« ForrigeFortsett »
good and evil. But more important perhaps are the immense combinations of men with power to shake the very foundations of the state, such as our labor unions, political groups, and religious organizations, not to mention the mushroom-like growth of coöperative and fraternal societies of all characters. Some of these in the United States and England, but more particularly on the Continent, have, by judicial decision and statute, been given many of the attributes of a corporation. Whether the effect of such laws has been to confer personality on any group or not, is a question to be determined by the laws of any place in which the group may happen to be present. Whether the jurisdiction which creates a status calls it by that name is immaterial.84 We are not directly interested in the domestic status and regulation of these groups.85 Our problem is the control the courts of a state may exercise over one of them, formed under the laws of another sovereign, which do not recognize its corporate personality, when it engages in activities within the territories of the state. We shall not stop to consider the jurisdiction of courts of law or equity over such members of the group as are within the jurisdiction. It is obvious that the courts have no jurisdiction over the non-resident members of these groups except such as they can exercise through the group.
If group A, an unincorporated union, is running a strike, or group B, an unchartered farmers' coöperative society, is disposing of its members' eggs within a state, either group is very clearly present and doing business within that state. If a negro slave domiciled in a state which denied him personality,86 came north and did some business while present within a northern state, there would in common law countries be no question as to the right of that state to predicate personality upon him, that is, the capacity for rights and obligations.87 Personality is not a status in the common law. There
84 United States v. Adams Express Co., 229 U. S. 381 (1912); Edgeworth v. Wood, 58 N. J. L. 463, 33 Atl. 940 (1896); Pipe Co. v. State Board, 57 N. J. L. 516, 31 Atl. 220 (1895); Express Co. v. State, 55 Ohio St. 69 (1896).
85 For the nature of the difficulties involved in these problems reference should be made to 3 MAITLAND, COLLECTED PAPERS, 271 et seq. Geldart's brilliant paper on Legal Personality, 27 L. QUART. Rev. 90, Jethro Brown's discussion of the Personality of the Corporation and State, 21 L. QUART. Rev. 365, the articles of Dicey and Geldart already cited, note 7, in English, and the vast continental literature on this subject.
86 STROUD, SLAVE LAWS, 2 ed., 34 et seq.; State v. Mann, 2 Devereux Law (N. C.) 263 (1829); Ex parte Boylston, 2 Strobhart Law (S. C.) 41, 43 (1846).
87 Somerset v. Stewart, Lofft 1 (1772); Polydore v. Prince, 1 Ware *402 (1837).
seems, therefore, to be no reason why the laws of a state should not predicate personality upon any foreign group, capable of a capacity for rights and obligations, at any rate to the extent of the business done within the state. The United States Supreme Court has expressly held that Congress might do this.88 The courts of the state would then have the power to render a judgment in personam against the group as such, and, what might be more important, make a decree in equity binding it.
It seems that this is exactly what has been done by states that have passed statutes similar to the Texan one sustained in Sugg v. Thornton.89 Texas Statutes, section 1224, provide: "In suits against partners the citation may be served upon one of the firm and such service shall be sufficient to authorize a judgment against the firm and against the partner actually served.” Section 1346 provides: “Where the suit is against several parties jointly indebted upon a contract and the citation has been served upon some of the parties, but not upon all, judgment may be rendered therein against such partnership and against the partners actually served, but no personal judgment or execution shall be awarded against those not served.” The effect of this statute is to impose an obligation on the partnership as such, enforceable only against the property of the partnership, which is to that extent treated as a legal person. In Sugg v. Thornton 90 the United States Supreme Court sustained a personal judgment against a firm, one of the partners of which resided in another state, although service was made only upon the resident partner. Texas not having jurisdiction of the non-resident partner could not charge his share of the partnership assets by a personal judgment. But Texas had the right to treat a partnership present in Texas as a legal person as well as a commercial unit and as such to impose a personal judgment upon it enforceable against all its property no matter to whom that property might go in the event of a distribution of the firm's assets. In other words, such statutes cannot be supported as mere procedural conveniences when applied to partnerships all the members of which are not within the
88 United States v. Adams Express Co., 229 U. S. 381, 390 (1912).
132 U. S. 524 (1889). 90 Ibid.
jurisdiction of the court. 91 -Sugg v. Thornton and the long line of similar decisions hold that a state may personify a foreign partnership for the purpose of jurisdiction. Such statutes are to be found in nearly every jurisdiction in the United States, and judgments against foreign partnerships based upon the service they prescribe have been universally upheld.92 Some similar statutes have been held unconstitutional, and properly so, when they have made no provision for limiting the enforceability of the judgment to the property of the firm and of those partners personally served. The English rules of the Supreme Court 94 similarly provide for suits against the partnership as such when the firm is doing business in England. The judgment binds only the firm assets and the assets of any partner who may be served within the jurisdiction.95
Most of these statutes make service on the agent in charge of the local business enough to support a judgment against the firm, and this is clearly sound if the partnership is present and doing business in the jurisdiction. The presence of one partner cannot give the courts any peculiar right to charge the share of non-resident partners in the partnership assets; that power can exist only by virtue of the presence of the firm, and the presence of a partner is no more the presence of the firm than the presence of any other agent in the scope of his employment. Indeed, it would seem less so where an immense business is carried on in a partnership form and where the holder of a certificate for a 1/1000 distributive interest is a partner. The presence of such a partner taking no active part in the business of the group would, it seems, have no more the effect of giving the court jurisdiction than the presence of a stockholder in a corporation, provided the corporation were not otherwise engaged in business in the jurisdiction. 96
91 If all the members are within the court's jurisdiction it may be said that reasonable notice of the controversy is all that is required by due process.
92 Sugg v. Thornton, 132 U. S. 524 (1889); Winter v. Means, 25 Neb. 241, 41 N. W. 157 (1888); Broatch v. Moore, 44 Neb. 640, 63 N. W. 30 (1895) (only enforceable against firm property); Brawley v. Mitchell, 92 Wis. 671, 66 N. W.799 (1896); Sketchley v. Smith, 78 Ia. 542, 43 N. W. 524 (1889); Roberts v. Pawley, 50 S. C. 491, 27 S. E. 913 (1897) (S. C. Stat. not complied with); Yerkes v. McFadden, 141 N. Y. 136, 36 N. E. 7 (1894); Whitmore v. Shiverick, 3 Nevada, 288 (1867); Johnson v. Lough, 22 Minn. 203 (1875); Brooks v. McIntyre, 4 Mich. 316 (1856); Ralya Market Co. 0. Armour, 102 Fed. 530 (1900); Thomas v. Nathan, 65 Fla. 386, 62 So. 206 (1913); Kearney v. Fenner, 14 La. Ann. 870 (1859).
93 Flexner o. Farson, 268 Ill. 435, 109 N. E. 327 (1915); Caldwell v. Armour, 1 Pen. (Del.) 545, 43 Atl. 517 (1899); Brooks v. Dun, 51 Fed. 138 (1892); Aikmann o. Sanderson, 122 La. 265, 47 So. 600 (1908), all partnership cases.
94 Order 48; A, sec. 1, 8.
25 Banking Co. o. Firbank, (1894) 1 Q. B. 784, but see PIGGOTT, SERVICE OUT OF THE JURISDICTION, 81 et seq., for previous state of the law and difficulties raised before this conception was accepted
Where the group is of such character it has all the advantages of a corporation together with the protection of the comity clause. If it could insist on having all its members joined as necessary parties defendant as a condition of suit, it would obtain practical immunity from personal obligation. This difficulty has likewise been met by statutes which in effect make such companies legal persons. A typical statute is to be found in the New Jersey Practice Act, section 40 of which provides as follows:
"Any unincorporated organization, consisting of seven or more persons and having a recognized name, may be sued by such name in any action affecting the common property, rights and liabilities of such organization; all process, pleadings and other papers in such action may be served on the president ... or the agent or manager or person in charge of the business of such organization; such action shall have the same force and effect as regards the common property, rights and liabilities of such organization as if it were prosecuted against all the members thereof; and such action shall not abate by reason of the death, resignation, removal or legal incapacity of any officer of such organization or by reason of any change in the membership thereof." The sections following treat the group in all respects as a corporation. Service under this statute was made the basis of a personal judgment against a Lloyds Association for insurance in Bank v. Fire Association.97 Such judgments have been invariably sustained, 98 even where the group has been organized outside the state and is composed principally of non-residents.99 New York has gone to
98 It should be remembered that service on an agent is not upheld because he is an agent of the partners. That reasoning would be equally applicable to support a personal judgment against each partner, and, a fortiori, to support a personal judgment against each and all of the partners where only one has been served. The court having jurisdiction of the agent of the partnership group has thereby jurisdiction of the group through its presence, and the service is upheld as service on the group.
87 63 N. J. L. 5 (1899).
98 Bank o. Van Derwerker, 74 N. Y. 234 (1878); BLISS, ANNOTATED NEW YORK CODE, Š 1919 et seq., and cases cited; Patch Mfg. Co. v. Capeless, 79 Vt. 1, 63 Atl. 938 (1906) (VT. Star., $ 1099); Appeal of Baylor, 77 S. E. 59 (S. C. 1913).
» State v. Adams Express Co., 66 Minn. 271,68 N. W. 1085 (1896); Taylor o. Order of Railway Conductors, 89 Minn. 222, 94 N. W. 684 (1903); Adams Express Co. .
the extent of treating a joint stock company, which it declares not to be a corporation and which has non-resident members, as having personality sufficiently distinct in law to allow one of its members to sue it for a wrong arising out of its dealings with him as a common carrier.100 The United States Supreme Court has held that the Interstate Commerce Act has personified the joint stock companies engaged in the express business to the extent of making them indictable.101
The form in which the group's business is carried on should not affect the question of jurisdiction. The sole question should be: Is the group present? It is conceived that it is not present unless it maintains agents or members engaged in the group business within the state. If the group is actually doing business there, whether the profit sharers are partners, or cestuis que trustents,102 or mere shareholders, 103 should be immaterial. There is certain property being used in the business and judgment can always be enforced against that — the judgment itself can run against the group in its business name. If a hedge of trustees holds legal title to the assets of the business, the equitable title is at any rate in the group and its members, and may be levied upon in a judgment against the group. A trust estate is not less capable of personality than other groups; it possesses personality on the continent. Indeed, all these groups receive more or less recognition as persons, principally in taxing statutes.104
As a matter of fact, the external group activities of the house of J. P. Morgan, of which J. P. Morgan is the sole proprietor, are not distinguishable from those of the firm of J. P. Morgan & Co., of which J. P. Morgan and H. P. Davison are partners, or from those of J. P. Morgan, Inc., of which J. P. Morgan owns all the shares except those allotted to dummy directors. If J. P. Morgan & Co. and J. P. Morgan, Inc., can as matter of fact be said to be present in a foreign jurisdiction, then the house of J. P. Morgan may simi
Schofield, 23 Ky. L. 1120, 64 S. W.903 (1901); Messler v. Schwarzkopf, 35 N. Y. Misc. 72 (1901).
100 Westcott v. Fargo, 61 N. Y. 542 (1875).