NATIONAL EQUIPMENT RENTAL, LTD., Plaintiff-Appellant, v. Steve SZUKHENT and Robert Szukhent, Defendants-Appellees.
No. 21, Docket 27486
United States Court of Appeals Second Circuit
Decided Dec. 6, 1962.
Argued Oct. 11, 1962.
An affidavit from Fred Bruner, Esquire, Linton‘s attorney, was also attached in which Mr. Bruner testified:
“At the time of the trial of the said co-defendant, LAVONNE NEWSOM, the said TRAVIS DALE LINTON was requested to testify on behalf of the co-defendant, the said LAVONNE NEWSOM, at which time the said TRAVIS DALE LINTON refused to testify on behalf of the said LAVONNE NEWSOM in that he could not testify without incriminating himself.”
The record reveals that at the beginning of Newsom‘s trial, Linton was sworn as a witness at the request of both the government and the defendant Newsom, but that Linton was never placed on the stand.
Seldom indeed will this Court reverse a district court for refusing to grant a new trial.3 The evidence in this case of Newsom‘s guilty knowledge of the marijuana was weak. His trial before a jury selected from a panel which had heard Anderson‘s statement may not have been entirely fair. Newson could not avail himself on his trial of the testimony of Linton. Another jury may reasonably find Linton‘s testimony sufficiently credible to raise a reasonable doubt as to the truth and meaning of the testimony of the special employee, and hence of the defendant‘s guilt, or it may not so find. Every practicable precaution should be taken to insure that the verdict really speaks the truth, for if it does not an innocent man may be imprisoned for years. We hold, therefore, that, under the peculiar circumstances of this case, the district court erred in denying the defendant‘s motion for new trial.
Reversed and remanded.
Leonard P. Moore, Circuit Judge, dissented.
Defendants, residents of Michigan, obtained farm equipment in Michigan on a lease from plaintiff, a Delaware Corporation with its principal place of business in New York. Claiming default, plaintiff sued for payments under the lease in the Eastern District of New York, the marshal delivering two copies of the summons and complaint to one Florence Weinberg as agent designated in the lease for the purpose of accepting process for defendants in the State of New York. The copies were promptly forwarded by Weinberg to defendants by mail with a covering letter under an agreement between Weinberg and plaintiff to perform this service without compensation. Nothing in the lease required notice to defendants. Plaintiff also notified defendants by mail promptly on the purported service of the process. The United States District Court for the Eastern District of New York, John F. Dooling, Jr., D. J., held the service invalid and quashed the service. Plaintiff appeals. We agree with the District Court that no valid agency of Weinberg for defendants was created by the instrument in suit and affirm the order.
The lease contract here was on a printed form provided by plaintiff. There is no requirement in the purported appointment of the agent for any notice to defendants. A provision for notice would be essential to the validity of a state statute providing for substituted service on a statutory “agent“. Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446 (1928). There is no such requirement when individuals freely contract for a method of substituted service. Lack of such a provision in a contract of adhesion, here involved, may, however, be considered in determining the meaning and effect of the provisions of the contract. There is no provision in the lease for any undertaking by the purported agent to act for, or give notice to her purported principal. Normally, an agency exists only if there has been a manifestation by the principal to the
Wilbur G. Silverman, Jamaica, N. Y., for plaintiff-appellant.
Harry R. Schwartz, Brooklyn, N. Y., for defendants-appellees.
Before CLARK, MOORE and SMITH, Circuit Judges.
Plaintiff might have provided, with defendants’ agreement, that service or notice be waived or that notice be given by plaintiff. See Bowles v. J. J. Schmitt & Co., 170 F.2d 617, 622 (2 Cir. 1948), Gilbert v. Burnstine, 255 N.Y. 348, 174 N.E. 706, 73 A.L.R. 1453 (1931). This would, however, have required defendants’ consent, which might or might not have been forthcoming. The illusory purported agency provision, however, is properly held ineffective to subject defendants to suit in New York.
Affirmed.
LEONARD P. MOORE, Circuit Judge (dissenting).
The question here presented goes so much beyond the facts of this particular case that I believe my contrary view should be stated. After all, it may be said, who (except this plaintiff, of course) cares whether a Michigan farmer pays for machinery he has leased in New York? However, the federal jurisdiction problem presented here is of the greatest commercial importance to merchants and consumers who engage in interstate business transactions. Furthermore, the opinion of the majority would appear to be in conflict with Kenny Construction Co. v. Allen, 101 U.S. App.D.C. 334, 248 F.2d 656 (1957) and Green Mountain College v. Levine, 120 Vt. 332, 139 A.2d 882 (1958).
Plaintiff, a Delaware corporation with its principal place of business in New York, is in the business of purchasing equipment on its customers’ orders for leasing to the customers on terms and conditions set forth in an instrument denominated a lease. Defendants, residents of Michigan, obtained farm equipment from plaintiff pursuant to such a lease, the last operative clause of which read:
“* * * and the Lessee hereby designates Florence Weinberg, 47-21 Forty-First Street, Long Island City, New York, as agent for the purpose of accepting service of any process within the State of New York.”
Plaintiff, alleging default under the lease, commenced this action in the Eastern District of New York. The Marshal delivered two copies of the summons and complaint to defendants’ designated agent, Florence Weinberg, who promptly mailed them to defendants with a covering letter, explaining that they had been served upon her as the defendants’ agent in accordance with the provisions of the lease. On the same day, plaintiff itself notified defendants by certified mail of the service of process on Florence Weinberg. Twenty-two days after this service, counsel for defendants notified plaintiff‘s attorney that he was appearing specially to set aside the service of the summons and complaint. The District Court held the service invalid and quashed it.
The clause appointing the agent was no fine print clause buried in an oppressively long and complex instrument. The entire contract is only 1 1/2 pages long and the agency provision is in the last paragraph appearing directly above defendants’ signatures. The clause was included in the contract for the purpose of subjecting defendants to suit in the
The trial court found that it was plaintiff‘s established practice to assure that prompt notice was sent to defendants of any action it brought against them. That citizens of different states may agree in advance that any disputes arising out of a commercial transaction between them shall be subject to the jurisdiction of the courts of a designated state is well established. United States v. Balanovski, 236 F.2d 298 (2d Cir. 1956); Kenny Construction Co. v. Allen, 101 U.S.App.D.C. 334, 248 F.2d 656 (1957); Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502 (4th Cir. 1956); Bowles v. J. J. Schmitt & Co., Inc., 170 F.2d 617 (2d Cir. 1948); Gilbert v. Burnstine, 255 N.Y. 348, 174 N.E. 706, 73 A.L.R. 1453 (1931); Restatement, Conflicts § 81; Restatement, Judgments § 18; cf. Adams v. Saenger, 303 U.S. 59, 58 S.Ct. 454, 82 L.Ed. 649 (1938).
The only question presented by this appeal2 therefore is whether the service made on Florence Weinberg is service on “an agent authorized by appointment * * * to receive service of process” within the meaning of
the Federal Rules of Civil Procedure.3 The majority‘s strained search for the contract‘s “meaning” and “effect“, and their invocation of Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446 (1928) to provide the unexpressed intendment of the parties do not obliterate the federal nature4 of the question being here decided. Although my colleagues do not expressly evince a desire to remove
The majority initially concede that the constitutionally dictated requirements of Wuchter v. Pizzutti, supra, do not apply to contracts entered into by individuals. Then, in the guise of construing the contract in question, they read those same requirements into
The Supreme Court, in Wuchter, declared that in those situations in which a State may subject a non-resident individual to the jurisdiction of its courts other than through personal service within the State, due process requires that the statutory scheme provide a means of service reasonably calculated to apprise the defendant of the proceedings against him. Compare Wuchter, supra, with Hess v. Pawlowski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927). See McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). In that case the Court was dealing with the limitations on the coercive powers of the States imposed by the due process clause of the Fourteenth Amendment, and not with arrangements for service of process voluntarily agreed to by individuals. As Cardozo, J., said in related context, “The distinction is between a true consent and an imputed or implied consent, between a fact and a fiction.” Bagdon v. Philadelphia & Reading Coal & Iron Co., 217 N.Y. 432, 437, 111 N.E. 1075, 1076, L.R.A.1916F, 407 (1916). See L. Hand, D. J., in Smolik v. Philadelphia & Reading Coal & Iron Co., 222 F. 148 (S.D. N.Y.1915). The demise of the implied consent theory serves only to accentuate that distinction, namely, between a voluntary and a forced subjection to the jurisdiction of the courts of a state.
Actual notice by an agent authorized by appointment to receive service of process should be dispositive. The reasoning of Justices Brandeis’ and Holmes’ dissent in Wuchter is, in the context of
“Notice was in fact given. And it was admitted at the bar that the defendant had, at all times, actual knowledge and the opportunity to defend. The cases cited by the Court as holding that he could deliberately disregard that notice and opportunity and yet insist upon a defect in the statute as drawn, although he was in no way prejudiced thereby, seem hardly reconcilable with a long line of authorities.” 276 U.S. at page 28, 48 S.Ct. at page 264.
To allow a defendant to insist upon what the majority here holds to be a defect in this privately drafted and voluntarily agreed to agency appointment, even though he has in no way been prejudiced thereby, is the essence of formalism. The purpose of service of process is to apprise the defendant that suit has been brought against him and to give him an opportunity to defend. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Wuchter v. Pizzutti, supra; Grooms v. Greyhound Corp., 287 F.2d 95 (6th Cir. 1961); Tarbox v. Walters, 192 F.Supp. 816 (E.D.Pa.1961); American Football League v. National Football League, 27 F.R.D. 264 (D.Md.1961). Once it is found that that purpose has been served, the inquiry should come to an end.
I do not reach the question whether actual receipt of notice by the defendant is always required because here notice was received. If the agent is the nominee of the defendant, plausible argument has been made that service of process is valid even though notice is not forwarded to the defendant. Kenny Construction Co. v. Allen, 101 U.S.App. D.C. 334, 248 F.2d 656 (1957); Green Mountain College v. Levine, 120 Vt. 332, 139 A.2d 882 (1958).
In considering this question, the Vermont court said:
“The capacity of the Secretary of State to accept the appointment and the danger that he might not forward notice to the defendants were risks which they took in appointing him. Restatement, Agency, § 21.” 120 Vt. at page 336, 139 A.2d at page 825.
Also apropos here are the words of the Supreme Court in the landmark case of
“It is not contrary to natural justice that a man who has agreed to receive a particular mode of notification of legal proceedings should be bound by a judgment in which that particular mode of notification has been followed, even though he may not have actual notice of them.”
The rationale of the majority opinion would, however, extend even to the case posited. They require that the authorization to receive service of process intrinsically provide that the agent be bound to forward notice to the defendant. If, for example, defendants in the present action had selected Florence Weinberg themselves but no consideration ran to her or some other contractual infirmity existed, they would hold that service on her was invalid because she was under no obligation, no binding undertaking, to forward notice. And yet they actually go so far as to concede that a contract providing for no notice at all would have been permissible. Also implicit in the majority opinion is the thought that an appointed agent must be presumed to be faithless to his obligation and that some compensation must be paid by the principal for the services. If these are to be the legal consequences, then precautionary steps should be taken to require that the contract provide for a certificate from the agent in substance as follows: “I, Florence Weinberg, hereby agree for good and valuable consideration by me received from the Lessee, faithfully to perform my agency duties and to forward forthwith by registered mail any papers served on me.”5
At the heart of the majority opinion there seems to lie a mistrust of the agency provision in question because it might be construed to permit the entry of a default judgment with no notice being provided the defendants. Hard cases may make bad law but easy cases, misconceived to be hard ones, make even worse law because in the latter there is not even the seeming justification attendant the former.
Defendants here received all they were entitled to. They agreed to submit to the jurisdiction of the courts in New York and that is all plaintiff required them to do. No default judgment is contemplated; they received adequate notice of the suit pending against them and were afforded ample opportunity to defend. In order to relieve them of this obligation which they voluntarily incurred, the majority throws in doubt the validity of countless provisions of a similar nature and throws the law into a state of confusion and uncertainty. If, as the majority seem to fear, this agency provision can be used as a vehicle of oppression and overreaching, I suggest that we wait until such a case is presented to us. The same Federal Rules that provide for service of process upon an agent authorized to receive such service also contain provision for the setting aside of default judgments,
I would require the parties to abide by their contract and would reverse the district court.
The nub of my disagreement with the majority, of course, is that they read into