Court Opinion

ID: 9760833
Source: CourtListenerOpinion
Date Created: 2023-08-29 01:18:47.909435+00
Date Added: 2024-06-11T07:29:17.661898
License: Public Domain

SCHREIBER and O’HERN, JJ.,
dissenting.
We disagree with the majority’s view that the only way that a foreign corporation may appoint an agent for service of process, and thereby obtain the benefit of the statute of limitations, is to obtain a certificate of authority to transact business in the State.
We disagree as well with the Supreme Court characterization of footnote 10 of Velmohos v. Maren Engineering Corp., 83 N.J. 282, 293 n. 10 (1980), as “opaque.” See G.D. Searle & Co. v. Cohn, 455 U.S. 404, 414,102 S.Ct. 1137,1144, 71 L.Ed.2d 250, 259 (1982). It is clear to us that a majority of the Velmohos Court determined that under New Jersey law all that is required of a foreign corporation to obtain the general benefits of our statute of limitations is that it appoint an agent for service of process, not that it submit to the general jurisdiction of the forum by obtaining a certificate of authority to do business.
I.
In Velmohos we upheld N.J.S.A. 2A:14-22, which provides for the tolling of the statutes of limitations with respect to claims against foreign corporations that are “not represented in this state by any person or officer upon whom summons or other original process may be served.” We held that the section did not violate the constitutional Equal Protection or Due Process Clauses when applied to a foreign corporation that is not “represented” in New Jersey, but is subject to long-arm jurisdiction by service outside the State. The United States Supreme Court affirmed this holding in Searle, 455 U.S. at 412 & n. 7,102 S.Ct. at 1143-44 & n. 7, 71 L.Ed.2d at 258 & n. 7, but considered it unwise to pass on the claim of a Commerce Clause violation not *320raised below and remanded the Searle case to the Circuit Court of Appeals to determine whether the Commerce Clause argument had merit. Id. at 412-14,102 S.Ct. at 1143-44, 71 L.Ed.2d at 258-59. The Supreme Court also vacated and remanded Velmohos to this Court for further consideration in light of Searle. 455 U.S. 985,102 S.Ct. 1605, 71 L.Ed.2d 844 (1982). The case was settled before reconsideration.
In Velmohos Justice Pashman carefully observed “that whatever hardship on foreign corporations might be caused by continued exposure to suit can be easily eliminated by the designation of an agent for service of process within the State.” 83 N.J. at 293 n. 10. It is remarkable that the majority opines that such representation can be authorized only by statute and not by a voluntary designation, such as by a power of attorney or by specific provision in an agreement.
Service of process upon corporations, foreign and domestic, in New Jersey is a function of court rule, not of statutes. Under the New Jersey Constitution of 1947 the Supreme Court has exclusive rule-making power over practice, procedure and administration of the courts. Winberry v. Salisbury, 5 N.J. 240, cert. den., 340 U.S. 877, 71 S.Ct. 123, 95 L.Ed. 638 (1950). Thus, New Jersey does not have a long-arm statute. Long-arm service is available pursuant to R. 4:4-4(c)(l) (eff. Sept. 8, 1969) (source rule R.R. 4:4 — 4(d) (eff. Sept. 3, 1958)).
At the time the New Jersey Court Rules were first adopted, in 1948, the existing statutes governing service on corporations read:
2:26-43. Domestic corporations in personal actions; personal or substituted service of summons.
Service of a summons in a civil action commenced against a domestic corporation in any of the courts of this State may be made by delivering a copy thereof to an officer, director, trustee or a managing or general agent of the corporation personally, or by leaving a copy thereof at his dwelling house or usual place of abode with some competent member of his family of the age of fourteen years or over then residing therein, or by delivering a copy thereof to any person authorized by appointment or by law to receive service of process on behalf of the corporation, or by leaving a copy thereof at the registered office of the corporation with any person in charge thereof.
*3212:26-44. Foreign corporations.
Service of a summons in a civil action commenced against a foreign corporation may be made in the same manner as is provided in section 2:26-43 of the Revised Statutes for service of summons upon a domestic corporation. [L.1948, e. 356 (emphasis supplied) ].
The proposed draft Court Rules included a rule for service upon corporations, foreign and domestic, which closely followed the language of the now repealed statutes, R.S. 2:26-43 and 44 (1937).
The specific language of the rule was:
d. [Service of process may be made u]pon a domestic or foreign corporation or partnership or other unincorporated association which is subject to suit under a recognized name, by serving in the manner prescribed in Paragraph a, an officer, a managing or general agent or, in the case of the corporation, a director or trustee or, in the case of the partnership, any partner; or upon the corporation, by serving personally any person authorized by appointment or by law to receive service of process, or any ticket or freight agent employed in any of the corporation’s offices in the county in which the venue is laid; or as may be provided by law.1 [R. 3:4-4(d) (Tentative Draft 1948) (emphasis supplied)].
It was modeled upon Fed.R.Civ.P. 4(d)(3). In 1948, Federal Rule 4(d)(3) authorized service within the territorial limits of the state within which the district court is held
(3) Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by *322delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant. [Emphasis supplied].
The federal rule has been interpreted to include designations made by a party in an agreement. Thus, for example in Emerson Radio & Phonograph Corp. v. Callander Distrib. Corp., 116 F.Supp. 926 (S.D.N.Y.1953), service upon Prentice-Hall, Inc. as one designated in a franchise agreement “to accept in the name and on behalf of [the] distributor service of process” was held valid process under the federal rule. That court referred to the consistent practice in New York of recognizing the appointment of agents for service of process, citing Gilbert v. Burnstine, 255 N.Y. 348, 174 N.E. 706 (N.Y.Ct.App.1931). Id. at 927-28.
The majority’s reliance upon the sponsor’s statement to limit the effect of N.J.S.A. 2A:14-22 to foreign corporations which become licensed to do business in New Jersey is misplaced. It was quite natural for the sponsor to describe the most serious problem the legislation addressed. Originally no foreign corporations, whether licensed, represented, or subject to process in New Jersey, could obtain the benefit of the running of the statute of limitations. See Cramer v. Borden’s Farm Products Co., Inc., 58 F.2d 1028 (S.D.N.Y.1932) (under New Jersey law, New York corporation licensed to do business in New Jersey is not resident of New Jersey and therefore is within scope of tolling statute). It was not until 1949 that any foreign corporations became exempt from its effects. The language of the statute is clear in extending the benefits of the running of the statute of limitations to corporations that are represented in the State, not corporations that are licensed to do business. That the sponsor highlighted its major purpose does not detract from the plain meaning of the statute, which we should follow. See Service Armament Co. v. Hyland, 70 N.J. 550, 562 (1976) (extrin*323sic aids to construction of statute do not alter its plain meaning).2
These precedents form the basis for the interpretation given the tolling statute by the Velmohos majority. Simply put in the circumstances of this case, the manufacturer of the motorcycles could have appointed its local dealer or distributor as a person authorized to receive service of process on behalf of the corporation.
The argument that such an appointment would give no public notice of the representation is especially hollow in the circumstances of this case where the motorcycle was purchased directly by the injured claimant Coons’ cousin from American Honda Motor Co., Inc., a distributor for Honda Motor Company, Ltd. of *324Japan (Honda of Japan). It would require little' effort or expense to add a line to the manufacturer’s warranty advising the consumer of the appointment of the distributor to accept process with respect to product claims. In that way the foreign manufacturer would gain the benefit of the running of the statute of limitations without the burden of registering to do business in New Jersey. “The normal pattern that the manufacturer-dealer relationship follows relegates the position of the dealer to the status of a way station along the car’s route from maker to consumer.” Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 374 (1960). Where else would he go but to the dealer in the first place? In fact, Coons inquired whether the dealer would be authorized to accept service in this case.
*323Mackey’s introductory statement to the 1949 amendment to the New Jersey tolling statute indicated that New York had amended its tolling statute in a similar fashion in response to recent court decisions. Research has disclosed no significant cases prior to 1943 regarding persons through whom a foreign corporation might be served. However, section 1 of the 1943 amendment to C.P.A. § 19, n. 5 supra, was adopted specifically to alter the rule of Maguire v. Yellow Taxicab Corp., 253 A.D. 249, 1 N.Y.S.2d 749, rehearing denied, 253 A.D. 890, 2 N.Y.S.2d 1021, aff'd mem., 278 N.Y. 576, 16 N.E.2d 110 (1938), which held that amenability to process through the Director of Motor Vehicles did not exempt a nonresident defendant from the tolling statute. These facts suggest that the New Jersey Legislature may well have intended that representation by a statutory agent within the state would be sufficient to satisfy the tolling statute’s foreign corporation exemption. [447 F.Supp. 908 n. 9].
While the sponsor’s statement regarding the 1949 amendment indicated that the legislature intended to give the benefit of the statute of limitations to foreign licensed corporations, the language of the amendment is not so narrowly phrased as to deny unlicensed corporations a statute of limitations defense. [447 F.Supp. 912 n. 18],
*324The manufacturer need only designate a person whom it trusts to receive process for it. In this fashion the foreign manufacturing corporation may simply and expeditiously gain the advantage of having the statute of limitations run from the date the cause of action arises, for claims of plaintiffs who can reasonably be expected to have knowledge of that designation.
II.
We also disagree with the majority insofar as it rules that the Secretary of State even now lacks power to receive and file a foreign corporation’s designation of an agent to receive process for the purpose of compliance with N.J.S.A. 2A:14-22.
The Attorney General has advised the Secretary of State that he has the power to accept such a designation and relies upon N.J.S.A. 14A:1-6(4), which provides that:
The Secretary of State shall record all documents, excepting annual reports, which relate to or in any way affect corporations, and which are required or permitted by law to be filed in his office....
The Attorney General’s position is that since N.J.S.A. 2A:14-22 presumes the designation by a foreign corporation of a representative for service of process (as we have seen, such designations may be accomplished by letters or powers of attorney), that statute constitutes authority for the Secretary of State to *325record such designations as documents that are “permitted by law” to be filed. Unquestionably, the designation of an agent for service of process by a foreign corporation “relate[s] to . .. [and] affeet[s] [the] corporation[ ].” N.J.S.A. 14A:l-6(4). It is certainly within the spirit of the type of documents the Secretary of State receives from foreign corporations and the Attorney General opines that the Secretary of State should accept the documents. We perceive no reason to reject his opinion. The filing of such a document would require a fee of $15, pursuant to N.J.S.A. 14A:15-3(15). The filing of that document would constitute a public record available to any person for inspection and duplication in accordance with N.J.S.A. 14A:l-9, which states that:
(1) Upon request of any person, the Secretary of State shall furnish certified copies of documents filed in his office in accordance with the provisions of this act.
(2) Upon request of any person, the Secretary of State shall certify to the existence or non-existence of any facts on record in his office relating to domestic or foreign corporations.
Therefore, in the Attorney General’s view, the applicable statutory framework provides a clear mechanism by which the recording of a designated agent by a foreign corporation can and will be reflected by the New Jersey Secretary of State. We agree that that position can be maintained under New Jersey law.
Although the customary meanings of the two phrases are similar, the majority makes a distinction between “recording]” and “filing,” ante at 315.3 We believe that it is too narrow an interpretation of the powers of the Secretary of State, a constitutional officer. Indeed, the Attorney General’s *326interpretation of the duty of the Secretary of State to receive and file this one-page document under N.J.S.A. 14:1-6(4) is consonant with the concept that statutes should be interpreted so as to be in harmony with constitutional requirements. See Right to Choose v. Byrne, 91 N.J. 287 (1982) (excision of offending provision prohibiting reimbursement for therapeutic abortions justified to maintain balance of Medicaid program); Jordan v. Horsemen’s Benev. & Protect. Ass’n, 90 N.J. 422 (1982) (allocation and reporting requirements imposed to uphold legislative program to distribute portions of purses to horsemen); New Jersey Chamber of Commerce v. New Jersey Election Law Enforcement Comm’n, 82 N.J. 57 (1980) (judicial surgery performed upon legislation to implant threshold reporting requirements to uphold campaign reporting act).
All we need do to sustain the legislation is to emphasize that it is beyond legislative power to require of foreign corporations the full panoply of registration to be covered by our statute of limitations and that provisions of the legislation inconsistent therewith would yield to the general legislative purpose. See New Jersey State Parole Bd. v. Byrne, 93 N.J. 192 (1983); United States Chamber of Commerce v. State, 89 N.J. 131 (1982); State v. Zito, 54 N.J. 206 (1969).4 We agree that it would be unfair to apply this ruling to the parties in view of the position previously taken by the Secretary of State in Searle. Ante at 314 n. 5. However, we see no reason why the Secretary cannot accept such designations in the future. Such a reading would preserve the constitutionality of the statute.
*327III.
Because of our conclusion, we find the legislative scheme does not violate the Commerce Clause.
When, as here, Congress has not preempted the field, states may enact legislation that touches upon interstate commerce. See generally K.S.B. Technical Sales Corp. v. North Jersey District Water Supply Comm’n, 75 N.J. 272, 294-300 (1977). When a state acts to prohibit out-of-state competition, a virtually per se rule of invalidity has been applied. Philadelphia v. New Jersey, 437 U.S. 617, 624, 98 S.Ct. 2531, 2535, 57 L.Ed.2d 475, 481 (1978). See also Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 527, 55 S.Ct. 497, 502, 79 L.Ed. 1032, 1040-41 (1935). But when the legislation promotes the health, welfare and safety of its inhabitants, the analysis then requires that a determination be made as to whether the effect of the statute on interstate commerce is only incidental. If the burden is clearly excessive in relation to the local interest, the statute will be declared invalid. The extent to which a burden on interstate commerce will be tolerated depends on the nature of the local interest and on whether that local interest could be promoted in an alternative fashion without such a burden. Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174, 178 (1970). [United States Chamber of Commerce v. State, 89 N.J. at 160-61].
It is clear here that we are not dealing with a case of direct discrimination against foreign commerce. Had that been so, the United States Supreme Court would have invalidated the legislation on the first go-round. Even Justice Stevens in dissent in Searle concluded that “there is a rational basis for treating unregistered foreign corporations differently from registered corporations because they are somewhat more difficult to locate and to serve with process.” 455 U.S. at 420,102 S.Ct. at 1147, 71 L.Ed.2d at 263. The legislation has a sound and beneficial state purpose. That purpose is clear, not to favor local businesses, but to guard the citizens against loss of their rights due to the conduct of absent enterprises.
Analysis of commerce clause challenges to state regulations that are not protectionist have generally yielded broadest authority to the states.
In determining whether the state has imposed an undue burden on interstate commerce, it must be borne in mind that the Constitution when “conferring upon Congress the regulation of commerce, .. . never intended to cut the states off from legislating on all subjects relating to the health, life, and safety of their citizens, though the legislation might indirectly affect the commerce of the country.” [Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 443-44, 80 S.Ct. *328813, 815-16,4 L.Ed.2d 852, 856 (1960) (quoting Sherlock v. Ailing, 93 U.S. 99,103, 23 L.Ed. 819, 820 (1876))].
See also Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 98 S.Ct. 787, 54 L.Ed.2A 664 (1978); Southern Pacific Co. v. Arizona, 325 U.S. 761, 65 S.Ct. 1515, 89 L.Ed. 1915 (1945). The Commerce Clause is, after all, a grant of authority to Congress, not to the courts. Cf. Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292, 302, 64 S.Ct. 950, 955, 88 L.Ed. 1283,1290 (1944) (Black, J., concurring) (“The Constitution gives [Congress] the power to regulate commerce among the states, and until it acts I think we should enter the field with extreme caution”).
We should decide a constitutional burden on the basis of the case before us. Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495 & n. 7, 102 S.Ct. 1186, 1191 & n. 7, 71 L.Ed.2d 362, 369 & n. 7 (1982); In re Martin, 90 N.J. 295, 309-10 (1982); Shelton College v. State Bd. of Educ., 48 N.J. 501, 521-23 (1967). To suggest it is a disproportionate burden for a world-wide enterprise to adapt to the statute of limitations law of the State of New Jersey and to designate an agent for service of process is simply not persuasive. According to the Standard Directory of Advertisers (1982), Honda spent $21,500,000 on advertising in this country. Moody’s International reports that Honda of Japan’s sales in 1982 were $7,945,400,-000.5 The message they send to the New Jersey consumer is clear and forceful. The Legislature has asked manufacturers to send one little brief message about where they can be found in case anything goes wrong with the motorcycle.
*329The irony here is that the purpose of the Legislature, in enacting the 1949 amendments to the statute of limitations, was to put foreign corporations on an even footing with individuals. Thus a foreign corporation, which was then considered domiciled elsewhere, could gain the advantage of the New Jersey statute of limitations if it had agents for process in New Jersey. In that respect, it would be no different from an individual, partnership or unincorporated association doing business. The anomaly of the Court’s decision is that a corporation now has an advantage over an individual. The long-standing judicial construction of this statute is that even though an absent individual defendant is subject to substituted service in New Jersey, the statute still tolls. Lemke v. Bailey, 41 N.J. 295 (1963) (service in a motor vehicle case upon the Director of Motor Vehicles); cf. Guas v. Guas, 146 N.J.Super. 541 (Law Div.1977) (jurisdiction based on residence at time of accident; move to another state tolled statute). The equation of amenability with presence has never been followed by our courts.
The legislative judgment is one with which we may or may . not agree. The point is that our courts have agreed with it for a long time and the Legislature has never changed it. Lemke, 41 N.J. 295; Lackovic v. New England Paper Tube Co., Inc., 127 N.J.Super. 394 (Law Div.1974) (corporate defendant); Whalen v. Young, 28 N.J.Super. 543 (Law Div.1953), rev’d on other grounds, 15 N.J. 321 (1954) (corporate defendant); Gotheiner v. Lenihan, 20 N.J.Misc. 119 (Sup.Ct.1942); Blackmon v. Govern, 138 F.Supp. 884 (D.N.J.1956). The only contrary holding, Ferraro v. Ferro Trucking Co., 72 N.J.Super. 519 (Law Div.1962), has been discredited. See Lackovic, 127 N.J.Super. at 397-98; Hopkins v. Kelsey-Hayes, Inc., 463 F.Supp. 539, 541 (D.N.J.1978), aff’d, 628 F.2d 801 (3d Cir.1980), vacated, 455 U.S. 985, 102 S.Ct. 1605, 71 L.Ed.2d 844 (1982).
The essence of what the majority is doing is to repeal the tolling provision with respect to nonresident corporations since, as Judge Brotman pointed out in Hopkins, “the vast majority who commit torts within the state would be amenable to long-*330arm service. Without more authority, we cannot construe a state statute in a manner rendering it ineffective.” 463 F.Supp. at 542. We would not do so either.
We understand the logic of the argument that was advanced by Justice Sullivan for the dissenting members of the Court in Velmohos, 83 N.J. at 297-99, that we should take into account the jurisdictional change of long-arm service of process that has extended “to the uttermost limits permitted by the United States Constitution,” Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971), and interpret the tolling statute in accordance with that change. We respect that argument but it was rejected in Velmohos. We either stand behind that judgment or we do not.
Taken in this framework, we cannot entertain that belief of unconstitutionality beyond a reasonable doubt necessary to invalidate this legislative program. Harvey v. Essex County Bd. of Freeholders, 30 N.J. 381, 388 (1959); New Jersey Sports & Exposition Auth. v. McCrane, 119 N.J.Super. 457 (Law Div. 1971), modified and aff’d, 61 N.J. 1 appeal dismissed sub nom. East Rutherford v. New Jersey Sports & Exposition Auth., 409 U.S. 943, 93 S.Ct. 270, 34 L.Ed.2d 215 (1972). For when we base our decision upon the Constitution we leave no room for legislative cure.
IV.
Honda of Japan manufactured the motorcycle purchased by the plaintiff through Honda’s local distributor. Honda of Japan could easily and at minimal cost have designated its local dealer to accept service of process. If it had done so, it would have been “represented” in this State and the statute of limitations would not have been tolled under N.J.S.A. 2A:14-22. Honda of Japan chose to do otherwise and therefore the statute of limitations has been tolled.
Moreover, we would permit every foreign corporation to file a designation or appointment for service of process within this *331State with the Secretary of State. We conclude, therefore, that N.J.S.A. 2A:14-22 does not violate the Commerce Clause.
We would affirm the judgment.
Chief Justice WILENTZ joins in this opinion.
For reversal — Justices CLIFFORD, HANDLER, POLLOCK and GARIBALDI-4.
For affirmance — Chief Justice WILENTZ and Justices SCHREIBER and O’HERN — 3.

The comment on Rule 3:4 — 4(d) provided:
This rule is broader than, and supplants, R.S. 2:26-43 (applicable at law) and 2:29-19 (applicable to suits in chancery) which are quite dissimilar in their terms. It does not supplant R.S. 2:26-44 applicable to foreign corporations; R.S. 2:26-44 and 45 dealing with service on domestic corporations by publication; R.S. 2:26-47 to 51 (cf. R.S. 14:6-2) dealing with service on secretary of state with respect to domestic and foreign corporations; R.S. 2:26-53 to 58.1 dealing with service as to foreign insurance companies, banks and others; R.S. 49:1-17 relative to the blue sky law; R.S. 14:13-14 relative to a defunct domestic corporation. The rule follows, somewhat, Federal Civil Rule 4(d)(3) except that it omits the last twenty-five words thereof.
The rule as adopted substantially conformed to the language of the Tentative Draft, except that the provisions for unincorporated associations and partnerships became separate rules. See R. 3:4 — 4(d), (e), (f) (eff. Sept. 15, 1948).

In Cohn v. G.D. Searle & Co., 447 F.Supp. 903, 912 (D.N.J.1978), rev’d, 628 F.2d 801 (3d Cir.1980), vacated, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed.2d 250 (1982), former District Judge Meanor found “[n]othing in the legislative history or court construction of N.J.S.A. 2A:14-22 [that] supports plaintiffs’ assertion that a purpose of the statute is to penalize foreign unlicensed corporations to encourage licensure.” He extended its benefits even to corporations amenable to process, a step further than we go, and one rejected by Velmohos. In two footnotes he cautioned against excess reliance upon the sponsor’s statement.

 File ... vb ... to deliver (as a legal paper or instrument) after complying with any condition precedent (as the payment of a fee) to the proper officer for keeping on file or among the records of his office.
Record ... vb ... to make or have made an authentic official copy of (as a deed, mortgage, lease) and deposit or have deposited esp. as in an office designated by law. [Webster’s New International Dictionary 849, 1898 (3 ed. 1976)].

In this way the designation of an agent for service of process would not be converted into a submission to the general jurisdiction of our courts. It would only facilitate service over otherwise amenable defendants. In this case Honda of Japan has preserved its jurisdictional defense under WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). There is a conundrum in the argument that the foreign corporation must surrender its jurisdictional defense by registering to gain the benefit of the statute because, by definition, if it is beyond the jurisdiction of the State under World-Wide Volkswagen, it cannot be sued at all and the statute of limitations issue is irrelevant. The life of the law is not always logic.

The Appellate Division granted leave to Brinco Mining Limited to participate in the proceedings as an amicus curiae. It was a bit like inviting the fox into the hen house. Papers on file with us refer to pending litigation in the United States District Court for the District of New Jersey where its amenability to process was at issue. Like Honda, it has a direct interest in the case’s outcome and the wherewithal to comply with our tolling statute. Brinco Mining is a worldwide resource development company with 1980 income of $18,000,000. In 1980 it acquired Cassiar Resources Ltd., a Canadian processor of asbestos.