Atlas Elevator Co. v. Presiding Judge of the Circuit Court

OF v. PRESIDING JUDGE ELEVATOR CO. ATLAS THE COURT OF THE FIRST CIRCUIT CIRCUIT; AMY CHITAE ADMINISTRATRIX OF SEGAWA, THE ESTATE OF GEORGE TERUO SEGAWA, AMY CHITAE INDIVID DECEASED, SEGAWA, KEITH TSUTOMU SEGAWA AND VAL UALLY; ERIE BY CHIEMI INFANTS THEIR SEGAWA, NEXT AND THE CITY AND COUNTY FRIEND; OF HONOLULU.

No. 4492.

March Acting C.J., Wirtz, JJ., Lewis Cassidy, Mizuha, Judge Assigned and Circuit Levinson Vacancy. Reason LEWIS,

OPINION OB’THE BY J. COURT By petition prohibition for writ of petitioner pre- whether sents service of filing summons the same with the Director Regulatory of the Agencies State September subjected on to the of the Circuit of the in jurisdiction Court First Circuit are brought by Amy a certain action who respondents, and in individually representative Chitae ca- Segawa, for the damages and two to recover death pacity infants, father said á of the result respondents husband in suffered an elevator accident Honolulu injuries The accident was caused September allegedly negligent installation of the elevator petitioner, named in suit as a said defendant.

The circuit Honorable Frank A. court, McKinley, Fourth Judge ruled had presiding, and denied petitioner’s motion to dismiss. This petition followed. After the prohibition case had been argued this court and while it was under Judge advisement McKinley left the bench. We deem the alternative writ, issued herein upon the filing equally ap- petition, plicable any judge who may preside over the case in the circuit and proceed to the court, question whether a permanent writ should issue.

Petitioner a California corporation which has not do qualified to business in this State. As defendant be- it moved to low, the circuit court action dismiss and to quash service of inter relying alia summons, upon R.L.H. 174-7.5 added S.L.

1955, (Supp. c. 1963), 315, § provides paragraph any (i) “transacting interstate commerce” shall not reason there- of be considered to be “doing or on carrying business in for the purposes of this chapter [chapter 174, [State] R.L.H. and sections 174-1 and 174-2 1955]”; upon of chap- they ter 174 as read in 1955. In as we shall have occasion to section 174-2 and note, repealed section 174-1 was amended. petitioner’s of on these significance reliance sec- 174 lies in the chapter provisions

tions of R.L.H. 1955, for 172-150. The authorization service the Director upon § be found in section. As Regulatory Agencies must this amended c. it read in as pertinent part S.L. 1963, follows: 172-150. Manner Service.

Ҥ

[*****] or “If superintendent no officer, director, manager, business or charge other person property, office of the corporation can be found within the State; and in case the if a corporation, foreign corporation, has neglected to file with the officer specified in section * * * the name of a person upon whom legal notice and process from the courts of the State may- be served; likewise in the event that the person so named is not found within the State, may service be made upon the corporation by filing with the [di- rector of regulatory or in agencies], his with absence, the [deputy a copy of the director], notice, process, certified to be such under the seal of court any * * record *. The or deputy so [director director] served shall immediately notify the defendant corpo- ration of such service. The shall filing be deemed upon the corporation forty-five days after the * * * filing Section referred 171-1, amended statute, by S.L. c. requires the supra,, qualification of a foreign corporation which undertakes to “do or on carry business in the State,” including as one of the require- ments for qualification the designation of an agent service of process. When sections 172-150 and 171-1 are read together, appears a foreign corporation which is not within the scope 171-1, required is not to designate for service of agent cannot an be process, served by filing with the Director of Regula- tory Agencies. Only foreign within a ambit of section 171-1 can be said to have to “neglected file with the officer specified section 171-1.” And such or unavailability of the neglect, corporation’s designated is terms of section 172-150 a condition agent, pre- 1 1963, 193, , c. deleted as obsolete a reference to section 174-2 SX. previously appeared point at which section addition to the reference to appearing 174-1 still there.

133 cedent to to authority serve the Director of Regulatory Agencies.

While this interpretation disputed Segawa respondents, plaintiffs the court deem it we below, only possible We are not interpretation. liberty at to rewrite 172-150 by section interpolating the under words “* * * scored below so as to cause it say: and in case if a foreign has corporation, corporation, neglected ** * or file is not .” required to do so If the legislature had intended to for a provide means of serving every foreign corporation it would have said But so. to have said that would rendered have the statute too broad; statute would have been without constitutional guideposts. Cf., Comm’nCo . Cella, v. 147 Eed. 419 Bohlinger, (8th Cir.). Section 172-150 is not of such breadth. It is easily recognized as type common statute, at least until a new trend was instituted International Shoe Co. v. 326 Washington, U.S. was founded 310, on the express or consent of implied be served an designated agent when purpose to and failed do required so. Cf., Wilson v. 144 Seligman, U.S. Old 41, Wayne Ass’n 45; v. Life McDonough, U.S. Simon v. 8, 21-22; Southern Ry., 236 U.S. American Express Co. v. Ry. 130; Royster Co., Gitano U.S. 274, 280; Washington Superior U.S. This statute might have served Court, re without spondents’ purpose resolution factual Act issues encountered had not S.L. here, nar requirements designation rowed the as to an agent, which in turn 174-2 caused reference repealing deleted from section 172-150 to section to be as set out further supra. in note is discussed connec This the legislative history chapter 174, tion with infra. legislature c. added to the By S.L. 1965, the State a armory providing statute for service of 134 persons on without the individuals as well State, corporations, arising

as to causes of action from cer “long-arm” tain enumerated acts. The 1965 statute ais reports statute as stated the committee which, on the (House Rep. bill Stand. Comm. No. Sen. Stand. 805; Rep. 822), Comm. No. in line with the modern “is trend2 making persons corporations, partnerships out-of-state significant who have certain contacts within the state, personal amenable a suit filed in the state upon resulting a claim from contacts.”3 The 1965 such appropriate statute not before us. deem it is we However, materially to note that it is different from Corp. Eng’r here involved. Elkhart v. Dornier Cf., Werke, (5th Cir.) 343 F.2d 864 Nelson v. 11 2d Miller, ; Ill. 143 N.E.2d Simonson v. International 14 673; Bank, Longines-Wittnauer N.Y.2d 200 N.E.2d Watch 427; & Co. v. Barnes 15 N.Y.2d 209 N.E.2d Reinecke, Inc., 68. Turning bearing the facts this case on the now to applicability applicability of section 174-1 and hence the findings proceed we on the basis of section 172-150, hearing judge presiding upon peti- of the trial motion. Under our construction of the statutes, tioner’s unnecessary upon petitioner’s attack to consider findings. deciding, that these We without assume, petitioner that that contracted with are as is, facts found, Realty the elevator in Belle Haven Co. to install Hotel in in the Waikiki Biltmore Honolulu,4 2 opinion origin 1945 in the “modern trend” liad its This Washington, Supreme in International Shoe Co. v. Court United States supra, 326 U.S. report quotation the House Committee on Judi- is from the Rep. ciary, 1965 Session. House No. Stand. Comm. installation — n position that it did not make the takes the Petitioner only a man to Belle furnished Belle Haven did accept supervise The trial court did not the installation. Haven to view, accept purposes present we do not it. and for

contract made in was that the California, elevator was during period installed in Honolulu sometime the between March and December of that the installation was petitioner, under the direct control and that several required accomplish months were to the work. un- It is disputed only that this the elevator installation which any made in this has State at time. they

We first consider the relevant statutes as read at the time elevator installation in 1955. At that as been section time, has 172-150referred to seen, section 174-2 provided as well as 174-2 174-1. Section that a foreign corporation engages any “which interstate or Territory, commerce in the and which does not carry any undertake to do or on intrastate business in Territory” register designating agent must an for furnishing and certain information. registration Pursuant to 174-7 section for fee was specifically 174-1 Section at that time $1.00. related to carrying “any on intrastate as did sec- business,” inapplicable 174-8 tions to 14. All of these sections were corporations registered engaged to under section 174-2, solely Foreign corporations in interstate commerce. com- ing subject requiring under section were to statutes furnishing required by of more information than capitalization as information to 174-2, such as and filing of a bond unless there were assets, sufficient payment filing Territory, assets in the of a fee of and $50 filing an annual license fee of and the of an annual $100, corporation. exhibit the affairs of the These statutes subjected agents penalties and to its for including corporation’s right noncompliance, denial of provided plead, sue for examination into the cor- poration’s imposed requirements certain affairs, Territory. statutory In withdrawal from the short, doing provisions applicable to the of intrastate business 174-1) (section were more burdensome than those im- confining posed aon itself to interstate busi- 174-2). merely required (section latter ness register, if it did service could be made under not, section 172-150.

Prior enactment of section to the which was 174-2, part enacted of section of the Revised Laws of S.L. c. there had Hawaii been some 1951, 294, system corporations engaged what similar under which required register, in interstate while were commerce, statutory required comply provisions with all foreign corporations. generally applicable to Thus in Co.,2 Mail S.S. U.S.D.C. Haw. Kalanianaole v. Pacific though (1905) it held that as a cor was defendant, foreign engaged solely poration or in the business of pursuant the terms of the interstate to statute commerce, required pay procure the annual fee or license was required register it and an annual still was license, foreign corporation doing agree that a “the authorities may advantage neglect locally of of not take its business papers thereby evading filing required service such process.” made on the defend Service in case was of agent Subsequently, c. S.L. 43, here. 1909, ant’s permit enacted to numbered sec. 172-150was section now predecessor Territory, on service treasurer Agencies Regulatory case State, the Director neglect. of such repealed c. 315, S.L. was

When section specifically legislature the treasurer “to authorized every foreign corporation registration cancel Territory registered to do has heretofore provi- pursuant commerce or in interstate According Standing Committee 174-2.” sions of section Report Act S.L. S.B. 609 which became No. 334 on 544-45) pp. testi- (S. section 174-2 “was Jour. 1957, being fled to it as further unconstitutional,”5 report stated in the committee that: “Creditors will not corporations be affected as the can be sued in our courts.” long corporation This of course true as re Territory. mained in the International Harvester Co. Cf., Kentucky, Fielding Superior v. 234 U.S. 579, 585; App. 111 Cal. 2d Court, 244 P.2d 972. But 490, 496, the 1957 enactment a left hiatus should a carrying Territory on interstate commerce in the there leaving managing agent after absent no officer itself, namely here. The 1957 Act knocked out the foundation, upon had 174-2, rested legislature in such cases under section and the 172-150, failed to substitute another until 1965.6 It does not rest supply deficiency. Similarly Avithus to in California, providing under statute for service on a withdraAvncor poration by serving officer if the state had transacted intrastate business it was held California, corporation engaged that service could not be effected aon solely in after interstate business it ceased to do business App. in the & state. Detsch Co. v. 228 Cal. Calbar, Inc., Rptr. 2d 39 Cal. 556, 566-67, While has been suggested stringent that this California statute more constitutionally required (5 than Stan. L. Rev. 510; perforce 355-56), 31 So. Cal. L. Rev. the court has 339, in followed it as we must foIloAVour statute. California, hardly legislative One could find a clearer statement of provision registrations intent than the for cancellation of containing designations on file under of section 174-2, 5 Imperial Inc., (E.D. cf., Airlines, Supp. 211 311 But Andreas v. F. Penn.) ; 379, 242, Co., Ford Motor 208 38 247-49. State v. S.C. S.E.2d 437, Supp. (W.D. Co., 72 440 And see McWhorter Anchor Serum F. v. Ark.). 6 statute, By 1965, 134, legislature “long-arm” enacted a S.L. c.

above noted.

138 for

agents of process.7 service And in enacting at same time paragraph of (i) section 174-7.5,8 providing that a corporation any transacting business interstate commerce should not by reason any thereof come under of provision chapter legislature 174, precluded the possibility corporations formerly by covered section 174-2 thereafter would come under section 174-1.

What kind of formerly business under came section 174-2? This section related to the kind of which, business even if it constituted doing business Territory, from protected the burdensome requirements of annual license of deprivation a fees,9 right $100 suit as for failure to penalty the like. Cannell qualify,10 Cf., & v. 26 74. We Deering, Haw. are confronted here Chaffin 7 argued only registered has It been who those had were affected provision. agree. provision cannot We This to demonstrated the legislature’s provide process intention not to continue for service of agent designated pursuant statutory requirements, on an to if the solely corporation engaged in interstate commerce. 8 evidently 174-7.5 from Section was taken the Model Business Cor poration corporations foreign Act. This model act has to with the do what required qualify incurring penalties. are at the risk of may subject foreign corpora It is not determinative of what activities a process proper tion to service of under a rule. statute or Model Bus. Annot., § Corp. 1965, provi Act 99 at 566. But 1957to from there was no sion in Hawaii for substituted service of on a broader basis than provisions governing qualification. that afforded The model act 168,merely itself, provides corporation section for service on a that has qualified. § Corp. Annot., Cf., Model Act 108 at Hill v. Bus. 620. Electronics rp. America, Co 253 113 Iowa N.W.2d We 316-18. note that Alaska found a broad basis a 1960 amendment of act, originally adopted 108 of its which was in the terms of sec Northern, Supply, Curtiss-Wright Corp., tion model (Alaska 1965) ; Stephenson Inc. act. Co., 397 P.2d 1013 v. Duriron 401 P.2d 423 (Alaska 1965). legislature adopt Our did not section 108 of the model act, say agree we have no we occasion to whether with Alaska’s interpretation corporations provision relating foreign that introduction therein of a doing “not authorized transact business in Alaska but legislature’s expand scope so” showed “the intent to transacting to cover situations where a was in fact state, whether or not the business was such nature require authority as state law.” 397 to obtain certificate of under 1616. P.2d at Taxes, Armstrong Perry, In See re 46 Haw. 379 P.2d 341. Remedy Cope, See Sioux Co.v. 235 U.S.

139 question petitioner’s with the sole whether business in this though State was of that character. Even we may why liability no see reason to service arising a suit based on a cause of action the State example, liability should for on the turn, attaching annual license was the result under fees, provisions of Act S.L. 1957. difficulty by respondents encountered that the legislature accepted in 1957 it the view that uncon- was require registration stitutional of a Territory exclusively whose business in the was interstate though penalty no even attached commerce, to a register liability through failure to other than to service filing with a officer. A state number of state courts have narrowly providing construed for statutes substituted apparently service on a state in the belief that the officer, protection required constitutional of interstate commerce though such narrow more recent construction, decisions may constitutionally indicate not have been re- quired. following Cf., case under the Massachusetts Rolling Pulson v. American Mill 170 F.2d statute, Co., (1st Cir.). Compare following 193 cases under the Aldridge v. Marco Chem. 234 statute, i.e., Arkansas Co., overruling Rodgers Ark. 356 S.W.2d 615, 621, Ark. 215 218 S.W.2d which had Howard, been 240, 242, Ark-La Feed & followed in Fertilizer Co. v. Marco Chem. statutory 292 In F.2d some Co., instances, provision applied on a state officer has been though exclusively business of upheld interstate been and such service has commerce, where the circumstances were such as to come within the following Pennsylvania statute. cases under the Cf., Imperial supra, Andreas v. Airlines, Inc., statute, i.e., (E.D. Supp. Penn.), 211 F. 311 v. Bastian- Rufo Blessing Pa. A.2d and under Co., 123;

South Carolina supra, State v. Ford Motor statute, Co., 208 legis- S.C. 38 S.E.2d 379, 247-49. But 242, since the accepted early lature in 1957 the narrow of the view deci- have no sions, we choice in the matter.

The decision below construed section 172-150 as providing any foreign corporation for service on constitutionally irrespective ap could be served, plicability reading of section 174-1 or 174-2. Under our namely presented, of section 172-150a different petitioner formerly whether came if under section 174-2, governed by chapter at all and hence excluded 174, operation from the of section 172-150 the amendments applicable above reviewed. We deem the line of cases stemming Mfg. Colley, from York Co. v. 247 U.S. 21, represented by following, the first tAVO of which relate shipped to the installation of elevators into the State from Metal & Trim outside Door Co. v. i.e., State, Haughton 170 Okla. 39 & Hunt, P.2d Elevator 72; 240, Candy Mach. Co. v. Detroit 156 Mich. 120 N.W. Co., Superior App. & Proctor Schwartz 99 18; v. Cal. Court, Eng’r, 2d 221 P.2d Combustion Inc. v. Arizona 972; jen State Tax 91 Ariz. 371 P.2d Brandt Comm’n, 879; Kluge, & Inc. v. 9 Wash. 2d 115 P.2d 731; Nanson, Ventilating Burlington Warming & Hess Co. v. Grain Elevator 217 S.W. 493. Mo. Co., applicable

York the criteria here. If the states instal- machinery “appropriate” lation of bears a “relevant” or relation for transaction to the contract made its sale the not lose character reason of the does its interstate “in- A court must ask itself installation. whether upon machinery] largely depends its [of trinsic value being operative The “func- made as a whole.” united and complexity,” machinery,” and “the neces- tions of the “its sity aggregation mechanical and unison with skill of its precision that the result of the contract of in order * * * might into existence” are to be considered sale come as on tbe in the bearing appropriateness including contract a provision installation tbe seller.

U.S. at 25. On tbe other band factors these will serve to obscure the intrastate character the busi at ness least takes on where the seller under partially takes the of such as the performance digging functions miles of Co. many General ditches, Ry. Signal 246 U.S. 500. Virginia,

In answer to a court11 re question presented by this spondents filed a memorandum in they which distinguish York Co. v. 247 Mfg. rely U.S. Colley, supra, upon 21, stated in principles General Co. v. Ry. Signal Virginia, 246 U.S. supra, 500; v. 233 U.S. Browning Waycross, 16, and Caldwell North v. 187 U.S. 622. Carolina, Relying upon the of the court findings respondents empha below, size that the for agreement provided complete installation by the seller and not for an merely supervision by expert by furnished the seller. They also there though assert, are no on the that findings local labor point, was hired and materials locally by were the seller. But purchased these are not criteria in They themselves. bear simply on the main In question. the incidental nature of short, the work in performed by the State is the seller test. cite

Respondents also Beach v. Kerr 243 Turbine Co., Fed. 706 but that case antedated York (N.D. Ohio), Mfg.

Co. v. 247 did S. R. U.S. Co. Colley, supra, 21, Smythe Ft. & v. Worth Glass Sand 105 Tex. 142 S.W. 1157. Co., 8, United Constr. Nat’l States Co. v. Hamilton 73 Ind. Bank, 11 briefing following point: tbe court called additional on subject having respondents “It been ‘that the action contended directly petitioner’s the lower tivity the is one which out of the ac- court arose Hawaii, activity being place took within said the State negligent in Waikiki installation of an elevator Biltmore Hotel Honolulu; activity place shows took over the record petitioner’; such several months and was under the direct control of and it having that, case, been if be contended even jurisdic- 1955, 174-7.5(i) (Supp. 1963), § R.L.H. is fatal to the claim of (i) may assuming deciding without that such section 174-7.5 is or tion — activity pertinent, scope?” within be does the come its

142 App. 126 N.E. cited 149, 866, v. Browning Waycross Co., and General supra, Ry. Signal Co. v. but Virginia, supra, did not consider York. In National Co. Refrigerator v. Southwest Missouri 288 Light Mo. 231 Co., S.W. 290, 930, tbe court distinguished York Co. Mfg. v. Colley, supra, 247 U.S. on 21, factual but here are grounds, facts insufficient. As to v. S. F. Bryan Bowser & 209 S.W. Co., 189 (Tex. and American App.), Amusement Co. v. East Lake Chutes 174 Ala. Co., 56 So. 526, 961, remaining cases cited respondents on this we do not question, find the reasoning of these cases persuasive. The Texas case cited the state court’s decision in York Co. Mfg. v. 172 Colley, supra, S.W. apparently 206, overlooking overruling that decision by the United Supreme States Court in the 247 leading case above U.S. cited, 21, Alabama case decided before York Co. Mfg.

As plaintiffs the circuit respondents had the court, burden of sustaining the court’s over peti tioner. Inc. Victory Carriers, Haw. Hawkins, 352 P.2d & 320; Proctor Inc. v. Su Schwartz, perior Court, App. Cal. 2d P.2d supra, 974.12 On the record before respondents have not us, sustained that burden of The mere fact that proof. installation took several months cannot be said to be dec isive.13 It that is manifest of the court below findings Victory Carriers, Hawkins, supra, As stated Inc. v. when a question jurisdiction put defendant adduces sufficient evidence to issue the of jurisdiction person, establishing over the the burden of plaintiff. below, put petitioner, shifts to the Here as defendant jurisdiction only showing of in issue an affidavit that its respect single connection with Hawaii was with to the installation of a elevator in Paragraph (j) 174-7.5, of section the new section enacted Act provides “conducting that an isolated transaction com S.L. thirty days pleted period within a of and not in the course of a number repeated of transactions of like nature” shall not be considered to be findings doing sustain carrying on in the State. The of business court’s fact concerned, respondents paragraph insofar as this but are not (i) respect paragraph of same decisive in to section which relates transacting to in interstate of business commerce. The inadequate. are court did not helow address itself to the factual on a questions reading correct sec which, tion Due presented. are to its 172-150, interpretation section 172-150 the court directed its consideration facts the question as a matter of whether, constitutional had petitioner had “the minimal contact law, with the State necessary to sustain the court.” this No finding has been made that in 1955 or petitioner, at any other was within the ambit of time, as a corporation whose was partly intrastate. Un der the terms of section 172-150 that requisite order to be on for service made the Director of Regulatory Agencies. made in

Respondents court a motion to supple- ment the We record. took this motion under advisement rule now that motion will be treated an offer of proof as to further evidence that could be adduced the trial court jurisdiction. in support proffered evidence would tend to that Belle show the builder Haven, of the Waikiki with arranged for Biltmore, the installation of the elevator time some after the hotel made provision at the built, having time of construc- tion for an additional for the elé- elevator, freight; vator equipment was to the Waikiki shipped Biltmore from California pursuant August contract on and that Belle 1955; Haven the contract payments made in California through its office for except payments there, for materials locally and services used in obtained and made payments were Belle installation, Haven price. in Hawaii credited on the contract It further would tend on the date of shipment show petitioner billed Belle Haven “1-Geared Electric Ele- vator be at price installed Waikiki Biltmore —Contract on Due all upon shipment of eleva- $19,770.00. elevator — and that tor contract price equipment, $9,885.00,” 50% 144

this sum of $9,885 wms paid Nothing installments. appears to as how the remainder of the price contract to paid, as the amount credited for and serv- materials ices paid for by Belle Haven Hawaii. While incom- plete these and other respects the offer of proof does tend to further show that is bearing evidence available on the York application criteria of Mfg. Co. v. 247 Colley, supra, U.S. 21.

The ruling of the court below denying petitioner’s motion to dismiss was interlocutory subject recon sideration. It is still subject reconsideration the circuit court our Unless writ not only reverses the circuit court but also the matter out takes of the circuit court’s grants hands and A petitioner’s motion. writ in the form prayed for would have that effect, petitioner has asked for a restraining writ forever the further prosecution of respondents’ action with A respect writ petitioner. such form is not v. appropriate. Cf., Dole Haw. Gear,

In the first we have no that place, made decision the action should be to dismissed as or that should petitioner’s summons be motion for dis- quashed; missal sought both but we make no either. holding as Under our interpretation of R.L.H. 172-150, 1955, § issue validity before us is the one narrow service of summons.14 In second our holding on place, is that point only validity of sum- supported. holding mons has been We make no place cannot be In third the factual supported. now that have are for the issues, we them, ideutified circuit court to resolve. oh the prohibition sought writ of

Where, here, ground the lower court has decided wrongly (Colo.). Leasing Corp., Bolger Dial-A-Style 409 P.2d See the of the over person petitioner, of for the of the purpose preventing expense, lies prohibition of an unauthorized annoyance proceeding, and vexation at the only a matter of conclusion right since is appeal not after Prohibition does judgment. proceeding, off to further con cutting right lie for the purpose have had if a ruling would respondents sideration which Had the mat appeal. their had been reversed on favor the case have been remanded appeal ter would up come on including of petitioner’s motion, for reconsideration Tugaeff of further evidence. taking Cf., Tugaeff, Haw. 455, only the circumstances entitled

Under further of the action restraining prosecution a writ of the circuit court’s deci- on the basis against petitioner and December of December order of 10,1964 31,1964, sion reaffirmation of jurisdiction it our intention that being calls for evidence is adduced which proper in the event nor shall the writ not be restrained, result shall may see respondents of such taking steps restrain the to effect service other as to means, fit in an endeavor In has been validity opinion expressed. of which no the writ parties understanding with the accordance prosecution respect as well operate will County’s and cross-claim. City and Leo W. Niokelsen, Jr. (Harold

Willson C. Moore, him on the briefs, San with J. Walcom of Francisco, & Harmon & Walcom Hamilton, Conroy Henshaw, for petitioner. of counsel), of San Francisco, Beebe & Cades of A. Cagle (Smith, Wild, Singleton counsel) respondents. City Deputy Corporation Counsel,

William Yim, argue. but did not present County Honolulu, MIZUHA, BY DISSENTING OPINION J. agreement

I am with the statement in majority opinion “legislature that since the in 1957 ac- cepted require the view that it was unconstitutional registration of a whose in the Territory exclusively interstate commerce” has “accepted early view of narrow decisions” wherein narrowly “a number state courts have construed providing statutes for substituted service on a state of- apparently in ficer, the belief that the constitutional protection required of interstate commerce such narrow * * *.” construction, Standing Report

The Committee No. 334 on S.B. 609 (S. pp. which Act became S.L. 1957 Jour. 315, 544-45) stated that section 174-2 “was to as testified being unconstitutional.” It further stated that “Creditors corporations not will the be affected as be can sued in majority opinion: our courts.” But the the statement in long “This of course true as as was the re- Territory,” in mained the does not follow aas matter of respondent course. The main contention of is that service upon petitioner, doing of can be made if it were provisions in business this under of the State, section 174-1 and section 172-150. repeal unnecessary.

The of section 174-2 It was was “long process upon foreign a arm” statute for service of corporations c. similar to S.L. the However, legislature may in 1957 in an abundance caution have accepted testimony provisions that the domestication section were unconstitutional and believed that it unnecessary foreign corpora- was burdensome a engaging solely as a condition of tion, within State in registration file interstate statement commerce, required in said section. repeal

But the of section 174-2 cannot construed be acceptance by legislature, the 1957 of a architects new “the narrow de- early view of decisions” Hawaii, narrow- fining doing thereby business in a state, what is ing where is whether scope a legal is amenable to foreign corporation process. a hiatus may

The section 174-2 have “left repeal should on interstate commerce corporation carrying thereafter no officer or Territory leaving absent itself, here.” But that true managing agent only is situations solely where the in in- foreign corporation was engaged terstate without State. doing business commerce, It unnecessary is for us to which does supply deficiency not are from which court exist. There facts the lower in this doing determined that State therefore under the of section 174-1 and provisions under amenable to service of process 172-150. &

Detsch Co. Cal. 2d Inc., App. Calbar, in the majority Cal. cited Rptr. opinion 556-57,39 under this case. relevant statute applicable Corpora- which the served was tions “A provided part: Code, busi- which has transacted intrastate foreign corporation thereafter in this State and has withdrawn from ness in in State be served with may process this business any brought in in action provided chapter manner this or not in out such whether arising business, this State of requirements Chapter has with the of complied ever The decided on theirs). case was (Emphasis of this part.” busi- intrastate given “transacting definition narrow section 6203 defined which Corporations ness” by Code, trans- successive “entering repeated into the term as in this other than interstate State, its business actions of We do not added). (Emphasis or commerce.” section Corporations Code, have similar a statute definition in deter- a narrow restricted to such and are not inter- in engaged a foreign corporation, mining whether doing state thereby is also business, business in this State subjecting provisions itself to under the of sections 174-1and Milling 172-150. See S. Howes Co. v. W. P. Co., (OMa. appeal 1954), 277 P.2d 655 348 U.S. dismissed, 983. legislature repealed At the time the 174-2 in 1957 it added (Supp. also 1963) R.L.H. 1955 174-7.5, among provides, foreign corporation which that a others, doing carrying “shall be considered to be or on busi- purposes chapter in [chapter ness the State for the of this carrying R.L.H. reason 1955] of inon the State any following one or more of the activities:

“(i) Transacting any ^[*********] business in interstate com- merce.

“(j) Conducting completed an isolated transaction period thirty days Avithina of and not in course repeated of a number of transactions of like nature.” foreign corporations activities mentioned power this section definite restrictions on the are this require foreign corporations qualify State to under the provisions By repeal of section 174-1. of section foreign corporations it does not follow that 174-2, “trans- acting may business in interstate commerce” not also provisions transact business the State under the section 174-1. listing

By specifically in section 174-7.5the activities foreign corporation doing do not constitute a legislature clearly carrying on business this State, may doing recognized that be business engaged ordinarily although in interstate busi- State pp. See infra, ness. concerned here as Avhatkind are not

We peti- 174-2. main The issue is whether under section came provi- doing in State the under business tioner was 174-1. of section sions

I do not construe the decision below as in the noted majority opinion [provides] that “section 172-150 any constitutionally service on that irrespective applicability could be of the served, of section agree 174-1 or nor do I 174-2,” with the that conclusion finding the in lower court did not hold that petitioner doing in 1955 in was business this State for service of to be effective under section 172-150. reading A careful of the “Decision on Motion to Dismiss” specific and the record indicates there is no reference support to section 174-2in the In Decision. of its motion petitioner specifically placed ap- in dismiss, issue the plicability apparent of section 174-1 as follows: “It is that at the time of isolated the transaction ATLAS required ELEVATOR it was not to file or COMPANY, register pursuant provi- with State of to the Hawaii, citing applicable section 174-1then sions effect,” provisions. apparent It is from the record and decision the trial court considered whether doing provisions under since it found that “ATLAS contracted with Belle Haven Realty subject Co. to install the elevator the Waikiki Biltmore Hotel Honolulu. This contract was made performed California and to be in Hawaii. The eleva- period during tor sometime was installed between March and December of 1955. The installation of subject provisions elevator was to the of the then current promulgated gov- elevator code enforced the local appears “it ernment.” to the Court that ATLAS Thus, responsibility had the for the of the elevator installation activity regulated and that this work anwas which was power government. police local record necessary accomplish indicates that time the work appear involved several therefore would months, enjoyed protection that ATLAS of the State of Hawaii for a period considerable of time in an engaging while activity in furtherance of its own interests.”

The decision further “Objection states: made to the is service on the ground activity may of ATLAS not be classified as business’ in ‘doing Hawaii within of RLH meaning Chapter was the law 174, 1955, which to the at the applicable parties time of installation.” The decision then referred to another First Circuit Court Blackburn case v. Honolulu Gas Civil No. Co., R.L.H. where the court stated that section 172-150, “ * * * service permitted upon foreign corporation by of the the ‘treasurer’ to the filing copy process with constitutionally fullest extent is and permissible, re solely limited to those who are corporations is RLH have to but quired comply Chapter with ” ‘to do so.’ The court concluded that neglected lower on ATLAS and summons complaint “the service RLH of Section to the pursuant provisions 172-150, should be denied.” From and that the motion good was specific ground examination of the the trial court’s careful of the motion petitioner support relied upon enumeration of the activities of the detailed quash, and the reference to the manner petitioner State, this that such holding 172-150 and the under section service the trial one conclusion: only there service was is good, business doing was petitioner court found effective under process and hence, State, had since 172-150, provisions Regulatory Agencies. Director of file with the neglected court couldn’t. The never considered. Section 174-2 was in 1957. It repealed between distinguish has failed to majority opinion

The “necessity domesticating question is cases where cases where and bringing suit, before to legal is amenable foreign corporation whether are process. standards not the and the same, quality, quantity conducted character, within the state be sufficient may subject a foreign corporation to be yet insufficient require to take out * * * a license. Such corporations may be doing business within the state so as to be to subject jurisdiction of the local courts and yet subject not be to a statute conditions of their prescribing doing business within the state. The basis of distinction is that power the state subject a foreign local regu- lations is restricted the commerce clause Federal but that a state Constitution, may subject such a corpo- ration which is doing business in the state to service of process therein notwithstanding the fact the local activities of the corporation are confined to transactions in interstate commerce. International Harvester Co. v. * * Kentucky, U.S. Wills v. National Mineral 176 Okla. Co., 55 P.2d S. Co. 452; Howes v. W.

P. Milling Co., supra, P.2d 655 (Okla. 1954), appeal 348 U.S. dismissed, Superior 983; Distributing Corp. 312 P.2d

Hargrove, 893 (Okla. 1957). See 45 Mich. Note, L. Rev. 218-21 An (1946); Isaacs, Analysis Doing 25 Colum. Business, L. Rev. 1024-27 (1925); Note, 16 U. Chi. L. Rev. 523-25 Case 26 So. (1949); Cal. Notes, L. Rev. 215-16 (1953).

In S. Howes Co. v. W. P. Milling defend- Co., supra, ant awas foreign corporation not domesticated in the State of Oklahoma and service of summons was had upon it on of State under Secretary statutes similar sections De- R.L.H. 1955. 172-150, fendant objected of the court over it because it a foreign The corporation. plaintiff, Oklahoma Muskogee, purchased a corn company, with cob husk from defendant an in- separator through dependent Ward R. in Oklahoma. The broker, McGavren, guaranteed by

machine was defendant. McGavren, gave collaboration with the defendant, detailed instruc- plaintiff tions to the for the construction of an elevator and shuck house. Plaintiff built these structures con- formity Muskogee with the instructions. McGavren was in when the machine was installed. After the installation completed, put operation, the machine was into and, within a few hours, shucks were set on fire friction and carried burning. into the shuck house while still resulting destroyed fire the shuck house. McGavren was Muskogee, and he notified, went to where the machine was began. started investigation by and another fire After salesman of City, defendant from Kansas defendant sent other fans to be substituted in the mill. The trouble was plaintiff damages. not eliminated and sued for argued Defendant that the factual situation indicated only single an isolated or a transaction, transaction not “doing continuous nature; was not therefore, busi- subject ness” within the State of Oklahoma and was not process. to local The Oklahoma court stated: “* * * argument upon Such is not based reason justice. particular and of a Courts state should have disputes arising over all out of contracts (or performed) regard made to be within the state, of the number of less contracts of the defendant which (or performed) were made to be there. the Moreover, subject test as to what activities will the cor poration ‘qualitative’ simply to suit is ‘mechan ‘quantitative’. Milking ical’ or Marlow v. Hinman Machine 7 F.R.D. and Co., cases cited D.C., 751, 753, question therein. Therein it that was said the ‘doing whether defendant business’ not the was number length doing of transactions or of time it was business. foreign corporation The defendant there was whose a agents milking solicited for machines, orders factory corporation shipped from its the were agents the another Its advised with located in state. operate

purchasers the machines and how use, repairs. minor the facts made There were sometimes ‘doing business’ held sufficient to constitute within * * *” Milling P. Co. v. W. Co., state. S. Howes P.2d 657-58. difficulty holding

The that Oklahoma court had no transacting foreign corporation “engaging in or busi- was “as to in this state and ness” within be sued state upon it.” It further service of obtained stated at 657: “* * * raised Whenever the has been corporation’s meaning

whether activities within ‘doing (a term these statutes constitutes business’ by statute) not defined held this Court has almost exception corporation without was liable to * * * process. multiple ‘doing local standard categorically stated to be the in 20 business’ is law recognized Corporations, § C.J.S., supra [Wills v. National Mineral Co., Wills case, supra, 449].” 176 Okla. 55 P.2d Curtiss-Wright Supply, Corp.,

In Northern Inc. (Alaska foreign corporation 1965), 397 P.2d 1013 scraper the manufacturer of a road sold Alaska an Wright & Serv- Alaskan Tractors Tractor Wright litigation In Alaskan Inc. between ice, scraper corporation, former claimed that the was de- had breached its fective and the Alaskan warranty scraper. The Alaskan as to the condition of party complaint against corporation filed a third contending foreign corporation if there had been a that foreign corporation warranty, the and not the breach of responsible. corporation there no Since was Alaskan was upon foreign corporation agent in Alaska officer or whom process could be service of served, the third party complaint and summons was made by delivering copies to the State Commissioner of Commerce in accordance with rule and statute.

The AS 10.05.642 statute, provided in part: “When a foreign corporation authorized to transact business in or not state, authorized to transact business in the state but doing so, fails to appoint maintain a reg- istered in agent or when state, registered agent cannot with reasonable diligence be found at the reg- * * istered office, *, commissioner is an agent upon * * *” whom process, notice, or demand may be served. The question was whether the alleged breach of warranty as to the condition of the road sold Alaskan scraper, corporation to Wright, was so connected with the trans- action of in the state by the foreign corporation as to AS bring 10.05.642 into operation. April Between 1960 and September there was effect a distribu- tion sales service agreement between the Alaskan corporation and the foreign corporation. The Alaskan given exclusive right to sell the foreign corporation’s earth moving equipment and parts ac- cessories Alaska. While the agreement was still the Alaskan effect, corporation ordered three road scrap- ers from the foreign corporation. One scraper sold by the Alaskan corporation to A Wright. representative of the foreign corporation came to Alaska to aid and assist of the scraper. sale

The Alaskan court did not hesitate in finding carried on or transacted business in Alaska within the of AS 10.05.642 meaning when it en- tered into the distribution agreement with the Alaskan it a selling scraper to that corporation, pursuant agree- ment. court held: “We construe statute having of a local purpose providing its forum for

155 a against a grievance have who of the state residents activities its business out of growing foreign corporation v. Curtiss- Inc. Northern Supply, the State.” within at supra Wright Corp., did activities its argued foreign corporation

The Alaska because business transaction of not amount to to our is similar AS of 10.05.600, the provisions “transact words scope limited the section 174-7.5, In answer to this in AS 10.05.642. as used business” men “The activities Alaska court stated: contention the to the transaction only pertain AS 10.05.600 tioned in to require of the state the power as it to business relates authority certificate of to obtain a the foreign corporation AS 10.05.600 does in the business state. to transact a foreign may subject those activities which to pertain AS under our courts to the Curtiss-Wright Inc. v. 10.05.642.” Northern Supply, 1015.1 supra at Corp., 1960 AS that prior court also noted

The Alaska 2 Business Cor- of Model 108 following section 10.05.642, for did not provide 605 p. (1960), poration Act, Annot., a cor- in cases where of jurisdiction the exercise Alaska but was business actually transacted poration statutory provisions under do so not authorized to 10.05.642 was In AS authorization. obtaining such to trans- not authorized “or the words by adding amended con- court and the doing in Alaska but so” act business legislature’s “showing broad language strued the cover situ- of jurisdiction the scope intent to expand transacting in fact a foreign ations where given interpretation 1 section 99 was the noted that this The court Corporation Act, 10.05.600 was AS from which the Model Business “* * * deal does not 99 Section to section 99 states: taken. with the determination ration to service of ration comment subject foreign corpo may of what activities Corpo Business Model local taxation.” (1960). § Annot., 99, p. Act, business in the Avhether or not the state, Avas such a nature as to require the corporation obtain certificate of authority under state Iuav.” Northern Sup Inc. v. ply, Curtiss-Wright supra at Corp., position majority opinion taken the similar is taken courts Avhichare concerned Avith the question may impose upon Avhetherthe state restrictions pass interstate commerce or Avhich laAvs amount to the regulation question of such commerce. But that is not the before us. We are concerned Aviththe of Avhether process may foreign of our State courts reach a cor- poration Avhichhas transacted business our State even though the transaction stems from interstate commerce.

Elcanon in An Isaacs Analysis 25 Doing Business, Colum. L. Rev. distinguishes 1018, (1925), degrees “doing business” under three legal purposes, service of taxation and i.e., process, qualification, of activity in the degree required rising order named. Whenever domestication courts issue, is have doing insisted that a must be business high at a level since the State dictates manner Avhich may comply it is to be and failure to result licensed, penalties corporation’s right Avell denial of as question, But sue. Avhenservice of the deci loAvering degree haAre sions been almost unanimous doing permit process. “doing This double standard betAveen business” Avhich Avithin a court’s foreign corporation Avill state bring necessary subject business” “doing been to domestication most applied has Corp. Veneer v. 90 F.2d 196 Liquid Smuckler, courts. supra, v. National Mineral Co., Cir. Wills (9th 1937); 137 Doane, 55 Webster v. Misc. 119; 176 Okla. P.2d 193, v. United Operating 211 Atkinson States N.Y.Supp. 212; 513, Rand Remington Minn. 152 N.W. 110; 129 ., 232, Co 157 Knapp-Monarch Supp. (E.D. Inc. v. 139 F. 617 Co., 613, 1956); Corp., Super., Penn. Klein v. 47 Sunbeam Del. 485, Releasing Organization 93 A.2d Filmakers Realart 732; v. (Mo.

Pictures St. 374 S.W.2d Louis, Inc., 539 535, 1964); Super. Malavasi v. 62 N.J. 163 Villavecchia, Knight A.2d Inc. v. 214; Donnen-Fuel 20 Products, Co., Sperling N.Y.S.2d v. 49 135, 139-40; N.Y.S.2d McGee, App. 268 Div. 477, aff’d, 51 N.Y.S.2d v. Suss 274; Corp., Knit 4 Durable Misc. 2d 147 N.Y.S.2d 363; L. William Bonnell Co. v. 23 Misc. 2d Katz, 196 Milling supra, N.Y.S.2d S. 763; Howes Co. W. P. Co., appeal 277 P.2d 655, 348 U.S. Common dismissed, 983; wealth v. & Pa. D. C. State v. Andrews, Ford 505; Supply, Motor Co., S.C. S.E.2d Northern 242; Curtiss-Wright Corp., supra; Susquehanna Inc. v. see Tauza v. Coal Co 220 N.Y. N.E. ., 259, 115 915. approach by major

I cannot reconcile the followed ity opinion expressed opinion in view of the United Supreme accept States Court that it will the decisions doing of state courts toas what constitutes the of business meaning in the state within but deter will laws, its foreign corporation’s mine for itself a whether business applied was interstate and whether local enactments as repugnant City are commerce to the clause. Kansas Steel Co. v. 269 U.S. 150. Arkansas, successfully

The interstate commerce clause has been by foreign corporations magic avoiding used jurisdiction by as a wand past,

the state in the but the courts door many phases litigation has been of state on this closed especially in tort law. I am amazed that this defense, willing theory jurisdic- court to the is to bow state by city alleged in a suit a resident of tion tort this negligence foreign a in the installation an took three to four de- elevator which will months, degree activity pend measured on a as whether —such foreign corporation “many dug a miles of ditches” as Ry. Signal Virginia, Co. General v. U.S. 500. Mfg. Colley, York The criteria of Co. v. 247 U.S. 21, inapplicable here. The manner in which the case is brought Supreme

to the Court of the United States significant. Mfg. Colley, supra, In York Co. is v. Supreme Court the interstate commerce clause invoked deny attempt State to strike an of Texas down right a to sue in courts its machinery just making collect a debt for sale of ice reasoning analysis The to Texas residents. same imposed upon applied inter to the fees and taxes license municipalities in v. Caldwell state commerce or states Pennsylvania, Rearick North U.S. v. Carolina, 622; 218 U.S. 124. 203 U.S. Dozier Alabama, 507; petition problem whether main raised is The foreign corporation, upon petitioner, is with the service process. requirements of due in the constitutional doing corporation was whether the test this case the elevator, at the time installed in this State corpora under which and whether not statute provides of noti method for a reasonable tion was served Washington, 326 U.S. Co. v. fication. International Shoe instant case. met in the Both have been tests legislature the 1957 intent of I it was the do believe foreign corporation repealed 174-2 that which at Waikiki an elevator to install took three months escape process, and that be allowed to should foreign a courts on forced to sue resident should be a negligent alleged arising installation from the claim tort the elevator. of a activities distinction between There corporation subject to the will penalties requirement 174-1 and of section domestication will activities which 174-14, under sections Í59 bring within the of our courts in a by tort suit a resident of this State under sections 174-1 and term 172-150. The business” for the “doing purpose of subjecting foreign corporation to the process of our should State courts be “measured the outer limits of the due clause of the federal constitu tion.” Northern Inc. Supply, Curtiss-Wright Corp., at 1017. supra I cannot agree with the

Hence, majority’s application criteria York used Co. v. Mfg. Colley, supra, holding activities in this State enumerated the lower court in its decision is in sufficient to confer jurisdiction under provisions sections 174-1 and R.L.H. 1955. 172-150,

I would the petition discharge dismiss the alter- nate writ.

Case Details

Case Name: Atlas Elevator Co. v. Presiding Judge of the Circuit Court

Court Name: Hawaii Supreme Court

Date Published: Mar 24, 1966

Citation: 412 P.2d 645

Docket Number: 4492

Court Abbreviation: Haw.