Source: https://openjurist.org/985/f2d/1389/sondergard-v-miles-inc
Timestamp: 2018-06-23 01:11:07
Document Index: 361515412

Matched Legal Cases: ['§ 15', '§ 47', '§ 47', '§ 11', '§ 47', 'art,5', '§ 15', '§ 15', '§ 47', '§ 47', '§ 303', '§ 885', '§ 293']

985 F. 2d 1389 - Sondergard v. Miles Inc
985 F2d 1389 Sondergard v. Miles Inc
985 F.2d 1389
Donald Bruce SONDERGARD, Appellant,
MILES, INC., Appellee.
Id. The question whether such service in fact did confer jurisdiction, as opposed to whether it merely could, was a question of legislative intent, the court said. It found such an intent in the insurance statute, noting that the statute provided for service on the commissioner "with the same effect as if the company existed in this state." Id. at 375.
The South Dakota Supreme Court considered the same issue in 1985. Sharkey v. Washington Nat'l Ins. Co., 373 N.W.2d 421 (S.D.1985). The court reaffirmed the Thomson view, noting that in Thomson, "[t]he court adopted the view that a corporation may be sued on a transitory cause of action in any jurisdiction in which it may be served with process, and that the residence of the plaintiff and the place at which the cause of action arose are immaterial to the question of jurisdiction." Id. at 425. The court's language concerning general jurisdiction is not limited solely to insurance companies, but includes all corporations.
Miles initially contends that these cases are inapposite, as they apply only to insurance companies. We disagree. Miles confuses the question of whether the South Dakota courts would accept the doctrine of general jurisdiction with the question of whether service of process on the company's registered agent confers such general personal jurisdiction. Thomson and Sharkey are irrelevant to the latter question because the courts there considered a statutory scheme limited to insurance companies. The two cases are relevant, however, to the question whether South Dakota would adopt the doctrine of general jurisdiction for all corporations. The Thomson and Sharkey courts did adopt the doctrine of general jurisdiction, as they allowed the insurance companies to be sued on causes of action arising outside the state. Moreover, the language in these cases clearly extends beyond insurance corporations to include all corporations, and suggests that if the corporation could properly be served, the court would uphold jurisdiction over any cause of action. Given South Dakota's consistent trend of broadly construing its personal jurisdiction,2 we believe that the South Dakota Supreme Court would hold that the doctrine of general jurisdiction accepted for insurance companies in Thomson and Sharkey applies to all foreign corporations.
We now must consider whether the South Dakota legislature intended a foreign corporation's appointment of an agent for service of process to constitute submission to the general jurisdiction of the South Dakota courts. As Thomson and Sharkey put it, the question is whether the corporation "can be served" with process when the cause of action arose outside the state. We believe that the South Dakota legislature intended the authority of a foreign corporation's registered agent to accept process to extend to causes of action arising outside the state prior to the appointment of the agent.
We start with the backdrop provided by this court's decision in Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196 (8th Cir.1990). There, in considering the effect of a Minnesota statute requiring foreign corporations to appoint an agent for service of process,3 the court stated that as a general rule, "[t]he whole purpose of requiring designation of an agent for service is to make a nonresident suable in the local courts. The effect of such a designation can be limited to claims arising out of in-state activities, and some statutes are so limited, but the Minnesota law contains no such limitation." Id. at 1199. Thus, this court has presumed that service upon a company's registered agent is sufficient to confer jurisdiction.
We believe that South Dakota intended service upon a foreign corporation's registered agent to be effective in these circumstances. South Dakota law provides that for foreign corporations:
If the action be against a foreign private corporation, [delivery of process shall constitute personal service] on the president or other head of the corporation, secretary, cashier, treasurer, a director or managing agent thereof; but such service can be made as to a foreign corporation only when it has property in this state or the cause of action arose therein, or when such service shall be made within this state personally upon the president, treasurer, secretary, or authorized agent for the service of process.
S.D.Codified Laws § 15-6-4(d)(2) (1991) (emphasis added).
We believe that this provision demonstrates two things. First, a foreign corporation's authorized agent can be served even if the cause of action arose outside the state. The statute provides that a personal service is effective as to a foreign corporation if, inter alia, service is made personally upon the corporation's authorized agent. It further suggests that such service is effective even if the cause of action arose outside the state. The three situations in which a foreign corporation can be served are stated in the disjunctive, which makes sense only if they each operate as independent bases to support valid service.
Second, service on a foreign corporation's properly authorized agent is sufficient to establish personal jurisdiction. Miles contends that this section refers only to manner of service, rather than amenability to it. Were the quoted sentence to end at the semicolon, we might agree. The first part of the sentence does in fact seem to deal with the "manner" of service. The limitation in the second clause concerning situations in which personal service "can be made," however, seems more logically to refer to limitations upon amenability to service, i.e., when service has its effect to confer jurisdiction.
The South Dakota Supreme Court confirms that it considers the latter portion of this section to be jurisdictional. In Thomson, the court used the identical provisions then in force to demonstrate its conclusion that "it seems to be the general policy of our law to place individuals and foreign corporations coming into this state upon the same basis, so far as the right to sue them is concerned." Thomson, 162 N.W. at 376. The context of the opinion clearly demonstrates that the South Dakota Supreme Court believed individuals would be subject to suit on any cause of action if personally served with process within the state. Equation of the requirements for service of process on a foreign corporation with the policy noted above thus makes sense only if such service conferred personal jurisdiction.4 Id. at 376. To our knowledge, the South Dakota legislature has neither changed the language of the statute nor repudiated the Thomson holding.
We must then consider whether the process agent appointed by Miles has authority to receive process relating to causes of action accruing outside the state. The statute concerning this agent provides: "The registered agent appointed pursuant to § 47-8-11 by a foreign corporation authorized to do or engage in any business in this state shall be an agent of such corporation upon whom any process, notice or demand required or permitted by law to be served upon the corporation may be served. " S.D.Codified Laws § 47-8-15 (1991) (emphasis added). Like the statute construed in Knowlton, this statute does not limit the authority of the agent to accept service to causes of action arising within the state.
South Dakota has limited the authority of process agents in other contexts, however. Prior to 1965, when the present provision concerning registered agents was adopted, South Dakota required a foreign corporation to " 'constitute[ ] and appoint[ ] the Secretary of State its true and lawful agent upon whom the summons, notices, pleadings, or process in any action or proceeding against it may be served in respect to any liability arising out of any business, contract, or transaction in the state....' " Uhlich v. Hilton Mobile Homes, 80 S.D. 478, 126 N.W.2d 813, 815 (1964) (quoting S.D.Codified Laws § 11.2003 (repealed 1965)). Thus, the prior provision specifically restricted the scope of the Secretary's agency to causes of action arising from the corporation's transactions within the state, even while the corporation was registered to transact business. Similarly, the present provision for withdrawal of authorization to do business as a foreign corporation provides that in order to secure a certificate of withdrawal, the corporation must, inter alia:
revoke[ ] the authority of its registered agent in this state to accept service of process and consent[ ] that service of process in any action, suit or proceeding based upon any cause of action arising in this state during the time the corporation was authorized to do or engage in any business in this state may thereafter be made on such corporation by service thereof on the secretary of state.
S.D.Codified Laws § 47-8-23(4) (1991) (emphasis added). We believe our conclusion in Knowlton applies with equal force here: "These words of limitation ... clearly indicate that the Legislature knew how to limit the purposes of service of process when it wanted to do so, and that provisions for service of process without such an express limitation are intended to apply to any claims made against a corporation with a registered agent within the state." Knowlton, 900 F.2d at 1199.
Miles contends, however, that the limitation on the agent's authority presently exists within the provision that the agent may accept "any process, notice or demand required or permitted by law." Miles argues the phrase "required or permitted by law" means that the agent may validly be served with only such process for which there is an independent basis for personal jurisdiction, such as the long-arm statute. Sondergard argues, and we agree, that this language more naturally refers to the types of process "required or permitted" to be served in South Dakota. Because corporations may be served with process in a tort case, such as this one, such process is "permitted" by law. We cannot improve upon the words of Justice Stewart,5 addressing the identical objection to an identically worded New Hampshire statute:
In our view there is a more natural reading of the phrase 'process, notice or demand ... permitted by law' than that suggested by [the defendant]. We believe that the phrase merely refers to lawful process, notice or demand. Thus, because a summons and complaint in a tort action are documents that may be served on a corporation in accordance with the law, the service in this case falls within the term of the statute. Had the New Hampshire legislature wished to restrict the applicability of the provision to situations in which another statute created jurisdiction, it would hardly have expressed itself in so cryptic a fashion. There are many phrases that would communicate such a restriction far more clearly than the phrase 'process ... permitted by law.' We would be hesitant to attribute to the legislature so obscure a means of expressing itself as [the defendant] attributes to it, when a far more natural reading of the words is possible.
Holloway v. Wright & Morrissey, Inc., 739 F.2d 695, 697 (1st Cir.1984).6 Because Miles' agent was authorized under state law to accept process as to causes of action arising outside the state, and was personally served, jurisdiction should be established.
Miles further argues that none of this demonstrates an intent to subject a corporation to personal jurisdiction over causes of action arising before the appointment of an agent for service of process. Again, we disagree. We first note that South Dakota has applied its jurisdictional statutes, specifically the long-arm provision in S.D.Codified Laws § 15-7-4, to causes of action arising before its passage. See Johnson v. Kusel, 298 N.W.2d 91, 92 (S.D.1980); S.D.Codified Laws § 15-7-4 (1991). Thus, its courts have demonstrated a willingness to entertain causes of action antedating the jurisdictional basis. Second, the statutory provision concerning withdrawal by a foreign corporation limits the authority of the agent appointed under its terms to causes of action arising while the corporation was authorized to do business in the state. The statute requiring the appointment of such an agent while the corporation is registered to do business within the state, however, contains no such limitations. The specific temporal limitation in the revocation statute, coupled with the absence of any such limitation in the registration statute, suggests that the time of the facts giving rise to the cause of action is irrelevant when an agent appointed pursuant to S.D.Codified Laws § 47-8-15 is personally served.
More fundamentally, this argument misunderstands the nature of general jurisdiction. The South Dakota Supreme Court stated that one subject to its general jurisdiction is subject to suit on any transitory cause of action. Thomson, 38 S.D. 570, 162 N.W. 373; Sharkey, 373 N.W.2d 421. There is no question that the South Dakota courts could exercise jurisdiction over an individual who moved to South Dakota even though the cause of action arose before he arrived. Because the South Dakota Supreme Court has discerned a state policy to treat out-of-state corporations like residents with respect to when they can be sued, we believe that the time at which the facts giving rise to the cause of action occurred is irrelevant.
Thus, we conclude that the South Dakota courts would find personal jurisdiction to exist on these facts.
We still must consider whether the due process clause would bar the exercise of jurisdiction over Miles on these facts. This court recently held that a state's requirement that a foreign corporation submit to the jurisdiction of that state's courts in order to qualify to do business did not need to be tested under the due process "minimum contacts" analysis set forth in International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). See Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196 (8th Cir.1990). Instead, we held that appointment of an agent for service of process constituted consent to jurisdiction, and the due process clause was thus satisfied. As we are bound by that decision, the only question before us today is whether extending such "consent" to cover causes of action antedating the appointment of the process agent violates due process.
We conclude that the rule announced in Knowlton is not changed simply because the cause of action antedated the appointment of an agent for service of process. Although the Knowlton court noted that the corporate defendant there sued had appointed an agent for service of process prior to the facts in question, its decision did not depend on that fact. Instead, the court focused on whether the Minnesota statute in question extended jurisdiction to the facts before it. The court noted that Minnesota "adheres to the prevailing rule, which permits suit on transitory causes of action ... regardless of where the cause of action arose...." Id. at 1200. It continued to "conclude that appointment of an agent for service of process ... gives consent to the jurisdiction of Minnesota courts for any cause of action, whether or not arising out of activities within the state. Such consent is a valid basis of personal jurisdiction, and resort to minimum-contacts or due-process analysis to justify the jurisdiction is unnecessary." Id. As a court's general jurisdiction is not limited to causes of action accruing after the basis for general jurisdiction arose, and appointment of an agent for service of process in South Dakota subjects the corporation to general jurisdiction, we conclude that there is no due process objection to South Dakota's exercise of jurisdiction in this case. We note Justice Holmes' observation that "when a power [to accept process] actually is conferred by a document, the party executing it takes the risk of the interpretation that may be put upon it by the courts. The execution was the defendant's voluntary act." Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93, 96, 37 S.Ct. 344, 344, 61 L.Ed. 610 (1917).
In any case, we could not conclude that Miles is unconstitutionally burdened by having to defend this suit in South Dakota. Even without the appointment of the process agent, Miles should have foreseen similar suits in South Dakota at the time Sondergard consumed Alka-Seltzer Plus. Miles admits that it distributed Alka-Seltzer Plus for sale throughout South Dakota at the time Sondergard took it. Its sales in South Dakota are "not simply an isolated occurrence, but arise[ ] from the efforts ... to serve, directly or indirectly, the market for its product in [South Dakota]." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). Thus, Miles had purposely availed itself of the benefits and privileges of South Dakota's laws and economy. See, e.g., Hanson v. Denckla, 357 U.S. 235, 253-54, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958). Its own activities created a connection with South Dakota through which it could reasonably foresee being haled into court in South Dakota. See, e.g., World-Wide Volkswagen, 444 U.S. at 296, 100 S.Ct. at 566. Had Sondergard consumed the Alka-Seltzer Plus in South Dakota, there would be no question about the constitutionality of South Dakota's personal jurisdiction.
Thus, Miles is left to argue that they could not foresee being sued in South Dakota on this particular cause of action. This argument rings hollow, however, when one realizes that Miles does not engage in face-to-face transactions with the buyers of its products, and does not attempt to structure its sales of Alka-Seltzer Plus with regard to whether or not it might be sued in South Dakota. Instead, it sells Alka-Seltzer in every state. Because Miles does not limit who may buy its product or where they may buy it, we cannot conclude that Miles is unconstitutionally burdened by having to defend this suit in South Dakota simply because the plaintiff did not consume its product there. We believe that South Dakota's exercise of personal jurisdiction over Miles would not violate "traditional notions of fair play and substantial justice." See, e.g., International Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).
We therefore reverse the district court's decision denying personal jurisdiction and remand for further proceedings.
South Dakota requires that a foreign corporation engage in significant intrastate activities before such certificate is required. A non-exhaustive list of activities not requiring such a certificate include:
(4) Maintaining offices or agencies for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositories with relation to its securities;
(6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance without this state before becoming binding contracts;
(7) Creating evidences of debt, mortgages or liens on real or personal property;
(10) Conducting an isolated transaction completed within a period of thirty days and not in the course of a number of repeated transactions of like nature.
S.D.Codified Law § 47-8-1.1 (1991).
South Dakota has evidenced a clear policy to extend its jurisdiction to the extent allowed under the due process clause. See State v. American Bankers Ins. Co., 374 N.W.2d 609, 612 (S.D.1985); Russell v. Balcom, 328 N.W.2d 476, 479 (S.D.1983); John W. Larson, In Personam Jurisdiction and the South Dakota Jurisdictional Statutes: A Basic Review and Update, 31 S.D.L.Rev. 116 (1985) (South Dakota Supreme Court has consistently expanded its personal jurisdiction)
The statute in question provided: "A foreign corporation shall be subject to service of process ... by service upon its registered agent." Minn.Stat. § 303.13 subd. 1(1)
The Thomson court first noted that § 885 of the South Dakota Civil Code provided that "service of process may be made upon the duly authorized agent in any action in which said corporation may be a party." It then noted, in relation to service of summons, that the statute provided, "[b]ut such service can be made in respect to a foreign corporation only when it has property in this state, or the cause of action arose therein, or when such service shall be made within this state personally upon the ... duly authorized agent thereof," and that "[s]ervice made in any of the modes provided in this section shall be taken and held to be personal service." That the court believed that service in this manner conferred valid personal jurisdiction is confirmed both by its use as an example for the general proposition noted above, and by the court's further statement, immediately following, that "[w]e are also inclined to the view that the Legislature intended [the insurance appointment of service agent statute] to cover transitory actions accruing in another jurisdiction...." Id. at 376
Justice Stewart was sitting by designation in the First Circuit
In Holloway, the plaintiff asserted jurisdiction based upon personal service of the defendant's registered agent. This agent was appointed pursuant to New Hampshire Revised Statutes § 293-A:119, which provided that "[t]he registered agent appointed by a foreign corporation authorized to do business in this state shall be an agent of the corporation upon whom any process, notice or demand required or permitted by law to be served on the corporation may be served." The defendant claimed that service of process would be "required or permitted by law" only if the corporation could be served pursuant to New Hampshire's long arm statute. The court rejected this view