De Rees v. Costaguta

• Decision Date: 06 December 1920
• Docket Number: No. 341,341
• Citation: 65 L.Ed. 202,41 S.Ct. 69,254 U.S. 166
• Parties: DE REES v. COSTAGUTA et al
• Court: U.S. Supreme Court

254 U.S. 166

41 S.Ct. 69

65 L.Ed. 202

DE REES

v COSTAGUTA et al.

No. 341.

Submitted Oct. 11, 1920.

Decided Dec. 6, 1920.

Messrs. Marion Erwin and Frederick M. Czaki, both of New York City, for appellant.

[Argument of Counsel from page 167-168 intentionally omitted] Mr. Walter H. Merritt, of New York City, for appellees.

[Argument of Counsel from page 168-169 intentionally omitted] Mr. Justice DAY delivered the opinion of the Court.

The appellant, plaintiff below, a resident and citizen of the state of New Jersey, filed a bill of complaint against David Costaguta, Marcos A. Algiers, Alajandro Sassoli, and Eugenio Ottolenghi, individually and as copartners composing the firm of David Costaguta & Co., asserting that they, and each of them, were aliens, and residents of the republic of Argentine, South America. The bill joined as defendants Renado Taffell, a British subject, resident of New York and the Southern district thereof, and the American-European Trading Corporation, organized under the laws of New York.

The bill sets forth at length a contract whereby it is alleged that a copartnership was formed between the plaintiff and David Costaguta & Co., for the buying and selling of hosiery. The bill alleges that to carry the contract into effect a place of business was established in New York City; that disagreements arose between the parties; that plaintiff elected to terminate the contract and demanded a liquidation of the merchandise and an accounting; that the firm of David Costaguta & Co., caused the American-European Corporation to be organized under the laws of New York, and that said firm caused certain assets of the copartnership to be transferred to the corporation in fraud of the plaintiff, and which assets, it was alleged, were within the territorial jurisdiction of the Southern district of New York. Plaintiff prayed a dissolution of the alleged copartnership; the liquidation of the property thereof; that the nonresident defendants account for their acts and transactions, and that it be established what sum, if any, remained due to the plaintiff; that the plaintiff be decreed to have a lien on all of the property of the defendants and on the property and assets of the American-European Trading Corporation; that a receiver pendente lite be named. An order was prayed for the delivery of the property to the receiver, and an injunction to restrain its transfer or disposition. A temporary restraining order was asked pending the hearing and the return of the rule nisi, prohibiting in any manner or form interference with the property, or removing the same from the jurisdiction of the court. An order was issued requiring the defendants to show cause why such receiver pendente lite should not be appointed, and the defendants required to transfer the property to such receiver, and enjoining them from otherwise transferring the same. The subpoena and order for the rule were served on the resident defendants American-European Trading Corporation and Taffell. Plaintiff then procured an order for service upon the nonresident defendants by publication under section 57 of the Judicial Code (Comp. St. § 1039). The nonresident defendants filed a special appearance for the purpose of asking the court to quash and set aside the order for service by publication, and for an order requiring the plaintiff to show cause why an order should not be made vacating and setting aside the service by publication, and also to vacate, quash, and set aside certain alleged service on an agent of the firm in the Southern District of New York. A motion was also made by the American-European Trading Corporation and Taffell, by special appearance, for the purpose of opposing the jurisdiction. The District Court denied the plaintiff's motion for an injunction and receiver, and granted the nonresident DEFENDANTS' MOTION TO VACATE THE ORDER FOr service by publication. this resulted in the dismissal of the plaintiff's bill by final decree, and the case was brought here by the plaintiff under section 238 of the Judicial Code (Comp. St. § 1215) upon the question of jurisdiction of the court.

The District Judge after entering the decrees of dismissal made a certificate as follows:

'I hereby certify that said decrees were entered solely because the case as made by the bill did not set forth a legal or equitable claim to or lien on the property in the district, of which this court would have jurisdiction within the meaning of section 57 of the Judicial Code, or in which this court could render a judgment otherwise than a judgment in personam against the nonresident aliens who appeared specially and objected to the jurisdiction of the court.'

The judge also delivered an opinion, which is in the record, holding that under the terms of the contract the plaintiff had no right in the assets as such, and no partner's lien upon the property, but was confined to his rights in personam against the firm, and that, therefore, there could be no service by publication under section 57 of the Judicial Code. That section is a re-enactment of section 8 of the Act of March 3, 1875, 18 Stat. 472. It provides for service by publication when in any suit commenced in any district court of the United States to enforce any legal or equitable lien upon, or claim to, or to remove any incumbrance or lien or cloud upon the title to real or personal property within the district where such suit is brought, one or more of the defendants therein shall not be an inhabitant of or found within the said district, or shall not voluntarily appear thereto.¹

Section 238 of the Judicial Code provides that, the case being one in which the jurisdiction of the court is in issue, that question shall be certified to this court.

The appellees challenge the jurisdiction of this court to entertain this appeal on the ground that the case does not present a jurisdictional issue properly reviewable by this court.

Since the decision of Shepard v. Adams, 168 U. S. 618, 18 Sup. Ct. 214, 42 L. Ed. 602, it has been the accepted doctrine that where there is a contention that no valid service of process has been made upon the defendant, and the judgment is...