Court Opinion

ID: 6903661
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:57:33.7002+00
Date Added: 2024-06-11T16:06:15.194783
License: Public Domain

KALODNER, Circuit Judge
(dissenting).
While it is true that the issue presented by this appeal will not arise in the future by reason of the provisions of Section 1391(c) of revised Title 28 U.S.C.A., effective September 1, 1948, I am constrained to dissent because of the manifest importance of the problem to the parties concerned in the instant litigation.
Neither the Neirbo nor the Gulf Oil cases cited by the majority are dispositive of the issue. In both cases the defendant corporations were registered to do business in New York under a statute which required them to have an agent within that State for service for any suit without regard to where the cause of action arose.
Under the General Corporation Law of New York, the Courts there have held that, as to foreign corporations doing business in New York, they have jurisdiction over causes of action arising out of transactions in other states even though both *417plaintiff and defendant are non-residents of New York. The exercise of such jurisdiction is, however, a matter of discretion. Gregonis v. Philadelphia & Reading Coal & Iron Co., 1923, 235 N.Y. 152, 160, 139 N.E. 223, 32 A.L.R. 1; Murnan v. Wabash R. Co., 1927, 246 N.Y. 244, 158 N.E. 508, 54 A.L.R. 1522.
In the Neirbo case, the issue was merely whether the consent given by the defendant corporation to be sued in the Courts of the State of New York under its foreign corporation registration legislation extended to the federal courts sitting in that State. Parenthetically, it may be noted that the cause of action arose in New York. In the Gulf Oil case, the questions presented were (1) whether the United States District Court had inherent power to dismiss a suit where jurisdiction and venue existed under the doctrine of forum non conveniens, and (2) if so, whether the power was abused under the circumstances.
In the instant appeal, the sole issue is whether under the Pennsylvania Business Corporation Law there is jurisdiction in the Courts of that State, and therefore in the federal courts under the Neirbo decision, where the cause of action arose outside of Pennsylvania and both plaintiff and defendant are non-residents of that State.
While it is true that the Pennsylvania Courts have not ruled specifically on the question in controversy, we are, nevertheless, not free to apply the statute in any other manner than in accordance with (1) such construction as we find the Courts of Pennsylvania would place upon it, or (2) in absence of an express statement by the Pennsylvania Courts, such rules of construction that the United States Supreme Court says we ought to apply in the situation presented.
There is an indication in Kraus v. American Tobacco Co., 1925, 283 Pa. 146, 129 A. 60, that the scope of the statute is limited to specific situations. Thus, the Court there said, 283 Pa. at page 150, 129 A. 61:
“Here, the Commonwealth, whose officer is named as agent, has an interest to be served, by affording convenience to its citizens in bringing suit against a foreign corporation while the latter is located for business purposes within the confines of the State; * * (Emphasis supplied.)
Moreover, in the absence of a specific delineation of the scope of the statute by the Pennsylvania Courts, a restrained interpretation is required to exclude from the operation of the Act such suits as that sub judice. Robert Mitchell Furniture Co. v. Selden Breck Construction Co., 1921, 257 U.S. 213, 42 S.Ct. 84, 65 L.Ed. 201; Mis-ouri Pacific R. Co. v. Clarendon Boat Oar Co., Inc., 1922, 257 U.S. 533, 42 S.Ct. 210, 66 L.Ed. 354; Morris & Co. v. Skandi-navia Ins. Co., 1929, 279 U.S. 405, 49 S.Ct. page 85 of 42 S.Ct.:
In the Mitchell Furniture Co. case, the Court said, pages 215-216 of 257 U.S., at page 85 of 42 S.Ct.:
“The purpose in requiring the appointment of such an agent is primarily to secure local jurisdiction in respect of business transacted within the State. Of course when a foreign corporation appoints one as required by statute it takes the risk of the construction that will be put upon the statute and the scope of the agency by the State Court. Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93, 37 S.Ct. 344, 61 L.Ed. 610. * * * Unlessi the state law either expressly or by local construction gives to the appointment a larger scope, ive should not construe it to extend to suits in respect of business transacted by the foreign corporation elsewhere, at least if begun, as this was, when the long previous appointment of the agent is the only ground for imputing to the defendant an even technical presence. * * * ” (Emphasis supplied.)
And in the Missouri Pacific case, the Court said, at page 535 of 257 U.S., at page 211 of 42 S.Ct:
“Still less is it incumbent upon a state in furnishing such process to make the jurisdiction over the foreign corporation wide enough to include the adjudication of transitory actions not arising in the state. Indeed, so clear is this that in dealing with statutes providing for service upon foreign corporations doing business in the state upon agents whose designa*418tion as such is especially required, this court has indicated a leaning toward a construction, where possible, that would exclude from their operation causes of action not 'arising in the business done by them in the state. * * * ” (Emphasis supplied.)
Again, in the Morris case, it said, 279 U.S. pp. 408-409, 49 S.Ct. p. 361:
“The purpose of state statutes requiring the appointment by foreign corporations of agents upon whom process may be served is primarily to subject them to the jurisdiction of local courts in controversies growing out of transactions within the State. * * * And, in the absence of language compelling -it, such a statute ought not to be construed to impose upon the courts of the state the duty, or to give them power, to take cases arising out of transactions so foreign to its interests. The service of the summons cannot be sustained.” (Emphasis supplied.)
That the Supreme Court still adheres to the views above expressed is evident from the following statement in the Neirbo case, at page 170 of 308 U.S., at page 155 of 60 S.Ct.:
“Men’s minds had become habituated to corporate activities which crossed state lines. The fact that corporations did do business outside their originating bounds made intolerable their immunity from suit in the states of their activities. And so they were required by legislatures to designate agents for service of process m return for the privilege of doing local business.” (Emphasis supplied.)
The well established principles above quoted dictate to me the conclusion to be reached in this case. There is, however, another persuasive reason for ■ disagreeing with the majority.
The majority adopts the view that the statutory language, “ * * * as long as any liability remains outstanding against the corporation m this Commonwealth * * * ”, is simply a time limitation “so" that the designation cannot be withdrawn while local liability" exists”. In short, there is a very broad agency designation which must continue in effect so long as there is any outstanding “local liability’’ of the corporation in Pennsylvania.
The difficulty I find with this approach is that the availability of the corporation in Pennsylvania to one not a resident thereof who wishes to sue on a cause of action not arising therein may very well depend upon whether the corporation has an outstanding “local liability”. Thus, a plaintiff may be put in the position of having to prove that a “local liability” exists— even though it be to someone other than the plaintiff — where a foreign corporation has otherwise sought to terminate the designation by withdrawing its registration under the Pennsylvania law; for, by hypothesis, so long as a “local liability” exists, the corporation cannot withdraw the broad agency with which, the majority says, it invested the state officer. Certainly there is nothing in the statute to warrant the conclusion that such a double standard was intended. And only a construction of the statute complying with the rule quoted above from the cases in the United States Supreme Court would give it a uniformity of application.
For the reasons stated, the decision of the District Court should be affirmed.