Court Opinion

ID: 9637406
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:06:43.983297+00
Date Added: 2024-06-11T18:09:56.088470
License: Public Domain

STEPHENS, Associate Justice
(dissenting).
The findings of fact made by the court, which are set out in full in footnote 1 in the majority opinion, were in brief to the effect that the appellee is a corporation of Kentucky with, its principal place of business at Louisville and no office or place of business in the District; Lovewell was a resident of Chevy Chase, Maryland, was employed by the appellee for the purpose of soliciting orders for its products and transmitting such orders to the appellee in Louisville for acceptance or rejection; his activities were restricted to such solicitation and transmission of orders, except that upon occasion for the purpose of bringing about good will and promoting his work of soliciting business, but not as a matter of duty, Lovewell would visit jobs where the appellee’s products were being used and make suggestions with respect to the solution of difficulties experienced in their use and forward complaints; the material known as “Brixment” which was used by the appellants in the construction of their house was obtained by one of the appellants from the Hudson Supply and Equipment Company and was billed by that Company to one of the appellants, Cora L. Frene; the order for this material was not placed by the appellants with Lovewell. The court concluded as a matter of law that the appellee was not engaged in doing or transacting business in the District of Columbia, and that the process served upon Lovewell was not effectual to bring the appellee before the court under D.C.Code (1940), § 13 — 103.
Upon these findings and conclusions the court entered the judgment appealed from “that the service of process made upon the said C. E. Lovewell ... be and the same is hereby quashed.”
The record on appeal contains the proceedings below including the evidence. Examination of the evidence shows that it was sufficient to support the findings. They are therefore conclusive.
The statute in respect of service of process upon foreign corporations, referred to by the trial court in its conclusions of law, is set out in full in the text of the majority opinion. Its provisions are of course to be construed and applied in consonance with the due process clause of the constitution and the general principles of law relating to jurisdiction.
The sole question in the case is whether the activities of Lovewell as described in the findings of the trial court were such as to constitute a doing or transacting of business in the District by the appellee. I think they were not, that they did not go beyond solicitation as that term has in *520effect been defined by the Supreme Court and this court.
It is well settled that the solicitation of orders in one jurisdiction which are forwarded to the home office of a corporation in another jurisdiction for acceptance or rejection and the shipping of the ordered goods into the jurisdiction, in which the solicitation took place, do not constitute the doing or transacting of business therein by the foreign corporation. Green v. Chicago, Burlington & Quincy Ry. Co., 1907, 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916; Philadelphia & Reading Ry. Co. v. McKibbin, 1917, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; People’s Tobacco Company v. American Tobacco Co., 1918, 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas. 1918C, 537; Cancelmo v. Seaboard Airline Railway, 1926, 56 App.D.C. 225, 12 F.2d 166; Whitaker v. Macfadden Publications, 1939, 70 App.D.C. 165, 105.F.2d 44. A question similar to that involved in the instant case was presented in Whitaker v. Macfadden Publications. There Whitaker sued. the Macfadden Publications for an alleged libel in one of its magazines. He caused process to be served on one Arthur Pendergast as an agent of Macfadden Publications. There, as here, there was a motion to quash the service upon the ground that the Macfadden Publications was not doing business in the District. The trial court granted the motion and Whitaker appealed. We affirmed. We detailed the facts as follows:
“. . . Defendant [Macfadden Publications] is a New York corporation. It sells and ships its magazines to, and collects payment from the District News Company, of Washington, D. C. The District News Company resells to and collects from retailers and street vendors. Pendergast and four assistants, for remuneration which defendant pays by check from New York, supervise and promote sales of the magazines among the street vendors who buy their stock from the District News Company. Pendergast solicits neither advertising nor subscriptions, and neither collects nor forwards money to defendant. Neither the District News Company nor Pendergast is authorized to make any contracts for defendant. Defendant has no place of business in the District, but the District News Company furnishes Pendergast with an office and telephone on its premises without cost to him or to defendant.”
We said:
“ ‘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.’ Philadelphia & Reading Railway Co. v. McKibbin, 243 U.S. 264, 265, 37 S.Ct. 280, 61 L.Ed. 710. Accordingly, the District Code provides for service of process on foreign corporations ‘doing business in the District.’ Tit. 24, § 373 [D.C.Code (1940) § 13—103]. It is elementary that not all economic activity amounts to ‘doing business’ in this sense. In Green v. Chicago, Burlington & Quincy Railway Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, a railroad west of Chicago was sued in a United States court in Pennsylvania. The road maintained in Pennsylvania an office, a district freight and passenger agent, and several employees who solicited passenger and freight business. These agents did not sell tickets over defendant’s lines, but they sold ‘prepaid orders’ which entitled the holder to receive a ticket in Chicago. The Supreme Court said it was ‘obvious that the defendant was doing’ in Pennsylvania, ‘a considerable business of a certain kind.’ Yet the Court ruled that ‘The business shown in this case was in substance nothing more than that of solicitation’ (205 U.S. page 533, 27 S.Ct. page 596, 51 L.Ed. 916), and that the defendant was not, in the jurisdictional sense, doing business in the state. If the Burlington was not doing business in Pennsylvania, by stronger reason Macfadden is not doing business here. The local agents of the Burlington solicited persons to enter into transactions with their employer, but the local agents of Macfadden do not; the transactions which Pendergast and his assistants promote are sales by the District News Company to newsboys or by newsboys to the public. The Burlington agents -made contracts and received money for their employer, but the Macfadden agents do neither. The present case closely resembles People’s Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537. There the American company sold goods to Louisiana jobbers, who sold to retailers. The company sent drummers into the state to solicit orders from retailers, to be turned over to the jobbers. These drummers made no sales, collected no *521money, and extended no credit. The Supreme Court held that the company was not doing business in Louisiana so as to permit service of process upon it. The Court distinguished International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, on the ground that there the agents not only solicited business but received payment.” [70 App.D.C. at pages 165, 166; 105 F.2d at pages 44, 45.]
I think that Lovewell’s activities in the instant case in visiting jobs where the appellee’s products were being used and making suggestions with respect to the solution of difficulties experienced in their use and forwarding complaints were, to use the language of Green v. Chicago, Burlington & Quincy Ry., supra, “in substance nothing more than that of solicitation.” Solicitation cannot sensibly be said to be limited to the mere verbal act of asking for orders. It properly includes activities “to bring about good will and create a favorable attitude, and thus promote . . . [the] work of soliciting business.”1
The appellant relies upon Toledo Computing Scale Company v. Miller, 1912, 38 App.D.C. 237; Carroll Electric Co. v. Freed-Eisemann Radio Corp., 1931, 60 App.D.C. 228, 50 F.2d 993; and Hoffman v. Washington-Virginia Ry. Company, 1916, 44 App.D.C. 418. I think all of those cases distinguishable. In Toledo Computing Scale Company v. Miller a suit was brought against the Scale Company, a foreign corporation, for alleged false warranty and misrepresentation in the sale of a computing scale. In one aspect the facts in that case were similar to those in the instant case, that is, the representative upon whom service was made in the District in the Toledo case had no power to make binding contracts on behalf of the Scale Company but only authority to negotiate tentative contracts upon acceptance of which the goods were to be sent to the District. But the facts were otherwise materially different. The Scale Company, which was a corporation of New Jersey with executive offices and factory at Toledo, Ohio, had a representative in the District described by the Scale Company as its “sales agent” and charged with the duty of representing it in matters growing out of sales. He not only negotiated sales but also looked after deliveries, collections and complaints. He occupied an office in the District upon the window of which was printed “Toledo Computing Scale Company,” the name of the representative not appearing. The representative who negotiated the sale which was the subject of the suit had! personally delivered the scale to the purchaser plaintiff. In a letter from the Scale Company to the plaintiff reference was made “to the scale which you . . . purchased from our representative.” On these facts we held that the representative upon whom service of summons was made was more than a mere solicitor and that the Scale Company was transacting business in the District and that the service was valid. We said:
“. . . Congress intended that if a foreign corporation should transact business here, it should be subject, as to that business, to the jurisdiction of the local courts . . ..” [38 App.D.C. at page 240]
Construing the same statute as the one involved in the instant case we said:
“Sec. 1537 [D.C.Codc (1940) § 13 — 103], as previously pointed out, is in two paragraphs. The first paragraph relates to service upon foreign corporations ‘doing business’ in the District. The second prescribes the method of service ‘when a foreign corporation shall transact business’ here without having any place of business or resident agent in the District. . . . ” [38 App.D.C. at page 241]
We concluded:
“. . . Its representatives, as above suggested, were much more than mere solicitors whose responsibility ended when they brought appellant and prospective purchasers together. They not only negofiatec! sales, but, we are convinced, looked after deliveries, collections, and complaints. ...” [38 App.D.C. at page 242]
In Carroll Electric Co. v. Radio Corp. again the facts were materially different from those in the instant case. There the Carroll Electric Company, a District of Columbia corporation, sued the FreedEisemann Radio Corporation, a corporation of New York, for damages for an alleged breach of a contract existing between the two companies relating to certain dealings in radio equipment. The return of service of summons showed service “on the Defendant Corporation within named by serv*522ing Fred McCarthy, Salesman, in charge personally . . ..” There was a special appearance and motion to quash upon the ground that the Radio Corporation was not doing or transacting business in the District at the date of the service and did not have or maintain an office or agent there, ánd that McCarthy was not a “Salesman, in charge” nor doing or transacting business for the defendant in the District except for assistance rendered in soliciting orders for merchandise. It appeared, however, that the Radio Corporation had a contract with a distributor in the District — for a time the Carroll Electric Company itself, prior to that another District of Columbia company. The contract was called a “Distributor’s Franchise.” The Radio Corporation was referred to in the contract as the “Manufacturer.” Under that contract the manufacturer granted to the distributor a franchise for a given term in the District. The distributor agreed to the following: to carry a representative stock of the manufacturer’s products and to exert effort to sell them at wholesale and to secure dealers to sell them at retail within the District; to purchase the products of the manufacturer on certain terms; to have every new dealer to whom the distributor sold the manufacturer’s products approved by the manufacturer and to have such dealer execute the manufacturer’s “Authorized Dealer Contract”; to act as a wholesale distributor of the manufacturer within the District and to. maintain at the distributor’s expense an office and showroom with an efficient service department and sales force adequately equipped to service and sell at wholesale the manufacturer’s products; not to sell any radio equipment other than that furnished by the manufacturer. On these facts and under the same statute as the one involved in the instant case we held the service of summons upon McCarthy valid. We said:
“The terms of the contract between the parties have the effect of creating a limited agency in the distributor, under which the latter discharged various obligations for the manufacturer in disposing of its products within the specified area. The distributor was not an independent merchant dealing with the manufacturer upon its own initiative, but conducted its business in the District of Columbia in conformity with the stipulations contained in the contract. The activities thus provided for constituted the transaction of business by both parties not only in New York City, where the contract was made, but also in the District of Columbia, within which it was in part carried out. The case thus falls within the provisions of the second paragraph of section 373 supra [D.C.Code (1940) § 13 — 103], and the service of summons on McCarthy, who was an employee of the manufacturer, was valid under that paragraph. ...” [60 App.D.C. at page 229; 50 F.2d at page 994]
In Hoffman v. Washington-Virginia Ry. Company there was no question whether the foreign corporations involved were doing or transacting business in the District of Columbia. The trial court found that “each severally had and maintained a place of business in the District of Columbia, and at said time [the time of service of summons] each severally was doing business in the District of Columbia.” These findings of fact were not challenged. The question in the case as stated by this court was:
“. . . whether the supreme court of the District has jurisdiction of an action brought by a resident of Virginia against a Virginia corporation having a place of and doing business in this District through its regularly appointed agents, upon whom the summons is served for a transitory cause of action arising outside the District. ...” [44 App.D.C. at page 421]
The appellant relies also upon International Harvester v. Kentucky, 1914, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479. That case was distinguished in People’s Tobacco Company v. American Tobacco Co., supra, from cases of mere solicitation of business on the ground that:
. .in that case the facts disclosed that there was not only a continuous course of business in the solicitation of orders within the State, but there was also authority upon the part of such agents to receive payment in money, checks and drafts on behalf of the company, and to take notes payable and collectible at banks in Kentucky; these things, taken together, we held amounted to doing business within the State of Kentucky in such manner as to make the Harvester Company amenable to the process of the courts of that State.” [246 U.S. at pages 87, 88, 38 S.Ct. 235, 62 L.Ed. 587, Ann.Cas.1918C, 537.]
I think the distinctions made by the majority between the facts in the instant case and those in Whitaker v. Macfadden *523Publications and Green v. Chicago, Burlington & Quincy Ry., supra, are immaterial; that, as said above, the activities of Love-well as described in the findings were in substance nothing more than solicitation in the normal sense of that term. In effect, therefore, in my view, the decision of the court is a repudiation of Whitaker v. Macfadden Publications and Green v. Chicago, Burlington & Quincy Ry. and denies to the appellee a disposition of the instant case according to the law as declared by this court and the Supreme Court. I think that under Whitaker v. Macfadden Publications and Green v. Chicago, Burlington & Quincy Ry. the appellee had a right to cause Lovewell to solicit orders without thereby submitting itself to the jurisdiction of the courts of the District for purposes of suit, and that the decision of the court now retroactively denies the appellee that right.

 The quotation is from the last sentence of paragraph 3 of the findings set forth iu footnote 1 in the majority opinion.