Schultz v. Schultz

• Decision Date: 12 January 1971
• Docket Number: No. 18507.,18507.
• Citation: 436 F.2d 635
• Parties: Madge SCHULTZ, Plaintiff-Appellant, v. Wayland SCHULTZ, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

436 F.2d 635 (1971)

Madge SCHULTZ, Plaintiff-Appellant, v. Wayland SCHULTZ, Defendant-Appellee.

No. 18507.

United States Court of Appeals, Seventh Circuit.

January 12, 1971.

Albert Koretzky and Irving Bronstein, Chicago, Ill., for plaintiff-appellant.

Ray T. McCann, Milwaukee, Wis., appearing specially for the defendant-appellee; John T. McCann, Milwaukee, Wis., of counsel.

Before MAJOR and HASTINGS, Senior Circuit Judges, and KILEY, Circuit Judge.

MAJOR, Senior Circuit Judge.

Plaintiff commenced an action against defendant in the County Court of Sheboygan County, Wisconsin, for a divorce, custody of their minor children, a settlement of their property rights and other relief. In that proceeding defendant was represented by attorney Paul Axel. On June 5, 1968, plaintiff obtained an interlocutory judgment of divorce, with a provision that the division of the estate of the parties be made at such later time as might be requested by plaintiff or her counsel. Plaintiff was given permission to sell real and personal property of defendant to satisfy any encumbrances. She was also awarded custody of three minor children, with the matter of support and alimony left to the further order of the court. The state court, so far as the record discloses, retains jurisdiction of the parties and the subject matter.

On January 18, 1968, during the pendency of the state court action, defendant granted to Axel in broad and sweeping terms and with great particularity a power of attorney which authorized Axel to control and manage defendant's property. As stated in plaintiff's brief, he was given the power "generally to do and perform all matters and things, transact all business, make and execute and acknowledge all contracts * * * and all other writing, assurances and instruments of every kind, which may be requisite or proper to effectuate all or any of the premises, or any other matter or thing appertaining or belonging to me defendant, with the same powers, and to all intents and purposes, with the same validity as I could, if personally present (giving and granting unto my said attorney, full power to substitute one or more attorneys under him, my said attorney, in or concerning the premises, or any part thereof, and the same at his pleasure to revoke); and hereby ratifying and confirming whatsoever my said attorney (or, his substitute or substitutes) shall and may do, by virtue hereof, in the premises."

Plaintiff commenced the instant action on January 26, 1970, by filing in the United States District Court a complaint consisting of three counts. In substance she alleged that property acquired during their marriage was through their joint efforts and constituted an equitable partnership, that defendant sold certain property and left the state with over $100,000, for the purpose of defrauding her; that defendant removed the minor children from the state to some "unknown place," for which she sought a monetary award for mental suffering, and that defendant committed an assault upon her about September 15, 1966, for which she sought damages. She also requested a judgment declaring that all property acquired by the parties during the course of their marriage, as well as that allegedly fraudulently conveyed by defendant, be declared assets of a partnership; that she be awarded all of the remaining assets owned by defendant; that the power of attorney given to Axel be declared fraudulent and void except to the extent necessary for him to convey defendant's property to plaintiff, and that he be required to use his power of attorney for that purpose.

On February 20, 1970, Axel entered his special appearance for the purpose of moving the court to dismiss the action on the grounds of (a) the insufficiency of the service of process, (b) lack of jurisdiction of the federal court over the person of defendant, (c) lack of jurisdiction over the subject matter, and (d) lack of diversity of citizenship.

In her original complaint plaintiff alleged that the "defendant is a citizen of the United States of America residing outside of the State of Wisconsin." Evidently this was not a sufficient allegation of diversity as on March 6, 1970 she obtained leave to amend her complaint by alleging, "defendant is a citizen of the State of Florida." In each count of her complaint plaintiff alleges that defendant "has appointed Paul L. Axel as his agent authorized to receive service of process." The Marshal's return shows that defendant was served on January 27, 1970, by service of the summons and complaint on Axel "who has a power of attorney for Wayland Schultz."

The court in its order entered April 23, 1970, from which this appeal comes, stated:

"The above cause having come on to be heard on the motion to dismiss the above-entitled action because of want of jurisdiction over the person of the defendant; and it appearing to the Court that it lacks jurisdiction over the person of the defendant,

"IT IS ORDERED, That the motion to dismiss is hereby granted and this action is dismissed without costs to either party and without prejudice."

Axel in the course of the proceedings filed an affidavit in which he admitted that he was the attorney for defendant in the divorce action pending in the state court but that he was unaware of the whereabouts of defendant since the commencement of the action in the federal court and, therefore, had never informed him or caused him to be informed of the federal action.

Federal Rule of Civil Procedure 4(d) provides numerous ways in which service of process upon an individual may be made, including, "by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service of process." Admittedly, Axel was not authorized by law to receive such service, and it is not claimed that he had actual authority by appointment. Plaintiff argues, however, that he had authority by implication to accept service, arising from the fact that he was defendant's attorney in the state court action with a broad power of attorney to act on behalf of defendant.

Indulging in the dubious assumption that such authority may be implied in some situations, we think there is no reasonable basis to do so in the instant case. The fact that the power of attorney at such length and great particularity enumerated the matters entrusted to Axel's care, item by item, without designating him as an agent authorized to accept service, dispels any idea that it was so intended. Moreover, it is a farfetched notion that when the power of attorney was executed on January 18, 1968, during the pendency of the state court action, Axel was given authority to accept service of process in another action not commenced until January 26, 1970, and in another court.

2 Moore's Federal Practice (2d ed.) Sec. 4.12 states:

"The phrase `an agent authorized by appointment to receive service of process\' is intended to cover the situation where an individual actually appoints an agent for that purpose." (Italics supplied.)

Of the many cases called to our attention, both state and federal, we first consider National Equipment Rental, Ltd. v. Szukhent et al., 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354, which involved Rule 4(d) as it related to an agent authorized by appointment to receive service of process. While we do not regard the case as conclusive, the reasoning of the court is pertinent. In the first place, the case was decided on federal rather than on local law. As the court stated (page 316, 84 S.Ct. page 414), "We deal here with a Federal Rule, applicable to federal courts in all 50 States."

Defendants, residents of Michigan, obtained farm equipment in Michigan on a lease from plaintiff doing business in New York. Claiming default, plaintiff sued for payments under the lease in a New York District Court. The Marshal delivered two copies of the summons and complaint to one Florence Weinberg as agent designated in the lease for the purpose of accepting process for defendants in the state of New York. The defendants were not personally acquainted with the agent. The copies were promptly mailed by Weinberg to defendants, with a covering letter stating that she had accepted service of process as the defendants' agent pursuant to the terms of the lease. Nothing in the lease required notice to defendants. Plaintiff also promptly notified defendants by mail of the reported service of process. The District Court held the service invalid and quashed it for the reason that the lease contained no provision which required notice to defendants. The Court of Appeals affirmed, 2 Cir., 311 F.2d 79. The Supreme Court reversed.

The issue as stated by the Supreme Court (375 U.S. page 315, 84 S.Ct. page 414) was "whether a party to a private contract may appoint an agent to receive service of process within the meaning of Federal Rule of Civil Procedure 4(d) (1), where the agent is not personally known to the party, and where the agent has not expressly undertaken to transmit notice to the party." The court sustained the service on the basis that the agent promptly mailed the summons and complaint to the defendants, together with a letter stating that the documents had been served upon her as defendants' agent for the purpose of accepting service of process in New York, in accordance with the agreement contained in the lease. The court (page 315, 84 S.Ct. 411) distinguished its previous decisions on the ground that in those cases "there was no actual notice" to the defendants.

The court concluded its opinion (page 318, 84 S.Ct. page 415):

"A different case would be

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