Title: State v. MacPherson
Citation: 309 P.2d 981, 62 N.M. 308
Docket Number: 6174
State: new-mexico
Issuer: new-mexico Supreme Court
Date: March 29, 1957

309 P.2d 981 (1957) 62 N.M. 308 STATE of New Mexico, ex rel. GRINNELL COMPANY, a Colorado Corporation, Grinnell Company, Inc., a Delaware Corporation, Grinnell Corporation, a Delaware Corporation, Petitioners, v. The Honorable D.A. MacPHERSON, Jr., Judge of Division Four of the District Court of The Second Judicial District of The State of New Mexico, Respondent. No. 6174. Supreme Court of New Mexico. March 29, 1957. Rodey, Dickason, Sloan, Mims &amp; Akin, Albuquerque, for petitioners. Simms, Modrall, Seymour, Sperling &amp; Roehl, Thomas J. Smiley, Albuquerque, for respondent. *982 SADLER, Justice. The relators seek by prohibition to restrain the respondent judge from proceeding in a case pending before him in the district court of Bernalillo County, entitled "Larnie Schultz and Hartford Accident and Indemnity Co., plaintiffs, v. Grinnell Company, defendant," and numbered 63,674 on the civil docket of said court. We granted an alternative writ upon the filing and presentation of the petition therefor and the matter is now before us in a test of whether the alternative writ was improvidently issued. It will be necessary to state the facts in order to ascertain this fact. On January 11, 1954, the plaintiff, Larnie Schultz, was employed as a steam fitter by the Flori Piping Erection Company of St. Louis, Missouri, and was working on the construction of the R.E.A. Electrical Plant at Algodones, New Mexico (also called the Plains Electric Generation and Transmission Co-op, Inc.). On the date mentioned while Schultz was astraddle a steel pipe approximately 16 feet above the floor level, the pipe fell to the ground and he along with it, as a result of which he was injured. At the time of the fall the workmen's compensation insurer of Schultz' employer was the Hartford Accident and Indemnity Company. Since the date of his injury, the insurer has been paying compensation to Schultz in the amount of $30 per week and furnishing medical benefits. Some two years later, on February 3, 1956, Schultz and the insurer, who will be referred to herein as "Hartford", filed suit against Grinnell Company for Schultz' personal injuries and reimbursement to Hartford for compensation benefits previously paid. The complaint alleges that the fall was caused by a defective or faulty metal hanger "manufactured, fabricated or made" and "warranted" by the defendant, Grinnell Company, "a foreign corporation * * * authorized to do business in the State of New Mexico." This hanger is also referred to in the pleadings as an "I-beam" or "pipe hanger." The Grinnell Company, the named defendant in cause No. 63,674, is a Colorado corporation with its principal place of business in Denver. It is duly qualified to do business in New Mexico. Service was made on said defendant through its authorized statutory agent, John T. Watson. Purported service was also made on the secretary of state as agent for the Grinnell Company Inc., and for Grinnell Corporation, pursuant to section 21-3-6(b) which section governs service on foreign corporations doing business in New Mexico but not authorized or qualified to do business in this state. This latter service was made on February 16, 1956. The only affidavit filed with the secretary of state upon such service is attached to the petition for the writ as Exhibit "C." On March 14, 1956, an answer was filed by the defendant admitting that it was authorized to do business in New Mexico, denying that it manufactured or fabricated the alleged defective metal hanger, and setting up the usual affirmative defenses. On June 18, 1956, certain pleadings were filed below as follows: (a) Defendants' motion for summary judgment with affidavit attached thereto, the grounds for such motion being that defendant was not a manufacturer but a distributor of products manufactured by the manufacturing corporation and others, that it did not manufacture the metal hanger as alleged in the complaint, nor did it sell the same to plaintiff Schultz' employer at the time of the accident, Flori Piping and Erection Company. (b) Grinnell Company, Inc.'s motion to quash purported service of process on the secretary of state as its agent with affidavit attached thereto asserting that: (1) the process or summons served upon the secretary of state was directed to "Grinnell Company," a separate corporate entity from Grinnell Company, Inc.; (2) an affidavit by the person to whom process was delivered for service was not filed in the office of the secretary of state as required by section 21-3-6(b), 1953 Comp.; (3) Grinnell *983 Company, Inc., did not do business within the state of New Mexico. (c) Grinnell Corporation's motion to quash purported service of process on the secretary of state as its agent with affidavit attached thereto on the ground that: (1) the process or summons served upon the secretary of state was directed to "Grinnell Company," a separate corporate entity from Grinnell Corporation; (2) the affidavit by the person to whom process was delivered for service was not filed in the office of the secretary of state as required by section 21-3-6(b), 1953 Comp.; (3) Grinnell Corporation did not do business within the state of New Mexico. On June 29, 1956, plaintiffs below filed separate interrogatories directed to Grinnell Company, Grinnell Company, Inc., and Grinnell Corporation, respectively. Copies of the interrogatories were attached to the petition herein as exhibits. Thereafter, on August 31, 1956, Grinnell Company, Grinnell Company, Inc., and Grinnell Corporation filed separate answers to certain of the interrogatories referred to above and objected to others, said objections relating primarily to interrogatories involving insurance. Copies of the answers also were attached as exhibits to the petition herein. On October 4, 1956, the motions to quash referred to above as well as motion for summary judgment by defendant, Grinnell Company, came on for hearing and each, in turn, was denied. There follow certain allegations in the petition for the writ by the defendant Grinnell Company in which it denies that it either manufactured or sold the allegedly defective metal hanger; that certain metal hangers were sold to plaintiff's employer, Flori Piping Erection Company, by Grinnell Company, Inc., in St. Louis, Missouri, and shipped from that point by the branch office of Grinnell Company, Inc., to the Flori Piping Company of Algodones, New Mexico, where said metal hangers were in fact delivered to the latter company. That said metal hangers were made and fabricated by Grinnell Corporation. It is further alleged in the petition for the writ that Grinnell Company, Inc., is a foreign corporation, not authorized or qualified to do business in New Mexico, nor actually so engaged at any material time; that Grinnell Corporation is likewise a foreign corporation, not authorized or qualified to do business in New Mexico, nor actually so engaged at any material time; that Grinnell Company and Grinnell Company, Inc., are wholly owned subsidiaries of Grinnell Corporation and that all three corporations are separate legal entities; that three directors of Grinnell corporation constitute the entire board of directors of Grinnell Company and Grinnell Company, Inc. It is further alleged in the petition for the writ that the defendant, Grinnell Company, while a foreign corporation, is authorized and qualified to do business in New Mexico. The petition goes on to allege that the books and records of Grinnell Company are kept entirely separate from the books and records of the Grinnell Corporation and that all employees of Grinnell Company are paid solely by it and receive no compensation from Grinnell Corporation. The respondent admits most of the allegations of the petition but specifically denies that respondent is without jurisdiction over Grinnell Company, Inc. and Grinnell Corporation, alleging, affirmatively, that the three Grinnell corporations are actually and in fact, "one giant operation of one octopus corporation and as such are amenable to process in New Mexico." A review of testimony taken on interrogatories in depositions to the parties, being officers of the three separate corporations, Grinnell Company, Grinnell Company, Inc., and Grinnell Corporation, along with exhibits attached to depositions, and admissions to be deduced from the pleadings, is sufficient, as we view the matter, to sustain the charge in the answer, or response to the writ, filed on behalf of the respondent, in this prohibition proceeding: There are so many facets to the widespread operations of the three separate corporations that it would be quite burdensome to attempt an enumeration of all of them. We shall, however, mention some of the more prominent of those leading us to the conclusion announced. For instance, we shall appropriate Exhibit 16, attached to the brief of respondent, as entitled and reproduced therein. It follows: As disclosed by Exhibit 16 attached to the answer brief of respondent, and reproduced next above, the Grinnell Corporation, the parent corporation, maintains its executive offices at Providence, Rhode Island, and so do Grinnell Company and Grinnell Company, Inc. All three have the same board of directors, the same secretary, share the same executive offices. The only difference noted by the exhibit, supra, lies in the fact that Grinnell Company has been duly qualified to do business in New Mexico, whereas, Grinnell Company, Inc., and Grinnell Corporation have not. The relators' response to an interrogatory No. 3 addressed to Grinnell Company reads, as follows: "Operation of a warehouse in Denver, Colorado, from which Grinnell manufactured products and products *985 purchased from others (being principally pipe, pipe fittings, hangers, plumbing and heating equipment) are sold within the territory of such company, including the State of New Mexico. Also operates as contractor selling and installing automatic sprinkler systems in its territory." The same witness, speaking for his employer, Grinnell Company, in interrogatory No. 6, and asked to explain the relationship between it and Grinnell Company, Inc., stated: Again, the same witness, speaking now as Secretary of Grinnell Company, Inc., in reply to an interrogatory addressed to that company as to the number of states in which it did business, answered: Likewise, the same witness, speaking still as Secretary of Grinnell Company, Inc., gave verbatim the same answer, substantially, as he had to a like inquiry directed to him while speaking as Secretary of Grinnell Company, touching the relationship of the three companies, to-wit: In the advertising done by the three companies, a common pattern is observed. The petitioners for the writ (relators) the three of them are treated as one. Actually, they hold out the name of "Grinnell" to the public and operate as one; a sample of such advertising is attached as Exhibit 17. It is put out under the trade name, "Grinnell." On the last page of this advertising circular appears the heading "Grinnell Sales Offices and Warehouses" under which are listed 34 offices and warehouses including the one at Denver, Colorado. The warehouse in Denver is the sole business of Grinnell Company. No distinction seems to be made between the manufacturing corporation or the various other so called selling corporations. In addition, we have before us, brought up as an exhibit below, a huge catalogue in which countless articles manufactured and sold by this triumvirate of companies are listed, described and priced. It is described on the outside front cover "Grinnell Wherever Piping is Involved Catalog 51." *986 On the inside of the catalog, at approximately page 5, there is this statement: But, why go on? Enough has been shown (and more appears) to demonstrate that, although the three companies are separately incorporated, their separate entities are not preserved in the conduct of their overall business sufficiently to enable them to thrust same forward successfully in a claim of immunity to suit in this state. A more liberal policy has grown up over the years with respect to what affords due process as to a foreign corporation doing business in another state than that of its creation. Especially is this true in setting up criteria by which its activities are to be judged in a determination whether it is doing business within a sister state, so as to subject it to suits in the courts of such state. See the illuminating opinion of Mr. Chief Justice Stone in International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95, 161 A.L.R. 1057, and annotation at 1068. But this case does not on its facts exactly fit the situation here confronting us. There is here no question but that good service has been made on Grinnell Company. Sufficiency of service on it alone, however, brings little comfort to the plaintiff in the action out of which this proceeding in prohibition grows, unless through the agency of such service others may be brought before the court. The plaintiff in the action sought to be prohibited must go beyond Grinnell Company and, indeed, to the parent corporation, if he is to have practical relief. This means he must establish service on Grinnell Company, Inc., or Grinnell Corporation, one or both, if he is to be afforded practical relief. We think under the facts here present it could well be concluded that the parent organization, itself, Grinnell Corporation, was doing business in New Mexico through the agency of one of its subsidiaries, Grinnell Company, and that service on the latter sufficed to authorize the court, upon proper request, to bring before the court by amendment the two counterparts of Grinnell Company, to wit, Grinnell Company, Inc., and Grinnell Corporation. There is ample authority to support such a conclusion. See Compania de Astral, S.A. v. Boston Metals Co., 205 Md. 237, 107 A.2d 357, 108 A.2d 372, 49 A.L.R.2d 646, and annotation at page 668; Pergament v. Frazer, D.C., 93 F. Supp. 9; Clover Leaf Freight Lines, Inc., v. Pacific Coast Wholesalers Ass'n, 7 Cir., 166 F.2d 626; Bach v. Friden Calculating Machine Co., 6 Cir., 167 F.2d 679; S.O.S. Co. v. Bolta Co., D.C., 117 F. Supp. 59; General Electric Co. v. Masters Mail Order Co., 122 F. Supp. 797; Industrial Research Corporation v. General Motors Corporation, D.C., 29 F.2d 623; Fish v. East, 10 Cir., 114 F.2d 177; Sterling Novelty Corp. v. Frank &amp; Hirsch Distributing Co., Ltd., 299 N.Y. 208, 86 N.E.2d 564, 12 A.L.R.2d 1435; Sales Affiliates, Inc., v. Superior Court for Los Angeles, 96 Cal. App. 2d 134, 214 P.2d 541; Fielding v. Superior Court, 111 Cal. App. 2d 490, 244 P.2d 968, certiorari denied, Westwood Pharmacal Corp. v. Fielding, 344 U.S. 897, 73 S. Ct. 277, 97 L. Ed. 693. In S.O.S. Co. v. Bolta Co., the court said [117 F. Supp. 61]: We quote from Satterfield v. Lehigh Valley R.R. Co., supra [128 F. Supp. 671], as follows: In Bishop v. United States, 16 F.2d 410, 415, the 8th Circuit Court of Appeals said: The case most relied upon by relators is that of Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S. Ct. 250, 251, 69 L. Ed. 634. The court simply held there that the separation of corporate identity had been sufficiently maintained and on that theory that the defendant sued was not doing business in the jurisdiction of the forum where sued. Said the court: The quoted language itself distinguishes that case from this one. The Cannon Mfg. Co. case held that if sufficient separateness between the parent and the subsidiary was maintained, the foreign parent was not subject to the local jurisdiction. However, as pointed out in the article in 56 Cal.L.Rev. 394, at p. 409: In a seven-page comment on the Cannon Mfg. Co. case, supra, the author says that the result "shocks one's common sense." 20 Ill.L.Rev. 281 (1925). In their reply brief counsel for relators, themselves, have this to say: Since this is exactly the situation confronting us here and the service on Grinnell Company is admittedly good, this brings before the Court the two missing corporations, each as an alter ego of Grinnell Company, the case only lacking the formality of an amendment to add them as parties defendant. It follows from what has been said that the alternative writ was improvidently issued and should, therefore, be discharged. It will be so ordered. LUJAN, C.J., and McGHEE, COMPTON and KIKER, JJ., concur.