Op. of the Ct. 242 It. S. Stewart v. Ramsay, 242 U.S. 128 (1916)

Stewart brought an action at law against Ramsay in the United States District Court for the Northern District of Illinois, and the summons was served personally upon defendant in that District. The jurisdiction was invoked on the ground that plaintiff was a citizen of Illinois and a resident of the Northern District and defendant was a citizen and resident of Colorado. Ramsay pleaded in abatement that he was a resident of the State of Colorado and was served with process while in attendance upon the District Court as a witness in a case wherein he was plaintiff and one Anderson defendant, and that the process was served while he was returning from the court-room after testifying. Upon plaintiff’s demurrer this plea was sustained, and, plaintiff electing to stand upon his demurrer, it was ordered that the writ be quashed and p. 129the defendant go without day. The present writ of error was sued out under § 238, Judicial Code, the jurisdictional question being certified.

In Blight v. Fisher (1809), Pet. C. C. 41, Fed. Cas. No. 1542, Mr. Justice Washington, sitting at circuit, held that the privilege of a suitor or witness extended only to an exemption from arrest, and that the service of a summons was not a violation of the privilege or a contempt of court unless done in the actual or constructive presence of the court. But in Parker v. Hotchkiss (1849), 1 Wall. Jr. 269, Fed. Cas. No. 10,739, District Judge Kane, with the concurrence, as he states, of Chief Justice Taney and Mr. Justice Grier, overruled Blight v. Fisher, and sustained the privilege in favor of a non-resident admitted to make defense in a pending suit and served with summons while attending court for that purpose, the court declaring: “The privilege which is asserted here is the privilege of the court, rather than of the defendant. It is founded in the necessities of the judicial administration, which would be often embarrassed, and sometimes interrupted, if the suitor might be vexed with process while attending upon the court for the protection of his rights, or the witness while attending to testify. Witnesses would be chary of coming within our jurisdiction, and would be exposed p. 131to dangerous influences, if they might be punished with a law suit for displeasing parties by their testimony; and even parties in interest, whether on the record or not, might be deterred from the rightfully fearless assertion, of a claim or the rightfully fearless assertion of a defense, if they were liable to be visited on the instant with writs from the defeated party.” Since this decision, the federal Circuit and District Courts have consistently sustained the privilege. Juneau Bank v. McSpedan, 5 Bissell, 64; Fed. Cas. 7,582; Brooks v. Farwell, 4 Fed. Rep. 166; Atchison v. Morris, 11 Fed. Rep. 582; Nichols v. Horton, 14 Fed. Rep. 327; Wilson Sewing Meh. Co. v. Wilson, 22 Fed. Rep. 803; Small v. Montgomery, 23 Fed. Rep. 707; Kinne v. Lant, 68 Fed. Rep. 436; Hale v. Wharton, 73 Fed. Rep. 739; Morrow v. U. H. Dudley & Co., 144 Fed. Rep. 441; Skinner & Mounce Co. v. Waite, 155 Fed. Rep. 828; Peet v. Fowler, 170 Fed. Rep. 618; Roschynialski v. Hale, 201 Fed. Rep. 1017.

While owning the majority stock of United States Iron Company, respondent and others conceived a scheme to consolidate it with certain coal properties, erect blast furnaces, engage in smelting and manufacturing iron, etc. He accordingly prepared an agreement, dated April 15, 1902, stating generally the ends in view, and invited subscriptions. This instrument designated him and two others as “Syndicate Managers,” and recited there was an opportunity to acquire for cash the 81,000,000 capital stock of that company, together with valuable coal properties, and that the purpose was to raise the essential two and a half million dollars. It further specified that “The Syndicate Managers hereunder shall have the direction and management of the subject-matter of the said Syndicate, and each subscriber nominates and appoints the Syndicate Managers his agents and attorneys irrevocable, until the termination of this agreement to exercise all the rights of the subscribers in and to the properties proposed to be acquired.” Still other provisions conferred upon the managers wide discretion and powers of control. Petitioner and his assignors became subscribers while in entire ignorance of respondent’s true position. He represented that it was proposed to purchase only valuable and paying properties; that subscriptions were payable in dollars, and not in property; that he had made a subscription for 8500,000 payable in dollars; that the enterprise was being organized in good faith; that all, according to their interest, had equal rights and stood on same basis; that every man’s dollar was put up against every other man’s dollar; and that there were to be no special advantages to any one. In fact, however, he always intended to utilize stock owned by him in payment of his subscription. The managers changed the company’s name to Sheffield Coal & Iron Company, increased the capital to 82,500,000, and caused it to acquire additional coal properties. For cash paid to them p. 134by syndicate members, they delivered an equal amount of stock issued by the corporation. In settlement of his subscription (reduced from 8500,000 to 8475,000) respondent surrendered the majority stock in United States Iron Company, at a valuation of 870 per share, paid balance in cash, and took new certificates. When he solicited and obtained subscriptions and received payments, he knew subscribers were relying upon him faithfully to act as their agent. Subsequent to the specified transactions petitioner and his assignors discovered respondent’s interest, and thereupon promptly elected to rescind their subscriptions, gave due notice to the managers, offered to return and restore all stock received, and demanded their money.