Merriam Company v. Arthur Saalfield

• Decision Date: 17 April 1916
• Docket Number: No. 178,178
• Citation: 241 U.S. 22,60 L.Ed. 868,36 S.Ct. 477
• Parties: G. & C. MERRIAM COMPANY, Appt., v. ARTHUR J. SAALFIELD, Saalfield Publishing Company, and George W. Ogilvie
• Court: U.S. Supreme Court

241 U.S. 22

36 S.Ct. 477

60 L.Ed. 868

G. & C. MERRIAM COMPANY, Appt.,

v ARTHUR J. SAALFIELD, Saalfield Publishing Company, and George W. Ogilvie.

No. 178.

Argued January 14 and 17, 1916.

Decided April 17, 1916.

Messrs. William B. Hale and James A. Ford for appellant.

Messrs. Wade H. Ellis and Challen B. Ellis for appellees.

Mr. Justice Pitney delivered the opinion of the court:

This is a direct appeal from the district court under § 238, Judicial Code [36 Stat. at L. 1157, chap. 231, Comp. Stat. 1913, § 1215], upon the sole question of the jurisdiction of that court to make and enforce a final decree in personam against appellee George W. Ogilvie. The decree was founded upon a supplemental bill making Ogilvie a party to a suit already pending, and upon substituted service of process on persons said to represent him as attorneys in the state of Ohio, he being a citizen and resident of the state of New York, and not having been personally served.

The facts are as follows: In December, 1908, appellant filed its original bill against Saalfield in the then circuit court of the United, States for the northern district of Ohio, for relief against unfair competition in the business of publishing and selling dictionaries. Saalfield was duly served with process, appeared, and made defense. The circuit court having dismissed the bill, the circuit court of appeals reversed the decree (111 C. C. A. 517, 190 Fed. 927, 117 C. C. A. 245, 198 Fed. 369), and remanded the cause, with direction for an injunction and an accounting in conformity with its opinion. The district court made a decree in accordance with the mandate September 11, 1912, with an order of reference for the accounting. Thereafter and on December 16, 1912, the supplemental bill was filed, setting up in substance that since the entry of the decree of September 11 complainant had discovered, and it charged the fact to be, that Ogilvie had from the beginning actively conducted, controlled, and directed the defense of the suit, having selected, retained, and paid, as solicitors and counsel for defendant Saalfield, the firm of Weed, Miller, & Nason, of Cleveland, Ohio, and Mr. George F. Bean, of Boston, Massachusetts, who, in pursuance of said retainer, appeared on behalf of Saalfield, but acted for and under instructions of Ogilvie; that in fact Ogilvie was the proprietor of the dictionaries involved in the suit, which were published and sold for his benefit and profit by Saalfield under a contract providing for the payment of royalties to Ogilvie; that pending the suit Saalfield had transferred and assigned to the Saalfield Publishing Company, a corporation, his business of publishing and selling the dictionaries; that the company, as successor of and claiming through and under Saalfield, was bound by all the proceedings in the suit, and that it was then carrying on the business, under contract with Ogilvie; and that, by reason of the facts mentioned, Ogilvie had made himself privy to the suit, and an actual though not a nominal party thereto, and was bound by the proceedings and decree therein. Appropriate relief was prayed against Saalfield, the Saalfield Publishing Company, and Ogilvie.

Upon the filing of the supplemental bill and an affidavit setting forth that Ogilvie was a nonresident of the northern district of Ohio, and that, as alleged in the supplemental bill, the firm of Weed, Miller, & Nason, of Cleveland, and George F. Bean, of Boston, Massachusetts, who had appeared respectively as solicitors and counsel for defendant Saalfield in the defense of the suit, were in fact retained and employed by Ogilvie for that purpose, and paid by him and acted under his instructions and directions, complainant moved for and obtained an order authorizing substituted service of process against Ogilvie, to be made within the district upon the Cleveland attorneys, and in the district of Massachusetts upon George F. Bean. Service was made accordingly, and the process returned; and it appearing from an affidavit made by defendant Ogilvie, and filed in the cause on February 22, 1913, that he had had actual notice of the supplemental bill, an interlocutory decree pro confesso was entered, and this was followed, on October 16, 1913, by a final decree for the recovery against him of profits amounting, with interest, to $81,312.78, besides costs. Thereafter Ogilvie, by solicitors, appearing specially for the purpose, moved to quash the service of the writ of subpoena issued against him, and to set aside all proceedings based thereon. The district court, having heard testimony, granted the motion, and at the same time denied a petition filed by complainant for enforcement of the final decree against Ogilvie; and from final orders entered for carrying into effect this decision, complainant has appealed to this court.

There is a motion to dismiss, based upon the familiar ground that the 'jurisdiction of the court' referred to in § 238, Judicial Code, means its jurisdiction as a Federal court, and not its general jurisdiction as a judicial tribunal; the insistence being that the contention of complainant below presented no more than a general question of procedure in equity, and not one peculiar to the district court as a Federal court. But the distinction referred to bears upon the nature of the jurisdiction exercised or refused to be exercised after a valid service of process upon the defendant, and does not affect the question whether the court has acquired jurisdiction over the person, which is the one here involved. This question may be reviewed on direct appeal. Shepard v. Adams, 168 U. S. 618, 623, 42 L. ed. 602, 603, 18 Sup. Ct. Rep. 214; Remington v. Central P. R. Co. 198 U. S. 95, 99, 49 L. ed. 959, 963, 25 Sup. Ct. Rep. 577; Board of Trade v. Hammond Elevator Co. 198 U. S. 424, 434, 49 L. ed. 1111, 1116, 25 Sup. Ct. Rep. 740; Commercial Mut. Acci. Co. v. Davis, 213 U. S. 245, 256, 53 L. ed. 782, 787, 29 Sup. Ct. Rep. 445; Mechanical Appliance Co. v. Castleman, 215 U. S. 437, 440, 54 L. ed. 272, 275, 30 Sup. Ct. Rep. 125; Herndon-Carter Co. v. James N. Norris, Son & Co. 224 U. S. 496, 498, 56 L. ed. 857, 858, 32 Sup. Ct. Rep. 550. In Bache v. Hunt, 193 U. S. 523, 48 L. ed. 774, 24 Sup. Ct. Rep. 547, the decision that was held not reviewable on direct appeal was rendered upon a plea to the jurisdiction of the court over the subject-matter. In Courtney v. Pradt, 196 U. S. 89, 49 L. ed. 398, 25 Sup. Ct. Rep. 208, the suit had been removed from a Kentucky state court to the United States circuit court, where Pradt filed a special demurrer, assigning as causes that the court had no jurisdiction of the person or of the subject-matter. The court dismissed the suit for want of jurisdiction, and it appeared from its opinion that this was done because Pradt, who was sued as executor, was appointed as such in Wisconsin, and a suit against a Wis- consin executor could not be maintained in the Kentucky state court, nor in the Federal court. The question of jurisdiction was not certified to this court, and the appeal was therefore dismissed. These cases are plainly distinguishable. The present motion to dismiss must be denied.

Appellant's case upon the merits is rested upon the theory that Ogilvie was privy to the original suit against Saalfield, and an actual though not an ostensible party thereto, in such a real sense that the final decree therein would be res judicata against him; that the district court had jurisdiction to entertain the suit as against him notwithstanding he resided outside the district, because by voluntarily coming in and defending for Saalfield, he had submitted to the jurisdiction and waived the objection, and because the supplemental bill was a dependant and ancillary proceeding, and therefore properly brought in the district wherein the original proceeding was pending; and, finally, that because of its being an ancillary proceeding, substituted service upon the solicitors representing Ogilvie in the original proceeding was sufficient to subject him to the jurisdiction for the purposes of the supplemental bill. There is a faint attempt to sustain the jurisdiction on the theory that Ogilvie's affidavit, filed February 22, 1913, as mentioned in the interlocutory decree pro confesso, amounted to a general appearance, because it was submitted in opposition to a motion for injunction on the supplemental bill, and because it 'argued the case upon the merits.' This may be overruled at once. The affidavit shows on its face that it was to be used only as evidence for defendants Saalfield and the Publishing Company, and was not to be construed as an appearance by Ogilvie.

The district court, while raising some question whether the solicitors and counsel who had appeared for Saalfield at Ogilvie's expense had not concluded their services in Ogilvie's behalf prior to the filing of the supplemental bill, yet rested its decision substantially upon the ground that complainant did not know that Ogilvie had any connection with Saalfield or the Saalfield Publishing Company until after the making of the decree of September 11, 1912, upon the going down of the mandate from the circuit court of appeals; and that for this reason Ogilvie could not have taken advantage of that decree had it been adverse to complainant, and therefore was not estopped by it, since estoppels must be mutual.

In so holding, the court applied the doctrine that has been laid down in a number of cases, that a third party does not become bound by a decree because of his participation in the defense unless his conduct in that regard was open and avowed or...