Salmon Falls Mfg. Co. v. Midland Tire & Rubber Co.

• Decision Date: 15 December 1922
• Docket Number: 3706.
• Citation: 285 F. 214
• Parties: SALMON FALLS MFG. CO. v. MIDLAND TIRE & RUBBER CO.
• Court: U.S. Court of Appeals — Sixth Circuit

285 F. 214

SALMON FALLS MFG. CO. v. MIDLAND TIRE & RUBBER CO.

No. 3706.

United States Court of Appeals, Sixth Circuit.

December 15, 1922

[Copyrighted Material Omitted]

W Lloyd Allen, of Boston, Mass. (Bayly, Simmons & De Witt, of Cleveland, Ohio, on the brief), for plaintiff in error.

Lowry F. Sater, of Columbus, Ohio (L. F. McGrath, of Cleveland Ohio, and Jos. B. Shepler, of Coshocton, Ohio, on the brief), for defendant in error.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

KNAPPEN Circuit Judge.

Defendant in error (plaintiff below) is an Ohio corporation, doing business at Coshocton, Ohio. Plaintiff in error (whom we shall call defendant) is a Massachusetts corporation, doing business at Salmon Falls, N.H. Plaintiff sued defendant in a state court of Ohio for failure to deliver 64,000 pounds of building fabric, the remainder of an amount contracted to be delivered by defendant to plaintiff between June and November, 1919, at 73 cents per pound. Defendant not being a resident of Ohio, and presumably not constructively within that state, no service of process was had on it. When the suit was begun in the state court, an attachment was issued, and funds of defendant to the amount of approximately $2,000 were seized. Thereupon the suit was removed by defendant to the court below, presumably on the ground of diversity of citizenship. The defendant, for the purpose of limiting the recovery to the property attached, appeared specifically for that purpose, denying jurisdiction otherwise over it, and denying generally the merits of plaintiff's petition. At the opening of the trial defendant moved the court to limit the scope of the hearing to the value of the property attached. This request was not at the time passed upon, and the trial proceeded, ^[1] resulting in verdict for plaintiff for more than $30,000, and personal judgment thereon against defendant in the full amount of the verdict. The asserted error most prominently urged here is directed to the refusal of the trial court to limit the recovery to the value of the attached property; error, however, being assigned with respect to proceedings upon the trial.

The situation, in the absence of personal service on defendant or general appearance by it, was originally simple. It was merely a proceeding in rem; the effect of recovery would be merely to subject the attached property to the judgment. Whatever the form of the verdict, no execution could issue against other property, nor could action upon the judgment be maintained either within the jurisdiction of the trial court or elsewhere. This rule is fundamental. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565; Grable v. Killits (C.C.A. 6) 282 F. 185, 194. There having been no service of process, the suit never became a personal one, unless the defendant has appeared generally therein. ^[2] No such appearance was made in terms

The sole ground on which personal judgment against defendant was permitted, and is now sought to be sustained, is that defendant, by answering plaintiff's petition, and by participation in the trial upon the merits (notwithstanding its protest and asserted nonwaiver of jurisdiction over its person, and denial of any right to recover beyond the value of the property attached), effected a general appearance in the cause, so submitting itself to recovery of personal judgment therein. We are unable to agree with this conclusion. In saying this we fully recognize that, had defendant, while protesting against the court's jurisdiction to render personal judgment without reference to the value of the attached property, yet asked relief on the merits beyond that value, whether before or in connection with the making of its protest, would be deemed to have appeared generally, and so to have waived lack of personal jurisdiction. Gen. Investment Co. v. L.S. & M.S.R. Co. (C.C.A. 6) 250 F. 160, 164, 162 C.C.A. 296; Dahlgren v. Pierce (C.C.A. 6) 263 F. 841, 846; Grable v. Killits, supra (C.C.A.) 282 Fed.at page 194; Railroad Co. v. Morey, 47 Ohio St. 207, 24 N.E. 269.

According to the general rule, however, defendant's appearance in court for the sole purpose of objecting to the jurisdiction of the court over defendant's person was not an appearance in the action, or waiver of any defect in the manner by which such jurisdiction was sought to be obtained. Grable v. Killits, supra, Smith v. Hoover, 39 Ohio St. 249. That in its pleading and in its motion to limit the recovery to the property attached defendant was not invoking the exercise of the court's jurisdiction, and was not asking relief on the merits, except so far as it affected the attached property, plainly appears. The special answer alleges that defendant, 'not waiving, but expressly relying, upon its objection to the jurisdiction of this court over it, and not subjecting itself thereto, but appearing specially and only for the purpose of protecting any interest which it may have in any of the credits or choses in action now subject to and burdened with the attachment, and for answer to the first cause of action in plaintiff's amended petition contained, for the sole and single purpose of protecting its property under said attachment, admits,' etc. Issue was thus joined on the merits only for the purpose and to the extent so stated. Defendant's motion made at the opening of the case, and before any testimony was introduced, was equally explicit, thus:

'This defendant, the Salmon Falls Manufacturing Company, at this time, at the beginning of this case, and at its first opportunity, moves the court to limit the scope of the hearing in this case to the value of the property attached. ' ^[3]

That this was defendant's first opportunity to so move is clear, and it is difficult to see in what words defendant's contention could be more explicitly stated. We have held that the question of general appearance is one of intent, actual or implied, and that where the whole purpose of the defendant's application to the court is to protect itself from personal jurisdiction, the conduct which will make the motion unavailing and destroy its basis must be clear and unequivocal. See Dahlgren v. Pierce (C.C.A.) at page 846; Grable v. Killits (C.C.A.) 282 Fed.at page 195. See, also, Citizens Savings & Trust Co. v. Railroad Co., 205 U.S. 46, 59, 27 Sup.Ct. 425, 51 L.Ed. 703. As applied to this case, we see no inconsistency between the rule so stated and the expression in Wabash Western R.R. Co. v. Brow, 164 U.S.at page 278, 17 Sup.Ct.at page 128 (41 L.Ed. 431), to the effect that 'a voluntary appearance * * * sometimes may result from the act of the defendant, even when not in fact intended.'

The denial of personal jurisdiction, and the attempt to limit the scope of the hearing to one in rem-- that is to say, to a recovery to be satisfied only out of the attached property-- involved no inconsistency whatever. ^[4] The trial of the action, if limited to satisfaction out of the property attached, involved precisely the same defense to the merits as if personal judgment was to be rendered. If the conclusion of the court below is correct, it is not readily perceivable how defendant could at one and the same time have contested jurisdiction over its person and exercised the right to defend the action to the extent of the value of the attached property. If the decision below is right, defendant could deny personal jurisdiction only by surrendering its defense to a recovery to be satisfied only out of the attached property. ^[5] Nor, in our opinion, did defendant waive its objection to personal jurisdiction by participating in the trial after ineffectual attempt to so limit recovery. This is so not only because such participation, including motion to direct verdict in its favor for failure to make out a case, or (if such were the fact) because also of plaintiff's failure to produce its books, was applicable directly as a defense to a recovery in rem, but for the further reason that defendant did not waive its objection to personal jurisdiction by participating in the trial upon the merits after its motion to limit recovery was denied, so long as it persisted in its protest against personal liability. Norfolk Southern R. Co. v. Foreman (C.C.A. 4) 244 F. 353, 357, 156 C.C.A. 639 and cases there cited; Grable v. Killits (C.C.A.) 282 Fed.at page 195

Nor do we see any merit in the suggestion that, had defendant's motion to direct verdict in its favor been sustained, such action would be an adjudication against the maintaining of future action in a court having personal jurisdiction. Had defendant's motion to limit relief to the value of the attached property been granted, as it should have been, a verdict in the amount rendered, followed by judgment thereon, would not sustain a suit in any court; nor would it be admissible in evidence in any other proceeding not affecting the attached property. Cooper v. Reynolds, 10 Wall. (77 U.S.) 308, 319, 19 L.Ed. 931; Grable v. Killits (C.C.A.) 282 Fed.at page 197; Cheshire Nat. Bank v. Jaynes, 224 Mass. 14, 18, 112 N.E. 500. Likewise, a verdict in defendant's favor would not protect it from further prosecution against its other property or against it personally provided jurisdiction therefor were obtained. Cheshire Nat. Bank v. Jaynes, supra. Upon the record in this case the result stated as applicable to either of the above contingencies would equally ensue whether defendant's motion to limit recovery was granted or denied.

We are cited to no controlling federal authorities, nor have we found any, in our opinion inconsistent with the views we have expressed. It scarcely need be said that decisions of state courts, so far as inconsistent with the rule in the federal courts, are not binding upon the latter. Mechanical Appliance Co. v....