44 Del. 538 | Del. | 1948
Judge, delivering the opinion of the Court:
In these prohibition cases, petitioner challenges the jurisdiction of the Superior Court in three actions against it. The actions were begun by attachments of petitioner’s property purportedly made under authority of a foreign corporation attachment statute, Revised Code of Delaware 1935, § 4631. Petitioner contends that the statute, properly construed, does not authorize proceedings under it in these actions; but that if it were construed to be applicable to them, it would violate the commerce clause, art. I, Sec. 8, of the Federal Constitution by imposing an undue burden upon interstate commerce conducted by petitioner, and would further violate the due process clause, Fourteenth Amendment, by depriving petitioner of its property without due process of law. The Superior Court considered these contentions and determined them adversely to petitioner.
The statute, insofar as we need consider it, provides as follows:
“4631. Sec. 26. Foreign Corporations; Subject to Foreign Attachment Laws; How Writ Obtained: Affidavit; Purport of; Writ; How Framed, Directed, Executed, and Returned; Attachments Dissolved How; Judgment, When Obtained; Security for Dissolution of Attachment; Form and Amount of How Determined; — A writ of foreign attachment may be issued out of the Superior Court of this State against any corporation, .aggregate or sole, not created by or existing under the laws of this State, upon affidavit made by the plaintiff or any other credible person, and filed with the Prothonotary of said Court, that the defendant is a corporation not created by, or existing under
“The said writ shall be framed, directed, executed and returned, and like proceedings had as in the case of a foreign attachment issued under the next foregoing section, except that attachments to be issued under this section shall be dissolved only in the manner hereinafter provided. * * *”
Petitioner’s first point is that the statute “does not authorize a writ of foreign attachment upon a foreign cause of action at the behest of a foreign plaintiff against a foreign corporation.” None of the plaintiffs in the law actions is a resident of Delaware or a Delaware corporation. The defendant (petitioner here) is an Indiana corporation. It owns no tangible property in Delaware, but owns shares of stock in a Delaware corporation which were attached in the actions. It is not qualified to do business in Delaware and does no business here. Its principal executive offices are in Chicago, and it transacts business in some fifteen midwestern states. It has no offices, directors, employees, or agents in Delaware. Its directors have never met in Delaware. The alleged causes of action against the petitioner are in covenant and are based upon breaches of an instrument executed outside of Delaware. No undertaking or covenant alleged to have been breached requires the doing of any act in Delaware.
Petitioner observes that the terms of the statute authorizing the process of foreign attachment are general; “it does not state by whom that process may be availed; for what causes of action it may be utilized or against what foreign corporations it may issue.” Nevertheless, it is argued, a construction of the statute with reference to other rules of law excludes from its ambit the writs issued in these actions. Strong reliance is placed on the case of
“The statute provides that, before foreign insurance companies shall be permitted to do business in this state, they must appoint an agent upon whom process may be served. The condition has relation to the permission given. The presumption is that only such jurisdiction is claimed as is necessary to deal with litigation arising out of the business that is done under this permission. ‘Statutes by which
“Judge Wheeler, in a case decided in Vermont in 1874 (Sawyer v. [North American Life] Insurance Co., 46 Vt. 697), expressed very strongly the opinion that a statute providing for the appointment of an agent on whom a process might be served ought not to be construed as intending to permit a nonresident to sue a foreign corporation for a cause of action arising outside of the state. He said that, even assuming that the agent in that case had been appointed in obedience to the statute, the question still remained what cases the statute was intended to reach. A statute is to be construed with reference to the old law, the mischief, and the remedy. When this statute was passed, the old law permitted the agents of any insurance company, foreign as well as domestic, to make contracts of insurance within the state under which causes of action would accrue to our own people within the jurisdiction of the state courts. The mischief was that the jurisdiction of the state courts over these causes of action would be unavailing except upon voluntary appearance, for want of power in the courts to compel appearance. The remedy provided was the requiring of any foreign insurance company making such contract to keep an agent in this state on whom service could be made.
“This would be a full remedy for all that mischief, without requiring such companies to keep an agent here on whom any process for any purpose could be served. There could be no advantage obtained for the people of the state
“The statute is not so explicit as to be clearly intended to require a foreign insurance company to submit to suits in this state having no relation to the business done within the state, nor with one of her citizens, or to suits brought by persons that are citizens of the state where the corporation was organized, or of some other foreign state. For this reason the attachment would have to be dismissed in this case.”
Petitioner argues that in so deciding the Court laid down a rule of general application; and that the reasons for the rule are of general application and “have convinced the Supreme Court of the United States and many other courts to reach similar results in a variety of cases,” citing Morris & Co. v. Skandinavia Ins. Co., 279 U. S. 405, 49 S. Ct. 360, 73 L.Ed. 762; Mitchell Furniture Co. v. Selden Breck Co., 257 U. S. 213, 42 S.Ct. 84, 66 L.Ed. 201, among others. Continuing, petitioner says that the reasons and the rule of the Furtick case apply to actions against foreign corporations whether the process employed is foreign attachment or summons, their purpose being the same, namely, to compel the appearance of the defendant. Petitioner cites Pull
Despite the logic of petitioner’s argument as stated, we think there are additional considerations than those dealt with, which must be taken into account. Our primary task
The language with which we are concerned is substantially the same as the first two sections of its earliest forerunner, adopted in 1857,11 Lems of Del. p. 482. As we pointed out in another opinion in this litigation (4 Terry 450, 49 A.2d 726, 734), the 1857 Act was adopted shortly after the Superior Court had held that the 1852 Code provisions
Moreover, differences between a corporation and an individual do not suggest any reason for treating them differently with respect to jurisdiction in quasi in rem proceedings, such as are authorized by this statute. The basic jurisdictional doctrine involved is the same whether the property seized be owned by a foreign corporation or by a non-resident individual: that a state may, by appropriate legislation, authorize the seizure and disposal of property within its borders, subject to limitations of the federal and state constitutions. McLaughlin v. Bahre, 5 W. W. Harr. 446, 166 A. 800.
Petitioner says that these considerations are outweighed by the rule and the reasons of the Furtick case. That rule and those reasons relate to the subject of jurisdiction in a proceeding in personam. A review of the development of doctrines of jurisdiction in personam over a corporation bears this out. The doctrines grew up after actions quasi in rem against foreign corporations had been recognized. In The Position of Foreign Corporations in American Constitutional Law, by Gerard Carl Henderson (Harvard Studies in Jurisprudence, Vol. II) Chap. 5, pp. 77, 78, we find:
“As foreign corporations became an increasingly important factor in the business communities of the several states, and their legal status to be generally recognized and accepted, the question inevitably arose whether they could be subjected to suit within the state. Until toward the middle of the century, the idea seems to have been widely prevalent that foreign attachment was the only process available against them. * * *
In St Clair v. Cox, (1882) 106 U. S. 350, 354, 1 S. Ct 354, 357, 27 L. Ed. 222, Mr. Justice Field said: “Formerly it was held that a foreign corporation could not be sued in an action for the recovery of a personal demand outside of the state by which it was chartered. The prinicple that a corporation must dwell in the place of its creation, and cannot, as said by Chief Justice Taney, migrate to another sovereignty, coupled with the doctrine that an officer of the corporation does not carry his functions with him when he leaves his state, prevented the maintenance of personal actions against it. There was no mode of compelling its appearance in the foreign jurisdiction. Legal proceedings there against it were, therefore, necessarily confined to the disposition of such property belonging to it as could be there found; and to authorize them legislation was necessary.”
See also Goodrich on Conflict of Laws, p. 147.
Jurisdictional doctrines relating to actions in personam developed separately from those relating to actions quasi in rem. That development was profoundly influenced by the non-migratory principle mentioned by Mr. Justice Field in
“Such a doctrine [the non-migratory principle] of necessity could not remain as the last word on the subject in an era of ever-increasing development of corporate activity. Some theory had to be worked out by which the foreign corporations could be subjected to suit in states other than where they were organized. This theory was found in the consent doctrine. The corporation, like the individual, could consent to suit in a place at which it was not personally present. Furthermore, the state could refuse to allow a foregn corporation to do business within its borders, subject to certain exceptions. Since it could refuse permission altogether, it could allow the corporation to do business within the state subject to certain conditions. One of these conditions could be the consent of the corporation to be sued in the state. The corporation, then, could be required to appoint an agent to receive service of process in suits brought against it within the state. If the foreign corporation has actually made such appointment, it is clear that it has consented to be sued and the state’s courts have jurisdiction to render a valid judgment against it. Whether the jurisdiction extends to suits upon all causes of action or only to those growing out of business done within the state is a question to be determined by ascertaining how broadly the consent given is to be interpreted.
“The consent doctrine has been enunciated in many judicial decisions, and is a satisfactory enough explanation
“Faced with this difficulty, some authorities have said that adherence to facts demands that it be realized that a corporation is in truth present wherever it does business. Wherever the group activity of the corporate enterprise is being carried on, there the corporation is found. * * *
“It may be said, then, that a foreign corporation (I) may be sued in a state where it consents to be sued; (II) Even in the absence of consent, if the foreign corporation does business in a state it becomes subject to the jurisdiction of the courts of the state to the extent that the state’s laws so provide, and subject to the limitations of due process of law. The jurisdiction in the latter case extends only to causes of action arising out of business done in the state.
“Unless the foreign corporation is doing business in the state it is not, in the absence of express consent, subject to the jurisdiction of its courts. The mere presence within the state of an agent or even a principal officer is insufficient as a basis for jurisdiction, and a judgment rendered against the corporation upon such service is invalid. But if the corporation has been engaged in business in the state and has later ceased to do so, the state may provide for service of process upon the corporation for causes of action which arose within the state before the withdrawal.”
The treatment of this subject in Henderson". The Position of Foreign Corporations in American Constitutional Law, Chap. 5, supra, is of like import.
“Though a State has no power over a foreign corporation, it nevertheless has complete jurisdiction over the property of the corporation within its borders. Irrespective, therefore, of whether the corporation has done business within the State or has consented to be sued in its courts, the courts of the State may proceed in rem against any tangible property situated in the State. * * *
“On this ground are to be justified suits against a foreign corporation which has not done business within the State, begun by attachment of property of the corporation within the State, the corporation being served by publication. Statutes commonly permit such suits. The jurisdiction is quasi in rem, and the judgment is valid so far as it affects the disposition of the property under attachment and no further.”
Returning again to the Furtick case, the court was considering statutes which required a foreign insurance company to designate an agent for the service of process, and authorized service upon the agent. The first such statute was adopted in 1879,16 Laws of Del., Chap. 347, p. 359, subsequent to the foreign corporation attachment Act of 1857. The Futrick case was decided in 1897. We think the opinion shows that the court’s construction of the statutes before it was materially affected by the non-migratory and consent doctrines of jurisdiction in personam over foreign corporations. It treated the requirement of designation of an agent as a condition of permission to do business in Delaware and held that [2 Marv. 35, 42 A. 483] “only such jurisdiction is claimed as is necessary to deal with litigation arising out of
In the Alabama and Louisiana cases, supra, the courts reached different results based on different reasoning. That reasoning does not seem to us as satisfactory as the foregoing, and we decline to follow the cases.
We have not overlooked the language of this Court in the Moffat Tunnel Case [6 W. W. Harr. 488, 178 A. 870], supra. That language must be read with reference to the facts and questions before the Court. The holding was that Section 4631 does not authorize quasi in rem proceedings against foreign municipal or public corporations. The Court did say that foreign attachment process cannot be utilized “where, if the process were that of a summons personally served, the court would refuse to assert its jurisdiction over the defendant.” But the Court did not have before it a question of limiting quasi in rem jurisdiction under an older statute by conditions which developed solely with relation to jurisdiction in personam under later statutes. The Moffat Tunnel case, in our view, decides nothing contrary to what we now hold: that Section 4631 authorizes proceedings by foreign plaintiffs based on “foreign” causes of action.
Petitioner’s second point is that if Section 4631 be construed as applicable to the three law actions, it would un
1. The petitioner carries on a large interstate business in the middlewest consisting of the refining of crude oil into petroleum products in Illinois, Indiana, Missouri, Kansas and Wyoming, and the marketing of such products not only in the five mentioned states but in ten other states. In addition to this general interstate business the petitioner is specifically engaged on a large scale in the interstate transportation of its products. To this end petitioner maintains hundreds of miles of interstate pipe lines, interstate barge lines, interstate tanker lines and interstate trucking lines. These lines move millions of barrels of petroleum products in interstate commerce.
2. In connection with petitioner’s business there are presented against petitioner annually in excess of 2,500 claims or causes of action for personal injuries and property damage. In many of such cases petitioner deems it imperative or advisable to leave the determination of its liability with respect to such claims to the courts. More than 75% of such claims involve facts known to employees of petitioner directly engaged in petitioner’s interstate transportation operations. The trial of claims requires the presence of such employees as witnesses. If the State of Delaware should assume jurisdiction over claims against petitioner by virtue of Delaware’s attachment statutes, litigation of such claims would entail long absence of petitioner’s officers and employees from their customary occupations in connection with testifying in such Delaware litigation and would impair substantially the efficiency of petitioner’s
3. The present litigation would be particularly burdensome to petitioner as well as to the courts and taxpayers of the State of Delaware for it involves issues of tremendous magnitude and may require the taking of thousands of pages of testimony and the calling of a very large number of witnesses, none of whom resides in Delaware.
The portion of the commerce clause upon which petitioner relies is as follows, Art. I, Sec. 8, Federal Constitution: “The Congress shall have Power * * * To regulate Commerce * * * among the several States * *
4. Petitioner says that “By virtue of this delegation of authority to the Federal government it has been held under a variety of circumstances that the several states may not, by direct regulation, taxation, or otherwise, unduly obstruct or burden commerce among the several states,” citing International Text-Book Co. v. Pigg, 217 U. S. 91, 30 S. Ct. 481, 54 L. Ed. 678, 27 L.R.A. (N.S.) 493,18 Ann. Cos. 1103; Buck Stove & Range Co. v. Vickers, 226 U. S. 205, 33 S.Ct. 41, 57 L.Ed. 189; Adams Mfg. Co. v. Storen, 304 U. S. 307, 58 S.Ct. 913, 82 L.Ed. 1365, 117 A.L.R. 429; Best & Co. v. Maxwell, 311 U. S. 454, 61 S.Ct. 334, 85 L.Ed. 275; Western Union Tel. Co. v. State of Kansas, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355. This proposition is not disputed. Next, petitioner argues that “state jurisdictional statutes, like Section 4631 here, whereby states attempted to exercise jurisdiction over foreign corporations actively engaged in interstate commerce upon foreign causes of action” have been held violative of the commerce clause “wherever it could factually be shown, as in the present case, that the exercise of jurisdiction, in fact, would substantially impair the efficiency of the petitioner’s operations in interstate commerce”, citing Davis v. Farmers’ Co-operative Co., 262
In each of these cases, the foreign corporation which asked for and obtained immunity from suit on a foreign cause of action was a common carrier for hire. The Davis case was the first. An action was brought in a Minnesota court by a Kansas corporation to recover against a railway company, incorporated in Kansas, for a cause of action which arose in Kansas. The railway company was engaged in interstate commerce. It neither owned nor operated a railroad in Minnesota but maintained an agent there for the solicitation of traffic. The Supreme Court of Minnesota, Farmers’ Co-Op. Equity Co. v. Payne, 150 Minn. 534, 186 N.W. 130, held that the railway company was subject to the jurisdiction of the Court of that state under a Minnesota statute authorizing service upon a foreign carrier’s traffic soliciting agent in the state. The judgment for plaintiff was reversed by the Supreme Court of the United States, which found that the attempted subjection to suit by foreign plaintiffs on foreign causes of action imposed upon interstate commerce a serious and unreasonable burden, which rendered the statute obnoxious to the commerce clause. The court said [262 U. S. 312, 43 S.Ct. 557]:
“Solicitation of traffic by railroads, in states remote from their lines, is a recognized part of the business of interstate transportation. * * *
“That the claims against interstate carriers for personal injuries and for loss and damage of freight are numerous ; that the amounts demanded are large; that in many cases carriers deem it imperative, or advisable, to leave the determination of their liability to the courts; that litigation
“The fact that the business carried on by a corporation is entirely interstate in character does not render the corporation immune from the ordinary process of the courts of a state. International Harvester Co. [of America] v. [Commonwealth of] Kentucky, 234 U. S. 579, 34 S.Ct. 944, 58 L.Ed. 1479. The requirements of orderly, effective administration of justice are paramount. * * * But orderly effective administration of justice clearly does not require that a foreign carrier shall submit to a suit in a state in which the cause of action did not arise, in which the transaction giving rise to it was not entered upon, in which the carrier neither owns nor operates a railroad, and in which the plaintiff does not reside. The public and the carriers are alike interested in maintaining adequate, uninterrupted transportation service at reasonable cost. This common interest is emphasized by Transportation Act 1920, which authorizes rate increases necessary to ensure to carriers efficiently operated a fair return on property devoted to the public use. See Railroad Commission of [State of] Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 U. S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; The New England Divisions Case [Akron, C. & Y. R. Co. v. United States], 261 U. S. 184, 43 S.Ct. 270, 67 L.Ed. 605. Avoidance of waste, in interstate transportation, as well as maintenance of service, have become a direct concern of the pub-
In Denver & R. G. W. R. Co. v. Terte, supra, the Supreme Court applied the rule of the Davis case in a suit in a state Court begun by attachment against a foreign carrier for hire, not doing business in that state, where the suit was based on a foreign cause of action.
Petitioner has cited no cases according the immunity from suit to a corporation other than a carrier for hire, but it urges that the immunity is not limited to carriers for hire and that the reasons for the rule are as applicable to it as to such a carrier. In support of this, petitioner refers to Hansell: The Proper Forum for Suits Against Foreign Corporations, 27 Col. Law Rev. 12; McGowan: Litigation as a Burden on Interstate Commerce, 33 Ill. Law Rev. 875, 1 Beale on Conflict of Laws, pp. 277, 378.
\J [5] We think the immunity principle evolved in the Davis case and followed in subsequent cases does not apply to a private business corporation such as petitioner, even though it engages extensively in interstate commerce and transports its own materials and products across state lines, and even though subjection to suit would substantially impair the efficiency of its operations in interstate commerce. We agree that the immunity principle is based upon a finding of an unreasonable burden on interstate commerce. But, the cases do not, in our view, sanction the finding of such a burden as to invoke the principle wherever it mqy appear that the efficiency of any business activities in interstate commerce would be substantially impaired by subjection of a foreign corporation to suit on a foreign cause. As we understand the reasoning of the Supreme Court, the conclusion that subjection to suit would impose an undue bur
Petitioner’s last point is that if Section 4631 be construed to authorize the attachments here, it would deprive petitioner of property without due process of law in violation of the Fourteenth Amendment of the Federal Constitution. Petitioner says that because of the requirements of the due process clause, “a foreign corporation may * * * be held to answer only upon domestic causes of action,” in the absence of express consent to be sued, citing Simon v. Southern Railway, 236 U. S. 115, 35 S.Ct. 255, 59 L.Ed. 492; Old Wayne Mut. Life Ass’n of Indianapolis, Indiana, v. McDonough, 204 U. S. 8, 27 S.Ct. 236, 51 L.Ed. 345; Intenational Shoe Co. v. State of Washington, 326 U. S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; 1 Beale on Conflict of Laws (1935) p. 380. The cases were proceedings in personam, not quasi in rem, as here. Petitioner describes this distinction as a difference in the form of process, summons or attachment, by which the actions were commenced. It then argues that in Denver & R. G. W. R. Co. v. Terte, 284 U. S. 284, 52 S.Ct. 152, 153, 76 L.Ed. 295, supra, the Su
This principle, petitioner urges, “must apply with equal force where the constitutional limitation is found in the Fourteenth Amendment rather than in the commerce clause. The rule that a foreign corporation may not be required by virtue of the Fourteenth Amendment to defend a suit upon a foreign cause of action in a jurisdiction in which it does no business and has not consented to be sued, applies whatever the process by which it is sought to compel such a defense.”
Petitioner’s analogy seems to us inapt, and its conclusion unsound. The limitation upon suits against foreign corporations, derived from the commerce clause, is based upon a finding of a burden on interstate commerce, and does not relate to any jurisdictional doctrine specially applicable either to proceedings in personam or proceedings quasi in rem. On the other hand, the limitation upon suits against foreign corporations, derived from the Fourteenth Amendment is based on “consent” and “corporate presence” doctrines which, as is apparent from the discussion under the first point in this opinion, relate uniquely to jurisdiction in proceedings in personam against foreign corporations. Since these jurisdictional doctrines have no connection with proceedings quasi in rem, the constitutional limitation asserted by petitioner has no application here.
An order accordingly will be entered in each case.
The 1852 Code provisions referred to read thus (Chap. 104, Sec. 19, p. 374): “A writ of foreign attachment may be issued against any person not an inhabitant of this State, after a return to a summons, or copias, issued and delivered to the sheriff, or coroner, ten days before the return thereof, showing that the defendant cannot be found, and proof, satisfactory to the court, of the cause of action; or upon affidavit made by the plaintiff, or some other credible person, and filed with the prothonotary, that the defendant resides out of the State, and is justly indebted to the said plaintiff in a sum exceeding fifty dollars.”