Fact pattern and procedural history
Oregon resident J. H. Mitchell brought a suit in state district court against Marcus Neff, a nonresident of Oregon, using publication service, and obtained a default judgment. Neff owned property in Oregon, and Mitchell used a writ of execution from his default judgment to auction the property, then purchased it himself. He later sold the property to Sylvester Pennoyer.
Nine years later, Neff sued Pennoyer in federal court under diversity jurisdiction for eviction. Neff prevailed in the trial court, as the judge pointed to irregularities in Mitchell’s service. Pennoyer appealed to SCOTUS.
Questions of law
What are the limits of state sovereignty? Should one state’s service requirements apply to a defendant outside that state who owns property there? What remedy does a plaintiff have for a person who is outside of the state? Does it matter when property is attached? What are the limitations of the full faith and credit clause?
In a lengthy opinion, the justices found for Neff. They determined that the sovereignty of a state does not extend beyond its borders, except insofar as a party outside that state has contracted in some way within that state. An action in rem, against property, can prevail against the property alone, but not against a person who has not been personally served; while an action in personam, against the person, is without any validity unless service has been completed upon him or his appearance.
The court decided that if Mitchell had attached the property and proceeded in rem against the property, he could have legally prevailed, as an owner of property is ordinarily expected to retain enough control over that property to be aware that it is attached. The attempt to bring the suit in personam, against Neff directly, was an attempt to obtain a default judgment enforceable against any property owned by Neff, and this was invalid without personal service on Neff.