320 F.2d 219 | 2d Cir. | 1963
Lead Opinion
On October 13, 1961, plaintiff, a resident of Maryland, brought this action for libel against United Press International (hereafter UPI), a New_York corporation, in the District Court for Vermont. He alleged that a news dis-patchTiransmitted by defendant on October 17, 19.58, under an Atlanta, Georgia, dateline, which reported the dynamiting of an Atlanta synagogue, contained a defamatory reference to him as a “ ‘fat cat’ financier” of anti-Semitic terrorist activity.
UPI moved under F.R.Civ.Proc._12(b)___ to dismiss on various grounds, including lack of personal jurisdiction, improper venue, and failure of the complaint (primarily because_it~alleged no special damages)..^ state a claim upon which relief could be granted? Judge Gibson .sustained the last mentioned, ground; he did not pass on the first two. 205 F.Supp. 56 (D.Vt.1962). Plaintiff.appeals from the judgment of dismissal.
We all agree it was error for the district court to proceed as it did. Not only does logic compel initial consideration of the issue of jurisdiction over the defendant — a .court without such jurisdiction lacks power_ to_ dismiss a complaint for failure to state a claim— 'but the functional difference that flows from the ground selected for dismissal likewise compels considering jurisdiction^ and venue questions first. A dismissal for lack of jurisdiction or improper venue does not preclude a subsequent action in an appropriate forum, whereas a dismissal for failure to state a claim upon which relief can be granted is with prejudice. We shall therefore vacate the judgment dismissing the complaint for failure to state a claim on which relief can be granted and remand the case for consideration of the issue of jurisdiction over the person of the defendant and, in the event that this be found, the issue of venue, prior to consideration of the merits.
The affidavits submitted by UPI. on the motion to dismiss showed the follow
I.
The issue of the standard to be in determining whether a federal court has jurisdiction over the person of a foreign corporation in a suit where federal jurisdiction is founded solely on diversity of citizenship, 28 U.S.C. § 1332, has arisen frequently since the late Judge Goodrich’s penetrating opinion, written for the First Circuit and concurred in by Judges Magruder and Woodbury, in Pulson v. American Rolling Mill Co., 1 Cir., 170 F.2d 193 (1948). He analyzed the problem as follows:
“There are two parts to the question whether a foreign corporation can be held subject to suit within a state. The first is a question of "“state law: has the state provided for bringing the foreign corporation into its courts under the circumstances of the case presented ? There is nothing to compel a state to exercise jurisdiction over a foreign corporation unless it chooses to do so, and the extent to which it so chooses is a matter for the law of the state as made by its legislature. If the state has purported to exercise jurisdiction over the foreign cor- ,/ poration, then the question may arise whether such attempt violates the due process clause or the interstate commerce clause of the federal ^constitution. Const, art. 1, § 8, cl. 3; Amend. 14. This is a federal question and, of course, the state authorities are not controlling. But . it is a question which is not reached’?? for decision until it is found-that the^ State statute is broad enough to assert jurisdiction over the defendant in a particular situation.”
Finding that the Massachusetts statute as interpreted by the Supreme Judicial Court did not purport to subject the defendant to suit in Massachusetts, the court affirmed Judge Wyzanski’s dismissal of the suit, saying “we have no occasion to discuss how far recent decisions might allow a state to go in extending its jurisdiction in this field.”
This conclusion, that a federal district court will not assert jurisdiction.over a corPora^on in an ordinary diversity case unless that would be done by the state court under constitutionally valid state legislation in the state where the court sits, has been reached in almost every circuit that has considered the issue:
First: Pulson v. American Rolling Mill Co., supra; Waltham Precision Instr. Co. v. McDonnell Air*223 craft Corp., 310 F.2d 20 (1 Cir. 1962);
Third: Partin v. Michaels Art Bronze Co., 202 F.2d 541, 542 (3 Cir. 1953) (“So the first question which comes up in a case like the one at issue is whether the State, here Pennsylvania, has, through legis-^/ lation plus the judicial application thereof, asserted jurisdiction over the defendant”);
Fourth: Easterling v. Cooper Motors, Inc., 26 F.R.D. 1, 2 (M.D.N.C.1960) (“There are two relevant North Carolina statutes dealing with jurisdiction over foreign corporations. * * * If service of process is to be sustained in this case, it must be under one of these statutes”) ;
Fifth: Stanga v. McCormick Shipping Corp., 268 F.2d 544, 548 (5 Cir. 1959) (“The first part is to ascertain whether the state law means to encompass the challenged service. This question — at least as to diversity cases [of] which this is one — is wholly a matter of state law”); New York Times Co. v. Conner, 291 F.2d 492 (5 Cir. 1961), judgment vacated on the basis of a changed view of state law, 310 F.2d 133 (5 Cir. 1962);
Seventh: Canvas Fabricators, Inc. v. William E. Hooper & Sons Co., 199 F.2d 485, 486 (7 Cir. 1952) (“The primary contested issue is whether defendant was ‘doing business’ in the State of Illinois so as to be amenable to local process * * *. This' being a diversity case, it can hardly be doubted but that the main question for decision is controlled by local law”); Rensing v. Turner Aviation Corp., 166 F.Supp. 790, 796 (N.D.Ill.1958); National Gas Appliance Corp. v. AB Electrolux, 270 F.2d 472, 475 (7 Cir. 1959), cert. denied, 361 U.S. 959, 80 S.Ct. 584, 4 L.Ed.2d 542 (1960); Green v. Robertshaw-Fulton Controls Co., 204 F.Supp. 117, 127-128 and n. 9 (S.D.Ind.1962);
Eighth: Charles Keeshin, Inc. v. Gordon Johnson Co., 109 F.Supp. 939 (W.D.Ark.1952); Hilmes v. Marlin Firearms Co., 136 F.Supp. 307-308 (D.Minn.1955) (“where jurisdiction in a ease is based solely upon diversity of citizenship, the power of the federal district court to entertain the case is dependent upon whether the case could have been brought in the state court of the state in which the federal district court is located”) ; see Electrical Equipment Co. v. Daniel Hamm Drayage Co., 217 F.2d 656, 661 (8 Cir. 1954);
Ninth: Kenny v. Alaska Airlines, Inc., 132 F.Supp. 838, 842-849 (S.D.Cal.1955) (“Our first reference then in determining the ‘doing business’ question, must be to the law as declared by the legislature and courts of the state of California”) ; Kesler v. Schetky Equipment Corp., 200 F.Supp. 678 (N.D.Cal.1961), citing L. D. Reeder Contractors of Arizona v. Higgins Industries, Inc., 265 F.2d 768, 776-79 (9 Cir. 1959) ;
Tenth: Steinway v. Majestic Amusement Co., 179 F.2d 681, 684 (10 Cir. 1949), cert. denied, 339 U.S. 947, 70 S.Ct. 802, 94 L.Ed. 1362 (1950) (“we know that the Oklahoma courts have not gone so far [as the 14th Amendment permits], and we cannot now forecast that they will”).
There thus exists an overwhelming consensus that the. amenability _ of_ a foreign .corporation to suit-.in a federal court in„a..diversity. action-is ■ de- - Yermined in accordance_witb.theilaw--of ( the state where the court sits, with “fed- f eral'law” entering the picture -only — for \ the purpose of decidin^whetbar-a.^tate’s S assertion of jurisdiction contravenes a. constitutional guarantee.
The only contrary voice by a court of appeals is our decision, by a divided panel, in J^ftex — jCorpniatiaQ^ v. Randolph Mills, Inc., 282 F.2d 508 (2 Cir. 1960). In that case all three judges agreed that a judgment in the Southern District of New York dismissing a complaint against a North Carolina corporation should be reversed because New York would have asserted jurisdiction under a constitutionally valid statute. But a majority went on to elaborate in -an opinion by Judge Clark, as an alternative ground for coming to the same conclusion, “that the question whether a foreign corporation is present in a district to permit of service of process upon it is one of federal law governing the, procedure - of the United States courts and is to be determined accordingly.’’ 282 F.2d at 516. T)he service there was evidently thought to be good under this “federal standard”, although the opin
No federal statute or Rule of Civil Procedure speaks to the issue either expressly -axJay_fair implication. 28 U.S.C. § 1391(c), providing that “[a] corporation mfty be sued in any judicial district in which it is incorporated or licensed to do Jiusiness or is * doing business,” relates to venue and not to jurisdiction, as is made clear by considerations polnted out in the concurring opinion in Jaftex, 282 F.2d at 518, and there recognized by the majority, 282 F.2d at 512. Neither is anv instruction to be found by combining the provlsinn ip F.R.Civ.Proc. 4(d) (3) that, service may be made “upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a. copy of the summons and of the complaint to an officer. a managing or general agejijt, or to anv other agent authorized by appointment or by law to receive service of process(and7jf the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant,” witR-the provision of Rule 4(d) (7) that m 'the" case of “a defendant of any class refeTred to in paragraph (1) or (3) of this subdiviYsion of this ruTe, it is”also'’sufficient if the summons and complaint' are served in the manner prescribed by any statute of the United States or in the manner prescribed by the law of the state in which the service is made for the service
Despite contrary intimations as to our position in the dissent, we fully concede that the constitutional? doctrine announced in Erie R. R. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), would, not prevent Congress ..or its rule=making delegate from authorizing a district court to assume jurisdiction over, a foreign corporation in an ' ordinary diversity case although the state court would not; and w¿ reaffirm decisions of this Court that have sustained the application of certain Federal Rules of Civil Procedure differing from the rules applied by the state where the court sits. Iovino v. Waterson, 274 F.2d 41 (2 Cir. 1960), cert. denied, 362 U.S. 949, 80 S.Ct. 860, 4 L.Ed.2d 867 (1961) [Rule 25(a) (1) relating to substitution]; Hope v. Hearst Consol. Publications, Inc., 294 F.2d 681 (2 Cir. 1961), cert. denied, 368 U.S. 956, 82 S.Ct. 399, 7 L.Ed.2d 388 (1962) [Rule 43(a) relating to qaidencel. the latter decision relying heavily on Monarch Ins. Co. v. Spach, 281 F.2d 401 (5 Cir. 1960), quoted in the instant dissent. But we find no federal nojicv that should lead federal courts in diversity cases to override valid state laws as to the subjection of foreign corporations to suit, in the absence of direction by fed'eral statute or rule. State statutes determining what foreign corporations"may be sued, for what, and by whom, are not mere whimsy; like most legislation they represent a balancing^of-variogs. corisid” erations — for example, affording a forum fdFwrongs connected with the state and conveniencing resident plaintiffs, while avoiding the discouragement of activity within the state by foreign corporations. We see nothing in the concept of diversity-jurisdiction that should lead us to read into the governing statutes a Congressional mandate, unexpressed by Congress itself, to disregard the balance thus struck by the states.
Our belief that neither the federal legislature nor the~TederaT rtfle- \ makers have nad’myiñféiffibñ^tó 'dfsplace ;■ state"^atüí'es“ás"Tó_fFé"faking of “juris- - diction óyérfforéi^yórpórations in órcti- r nary' TlfveTslfy “cases' Ts”s"trengthened by instaTHygs~wheW,'Yffc¥rtmn~typlesbgf''federal question litigation, Congress has provided for-servic^off nrbcess outside ‘ the district. A fairly early example is 22, § 12 of the Clayton Act, 15 U.S.C which directs that in any action under aflti-trust laws against a corporation, v-6nue may be laid in any district “whereof it is an inhabitant” or “wherein it may be found or transacts business”, and that process may be served “in the district of which it is an inhabitant, or wherever it may be found.” This seems to show that Congress neither" "'thought'. there,.existed nor wished to create a 7ifed> 1 eral standard” broad enough" to warrant service of process in antitruitlitightio: in any district where a _ corporation “transacts business’!: it directed íhat transaction of business was to suffice for venue but that process was then to* be served elsewhere. See Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1927) (venue in action against Eastman laid in Northern District of Georgia but process served at head office in Rochester, N. Y.); United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948). A similar scheme was used
We are told, however, that the existence of a “federal standard” of jurisdiction over foreign corporations in diversity cases has been established by binding authority which the many courts of appeals and district courts that have decided otherwisehave failed to perceive or understands.
As has often been pointed out, the courts have had difficulty in evolving a satisfying justification for this. At the start, they had to overcome the notion that a corporate entity could have no legal existence outside the state of its creation. See Bank of Augusta v. Earle, 13 Pet. (38 U.S.) 519, 588, 10 L.Ed. 274 (1839). For many years, beginning with LaFay-ette Ins. Co. v. French, 18 How. (59 U.S.) 404, 408, 15 L.Ed. 451 (1856), the received theory, which can be found in Supreme Court decisions as late as Mr. Justice Stone’s in Louisville & Nashville R. R. v. Chatters, 279 U.S. 320, 325-326, 49 S.Ct. 329, 73 L.Ed. 711 (1929), was of “‘implied consent” by the foreign corporation to state statutes conditioning the right to do business on amenability to suit. Most of the Supreme Court cases as to challenges to the assertion of jurisdiction over foreign corporations during this period came from state courts. There the state had., authoritatively construed its statute and the Supreme .Court decided only the issue of constitutionality. But even when the case came from a lower federal court, the question whether the corporation’s “consent” embraced the particular suit was necessarily one of state law, for the “consent” was to what the state statute constitutionally demanded, and the construction of state statutes, even in the heyday of Swift v. Tyson, 16 Pet. (41 U.S.) 1, 10 L.Ed. 865 (1842), was for state judges, although the question whether the state might permissibly exact such a consent was a constitutional one. Hence we find it_impqssible to regard the four opinions by Mr. Justice Brandéis,
The consent doctrine was later succeeded, or supplemented, by a theory of “presence” ; judges developed wondrous capacity to determine that a foreign corporation was “present” in the state in certain instances, but “absent” from it in others although something had somehow gotten done there. These spooks were banished, and fresh air let in, by Judge Learned Hand’s observation in Hutchinson v. Chase & Gilbert, Inc., 45 F.2d 139, 141 (2 Cir. 1930), that “It is difficult, to us it seems impossible, to impute the idea of-locality to a corporation, except by virtue of those acts which realize its purposes. * * * If we are to attribute locality to it at all, it must be equally present wherever any part of its work goes on, as much in the little as in the great”; the basis for determining whether or not to take jurisdiction, he suggested, was., to be found not in metaphysical subletiesjj but ’ in a standard of reasonableness; Since Hutchinson was a removed case,' Judge Hand could hardly have been thinking in terms of “federal law,” see Bomze v. Nardis Sportswear, Inc., 165 F.2d 33, 35 (2 Cir. 1948), save for the limiting principles of the due process clause of the Fourteenth Amendment (and in sopie instances other constitutional provisions). Then came International Shoe Co. v. Washington, 326 U.S. 310, 317, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), a case from a state court, in which the Supreme Court recognized that concepts such as consent and presence are mere rationalizations and that, in the words of Chief Justice Stone, the true question is the existence “by such_c.ontacts of the corporation with "the.state of "the forum as make it reasonable, in the context of our federal system of government, to require thj^corporatio.n to. dpfejid the particular suitjwhich is brought there.”
The-decision..of„what_conta&ts,-within the constitutionally permitted sphere, shall suffice to make a' foreign corporation subject to suit is, one for the state to make in tha-first instance: once the state'has made this, there is no reason for a federal court to go further — or less far — when it is acting under a head of jurisdiction supposedly designed to protect certain suitors from possible prejudice by state courts. We do not deny that the diversity clause of the Constitution also Has^~potentiaI~utility in’perffrftting a federal court, with the possibility ófñation-wide service of process, to give a remedy'unavairable''elsewhCTa"Butto "do that Jn limited classes of" cases ."'under <Tsfatutes specially designed for the purpose, e. g., interpleader, 28 U.S.C. § 2361, or proposals currently underUÍIscussion by the American Law Institute,
I We see little relevancy in the citation of Byrd v. Blue Ridge Rural Elec. Co-op., 356 U.S. 525, 537-540; 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), and Simler v. Conner, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963), holding that whether an isisue is of the sort triable.to a jury must 1 be decided as a matter_ of federal law ¡regardless of the law of the state where I the court sits,(am) surely no warrant for 6 saying that the latter decision has reinforced the alternative ground of Jaftex. These cases proceed on the basig^iat “the federal policy favoring j ury decisions of disputed fact questions^, a policy framed “under the influence — if. not the command of the Seventh Amendment”, 356 U.S. at 537-538, 78 S.Ct at 900, 901, and “of historic and continuing strength,” 372 U.S. at 222, 83 S.Ct. at 610 was such that federal courts should not yield to a contrary “state rule in the interest of furthering the objective that the litigation should not come out one way in the federal court and another way in the state court,” 356 U.S. at 538, 78 S.Ct. at 901. We are aware of no federalh policy of similar strength or constitution-I al basis that would justify disregard of ¡ state laws as to when a foreign corpora- | tion may be held to answer in a suit ljke ' the present. How warily the Supreme Court proceeds in disregarding state law even in the area of jury trial is shown by its refusal to decide whether federal courts in diversity actions may develop ftheir own standards as to the quantum ‘■of evidence necessary for submission to a jury. Dick v. New York Life Ins. Co., 359 U.S. 437, 444-445, 79 S.Ct. 921, 3 L.Ed.2d 935 (1959); and see the recent denial of certiorari, two Justices dissenting, 371 U.S. 935, 83 S.Ct. 307, 9 L.Ed.2d 271 (1962), to review Merritt-Chapman & Scott Corp. v. Gunderson Bros. Eng. Corp., 305 F.2d 659 (9 Cir.).
Neither do we find force in the statement in Jaftex, 282 F.2d at 513, that “[t]he federal and state rules are certainly not so mutually at odds that the federal decision will seriously damage state polity.” When, as in the New York situation there sub índice, the state standard and the supposed “federal standard” are identical or nearly so, it is hard to see what useful purpose the concept of a separate “federal standard” serves; when the “federal standard” is alleged to be significantly different from that which the state has chosen, it is equally hard to see what justification there is for it. One may agree with the premise of the dissent that the quest for uniformity between: state and federal courts 7'cant-b'e-"pushed too far, particularly when the issue may reasonably be denoted as one of procedure, without accepting the apparent conclusion that deliberately creating a difference in result between state and federal courts on an issue such as jurisdiction over foreign corporations in a diversity case is so demonstrable a good as to warrant federal judges in substituting their views for state legislators’. This is especially true when the inevitable result is to ^create still another difference — between^ di- | versify cases coming to the federal courts \ initially and those coming on removal. \where we do not understand how it can
II.
Having concluded that jurisdiction over the person of the defendant is to be determined here on the basis of conjstitutionally valid Vermont law, we fSaah, the quesMoirwiiethér'we should -rfiake the] determination on our own account or remand for initial consideration by the district judge. '
Vermont's provisions with respect to personal jurisdiction over foreign corporations are contained in Subchapter 6 of Title 12 of the Vermont Statutes. Section 851 provides that “[w]hen a foreign corporation has appointed the secretary of state as its process agent, pursuant to the statutes relating to such corporations, service of process, made upon such secretary by delivering to him duplicate copies thereof, shall be sufficient.” Whether Vermont would thmk UPI had been “doing business” in the state to an extent requiring it so to ap-noint the secretary of state, 11 V.S.A. §§ 652(a), 691(a), 692(3), is not clear. See Kinnear & Gager Mfg. Co. v. Miner, 89 Vt. 572, 96 A. 333 (1916); cf. Star-Chronicle Pub. Co. v. United Press Ass’ns, 204 F. 217 (8 Cir. 1913). In any event, UPI hadnot so appointed him, and Vermont, unlike many states, see, e. g., Conn.Gen.Stats. § 33-411(b), has no statute providing generally that a for
“If a foreign corporation makes a contract with a resident of Vermont to be performed in whole or in part by either party in Vermont, if such foreign corporation comA mits a tort in whole or in part in \ Vermont against, a^esident of Ver-Jmont, such acts shall be deemed to be doing business in Vermont by such foreign corporation and shall be deemed equivalent to the appointment by such foreign corporation of the secretary of the state of Vermont and his successors to be its true and lawful attorney upon whom may be ¡ served all lawful process in any ac- ! tions or proceedings against such ; foreign corporation arising from or / growing out of such contract or tort.”
Since plaintiff is not a resident of Vermont as § 855 requires,
Although the case thus does not appear to come within either of these statutes, the questions remain whether Vermont would nevertheless fill the gap beA, tween them and assert jurisdiction over \ this defendant on the basis, stated a-A half century ago in the attachment case of Somerville Lumber Co. v. Mackres, 86 Vt. 466, 85 A. 977-978 (1913), that “there being no statute specifically relating to the service of process on foreign corporations doing business in this state other than the one requiring them to appoint a process agent, they must be taken, if they omit that, to assent to be served with process the same as other non-resident defendants are served”, and whether the Fourteenth Amendment would permit Vermont to do that on the facts here. See Hanson v. Denckla v. 357 U.S. 235, 251, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); Blount v. Peerless Chemicals, Inc., 316 F.2d 695 (2 Cir. 1963). While it would be valuable to have the-benefit of Judge Gibson’s consideration* of the first question, and, indeed, of tfe other matters of Vermont law that we have mentioned, there would be no point in imposing a further burden upon him and upon the parties if assertion of jurisdiction by Vermont over the person of UPI in this action would violate the Fourteenth Amendment. On the rather meagre record before us, this might well be so. UPI’s Vermont activities, while perhaps greater than those of the defendants in Blount v. Peerless Chemicals, Inc., supra, or in New York Times Co. v. Sullivan, 273 Ala. 656, 144 So.2d 25 (1962), cert. granted, 371 U.S. 946, 83 S.Ct. 510, 9 L.Ed.2d 496 (1963), were rather small and did not arise from a privilege that Vermont could have withheld. Hanson v. Denckla, supra, 357 U.S. at 252, 78 S.Ct. at 1239. The Supreme Court’s most advanced decisions in this area have stressed that the obligation in suit arose out of the corporation’s activity in the state, International Shoe Co. v. Washington, supra, 326 U.S. at 319, 66 S.Ct. at 159; McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957);
On the other hand, the papers before us are meagre; a hearing, along with an amendment of the complaint which the judge might allow, may present a picture .different from what we now have. We therefore remand for consideration of the issues relating to jurisdiction, and, if the District Court should find these favorably to plaintiff, the issue of venue, before any further consideration of the merits. Since the court may not reach the venue issue, we shall not discuss it except to say that the court should not regard us as necessarily committed to the view, generally followed in the Southern District of New York but never passed on by us, whereby “the criteria which are applied in determining corporate presence for the jurisdictional purpose of effecting valid service of process” are “equally applicable to the venue provisions of § 1391(c).” Champion Spark Plug Co. v. Karchmar, 180 F.Supp. 727, 731 (S.D.N.Y.1960). Accord, Satterfield v. Lehigh Valley R.R., 128 F.Supp. 669 (S.D.N.Y.1955); Ostow & Jacobs, Inc. v. Morgan-Jones, Inc., 178 F.Supp. 150, 154 (S.D.N.Y.1959); First Congregational Church v. Evangelical & Reformed Church, 160 F.Supp. 651, 662-663 (S.D.N.Y.1958). But see Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 73 S.Ct. 900, 97 L.Ed. 1331 (1953); Remington Rand, Inc. v. Knapp-Monarch Co., 139 F.Supp. 613, 617-619 (E.D.Pa.1956); Rensing v. Turner Aviation Corp., 166 F.Supp. 790, 798 (N.D.Ill.1958); Carter v. American Bus Lines, Inc., 169 F.Supp. 460, 469-470 (D.Neb.1959).
The judgment dismissing the complaint is vacated and the cause remanded for further proceedings consistent with this opinion.
. The dispatch read as follows:
“Atlanta — (UPI)—Five persons were indicted today in connection with the dynamiting of the Jewish Temple here.
“The grand jury handed down indictments against the quintet that could possibly send them to the electric chair on charges of dynamiting of the house of worship on famed Peachtree Street last Sunday.
“An Atlanta detective working on the case disclosed meanwhile that the identity is known of a so-called ‘fat-cat’ financier of such terrorist activity as the temple bombing.
“Most investigators believe the bombing was part of an interstate, or possibly international, conspiracy.
“Detective Oapt. R. E. Little, Jr., said he ‘definitely’ knows the identity of person referred to in a confiscated letter as the ‘fat cat’ financier who, the writer said, ‘is putting his $ $ $ where his mouth is, God bless him.’ The Arlington, Ya., Sun said he is a resident of Baltimore.
“Police released the text of a letter that spoke of the ‘fat cat’ financier.
“The Associated Press said an Arlington printer (George Lincoln Rockwell) who turns out anti-Jewish literature acknowledged today he wrote a letter which-has figured in the bombing of a Jewish Temple in Atlanta.
“Rockwell said the letter was written-last July to Wallace H. Allen in Atlanta.
“FBI agents interviewed Rockwell but the FBI declined to disclose the outcome.
“It was learned in Washington that the FBI Thursday questioned Rockwell and Harold Noel Arrowsmith, Jr., described as a member of a wealthy Baltimore family.
“Authorities today sought a mystery figuro thought to be the mastermind of dynamitings in the South.
“Further evidence of the ‘fat cat’s’ role was reported by police in a letter containing this line: ‘The big blast is all set for either next Sunday or Saturday * * * we will know tomorrow and will keep you informed.” ’
. Thus, New Tork, where defendant is incorporated and whence the libel was allegedly transmitted to Vermont, Georgia, where the libel originated, and Maryland, where plaintiff resides, all have one-year statutes of limitations for defamation. N.T.Civil Practice Act § 51-3; Book 2, Tit. 3 Ga.Code Ann. § 1004; 57 Md.Code Ann. § 1. Defendant asserted at the argument that the only states with periods of limitation as long as three years were Vermont and Arkansas. A suit brought by plaintiff against de- ■ fendant in federal court in Arkansas, where defendant’s activities are considerably more extensive than in Vermont, was dismissed for want of jurisdiction by tlie District Court for the Eastern District of Arkansas, No. LIb-61-C-160, and we are told that plaintiff’s appeal from this order was dismissed on April 30, 1962. It appears that two other states, Hawaii and New Mexico, even more remote from the locus of the present claim, have limitation periods of three years or longer for libel actions. Hawaii Rev. Laws § 241-1 (e); N.M.Stats.Ann. § 23-1-8.
. If the district court should find it necessary again to consider the sufficiency of the complaint, it ought consider not simply Vermont internal law but the law or laws that a Vermont court would apply under applicable choice of law rules. See Hartmann v. Time, Inc., 166 F.2d 127, 133 (3 Cir. 1947), cert. denied, 334 U.S. 838, 68 S.Ct. 1495, 92 L.Ed. 1763 (1948); Brewster v. Boston Herald Traveler Con)., 188 F.Supp. 565, 560, 577 (D. Mass.1960), 74 Harv.L.Rev. 1457 (1961) ; Prosser, Interstate Publication, 51 Mich.L.Rev. 959, 971-78 (1953).
. A district judge in the Sixth Circuit seems to have construed Scliolnik v. National Airlines, 219 F.2d 115 (6 Cir. 1955) as establishing a “federal standard” although disagreeing with the view he thought it announced, Shuler v. Wood,
. A striking instance is Southern New England Distrib. Corp. v. Berkeley Finance Corp., 30 F.R.D. 43 (D.Conn. 1962). The. district judge, on the basis of a scholarly review of Connecticut statute and decisional law, found (1) that “Connecticut, as a matter of state policy, has recognized the advantage of not imposing qualifications on the right of foreign corporations to conduct some kinds of commercial and financial transactions, since it has enumerated certain business activities of foreign corporations which do not constitute ‘transacting business’;” (2) that the defendant’s activities came within these exclusions, as found in Conn. Gen.Stats. § 33-397(b); and (3) that the complaint did not allege tortious conduct in Connecticut under another statute, § 33-All (c) (4), authorizing service on a foreign corporation in such a ease “whether or not such corporation is transacting business in this state.” 30 F.R.D. at 45-48. Yet, in deference to Jaftex, these modern and comprehensive statutes, representing Connecticut’s assessment of the relative interest of plaintiffs, defendants, and the state itself, were set at naught, in an ordinary diversity suit, in favor of a supposed “federal standard.” ...
In fact, the Southern New England result may not have followed so inevitably from Jaftex as the judge thought. For the case came into the federal court on removal, and thus Connecticut law would still govern the- validity of the service (subject, of course, to constitutional limitations), unless Jaftex overruled sub silentio not only Judge L. Hand’s decision in Bomze v. Nardis Sportswear, Inc., 165 F.2d 33, 35 (2 Cir. 1948), but also Lambert Run Coal Co. v. Baltimore & O. R.R., 258 U.S. 377-382, 42 S.Ct. 349, , 66 L.Ed. 671 (1922)—no mean feat for 1 two judges of a court of appeals. But , this probable error serves to highlight another unhappy effect of Jaftex, discussed below, the undesirability of having two different rules for jurisdiction over foreign corporations in diversity actions depending on whether the case is originally brought in the federal court or is removed there. And the unfortunate result which the judge thought that Jaftex obliged him to reach would/have been required in a suit brought orig-‘ inally in federal court.
. The diversity clause of Article III was not one of the provisions of the Constitution about which the founders felt very deeply. " Madison thought it was not “a matter of much importance. Perhaps it might be left to the state courts.” 2 Elliot, Debates on the Federal Constitution (1828), at 391. Marshall conceded in the Virginia convention, “Were I to contend, that this was necessary in all cases, and that the government without it would be defective, I should not use my own judgment.” Id. at 406.
. “The essence of diversity jurisdiction is that a federal court enfacfiea^SJtata-law and State policy. If North Carolina has authoritatively announced that deficiency cannot ¡)é secured within its borders, it contradicts the presuppositions of diversity jurisdiction for a federal court in that State to give such a deficiency judgment. North Carolina would hardly allow defeat of a State-wide policy through occasional suits in a federal court.” 330 U.S. at 191-192, 67 S.Ct. at 661, 662.
. A state ^tzitute barring suit by foreign corporations which had not qualified is CaDie m a.federal court: “ * * * : which apptj ajpghlfr which ' ..________ it does not supt^ with a. remedy is.,no right at all for purposes of enforcement in a federal copr(-. ip" a diversify ^a.” 337 U.S. at 538, 69 S.Ct. at 1237.
. We express no opinion whether a “federal standard” may govern jurisdiction over foreign corporations in federal question litigation not covered either hy such special statutes or by contrary ones assimilating the situation to diversity litigation, e. g., § 23 of the Bankruptcy Act. Suffice it to say that the considerations favoring the overriding of state policy would be far more persuasive than in an ordinary diversity suit. We likewise express no opinion as to whUt~sfandard~is tg govern when -process is sérvé^jmj^dg the state und'eWthe fOO-mile provision for certain types of litigation, added to , F.B.Ciy.Proc.~SIfy,~^ective July 1. 1963.
. -vAs to the argument based on ■§ 11..of the First Judiciary, Act (now embodied in 28 U.S.C. § 1391). it is-enough, to say that this has always been a venue provision and nothing more. The dissent is right in stating that we have given no weight to 28 U.S.C. § 1693, also stemming from § 11, which says, “Except as otherwise provided by Act of Congress, no -person shall he arrested in one district for trial in another in any civil action m a district court.” The allegedly important bearmg of this provision still escapes us.
. Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710 (1917); Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372 (1923) Bank of America v. Whitney Central National Bank, 261 U.S. 171, 43 S.Ct. 311, 67 L.Ed. 594 (1923); James Dickinson Farm Mortgage Co. v. Harry, 273 U.S. 119, 47 S.Ct. 308, 71 L.Ed. 569 (1927).
. An additional reason is that the Rosenberg Bros, and James Dickinson cases came into the federal court bv rgmoval, where a federal court hasfo^^ggcli. ju-risdictionas_fte_state-coujJJjad, Mr. Justice Brandéis had written only a year before Rosenberg Bros.: “Tf tho .■¿int-» court lacks jurisdiction of the sub.i ect-matter or of the partial p|Q feiWal courl_acquires none * * Lambert Run Coal Co. v. Baltimore & O. R. R., 258 U.S. 377, 382, 42 S.Ct. 849, 351, 66 L.Ed. 671 (1922). Yet nothing in the four opinions suggests that the Court had a different “standard” in mind for the two original-jurisdiction cases.
. See American Law Institute, Study of the Division of Jurisdiction between State and Federal Courts, Tentative Draft No. 1, pp. 21-32, 70-108. In view of the dissent’s emphasis on academic support for Jaftex, based on a few law review comments, it is of interest that the proposal
. The dissent’s disapproval of some of our decisions relating to this subject thus seems at least premature.
. The dissent seems to concede this but does not explain why Congress should have wished the bizarre results that the concession entails. Thus, under the “federal standard” view, a foreign corporation which could have a suit by an in-stater dismissed in the state court or on removal if the “state standard” was narrower than the federal one, would gain nothing thereby since it would be subject to suit by the in-stater in the federal court.
. See also the reference to Hess v. Pawloski and to Henry L. Doherty & Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L.Ed. 1097 (1935), in McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), and the statement in American Law Institute, Restatement of Judgments, § 28, comment a.
. We have taken the references in Jaftex, see 282 F.2d at 510, to leading Supreme Court opinions on constitutionality to mean that the “federal standard” wad\ coterminous with the outermost limit per- \ mitted to a state under the due process/ clause of the Fourteenth Amendment. It would seem curious that a “federal standard” should be framed in terms of an Amendment applicable to state rather than federal action, and the dissent repudiates this view. We are told that the “federal standard” is quite well known and reasonably precise, but are given little further information about it save for phrases like “doing business” and “presence,” which have meant many different things to different courts and, as Judge Learned Hand held in Hutchinson v. Case & Gilbert, supra, boil down to notions of what is fair and reasonable, with much depending on the nature of the plaintiff’s claim. It is far from apparent why principles of fairness and reasonableness concerning the locus of suit should be thought to subject this defendant, which was available for service at its home office in New York and presumably in many other places where it had substantial establishments, but was doing very little in Vermont, to process in Vermont in a suit by a nonresident on a claim which, so far as now appears, is wholly unrelated to anything done in that state. Paraphrasing Judge Hand, 45 F.2d at 142, it would seem fairer that Arrowsmith should have come to New York, or have stayed in Baltimore, than that UPI should go to Vermont.
. 12 V.S.A. § 853, imposing a penalty-on the specified types of companies doing business in Vermont for failing to designate the secretary of state as process agent as required, and 12 V.S.A. § 854, providing that when a stipulation so appointing the secretary is not filed, “process may be served by delivering a true and attested copy thereof, with the officers’ return thereon to an agent, messenger or operator of such company residing in this state or to any person enum-ei’ated in section 813 of this title,” have been coupled ever since the Vermont legislature adopted “An Act Providing for Service of Process on Foreign Insurance, Express, Telegraph and Telephone Companies,” Laws of 1884, No. 46, in which these provisions were §§ 3 and 4, and codifiers of Vermont law have uniformly linked the two sections thereafter. See V.S.1894, §§ 4168-69; V.P.L.1906, §§ 4747 — 48; V.G.L.1917, §§ 1741-42; V.P.L. 1933, §§ 1524-25; V.S.1947, §§ 1560-61; 12 V.S.A.1958, §§ 853-54. The 1959 amendment of § 854, Public Act No. 261, § 11, broadened the category of persons upon whom the summons could be served to include the same persons as a current revision of § 813 provided in the case of domestic corporations; but nothing in the text suggests an intention to expand § 854 to include all foreign corporations rather than the limited category to which' it had been restricted since its original enactment in 1884.
. Question might be raised whether Vermont’s limiting the benefits of this corporate “long-arm” statute to plaintiffs who are Vermont residents is consistent with the equal protection clause of the Fourteenth Amendment and the privileges and immunities clause, Art. IV, § 2. A sufficient answer may lie in McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), where the California statute in issue was confined to suits on insurance contracts with California residents and was sustained in part on that very ground; moreover, the Court cited with approval, 355 U.S. at 223, 78 S.Ct. at 201 n. 2, Smyth v. Twin State Improvement Co., 116 Vt. 569, 80 A.2d 664, 25 A.L.R.2d 1193 (1951), sustaining the constitutionality of 12 V.S.A. § 855. If the validity under the due process clause of the Fourteenth Amendment of subjecting a foreign corporation to suit within a state on the basis of isolated activities within it depends upon a balancing of the interests of the plaintiff and the defendant, see 73 Harv.L.Rev. 909, 923-28 (1960), the fact that the plaintiff resides within the state is surely a relevant consideration, as the McGee decision indicates. The state has an interest in not making it too burden
As to what the consequences would be if the limitation to residents were deemed invalid, see Mr. Justice Holmes concurring in Chambers v. Baltimore & O. R. R., 207 U.S. 142, 151, 28 S.Ct. 34, 53 L.Ed. 143 (1907) ; Currie and Schreter, Unconstitutional Discrimination in the Conflict of Laws: Equal Protection, 28 U.Chi.L.Rev. 1, 14 n. 70 (1960).
. In Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), where the obligation did not so arise, the quantum of corporate activity was exceptionally large, the state having become the corporation’s wartime headquarters.
. In this respect Arrowsmith’s case is weaker than the plaintiff’s in New York Times Co. v. Sullivan, supra, where Sullivan, a resident and public official of Alabama, alleged that the libel had been circulated in that state and had injured his reputation there.
Dissenting Opinion
(dissenting).
In Jaftex Corp. v. Randolph Mills, 2 Cir., 282 F.2d 508, the two opinions considered at some length and with care a question of great national importance which can be "ultimately settfecT only by” the Supreme Court, namely, the law governing the obtaining of jurisdiction in personam of civil litigants in the federal courts. As wilh.be developed below,, the decision had a very good presSYn'the law schools and among"scholars. "ÑoWT’anT at a loss to understand the strong compulsion to eradicate root and branch the view there espoused that federal law con
^Bjjj; even though this decision as a7 precedent has great potentialities of! harm, the issue is no^one which normally (and here) has any considerable practical effect so far as the litigants are concerned; the use in federal service under F.R. 4(d) (7) of the new “long-arm” statutes becoming popular in the states, as well as the parallel, rather than conflicting, development of state and federal principles in this area, as in Jaftex with reference to New York, ordinarily give little occasion for meaningful federal-state conflict. So here, in order to make a case for their reversal, the majority has to ascribe a really fantastic “dooi\ closing” meaning, arrived at by way of-negative implication, to Vermont’s affirmative grant to its residents of a “long-arm” remedy by service in particular in-í stances on the secretary of state. _ The_ most natural conclusion here, just as in.. Jaftex, isthafstate and federal law as to ,' service__w£ujd__yield the "same "resiilt'."i' Hence this seems to me a~*substantially •manufactured case to register disagreement with Jaftex before the issue can ■get to the Supreme Court. This inconsiderable result is forced in a case where the district court did not advert to the issue and the plaintiff, a layman, greatly outmatched, filed his brief pro se without any mention of the matter. When I saw the turn the appeal was taking, I urged my brothers to appoint some lawyer of standing to represent the national interest and to assist us to a correct decision; but they have preferred to leave this most important intei’est unrepresented.
In their eagerness to blot out Jaftex, my brothers, it seems to me, have made an erroneous analysis of both the historical background and the present case law. I plan to cover both these aspects below; but since I consider yet more important the underlying philosophy and policy of e law and feel that this is sadly neglected by my brothers, I shall turn to it at once.
Now I think it clear that it is the assumed compulsion of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and only that, which leads to my brothers’ conclusion here; only such a positive mandate would justify rejecting the flexible and workable uniform standard so long followed in the federal courts for the vague, uncertain, conflicting rules of the states. And surely this is the more-apparentjyhen .adoption of the supposedstate_ rules -carries with..it an implied invitation...... for . discrimination against federal citizens otherwise elB • gible to sue federalwise. Butjmtu'ally uthere is no such compulsion 7rom ErifL; the bite there was to see that a litigant’s substantive rights are to be determined by the appropriate state law and are not to be prejudiced by the fact that they are being enforced in a federal court. Here state law as to libel will ultimately determine the plaintiff’s rights on the merits, as the considerable and premature discussion of the merits by my brothers demonstrates. But this does / not say how the federal courts shall be organized and how one is brought before them; indeed to put this in the hands / of the states would be to destroy all rea-; son for having a federal tribunal (af£ which the litigant has more confidence) enforce a litigant's rights accorded by state law. See Friendly, The Historic j Basis of Diversity Jurisdiction, 41 Harv.L.Rev. 483 (1928). This would seem settled by recent decisions of the Supreme Court upholding the obligation of. affording a trial according to federal standards. As the Court properly says: “The federal system is an independent system for administering justice to litigants who properly invok^jtsjjurisdiction.” Byrd v. Blue Ridge Rural Elec. Co-op., 356 U.S. 525, 537, 78 S.Ct. 893, 900, 2 L.Ed.2d 953. The Court there declined to follow state law as to issues to be kept from the jury. This principle was definitively and finally set for diversity as well as other actions in Simler v. Conner,
Contrary to the views of distinguished courts and commentators, the majority here brush these cases aside as only applications of the Seventh Amendment. But the matter cannot be so summarily dismissed. There is nothing in the Seventh Amendment to instruct as to this issue; and the result is one reached by the Court through a careful analysis of •what a trial in the federal court essentially means. It is by no means so clearly ■compelled as is the result I am supporting ’lere, which has a direct statutory base, as pointed out below. Moreover, reliance t»n the Seventh Amendment is a late afterthought with our court; in common with other, but not all, circuits we had brashly and overeagerly ruled at least three times that state law governed jury submissions in diversity cases. Gutierrez v. Public Service Interstate Transp. Co., 2 Cir., 168 F.2d 678, 680; Rowe v. Pennsylvania Greyhound Lines, 2 Cir., 231 F.2d 922, 924, cert. denied Pennsylvania Greyhound Lines v. Rowe, 351 U.S. 984, 76 S.Ct. 1052, 100 L.Ed. 1498; Presser Royalty Co. v. Chase Manhattan Bank, 2 Cir., 272 F.2d 838, 840; cf. O’Connor v. Pennsylvania R. Co., 2 Cir., 308 F.2d 911.
The correct rule is, I believe, ably stated by Judge Brown for a unanimous court in Monarch Ins. Co. of Ohio v. Spach, 5 Cir., 281 F.2d 401, refusing to apply to a federal diversity case a Florida statute excluding from evidence a written statement from a property owner concerning injury to his property where he had not been furnished a copy. Judge Brown speaks of the importance of the constitutional provision for diversity jurisdiction (which of course contains no limitation dependent on state action). He says, 281 F.2d 401, at page 407:
“Not the least of these countervailing considerations [against state practice] is the indispensable necessity that a tribunal, if it is to be Ían independent court administering law, must have the capacity to regulate the manner by which cases are to be tried and facts are to be pre- j sented in the search for the truth of f the cause. As Erie epitomized, the constitutional factors subject federal courts in diversity cases to special /-> limitations. But the jurisdiction of courts in such cases is no less constitutional than in non-diversitv litigation. The judicial power of the United States vested by Art. Ill of the Constitution ‘in such inferior Courts as the Congress may * * * establish’ is declared to ‘extend to all Cases, in Law and Equity * *; to Controversies * * * — between Citizens of different States * A United States District Court •clothed with power by Congress pursuant to the Constitution is not a mere adjunct to a state’s judicial machinery. In entertaining diversity cases it is responding to a constitutional demand made effective by congressional action and, as the recent abstention cases have made so clear, it has a constitutional duty to hear and adjudicate.”
It is significant that the Monarch Ins. Co. case and Jaftex are relied on by two acute commentators to justify their argument that federal rule-making authority may extend to uniform federal rules of evidence, now under consideration by the Judicial Conference of the United States and its committees. Degnan, The Law
The question raised in the articles cit-
The majority opinion affects to findl doubt as to the existing or pre-Erie rule! and to make various assumptions about it, such as that it assumes to accept federal jurisdiction up to the limits permitted the states by the Fourteenth Amendment (an odd straw man, indeed — one in no way suggested or intimated by me) | that it states no “federal standard,” and so on. This is a curious failure to react history — one which, however, is apparently at the root of their difficulty in appreciating the existing federal rule. While there may be lurking constitutional overtones in the background, the federal law is shaped by statutory enactment based on easily understood principles, which reflect still important and widely held views of common sense and I fairness that a person should not be j forced into litigation at a distance from ¡ his home: These appear in the First Judiciary Act of 1789 as provisions both of service, then termed “civil arrest,” and of venue. The famous § 11, ch. 20, 1 Stat. 78, 79, after providing for diversity jurisdiction in the federal circuit courts in cases where the matter in dispute exceeds the sum of $500 and for their exclusive cognizance of crimes against the United States, continues: “But no person shall be arrested in one district for trial in another, in any civil action before a circuit or district court. And no civil suit shall be brought before either of said courts against an inhabitant of the United States, by any original process in any other district than that whereof he is an inhabitant, or in which he shall be found at the time of serving the writ, * * These provisions were continued in Rev.Stat. § 739, Judicial Code § 51, and in the former 28 U.S.C. § 112. During this period the requirements as to service and venue were treated together; but, as the Reviser’s Notes state, they were separated in the recent revision of the Code, the venue requirements going to 28 U.S.C. § 1391 and the service requirements going to 28 U.S.C. § 1693.
That policy of course is the well known one going beyond venue requirements to require service within the district un- •
It is true, of course, that the application of this principle of restriction of service to the district had to go through a course of development as to corporations, due to the historic controversy as to location or citizenship of a corporation. But this was settled long ago by the rather natural construction that a corporation must be “present,” i. e., must be doing business, within the district to be subject to suit there. See, as examples of the settled law, Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; Robertson v. Railroad Labor Board, 268 U.S. 619, 45 S.Ct. 621, 69 L.Ed. 1119; and for full explanation and citation, Jaftex Corp. v. Randolph Mills, supra, 2 Cir., 282 F.2d 508, 512, and notes 2-4. And with this there has occurred the parallel development, as in New York, known to us all and outlined in Jaftex, of the state and federal law as to a corporation doing business within the district, but with the federal law getting its authority from this statutory background.
From all this I regard as quite clear and subject to dogmatic assertion that, there is a federal law of statutory authority governing the requirements of service of process upon defendants, in- ¡ eluding corporations, within the district," and that this law, contrary to repeated assertions in the majority opinion, _is quite well known and reasonably precise. Hence the concession in the opinion that the majority would accept a mandate from Congress “or its rule-making delegate” to settle this issue would seem directly applicable, for there exists just that mandate which the majority is rather blithely overriding. And the federal principle, as I have indicated, seems to me flexible and useful, making use of state developments under F.R. 4(d) (7),' but avoiding the confusions and limita,tions inherent in any attempt to apply exclusively state law.
■J Over-all is the issue of national subj servience to the divisive policies of the f statute, a pattern of law at best belittling and undignified for the national courts ^and in all events inviting states to make ¡invidious discriminations in favor of,( s ^Ctheir own locals. True, the states to date have not. been active in such discriminatory legislation, but the effect of the invitation now extended by my brothers may well be to stimulate such legislation on the part of states jealous of or ill disposed toward the. national power. Here, as I develop below, I do not believe it conceivable that Vermont had in mind to prevent as full remedies for New Hampshire or Maryland citizens as for its own. But the opinion suggests that perhaps it is foolish or quixotic for a state not to do just that.
Contrary to assertions in the majority opinion, this is by no means the law of all the other circuits. In its eagerness to overprove its point, that opinion fails to note a most obvious part, namely, that the great majority of cases cited depend upon an explicit state statúte made operative by F.R. 4(d) (7) authorizing service according to local state law. Thus in a federal case upholding service upon a foreign corporation by service upon the secretary of state under a state statute, it is obvious — there being no federal statute or rule directly authorizing such service — that the holding depends upon this cited rule and tells us absolutely nothing (unless by negative inference) about the supremacy of state service. A count of noses is not of supreme importance, since the Supreme Court must decide and, as we have already seen, our court has been known to go wrong in jumping too fast. But it is desirable to set the record straight; and in an appendix to this dissent, I make the more careful analysis which I think my brothers should have made before advancing their rather reckless version of the state of the precedents.
Thus I cannot concur in a remand which directs Judge Gibson to work on a wholly undesirable concept as to the governing law. I would not object to a re-J mand for the taking of evidence as to the ! defendant’s doing business in Vermont, j and for district court findings on this 5 issue which we do not now have. But on the whole, this appears unnecessary,
Further, while I welcome the views of Judge Gibson, sophisticated in Vermont law as he most certainly is, I cannot believe that there is enough doubt about this question to justify a remand. For the statutes dealing with service of foreign corporations, in my judgment, cannot possibly be found to represent a discriminatory or door-closing policy, as the majority imply. These statutes are ‘clearly but a natural response to the stress which recent Supreme Court cases have placed on contacts with the forum state. See International Shoe Co. v. State of Wash., Office of Unemployment Compensation and Placement, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283. When the Vermont statutory law is read in the light of the admonitions of these cases, the restrictions of its terms to actions concerning Vermont residents and growing out of Vermont occurrences can be seen as a quite sound attempt on the part of the Vermont legiálators to insure the statute’s constitutionality by requiring that even the farthest reaches of the long-arm statute necessarily involve sufficient contacts with the forum state
It is well, by way of summary, to consider what this opinion and decision actually accomplishes. In the case before us, it postpones decision for some months or years for interim proceedings which, in my judgment, can lead only to one eon- . elusion already indicated, namely, that the court has jurisdiction under either federal or state law. Beyond that, in the realm of federal procedure, it rejects a uniform, flexible, and well understood federal rule for service of process for an uncertain, conflicting, and variable rule of state service, with an invitation to the states to develop discriminatory legislation against nonresidents. And yet further it nullifies attempts applauded by scholars to confine the Erie principle to its proper role of substantive rights without impairment of the integrity of the federal court organization; in so doing it casts doubt upon the validity of the well-conceived and hitherto highly successful steps to improve the administration of justice in the federal system and indeed generally. Surely this is a heavy price to pay to register disagreement with a disliked decision before the issue can get to the Supreme Court.
So I dissent from the steps taken to. deny jurisdiction here.
APPENDIX
¿n supporting their claim to the unanimous support (except for Jaftex) of the rule they now enunciate, my brothers have made the obvious, but telling, mistake of ignoring the important distinction between service pursuant to F.R. 4(d) (3) and that pursuant to F.R. 4 (d) (7). The latter permits actions to be 'commenced in federal courts by service of process on a foreign corporation in the manner prescribed by the law of the forum state. It would seem needless to say, had not the majority missed the point, that state law must of course be looked to in determining whether a defendant served pursuant to a state statute is properly before the court. So cases applying state law under F.R. 4(d) (7) have no relevance at all to the issue at hand, but show merely that the Federal Rules provide an alternative to the manner of service prescribed by F.R. 4 (d) (3) — -the rule to which the Jaftex doctrine applies and which is the only one of the rules here in issue. Yet the majority repeatedly wrest from context quotations from F.R. 4(d) (7) cases which are then presented as acclaim for their position.
Thus in Pulson v. American Rolling Mill Co., 1 Cir., 170 F.2d 193, quoted approvingly, and in the very recent case also cited, Waltham Precision Instrument Co. v. McDonnell Aircraft Corp., 1 Cir., 310 F.2d 20, service was made on the Massachusetts Commissioner of Corporations and Taxation under the provisions of Mass.Gen.Laws ch. 181, § 3A, which provides for substituted service on a foreign corporation that “does business” in the Commonwealth. In such cases there is necessarily (a) question whether the service comports with the state requirements for holding a foreign corporation responsible to the laws of the state, and ‘Q).) whether these state requirements satisfy the commands of the United States Constitution. But to say this much is still to say nothing about the case in which service is made pursuant to F.R. 4(d) (3), rather than under a special state statute. Thus in all fairness we must disregard the deliberations of the First Circuit as immaterial to the issue which confronts us here.
The same is true of the Fifth Circuit cases which the majority cite. Connor v. New York Times Co., 5 Cir., 310 F.2d 133, reversing a previous decision, 5 Cir., 291 F.2d 492, concerned service on the defendant under the Alabama Substituted Service Statute, 2 Ala.Code 1940 (1955 Cum.Supp.) tit. 7, § 199(1), which provides that a foreign corporation appoints the secretary of state as process agent by “doing business” in Alabama. In Stanga v. McCormick Shipping Corp., 5 Cir., 268 F.2d 544, 548, the Fifth Circuit Court of Appeals clearly recognizes the distinction between F.R.
“As Holmes clearly was not a person described in F.R.Civ.P. 4(d) (3), 28 U.S.C.A. validity of the service of process depends wholly on it having been ‘served * * * in the manner prescribed by the law of the state in which the service is made for the service of summons * * * upon any such defendant * * *.'
“Thus have we come face to face with the law of Louisiana. * * * ”
The language quoted by the Fifth Circuit is, of course, that of F.R. 4(d) (7); the law of Louisiana becomes important when the court determines that F.R. 4(d) (3) is not applicable and turns to F.R. 4 (d) (7). The statement quoted by my brothers to show support for them from! the Fifth Circuit was, as one might guess, taken from the court's discussion of Louisiana law which followed the above quotation.
The majority’s pretentions of appellate support in the Eighth, Ninth, and Tenth Circuits are equally unjustified. Electrical Equipment Co. v. Daniel Hamm Drayage Co., 8 Cir., 217 F.2d 656, involved service made in accordance with Iowa Code Ann. § 494.2, subd. 6 — another statute making the secretary of state process agent for foreign corporations that do business on the forum state. In L. D. Reeder Contractors of Ariz. v. Higgins Industries, Inc., 9 Cir., 265 F.2d 768, the court, without discussion of this issue, looked to general law to decide whether the foreign corporation there did sufficient business in California to sustain service of process. Finally, in Steinway v. Majestic Amusement Co., 10 Cir., 179 F.2d 681, 18 A.L.R.2d 179, cert. denied 339 U.S. 947, 70 S.Ct. 802, 94 L.Ed. 1362, service'■jvas^'m.ade upon the secretary of state pursuáht-4o Okla.Stat.Ann. § 1.17. The court in that- case explicitly recognized that it was'proceeding under F.R. 4(d) (7).
The Sixth Circuit is admittedly regarded as at least tacitly in agreement with the Jaftex principle. See, e. g., First Flight Co. v. National Carloading Corp., D.C.E.D.Tenn., 209 F.Supp. 730, 735 n. 11 and accompanying text (opinion of Judge Frank W. Wilson approving of Jaftex) ; Shuler v. Wood, D.C.E.D.Tenn., 198 F.Supp. 801, 803 (opinion of Chief Judge Robert L. Taylor disapproving of Jaftex, with which he finds his Court of Appeals in seeming agreement); Paragon Oil Co. v. Panama Refining & Petrochemical Co., D.C.S.D.N.Y., 192 F.Supp. 259, 261. The Sixth Circuit cases which indicate that the Court of Appeals there is allied with the Jaftex majority are Lasky v. Norfolk & W. Ry. Co., 6 Cir., 157 F.2d 674, where the court in a Per Curiam opinion without mention of the Ohio statute and looking to general law upheld service on the manager of the defendant’s coal bureau at its Cleveland office; Bach v. Friden Calculating Mach. Co., 6 Cir., 167 F.2d 679, 680, where the court explicitly recognized F.R. 4(d) (7) as. an alternative manner of service to that prescribed by F.R. 4(d) (3), and, having noted an Ohio statute, Ohio Gen.Code § 11290, which provided to much the same effect as F.R. 4(d) (3), looked to both general and Ohio law to reverse a lower court order to quash the service on the managing agent of defendant’s Cincinnati office; and Scholnik v. National Airlines, 6 Cir., 219 F.2d 115, 120, cert. denied National Airlines v. Scholnik, 349 U.S. 956, 75 S.Ct. 882, 99 L.Ed. 1280, where the court again recognized the distinction between F.R. 4(d) (3) and F.R. 4(d) (7) and found that “under either the Federal or State provision” the service in question was sustainable. WSAZ, Inc. v. Lyons, 6 Cir., 254 F.2d 242, is in no way inconsistent with the above decisions, as my brothers seem to imply,, for not only did the action come to the federal courts by removal, but in addition it involved service upon the secretary of state pursuant to Ky.Rev.Stat. §§ 271.385 and 271.610. Thus it was appropriate for the court in that case to have regard for Kentucky law.
Thus all that fairly remains of the majority’s assertion of universal acclaim for their position is a divided Court of Appeals in the Third Circuit, Partin v. Michaels Art Bronze Co., 3 Cir., 202 F.2d 541, and the Seventh Circuit, Canvas Fabricators, Inc. v. William E. Hooper & Sons Co., 7 Cir., 199 F.2d 485.
. For the conflicting cases collected see 2B Barron & Holtzoff, Federal Practice and Procedure § 871.1, pp. 10-19 (1961); 5 Moore’s Federal Practice 92-104 (2d Ed. 1951), •with cases cited at 102, n. 5, 1962 Cum.Supp. 8, 9.
. Perrin v. Pearlstein, 2 Cir., 314 F.2d 863, seems another instance of undue haste to apply the Erie principle to reverse a jury verdict. See 2 Corbin on Contracts § 446 (1950) and 1962 Pocket Parts.
. This scholarly response of a dozen articles, including a number by some of the most acute procedural scholars of the country, so soon after the decision and so unusual in both quality and quantity, hardly merits the majority’s belittling denigration in its reference in note 13 to “academic support for Jaftex, based on a few [sic!] law review comments.”
Of the general law text writers, Professor Moore criticizes as “not sound” the view of “[s]ome federal courts * * * i that obtaining jurisdiction over a de- ¡ fendant is a matter falling under the Erie doctrine,” 1A Moore’s Eederal Practice 1f 0.317 [5], p. 3536 (2d Ed. 1961); 2 id. 1f 4.25, pp. 970, 971 (2d Ed. 1962); while the opposite view is supported in 1 Barron & Holtzoff, Eederal Practice and Procedure § 138, n. 35.4, § 179, n. 95.3 (Wright Ed. 1960), 1962 Pocket Parts § 138, nn. 35.4, 85, § 179, n. 95.3, but admitting a conflict in the cases. It is too early for extensive case citation of Jaftex; it is warmly approved in First Flight Co. v. National Carloading Corp., D.C.E.D.Tenn., 209 F.Supp. 730, and reluctantly followed (though actually doubtfully in point, see note 6 infra) in Southern New England Distributing Corp. v. Berkeley Finance Corp., D.C.Conn., 30 F.R.D. 43. See also the Appendix, p. 242, infra.
My brothers assume to find a modicum of that academic support, which they seem to need so desperately, in the ALI Study of the Division of Jurisdiction between State and Federal Courts (Tent. Draft No. 1, 1963), prepared by distinguished Reporters assisted by most distinguished Advisers, among whom the opinion writer here modestly omits reference to himself. It is difficult to perceive how much help can be drawn from this quite tentative and highly controversial, possibly courageous, possibly foolhardy, argument for preserving a shell of diversity jurisdiction, but only in sharply restricted form. Nowhere is there mention or direct discussion of Jaftex. But among the several proposals for limiting diversity jurisdiction, including the drastic one of denying it to a person in any district in a state of which he is a citizen, id. § 1302(a), p. 9, is one for a statute which rather ambiguously denies “binding effect” upon any party beyond that which the local state law “prescribes” in a like action brought in its courts of general jurisdiction, id. § 1303, p. 11, and see pp. 54-56. (Query: Is this intended to do anything more than restate the original Erie doctrine, without the later procedural glosses added by cases such as this?) One suspects, in these days of increasing racial tension, that Congress will long hesitate before sharply limiting access to the federal courts as thus urged. Incidentally, as pointed out in id. p. 56, n. 15, the enactment of these statutes will call for a “re-examination” — i. e., repeal — of the just adopted amendments to F.R. 4(e) and (f) discussed below.
. 28 U.S.C. § 1693 reads as follows:
“Except as otherwise provided by Act of Congress, no person shall be arrested in one district for trial in another in any civil action in a district court.”
. These provisions seem to have received a mixed reception. See, e. g., Carrington, The Modern Utility of Quasi in Rem Jurisdiction, 76 Harv.L.Rev. 303 (1962); Abraham, Constitutional Limitations upon the Territorial Scope of Service of Federal Process, 32 F.R.D. 83; Elliott & Green, Quasi in Rem Jurisdiction in the Federal Courts: The Proposed Amendments to Rule 4, 48 Iowa L.Rev. 300 (1963). The debate also demon-states the durability of the policy of restriction.
. The majority opinion appears to find great difficulty in how to treat removed cases. 'This issue is not before us and no definitive ruling is necessary, but I
. See Appendix, p. 242 infra:
. For similar statutes in other states, obviously due to a like impulse, see, e. g., 6 Conn.Gen.Stat. § 33-411; Idaho Code (Supp.) § 5-514; 2 Ill.Rev.Stat. c. 110, § 17; Wash.Rev.Code § 4.28.185; Wis.Stat.Ann. (Supp.) § 262.05.
Concurrence Opinion
(concurring).
While I do not share the doubts as to Vermont’s constitutional power to give its courts jurisdiction over this claim, and incline to the belief that such jurisdiction would be asserted here, Somerville Lumber Co. v. Mackres, 86 Vt. 466, 85 A. 977 (1913), I agree that Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947) and Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949), look toward application of^ state standards as to amenability to suit^; at least in diversity cases such as this. I also agree that it is desirable that the\ District Judge, experienced in Vermont Law, pass upon the Vermont law issue in the first instance, and that he should dispose first of the issues of jurisdiction and venue before considering whether a claim has been stated on which relief may be granted, all on the present complaint and affidavits or such amplification as he may see fit to allow,
Concurrence Opinion
(concurring).
I concur in the result reached by the majority of my colleagues. I join in the vacation of the order of the court below so that it will be clear that the learned district judge consider the questions of jurisdiction and of venue. I share with Judge Smith the belief that Vermont has constitutional power to give its courts jurisdiction over this claim, and I am of the opinion that such jurisdiction would have been asserted here if the case had been brought in a Vermont state court,
