Walton N. Moore Dry Goods Co. v. Commercial Industrial Co.

276 F. 590 | N.D. Cal. | 1921

VAN FLEET, District Judge

(aftef stating the facts as above). [1] A. foreign corporation can be sued in a jurisdiction other than the state of its creation only when it is at the time doing business therein and maintains there a business or managing agent subject to service of process. Section 411 of the Code of Civil Procedure of the state, prescribing the manner of serving process of summons upon a defendant, provides for the delivering of a copy thereof as follows:

“If the suit is against a foreign corporation, or a nonresident joint-stock company or association, doing business and having a managing or business agent, cashier, or secretary within this stare, to such agent, cashier, or secretary.”

[2] In my view the facts fail to bring the defendant within the statute. It was neither “doing business” within the state nor did it have “a managing or business agent, cashier or secretary” therein, within any proper interpretation of its terms. The term “doing business” is used in its broad popular acceptation of meaning and signifies something more substantial than a mere single or isolated, transaction arising under a mode of dealing calling for neither a place of business nor a local agent. The right of exemption of a foreign corporation from suit in a jurisdiction foreign to the state of its organization is one of substantive value and is not to be taken away by refinements based upon mere casual transactions which do not bring it in some definite substantial way within the ordinary meaning of the language of the statute. This will be found to be the effect of the more recent decisions of the Supreme and federal courts upon the subject, although there is some diversity of view found in cases from the state courts arising largely out of differences in local statutes.

As stated by Mr. Justice Brandeis in Phila. & Reading Ry. Co. v. McKibbin, 243 U. S. 264, 37 Sup. Ct. 280, 61 L. Ed. 710:

“A foreign corporation is amenable to process to enforce a personal liability, in the absence of consent, only if it is doing business within the state in such manner and to such extent as to warrant the inference that it is present there. And even if it is doing business within the state the process will be valid only if served upon some authorized agent. St. Louis Southwestern Ry. Co. v. Alexander, 227 U. S. 218, 226. Whether the corporation was doing business within the state and whether the person served was an authorized agent are questions vital to the jurisdiction of the court.” (Italics volunteered.)

And see, also, Toledo Rys. v. Hill, 244 U. S. 49, 37 Sup. Ct. 591, 61 L. Ed. 982, and People’s Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 38 Sup. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537_

_ A like view is taken by the Circuit Court of Appeals of this circuit in Doe v. Springfield Boiler & Manufacturing Co., 104 Fed. 684-687, 44 C. C. A. 128-131, wherein, in construing the same section of the Code, it is said:

“Legal service of process upon a corporation, which will give a court jurisdiction over it, can bo made only in the state where it resides by the law of its creation, or in a state in which it is actually doing business at the time of service, in the manner proscribed by the statutes of that state or of Ihe United States. The question as to what kind of business by a foreign corporation within a state will justify a finding that it is engaged in business therein, and, validate a service upon its agent, has been very thoroughly and elaborately discussed in the circuit and supreme courts of the United States, and the general consensus of opinion is that the corporation must transact within the state some substantial part of its ordinary business by its officers or agents appointed and selected for that purpose, and that the transaction of an isolated business act is not the carrying on or doing business in a state.” (Italics volunteered.) Citing a large number of authorities.

And as to ihe character of the agent upon whom process may he made under the statute it is further said in that case:

“The term ‘business agent,’ as used in the statute, does not mean every man who is intrusted with a commission or an employment by a foreign corporation. * * * The statute was never intended to include under the term ‘business agent’ every person who might incidentally or occasionally transact some business for a foreign corporation. Its meaning must be drawn from the general contest of the language used. The business agent mentioned in the statute means one bearing a close relation to the duties of managing agent, cashier, or secretary of the corporation. It must be an agent who is appointed, designated, or authorized to transact and manage one or more distinct branches of business, which may be, and is, conducted and carried on by the corporation within the state where the service is made — one who stands in the shoes of the corporation in relation to the particular business managed, conducted, and controlled by him for the corporation.”

The facts here fall far short of meeting plaintiff’s necessities under the principles thus announced. Neither the character of the business nor the authority of the agents bring it within the rule. While the agents may have been authorized to settle the matter in dispute, they were not agents of defendant in any general sense. To the same effect, see Cady v. Associated Colonies (C. C.) 119 Fed. 420-425; United States v. American Bell Telephone Co. (C. C.) 29 Fed. 17, 27, 41; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 5 Sup. Ct. 739, 28 L. Ed. 1137; Ladd Metals Co. v. American Mining Co. (C. C.) 152 Fed. 1008; Welch v. Farmers’ Loan & Trust Co., 165 Fed. 561, 91 C. C. A. 399.

In Louden Machinery Co. v. American Malleable Iron Co. (C. C.) 127 Fed. 1009, it is said:

“The defendant had no office, place of business, agent, agency, or property in Iowa, and never had. * * * As yet, I cannot believe that a foreign corporation, having a difference with an Iowa citizen concerning a contract not made in this state, surrenders itself to the Iowa courts because an agent, with or without authority, comes to this state, seeking to adjust such difference. If such be the law, then compromises, so much favored by law,-are largely at an end as to foreign corporations.”

And in Wilkins v. Queen City Savings Bk. & Trust Co. (C. C.) 154 Fed. 173, it is said:

“I do not understand that Mutual Life Ins. Co. v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569, is authority for the proposition that presence of an officer of a foreign corporation in this state for the purpose of discussing a proposed adjustment of the single controversy between it and plaintiff is sufficient to establish such a ‘doing business within the state’ as will take the case out of the rule laid down in Goldey v. Morning News, 156 U. S. 518, 15 Sup. Ct. 559, 39 L. Ed. 517, and Conley v. Mathieson Alkali Works, 190 U. S. 406, 23 Sup. Ct. 728, 47 L. Ed. 1113.”

The case of Premo Specialty Mfg. Co. v. Jersey-Creme Co., 200 Fed. 352, 118 C. C. A. 458, 43 L. R. A. (N. S.) 1015, from this circuit, principally relied upon by plaintiff, is readily distinguishable from the case of Doe v. Springfield Boiler & Mfg. Co. In the former case the facts showed that the contract sued upon was made and was to be performed in Ros Angeles, where the suit was brought, and that the party upon whom service was made was, at the time, the secretary of the corporation and had come to Ros Angeles where he was served, with reference to-business transactions theretofore had between the parties, out of one of which the cause of action arose. In the present case it is conceded that the contract sued upon was made and was to be performed at Vladivostok; and that the parties served were neither of them officers of the company in any other respect than that Ivanoff was a general business representative of defendant for Canada and the United States having his headquarters in New York, and had been-merely specially requested to ascertain upon what terms the controversy between the parties could be accommodated. It is apparent therefore that there is-nothing in that case which is at variance or out of harmony with the ruling in the case of Doe v. Springfield Boiler & Mfg. Co., and no purpose on the part of the court to ignore or depart from the principles announced in the latter case can be deduced from anything said in the former.

To hold the defendant amenable to the jurisdiction of this court, under the circumstances presented, would, I think, be rather harsh and inequitable as allowing the plaintiff to take advantage of a situation which does not in any substantial respect bring it within the right it invokes.

The motion to quash must be granted, and the action dismissed, Such will be the order.