Court Opinion

ID: 6557418
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:00:44.152026+00
Date Added: 2024-06-11T15:56:16.787178
License: Public Domain

Terry, J.
(dissenting).
The question presented is narrow. Was the defendant’s predecessor doing business in the State of Michigan on or about September 10, 1934 in such a manner as to subject itself to the legal process of the Michigan Court?
In Bank of Augusta v. Earle, 13 Pet. 519, 10 L. Ed,. 274, it was laid down as then well established in legal principle that a corporation had no juristic existence outside of the State of its creation. This decision apparently closed the doors to any assumption of judicial control over foreign corporations, because there being no legal corporation in the forum. any of its representatives leaving the State of organization were stripped of their official character. Subse*501quent to this decision, and due in the main to the development of corporate enterprise upon an enormous scale, such jurisdictional renunciation as adopted was found to be not only dangerous but unfair and unjust. It became, therefore, a practical necessity for the Courts to invoke fictional concepts in order to subject a foreign corporation to suit in another State. The manner in which the principle then existing was circumvented was by an artificial theory of implied consent to exterritorial service. This theory will be found in the case of Lafayette Ins. Co. v. French, 18 How. U. S. 404, 15 L. Ed. 451, wherein the Court held that jurisdiction could be obtained over'a foreign corporation, provided the corporation had agents “doing business” or aching for it in the forum on the theory that the State having the right to exclude the corporation altogether could admit it on its implied assent or consent that it would be subject to suit therein. The reasoning in the Lafayette case was subsequently altered by the decision in the case of St. Clair v. Cox, 106 U. S. 350, 1 S. Ct. 354, 27 L. Ed. 222, wherein ' the Court made as a requisite for jurisdiction not an agent “doing business” for a foreign corporation, but that the corporation must be “doing business” in the forum. From this change in thought followed a great number of cases defining, but never with any degree of consistency, what constitutes the “doing of business.” The test of jurisdiction over a foreign corporation as announced under the St. Clair decision was whether the corporation was “doing business” in the forum in such a manner as to justify the inference that it consented to the jurisdiction thereof.
Now the essence of the doctrine of “corporate consent” is the conception that the corporation is the creature of the State where organized, and, since it is not entitled to recognition elsewhere, as a matter of right, being permitted to do business only by reason of comity or by legislative courtesy, it must be presumed to assent to the jurisdiction of the forum in return for the permission of the forum. The doc*502trine became operative only in those cases where foreign corporations failed to comply with the service statute by designating an agent upon whom service of process could be made. It is in those cases that the corporation was presumed, or by reason of its conduct an implied intent was found evidencing its consent to be bound by the law of the forum.
It was not until 1914 that a new theory of jurisdiction was announced under the designation of “corporate presence.” International Harvester Co. v. Commonwealth of Kentucky, 234 U. S. 579, 34 S. Ct. 944, 58 L. Ed. 1479. Under this doctrine fictional theories of consent were discarded, and, whenever a corporation is found carrying on the purposes for which it was organized as an artificial whole, it is deemed to be present and subject to the jurisdiction of the forum. This idea suggests that whenever a corporation is found “doing business” it may for legal purposes, be deemed present as an individual; however, when the question of presence is applied to each we find a difference. The individual by his mere presence, irrespective as to the degree of his business transactions, is subject to the jurisdiction, but for the corporation a much higher degree of presence is needed. The corporation must be “doing business” under such circumstances as to justify the inference that by reason of the representative capacity of its- agents it is present. It naturally follows that a corporation is not present within the jurisdiction when its transactions do not quite approach the “doing of business” necessary to render it amenable to the service of process.
Since the International Harvester case, the doctrine of “corporate presence” has been universally followed — even as the basis for the assumption of jurisdiction over foreign corporations not engaged in interstate commerce. In the case-sub judice jurisdiction has been stipulated, provided we conclude the defendant’s predecessor’s presence in Michi*503gan meets the requirements as announced under the doctrine of “corporate presence” as it relates to the question of “doing business.”
It has also been stipulated that there does not exist in the State of Michigan a statute defining what constitutes “doing business” in said State with respect to a foreign corporation. Therefore, it is evident that the question presented is one of federal law wherein the defendant invokes the protection of the Federal Constitution, and the problem presented is the extent of that protection as defined and applied by the Federal Court. Since the question is one of due process, we naturally turn to the decisional law as announced by the Supreme Court in search of a criterion to follow. From my study of the decisions, I find that the Supreme Court has said nothing more than each case must be determined upon its own facts, and that there exists no rule that could be said to be all embracing in its application. The manner and extent of “doing business” must be of such import as to justify the inference of actual as apart from constructive presence of the corporation, and to such an extent that it may be properly said that the corporation, through the representative capacity of its agent, is present in the State.
Although each case must be determined uppn its own facts, there are certain characteristics that we look for to indicate the carrying on of a business.
(a) The establishment and maintenance of a permanent office to which all persons having business with the corporation may come.
(b) The employment of an agent located within the State who is advertised as the general agent of the corporation for such business as it transacts in the State.
(c) The continuous making within the State of contracts binding on the corporation.
• Although the absence of one or all of the above does *504not necessarily determine the question, yet, any act or acts on the part of the corporation relied upon not including one or more should be closely scrutinized with reference to the purpose and import of the due process clause of the Constitution. Corporations constitute the backbone of American enterprise. Their continued existence is essential; likewise, their legal rights cannot be abused.
A review of Koch’s authority and acts becomes necessary. In substance they "are as follows:
(a) Koch was the soliciting agent with no power to bind the corporation.
(b) He merely obtained from the applicant an application, together with the amount of money as set forth in the statement of facts, and kept four dollars as his commission sending the balance to the corporation at its home office in Denver, Colorado for acceptance or rejection by the corporation.
(c) Upon the mailing of the application, together with the money aforesaid, the authority of the agent ended, at which time no contract had been entered into between, the parties.
Appearing in the majority opinion are the following statements:
(a) “It was presumably in Michigan that the insured died.”
(b) “It was in that state that any investigation concerning the death would be made by the defendant, if it was not satisfied with the proof of its liability, for there all the witnesses were to be found.”
I find no justification for the above presumptions as indulged in by the majority. Certainly, these statements are completely outside the facts as stipulated, and, further, in *505my opinion, do not even constitute proper inferences to be drawn therefrom. However, admitting arguendo that the statements fall within the category of proper inferences to be drawn from the facts, yet the facts do not reveal that an investigation was ever made in Michigan thus forming the basis of jurisdiction as in the case of Commercial Mutual Accident Co. v. Davis, 213 U. S. 245, 29 S. Ct. 445, 53 L. Ed. 782. The contract herein is a Colorado contract, and the record is devoid of any facts that would justify the inference that the corporation transacted any business of whatever nature in the State of Michigan other than that which was done by Koch, the agent.
Many cases have been cited by respective counsel, and many more will be found in the majority opinion. In the light of the general rule as herein stated space will not be taken to discuss them, for the reason that I have been unable to find any case with facts corresponding to the facts in this case as to make any former decision a controlling force. Some of the cases deal with soliciting alone, some deal with definite statutory provisions, while others deal with soliciting, plus the collection of premiums, adjustment of losses and other transactions in pursuance to the contract entered into between the parties, irrespective as to the nature of the contract.
The plaintiff-relies strongly upon the case of Sparks v. National Masonic Acc. Ass’n, (C. C.) 73 F. 277, even to the extent of stating that this Court could well rest its conclusion thereon. A reading of the Sparks case clearly connotes that agents, in addition to soliciting applications, acted as collecting agents of the corporation subsequent to the execution of the contract, and did in fact collect monthly installments under said contract. The Sparks case in my opinion was properly decided and is clearly distinguishable from the case sub judice.
The argument is made throughout the decisional law *506that, if- the corporation through its agent adopts and pursues a plan for the furtherance of its , business, then it becomes subject to the process of the local jurisdiction. This argument has never been accepted as a rule to be followed, for the reason that the element of degree is of necessity the yardstick of measure and must be applied to all the circumstances found in any given case.
In the case of Green v. Chicago, Burlington & Quincy Ry. Co., 205 U. S. 530, 27 S. Ct. 595, 51 L. Ed. 916, the Supreme Court said that soliciting by an agent with no authority beyond solicitation does not amount to the “doing of business” which subjects a corporation to the local jurisdiction for the purpose of service of process upon it, so it is evident that there must be more, than a plan for the furtherance of its business in the forum in order for it to be said that the corporation is “doing business” therein. Likewise, a continuous course of business in soliciting is not sufficient, as in the case of Peoples Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 87, 38 S. Ct. 233, 235, 62 L. Ed. 587, Ann. Cas. 1918C, 537, the argument was advanced that by reason of the continuous course of soliciting the defendant was doing business, and, in support of this contention, the International Harvester Co. case was cited: The Court in answering this argument stated, “but in that case .(International Harvester Co.) 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 a manner as to make the Harvester Company amenable to the process of the courts of that State.” The Court did say, however, in the Tobacco case that the mere solicitation of orders of the retail trade to be turned over to -jobbers 'without ■ authority to make sales, to *507collect money or extend credit, did not constitute the “doing of business” within the forum.
In the case of Green v. Chicago, Burlington & Quincy Ry. Co., 205 U. S. 530, 531, 27 S. Ct. 595, 51 L. Ed. 916, the defendant operated a railroad line — the eastern point of which was at Chicago and from there its tracks extended westward. The business for which it was incorporated was the carriage of freight and passengers, and the construction, maintenance and operation of a railroad for that purpose. As incidental and collateral to that business, freight and passenger traffic was solicited in other parts of the country than those through which the defendant’s tracks ran. The defendant employed an agent, hired an office for him in Philadelphia, designated him as district freight and passenger agent, and in many ways advertised to the public these facts. The business of the agent was to solicit and procure passengers and freight to be transported over the defendant’s line. For conducting this business several clerks and various travelling, passenger and freight agents were employed who reported to the agent and acted under his direction. He sold no tickets and received no payments for the transportation of freight. When a prospective passenger desired a ticket and applied to the agent for one, the agent took the applicant’s money and procured from one of the railroads running west from Philadelphia a ticket for Chicago and a prepaid order which gave to, the applicant upon his arrival at Chicago the right to receive from the defendant a ticket over its road. Occasionally he sold to railroad employees who already had tickets over the intermediate lines orders for reduced rates over the defendant’s line. In some cases, for convenience of shippers who had received bills of lading from the initial line for goods routed over the defendant’s line, he gave in exchange therefor bills of lading over the the defendant’s line. In these bills of lading it was recited that they should not be in force until the freight had actually been received by the defendant. The *508plaintiff in the action was a citizen of Pennsylvania and brought his suit in .the Circuit Court for the eastern district of Pennsylvania to recover damages for personal injuries alleged to have been incurred in Colorado through the negligence of the defendant. The Court stated in its opinion that the question presented was whether service upon the agent was sufficient, and one element of its sufficiency was whether the facts showed that the' defendant corporation was “doing business” within the district. In answer to this question the Court held that it was obvious that the,defendant was-doing in Pennsylvania a considerable business of a certain kind, although there was no carriage of freight or passengers, but that the business shown was in substance nothing more than that of solicitation, and, without formulating any general rule defining what transactions will constitute “doing business” in the sense that liability is incurred, the Court stated that there was. not enough to bring the defendant within the district so that process could be served upon it.
The majority opinion evidences disapproval of the Green decision. Quite a few courts have criticized it upon two grounds: First, they say it is impossible to determine how far the Green decision was due to the Court’s reluctance to require the defendant and its witnesses to cross the continent and defend in the East a cause of action that arose in the West. Of course, this attack is based'upon, the theory of “corporate submission.” This doctrine is predicated upon the thought that a foreign corporation by “doing business” within' a State submits itself to the laws of that State which may reasonably be applied to it, and to the jurisdiction of the State so far as the laws of the State regulating the exercise of that jurisdiction are reasonable. When analyzed the • doctrine means nothing more than when a corporation does . business in a foreign State it submits to all the reasonable laws. respecting jurisdiction — the. consent doctrine being applied where consent is applicable, and the presence doctrine being applied in cases where consent is not applicable. *509If this doctrine is to be followed, it seems to me that the corporation' would, out of necessity, have to. be found to be “doing business” in such a manner as to subject itself to the jurisdiction of the forum, and then it would follow that although jurisdiction has been acquired, yet, due to the extreme inconvenience to be suffered by the corporation in having to come to the forum to defend the action, jurisdiction will be withheld. The inconvenience to the plaintiff does not seem to me to be the criterion- under this doctrine. Second, Courts having before them facts similar to the facts in the Green case and desiring to reach a different conclusion have said that the Green case is an extreme case, or that the Green case must stand alone as being determined upon the particular facts therein presented.
It is clear in the present case that the defendant’s predecessor did not establish and maintain a permanent office in the State of Michigan to which all persons having business with the corporation could go and there transact their business. It did not employ an agent located within the State of Michigan who was advertised as the general agent of the corporation for such business as it transacted in- that' State. It did riot make any contracts whatsoever in the State of Michigan. To be sure, it transacted business in Michigan, but such transactions did not approach the “doing of business” necessary to render it amenable to service of process, therein. It was not carrying on the purposes for which it was organized as an artificial whole. The business done was not of such an import as to justify the assertion that its presence was actual as apart from constructive. Since the contract herein was not made in Michigan, and, since the corporation performed no acts in Michigan in pursuance thereof, it is difficult for me to understand the conclusion as reached by the majority that it was present. Without attempting to lay down any rule defining what constitutes “doing business” so as to determine a corporation’s presence in the forum, I am of the opinion that the defendant’s prede*510cessor was not present in the State of Michigan on or about September 10, 1934 in such a manner as to subject itself to the process of the Michigan Court, for the reason that the transactions herein amounted to nothing more in substance ~ than mere solicitation.
Since concluding the defendant’s predecessor was not present, necessity does not require a determination as to whether or not the business transacted by the agent on behalf of the corporation constituted mere isolated incidents as opposed to a continuity of operation.