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Haase v. Michigan Steel Boat Co.

Supreme Court of New York, Appellate Division

December 29, 1911

WILLIAM A. HAASE and FRED S. SCHUMANN, Appellants,
v.
MICHIGAN STEEL BOAT COMPANY, a Foreign Corporation, Respondent.

APPEAL by the plaintiffs, William A. Haase and another, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 2d day of May, 1911, granting the defendant's motion to vacate a judgment entered on default.

COUNSEL

Benjamin Jaffe, for the appellants.

Charles J. Leslie, for the respondent.

Page 299

SCOTT, J.:

On August 10, 1910, an order for substituted service was made authorizing service of the summons on the defendant, a non-resident corporation, in an action by a resident of this State for damages for breach of contract, and personal service of the summons and complaint was made on the defendant at Detroit, Mich., on October 19, 1910. It does not appear that defendant had at that time any property in this State. The defendant did not then appear in the action. Six months afterwards, and on February 28, 1911, personal property of defendant having come into this State, plaintiffs procured an attachment and caused it to be levied upon said personal property, and at the same time a copy of the summons and complaint was personally served, within the State, on defendant's secretary.

On March 3, 1911, an attorney for the defendant served a notice of appearance upon plaintiffs' attorney, which was promptly returned with a statement that the reason for its return was that it had not been served within the time required by the Code of Civil Procedure, and was served after defendant was in default. On March 16, 1911, the defendant's attorney served upon plaintiffs' attorney an answer which was promptly returned with a notice similar to that which had accompanied the return of the notice of appearance. Thereafter and on or about the 24th day of March, 1911, without notice to defendant or its attorney, plaintiffs procured an order for judgment and for the assessment of damages, and on the sixth day of April, again without notice to defendant or its attorney, plaintiffs, having caused the damages to be assessed, entered the judgment now sought to be vacated.

The position taken by the plaintiffs is that by service on defendant in Michigan the court acquired jurisdiction of the defendant, although no attachment was then issued and the defendant had no property in this State which could be levied upon under attachment; that the only limitation to be found in the Code of Civil Procedure upon the effectiveness of such service is that contained in section 1217, to the effect that judgment may not be entered where the defendant is a non-resident or a foreign corporation, and has not appeared, except upon

Page 300

proof that a warrant of attachment granted in the action has been levied upon property of the defendant; and that such a warrant of attachment need not accompany the order for substituted service of the summons and complaint, but may be granted 'at any time after the commencement of the action and before final judgment therein.' (Code Civ. Proc. § 638.) Their contention is that after the service upon defendant in Michigan it had sixty-two days within which to appear in the action; that having failed so to appear it became in default, and that thereafter plaintiffs, while they could not enter judgment, could wait for any length of time until property belonging to defendant came into the State, when an attachment might be procured and levied and judgment entered upon defendant's prior default.

The order authorizing substituted service upon defendant was made under subdivision 1 of section 438 of the Code of Civil Procedure, which authorizes such an order 'where the defendant to be served is a foreign corporation.' There is no provision, as there was in the former Code of Procedure (§ 135), that it must also appear that the defendant, being a foreign corporation, 'has property within the State, or the cause of action arose therein.' The question is as to the effect of such service unaccompanied by a warrant of attachment. The question has been discussed, but not as yet authoritatively settled. In Parke v. Gay (28 Misc. 329) Mr. Justice BEEKMAN had before him a motion to vacate an attachment which had been issued after the granting of an order for the publication of the summons, and after the commencement of the publication, but before the publication and service had been completed. His conclusion was that the order for service for publication, although made before the issue of the attachment, was sufficient to sustain the writ. In that case there was no question as to when defendant's time to appear and answer expired. In Guffey v. Grand Trunk R. Co. (67 Misc. 553) Mr. Justice WHEELER set aside the service of a summons and complaint under an order for substituted service, upon the ground that such service was invalid unless accompanied by proof that the defendant, a non-resident corporation, had property within this State. We think that the present order may be sustained

Page 301

without going so far as that, and without nullifying subdivision 1 of section 438 of the Code of Civil Procedure. It is agreed by all the authorities that an action brought against a non-resident by substituted service is in the nature of an action in rem. (Pennoyer v. Neff,95 U.S. 714; Chesley v. Morton,9 A.D. 461.) If there be no res within the State there is nothing upon which the court can exercise its jurisdiction, and if there be property within the State the judgment can have effect only upon that property. Unless, and we may say until, there is property of the defendant within the State, the court acquires no jurisdiction to enter any judgment. By substituted service it acquires no jurisdiction in personam of the defendant, and he is not called upon to respond to the summons. It is the concurrence of substituted service and property within the State which confers jurisdiction upon the court, and until jurisdiction has been obtained there is no obligation upon the defendant to appear and defend, and he can lose nothing by his refusal to submit himself to the jurisdiction. The purpose of the service of a summons is to acquire jurisdiction, and the limitation of the time within which a defendant must appear and answer relates to the time when jurisdiction attached. In the case now presented jurisdiction did not attach until the warrant of attachment issued and was levied. It was then and not until then that the defendant was under any obligation to submit ...


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