give no validity and effect to any agreement or action of the corporation in obedience to its provisions, because it thereby was compelled to surrender a right and privilege secured to it by the constitution and laws of the United States; citing Insurance Co. v. Morse, 20 Wall. 445, and Barron v. Burnside, 121 U.S. 186, 7 Sup.Ct. 931. If, as we have already found, the debt to be garnished was not brought within the state by presence of the debtor corporation through its agent,...