PENNOYER v. NEFF

Facts: Attorney Mitchell brought suit against Neff to recover unpaid legal fees.  Mitchell did not serve Neff personally and instead published notice in a local newspaper.  Neff did not see the notice and failed to appear for court resulting in a default judgment against Neff.  Mitchell seized Neff’s land and sold it at a Sheriff’s auction to satisfy the judgment.  Mitchell was the one who purchased the land at the auction.  Mitchell assigned the land to Pennoyer who spent nine years improving the property.  Neff then sued Pennoyer in Federal Ct. for possession of the property, claiming that the original judgment against him had not been valid since the court did not have jurisdiction over him or the land. The Federal Ct. agreed that the judgment had not been valid and that the land belonged to Neff.  Pennoyer appealed the court’s decision and lost.

Issue:  Can a state court exercise personal jurisdiction over a non-resident who has not been personally served w/ process while within the state and whose property within the state was not attached before the litigation began?

Rule: A court may enter a binding judgment against a non-resident only if he is personally served w/ process while within the state or if he has property within the state, if that property is attached before litigation begins.

Application: Because Neff was not served in Oregon, the court did not have power over him.  If Mitchell had attached Neff’s land at the very beginning of the suit, then the court would have been able to issue a valid judgment in the case.  There is no way Mitchell could have done this though b/c Neff did not own the land at the time Mitchell initiated the suit.  The default judgment must be declared invalid.  Therefore, the sheriff had no power to auction the land so Neff still legally owns it.

Conclusion:  Judgment affirmed.