National Equipment Rental, Ltd. v. Szukhent – Case Brief
National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964).
Facts: Szukhent (D), a Michigan resident, leased farm equipment from National Equipment Rental (P), a New York corporation. The lease designated Weinberg, a New York resident, as agent for the service of process in New York. Szukhent did not know Weinberg and the lease did not indicate that Weinberg had to tell Szukhent of notice. National Equipment Rental sued Szukhent for a failure to make payments under the lease. Notice was served on Weinberg, who forwarded it to Szukhent with a letter stating the documents had been served on her as Szukhent’s agent. National Equipment Rental also notified Szukhent of the service of process on Weinberg by certified mail.
The district court quashed service of summons on the grounds that the lease did not specifically require Weinberg to give notice to Szukhent, and the court did not therefore have personal jurisdiction over Szukhent. The court reasoned that this was a failure of the agency agreement. The court of appeals affirmed and certiorari was granted.
Issue: Is an unknown agent who has not expressly undertaken to transmit notice to a party and who was merely designated by contract to receive notice, authorized to accept service of process?
Holding and Rule (Stewart): Yes. A party to a private contract may appoint an agent to receive service of process, and that service will be valid if that party promptly accepts and transmits notice of service.
D received timely and complete notice. This satisfies the requirements of Rule 4(d)(1). The clause under dispute is a forum selection clause. It is settled law that the parties may freely negotiate such matters and that contracts to agree to submit to the jurisdiction of a court are valid. Weinberg’s prompt acceptance and transmittal of the summons to D was sufficient to validate the agency. Weinberg’s sole role was to receive process and that interest does not conflict with the interests of D. The fact that D did not know Weinberg is irrelevant.
Dissent (Black): Today’s holding give a green light to every large company to contrive contracts which declare with force of law that when such a company wants to sue someone with whom it does business, that individual must go and try to defend himself in some place no matter how distant or else suffer a default of judgment. This ruling will allow such clauses to become boiler plate in most contracts. This service of process raises serious questions in Due Process.
Dissent (Brennan): Federal standards and state law must define who is an agent authorized by appointment within the meaning of Rule 4(d)(1). It offends common sense to treat a printed form which closes an installment sale as embodying terms to all of which the individual knowingly assented. There should be an explicit condition that the agent transmit actual notice to the principal and the non-drafting party must be shown to have understood and consented to the appointment.
Notes: Under an adhesion contract, the party who wrote the contract has the burden of proof that a party understood the contract. Private parties may consent in advance to the jurisdiction of a court. Not all courts give such prorogation agreements full effect. The consent to designate a third person to receive process is a consent to jurisdiction and such commercial contracts are valid.