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Simon v. Southern Railway Company

Supreme Court of the United States · Civil Procedure

Civil ProcedureFederal injunctionsPersonal jurisdictionVoid judgmentsService of processequity jurisdictionAnti-Injunction ActRev. Stat. § 720

Facts

The bill alleged diversity of citizenship and asserted that Simon was attempting to enforce by levy a Louisiana judgment obtained against Southern Railway without notice and by fraud. The cause of action underlying that Louisiana suit arose in Alabama, but service in Louisiana was made pursuant to a Louisiana statute on an agent designated there for foreign corporations. Southern Railway did not appear in the Louisiana action, and a default judgment was entered. Southern Railway then brought this independent federal suit to enjoin Simon from enforcing that judgment.

Issue

Whether a federal court may, in an original and independent equity suit, enjoin a party from enforcing a Louisiana state-court judgment alleged to be void for want of service and notice, notwithstanding Rev. Stat. § 720. Also, whether service under Louisiana's statute could give jurisdiction over Southern Railway for a cause of action arising in Alabama.

Rule

A federal court exercising general equity jurisdiction may, in an original and independent suit between diverse parties, enjoin a party from enforcing a state-court judgment that is absolutely void for want of notice or service; Rev. Stat. § 720 bars federal courts from staying proceedings in a state court, but does not prevent them from acting in personam against a party to deprive him of the benefit of a void or fraudulently obtained judgment after the litigation has ended. A foreign corporation's statutory consent to service in a state extends only to business or transactions within that state and does not authorize jurisdiction over causes of action arising in another state.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Freight Lines, a Nevada corporation, appointed an agent for service in Texas as required to do business there. Nora Bell sued the company in a Texas court on a collision claim arising entirely in New Mexico, served the Texas agent, and obtained a default judgment after the company did not appear. Bell then began levy proceedings in Dallas, and the company filed a new diversity suit in federal court in Texas seeking to enjoin Bell from enforcing the judgment.

Should the federal court grant relief if the only basis for the Texas court's personal jurisdiction was the statutory appointment of the Texas agent?

Explanation. The majority held that a foreign corporation's statutory consent to service in a state reaches only business and transactions within that state, not causes of action arising elsewhere. If the corporation did not appear, a default judgment entered on such service is absolutely void for want of jurisdiction. In an original and independent diversity suit, a federal court may act in personam against the judgment holder and enjoin enforcement of that nullity. (Derived from Simon v. Southern Railway Company (n.d.).)