Securities and Exchange Commission v. Briggs

Citation234 F. Supp. 618
Decision Date19 October 1964
Docket NumberNo. C 64-597.,C 64-597.
PartiesSECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Jessie BRIGGS and Mary Louise Weichel, Defendants.
CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio

John W. Vogel, Chicago, Ill., Orazio Sipari, Cleveland, Ohio, Thomas B. Hart, Chicago, Ill., for Securities and Exchange Commission.

Douglas F. Schofield, Cleveland, Ohio, for defendant Jessie Briggs.

James J. Carroll, James J. Stanard, Cleveland, Ohio, for defendant Mary Louise Weichel.

CONNELL, Chief Judge.

On September 8, 1964 Securities and Exchange Commission filed its complaint for injunctive relief, charging the defendants with violations of the registration and anti-fraud provisions of the Securities Act of 1933, 15 U.S.C. §§ 77e and 77q, and the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j and 78o. The complaint alleges that the defendants transacted business within this district and participated within this district in the transactions of which the government complains, namely, the fraudulent offer and sale of unregistered securities.

On the filing of the complaint a temporary restraining order was granted, and an order was entered pursuant to Rule 4(i) of the Federal Rules of Civil Procedure providing for service upon the defendant Briggs by any one or more of four methods: Service by registered mail, personal service by the sheriff of Vancouver County, British Columbia or any of his designated agents, service by said sheriff in accordance with the local rules of British Columbia, or service upon her by the United States Marshal. Pursuant to that order the defendant Briggs was served by registered mail on September 10, 1964. (Cf. Affidavit of Harry M. Jones) On September 17, 1964 the defendant Briggs was personally served by a Deputy Sheriff of British Columbia, Canada. (Cf. Affidavit of Alfred J. Tuttle) On September 18, 1964 counsel for the defendant Jessie Briggs appeared specially in open court and, by oral motion under Rule 12(b) of the Federal Rules of Civil Procedure, objected to this Court's assertion of jurisdiction over the defendant Briggs and moved to dismiss the complaint. The defendant's motion is divisible into five separate contentions:

1. The Court lacks the power to assert jurisdiction over Mrs. Briggs' person because such action is incompatible with fundamental concepts of due process;
2. Even if the Court had the power to exercise jurisdiction, recognition of Canada's sovereignty precludes the exercise of that power;
3. Rule 4(i) does not authorize service outside the United States;
4. Service of process was insufficient;
5. Venue is not properly laid as to the defendant Briggs.

The most significant issue is whether this Court has the power to take in personam jurisdiction over one of its citizens who is not physically present within the United States when served with process. Without attempting here to trace the difficult evolution of the concept of in personam jurisdiction,1 we think it abundantly evident that the due process clause of the Fifth Amendment is satisfied by compliance with the test enunciated in International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945):

"* * * due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" (Citations omitted.)

In the instant case it is admitted that the defendant is a citizen of the United States. It is alleged, and supported by affidavit, that the defendant participated in transactions in the United States and in this district. Thus we must conclude that compelling her to defend the suit brought in the United States would not be inconsonant with our "fundamental concept of ordered liberty." Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288 (1937). In an analogous action, the Supreme Court upheld a typical non-resident motorist statute in Hess v. Pawlowski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927), whereby the forum state could compel defense by a non-resident because of that person's activity within the forum. It was held that the defendant impliedly consented to suit in the forum by reason of his use of that state's highways. 274 U.S. 352, 356, 47 S.Ct. 632, 71 L.Ed. 1091.

In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed. 2d 223 (1957), the Supreme Court compelled a foreign corporation to defend suit on an insurance contract because that contract had a substantial connection with the forum state. In the instant case, the allegations of the complaint (which we must accept as true for purposes of this motion), clearly indicate that the defendant was personally active within the United States and that the allegedly tainted transaction had a substantial connection with this forum. Therefore it is this Court's opinion that we have the power to compel Mrs. Briggs to defend this action.

The defendant next contends that we cannot exercise that power lest we offend the sovereignty of our neighbor Canada, where the defendant was found and served. The defendant suggests that our right to exercise jurisdiction must be conditioned upon approval by Canada through a treaty. We seriously doubt that the defendant, admittedly a citizen of the United States, has standing to complain of an affront to a sovereign which is foreign to her. We need not reach that issue, however, because we perceive of no such invasion of Canada's sovereignty. In Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375 (1931), one of the petitioner's arguments was that in providing for personal service in a foreign country by the United States Consul, the statute violated the due process clause of the Fifth Amendment because "Congress has no power to authorize United States consuls to serve process except as permitted by treaty." Id. p. 436, 52 S.Ct. p. 254. In rejecting this argument, the Supreme Court stated:

"The question of the validity of the provision for actual service of the subpoena in a foreign country is one that arises solely between the government of the United States and the citizen. The mere giving of such a notice to the citizen in the foreign country of the requirement of his government that he shall return is in no sense an invasion of any right of the foreign government * * *." (at p. 439, 52 S.Ct. at p. 255.)

Therefore, we find no principle of comity between nations which precludes this Court from the exercise of jurisdiction over Mrs. Briggs.

Having determined that we have the power to assert jurisdiction and the right to exercise that power, we address the technical objections of the defendant. It is her contention that the Federal Rules of Civil Procedure afford the Commission no tool by which to implement this Court's power to cross national boundaries. The jurisdiction of district courts over the person of individuals is generally fixed by the territorial limits of the state in which the district is located, and service emanating from that court has similar restrictions. However, there are exceptions. Rule 4(e) of the Federal Rules of Civil Procedure provides for extraterritorial service, inter alia, whenever a statute of the United States authorizes the court to reach beyond its normal territorial limits. Rule 4(i) provides for service of process in foreign countries whenever the extraterritorial service authorized by rule 4 (e) must carry across our national boundaries. This Court is authorized to issue such process and to entertain this suit by 15 U.S.C. §§ 77v(a) and 78aa, which provide, in part:

"* * * any such suit or action under the Securities Act of 1933 may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district where the offer or sale took place, if the defendant participated therein, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found." (77v(a)) (Emphasis added.)
"* * * any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder Securities Exchange Act of 1934, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found." (78aa) (Emphasis added.)

The defendant argues that the clause "wherever the defendant may be found" modifies the noun "district" in that sentence, and that therefore there is no provision in these statutes for service of process outside the United States. We must disagree with the defendant's grammatical construction2 of the sentence in question — "wherever" does not modify "district." If our legislators intended to restrict extraterritorial service, as the defendant argues, to districts of which defendants are inhabitants or in which defendants may be found, we assume they would have said so. If that was their intention, the statute would have read:

"* * * in any other district of which the defendant is an inhabitant or in which the defendant may be found."

The defendant reminds us that the Supreme Court in Foley Bros. v. Filardo, 336 U.S. 281, 285, 69 S.Ct. 575, 577, 93 L.Ed. 680 (1949), adopted the following canon of statutory construction:

"The canon of construction which teaches that legislation of Congress, unless a contrary
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  • Pioneer Properties, Inc. v. Martin
    • United States
    • U.S. District Court — District of Kansas
    • March 3, 1983
    ...is well recognized that though the process provision of Section 27 permits service on a defendant in a foreign country, SEC v. Briggs, 234 F.Supp. 618 (N.D.Ohio 1964), the jurisdictional reach extends up to, but not beyond, the limits of the due process clause of the Fifth Amendment. Leasco......
  • General Electric Credit Corp. v. James Talcott, Inc.
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    ...Accordingly, the question presented is whether the special venue provisions of the Securities and Exchange Acts (see SEC v. Briggs, 234 F.Supp. 618 (N.D.Ohio 1964); SEC v. Wimer, 75 F.Supp. 955 (W.D.Pa.1948)) expand and accordingly repeal in part the venue provisions of the National Bank Ac......
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    ...268, 270 (E.D.Pa. 1959) (dictum). See also, Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940); SEC v. Briggs, 234 F.Supp. 618, 623 (N.D. Ohio 1964). Cf. Hanna v. Plumer, 380 U.S. 460, 463 n. 1, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) 11 See Kurland v. Chernobil, 260 N.Y. 25......
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    ...855, 89 S.Ct. 97, 21 L.Ed.2d 125 (1968); TPO Inc. v. Federal Deposit Insurance Corp., 325 F.Supp. 663 (S.D.N.Y.1971); SEC v. Briggs, 234 F.Supp. 618 (N.D.Ohio 1964); Roberts Brothers, Inc. v. Kurtz Bros., 231 F.Supp. 163 (D.N.J. 1964); Leith v. Oil Transport Co., 210 F.Supp. 877 (W.D.Pa.196......
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1 books & journal articles
  • Jurisdiction and Service of Process Beyond Colorado Boundaries
    • United States
    • Colorado Bar Association Colorado Lawyer No. 11-3, March 1982
    • Invalid date
    ...(transaction of business). 55. Van Schaack, supra, note 54. 56. 20 U.S.T. 361, T.I.A.S. No. 6638, 658 U.N.T.S. 163. 57. SEC v. Briggs, 234 F.Supp. 618, 620-21 (N.D. Ohio 1964). 58. United States v. Danenza, 528 F.2d 390 (2d Cir. 1975); see also, "Service of Process in Austria, England, Ital......

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