First Nat. Bank & Trust Co. v. Pomona Machinery Co.

• Decision Date: 25 June 1971
• Docket Number: No. 10332,10332
• Parties: FIRST NATIONAL BANK AND TRUST COMPANY, a national banking association, Appellant, v. POMONA MACHINERY CO., a sole proprietorship, et al., Appellees.
• Court: Arizona Supreme Court

Page 184

486 P.2d 184

107 Ariz. 286

FIRST NATIONAL BANK AND TRUST COMPANY, a national banking association, Appellant, v. POMONA MACHINERY CO., a sole proprietorship, et al., Appellees.

No. 10332.

Supreme Court of Arizona, In Division.

June 25, 1971.

Rawlins, Ellis, Burrus & Kiewit by Michael S. Milroy and Michael V. Mulchay, Phoenix, for appellant

Jennings, Strouss & Salmon by Jon L. Kyl and Charles E. Jones, Phoenix, for appellees.

CAMERON, Justice.

This is an appeal from an order of the trial court dismissing the plaintiff's complaint and quashing the writ of garnishment issued therein. We are called upon to determine:

1. Whether a garnishment can give the court jurisdiction as to the amount garnisheed in an action involving a foreign plaintiff, defendant, and debt.

2. Whether the doctrine of forum non conveniens should apply.

3. Whether the Arizona garnishment statute is unconstitutional as applied to non-wage earner debts.

The facts necessary for a determination of this matter on appeal are as follows. The First National Bank and Trust Company, a national banking association with its principal place of business in the State of California, filed this action in Maricopa County Superior Court to collect monies due under the terms of a promissory note given by Pomona Machinery Company, a California sole proprietorship, and guaranteed in writing by Edward D. Testo, the sole proprietor, and his wife, both California residents. At the same time the action was filed, and in aid thereof, there was issued a writ of garnishment directed to the Arizona Bank. Summons and copies of the complaint were served on the defendants by the Sheriff's Office of Los Angeles County pursuant to Rule 4(e) of the Rules of Civil Procedure, 16 A.R.S. The bank by answer admitted an indebtedness to both Pomona and Testos, but in an amount less than the amount allegedly due on the note.

Appellee filed a motion to dismiss for want of jurisdiction over the subject matter, insufficiency of process, lack of jurisdiction, over the persons, and failure to state a claim. The motion was granted and appellant herein asserts error. Appellee on appeal counters that even if jurisdiction existed it should not have been exercised as the prejudgment garnishment statute is unconstitutional.

JURISDICTION

We are first concerned with the jurisdiction over the subject matter of the action. Jurisdiction over the subject matter--the underlying obligation--(i.e., the debt as defined in § 12--1571, subsec. A, par. 2, A.R.S.) is the power to hear and determine cases of the general class to which the particular proceedings belong, i.e., the abstract question. Arizona Public Service Co. v. Southern Union Gas Co., 76 Ariz. 373, 265 P.2d 435 (1953); Tube City Min. & Mill Co. v. Otterson, 16 Ariz. 305, 146 P. 203 (1915). The Superior Court had jurisdiction over the subject matter of this case and therefore could issue the writ of garnishment. Act. 6, § 6, Arizona Constitution, A.R.S., § 12--123, subsec. B; 6 Am.Jur.2d, Attachment & Garnishment, § 17, p. 573.

Having jurisdiction over the subject matter of the lawsuit does not mean, however, that the court had personal jurisdiction over the defendants in this case. Pursuant to filing the complaint, summons was personally served on both defendants in California pursuant to the Rules of Civil Procedure, 16 A.R.S. As pertinent hereto, Rule 4(e)(1) reads:

'* * * When a defendant is a nonresident of the state * * * summons shall be issued as in other cases and service may be made in accordance with Sections 4(e)(2) or 4(e)(3) of this Rule.'

Rule 4(e)(2) is, of course, the longarm rule. However, not all service accomplished pursuant thereto involves in personam longarm jurisdiction or the minimum contacts theory embodied therein, and absent reasons for application of longarm personal jurisdiction (See Liston v. Butler, 4 Ariz.App. 460, 421 P.2d 542 (1967) and Phillips v. Anchor Hocking Glass Corp., 100 Ariz. 251, 413 P.2d 732 (1966)), the rule in Arizona is that there must be personal service within the State to support in personam jurisdiction and judgment:

'In the landmark case of Pennoyer v. Neff (5 Otto 714), 95 U.S. 714, 24 L.Ed. 565, 569, the U.S. Supreme Court made it very clear that jurisdiction is either in personam or in rem; that in order to obtain a judgment in personam it is necessary to serve the defendant within the state; that where such service is not feasible, only judgment in rem may be obtained; that to obtain a judgment in rem, the res must be found within the state, must be brought within the court's jurisdiction by attachment, garnishment, or some such proceeding directly against the property; and that in such case the 'defendant is not personally bound by the judgment beyond the property in question.' As to the garnishment itself, the res, and the person of the garnishee, the appellant filed an affidavit stating facts sufficient to authorize issuance of a writ of garnishment upon garnishee--The Arizona Bank--pursuant to 4 A.R.S. § 12--1573.

Pennoyer's impact has been circumscribed in some ways by International Shoe Company v. Washington, Office of Unemployment Comp. etc., 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057 and other cases on the subject, but the above principles are still valid and form the very basis of all courts' jurisdictions.' O'Leary v. Superior Court of Gila County, 104 Ariz. 308, 312, 452 P.2d 101, 105 (1969).

Thereupon the writ was served personally upon the garnishee in Maricopa County and jurisdiction vested. As we have previously noted:

'From the above it is evident and conclusive that from the date of service of the writ of garnishment any amount due or found to be due from the garnishee to the defendant is in control of the court * * *.' Gillespie Land & Irrigation Co. v. Jones, 63 Ariz. 535, 542, 164 P.2d 456, 459 (1945).

Thus, when the garnishee's answer disclosed an admitted indebtedness to defendants, Pomona and Testo, the court acquired, from the date of the service of the writ, jurisdiction over the res of the account.

There being jurisdiction over the subject matter and over the amount garnisheed but no personal jurisdiction over the sheed but no personal jurisdiction over the defendants, we must then determine whether the court in Arizona has jurisdiction in an action wherein we have a foreign plaintiff, foreign defendants, foreign debt, and property in the State subject to garnishment or attachment.

Upon occasion garnishment proceedings have been described as In rem, however:

'While, properly speaking, actions or proceedings In rem are against the thing itself, and for the purpose of disposing thereof without reference to the title of the particular claimants, the term has in a larger and broader sense been applied to certain actions and proceedings between parties, where the object is to reach and dispose of property owned by them or in which they have an interest; but, as these are not strictly In rem, they have frequently and more properly been termed Quasi in rem, or in the nature of actions or proceedings In rem.' Hook v. Hoffman, 16 Ariz. 540, 557, 147 P. 722, 729 (1915).

By its terms, such is the nature of a § 12--1571, subsec. A, part. 2 garnishment action, where the garnishment is originally ancillary to the main action. See Porter...