Canadian Pac. Ry. Co. v. Sullivan, 3689.

• Decision Date: 02 March 1942
• Docket Number: No. 3689.,3689.
• Citation: 126 F.2d 433
• Parties: CANADIAN PAC. RY. CO. v. SULLIVAN et al.
• Court: U.S. Court of Appeals — First Circuit

126 F.2d 433 (1942)

CANADIAN PAC. RY. CO. v. SULLIVAN et al.

No. 3689.

Circuit Court of Appeals, First Circuit.

March 2, 1942.

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Richard W. Hall, of Boston, Mass., for appellant.

Edward B. Hanify, of Boston, Mass. (Henry W. Lawlor and Richard B. Johnson, both of Boston, Mass., H. William Radovsky, of Fall River, Mass., and Ropes, Gray, Best, Coolidge & Rugg, of Boston, Mass., on the brief), for appellees.

Before MAGRUDER, MAHONEY, and WOODBURY, JJ.

WOODBURY, Circuit Judge.

One of the two actions of tort consolidated for this appeal was brought by Dennis and Margaret Sullivan, as ascendent heirs, to recover for the death of their daughter Annie who was killed when an automobile she was driving was struck by one of the defendant's locomotives on a grade crossing in Yamachiche in the Province of Quebec, Dominion of Canada. The other was brought by Margaret Sullivan individually to recover for personal injuries sustained by her in the same accident.

Both actions were commenced by trustee process in which the New York, New Haven and Hartford Railroad Company and the Boston and Maine Railroad were named as trustees.¹ The writs in each case were returnable in the Superior Court of the Commonwealth of Massachusetts for Bristol County, the County in which the decedent was and the plaintiffs are bona fide life-long residents. After service of process on the trustees in the usual way, the writs were served on the Commissioner of Corporations of the Commonwealth of Massachusetts, as agent of the defendant for service of process, in accordance with the provisions of Massachusetts General Laws (Ter.Ed.) c. 181, § 3,² which, so far as material, is copied in the margin.

The defendant is a Canadian corporation and the District Court found that "Years ago, the defendant in writing appointed the Commissioner of Corporations and Taxation and his successor in office as its attorney upon whom all lawful process might be served, and agreed that the process so served should be of the same force as if served on the corporation. This appointment was never revoked."

After entry, the defendant, appearing specially, moved to dismiss each case for lack of service. Thereafter, but seasonably, the defendant still appearing specially, filed answers in abatement denying the jurisdiction of the court, answers on the merits, and petitions to remove the actions into the United States District Court for the District of Massachusetts on the ground of diversity of citizenship and an amount in controversy, exclusive of interest and costs, in excess of the statutory amount.

The petitions to remove were granted and the District Court, after hearing, overruled the defendant's motions to dismiss and answers in abatement. A trial by jury thereafter, in which the actions were consolidated, resulted in a verdict for the plaintiffs in the first action for $8,000 and one for the plaintiff in the second action for $2,000. The District Court ordered personal judgments on these verdicts and the defendant appealed. The points upon which it relies are that the court below "erred in ruling that service on the Commissioner of Corporations was valid to subject this defendant to the jurisdiction of the courts of the Commonwealth of Massachusetts or the courts of the United States for the District of Massachusetts", and that the court also erred in denying its motions for directed verdicts, for judgments notwithstanding the verdicts, and for new trials.

The service of process upon the Commissioner of Corporations as agent for the principal defendant was made in the way provided by the statute. This appears to be conceded, and we therefore proceed directly to the jurisdictional question involved, which, in this case, is a two-fold one. It is, first, did the Massachusetts legislature intend its statute to apply to cases like the present in which recovery is sought on a cause of action which not only arose outside the Commonwealth, but which also was wholly unconnected with any business done there by a defendant; and, second, if the legislature did so intend, can the statute be constitutionally applied to this defendant? We address ourselves first to the question of the scope of the statute.

This is a question of state law (Pennsylvania Fire Ins. Co. v. Gold Issue Mining Co., 243 U.S. 93, 37 S.Ct. 344, 61 L. Ed. 610; see also Davis v. Farmers' Co-operative Co., 262 U.S. 312, 43 S.Ct. 556, 67 L. Ed. 996; Louisville & Nashville R. R. Co. v. Chatters, 279 U.S. 320, 325, 49 S.Ct. 329, 73 L.Ed. 711) which, although direct authority appears to be lacking, we believe should be answered in the affirmative. We base our conclusion upon the decision of the Massachusetts Supreme Judicial Court in Johnston v. Trade Insurance Co., 132 Mass. 432, and also upon the decisions of that court construing § 38 of c. 223 of the Massachusetts General Laws to be referred to hereafter.

In Johnston v. Trade Insurance Company, the court had before it an action by a citizen of Delaware against a New Jersey corporation to recover upon a policy of insurance issued in Pennsylvania upon property situated in Delaware. Service in the action had been made upon the insurance commissioner of Massachusetts under a statute, with which the defendant had complied, requiring foreign insurance companies, before doing business in Massachusetts, to appoint the insurance commissioner their attorney "upon whom all lawful processes, in any action or proceeding against the company, may be served with like effect as if the company existed in this Commonwealth." The court, after holding that the plaintiff, although a non-resident might sue in Massachusetts, construed the above quoted statute as broad enough to authorize service in transitory actions brought to recover on a contract even though the contract was made and the property to which it related was situated in another state. This holding persuades us that the same court would construe the language of the statute under which service was made in the case at bar as broad enough to authorize service in transitory actions of tort brought against a foreign corporation to recover on a cause of action which arose outside the Commonwealth and was not in any way connected with the corporation's local business.

This view is reinforced by the Massachusetts cases construing Section 38 of c. 223 of the General Laws of Massachusetts (Ter.Ed.).³ This statute provides an alternative method for service of process upon foreign corporations and the Massachusetts Court has held that service under it may be made in cases which not only arose outside of the state, but which also did not arise out of any business transacted locally. Reynolds v. Missouri, Kansas & Texas Ry. Co., 228 Mass. 584, 117 N.E. 913; Trojan Engineering Corp. v. Green Mountain Power Corp., 293 Mass. 377, 383, 200 N.E. 117. Thus, if in the case at bar service had been made upon Hart (he was the manager of the defendant's local office), it would have been good under the statute providing for such service. The Massachusetts Court so held in Stein v. Canadian Pacific Ry. Co., 298 Mass. 479, 11 N.E.2d 457, a case in principle on all fours with the one before us. This being so, there is every reason to believe that the Massachusetts Court would hold that service in a similar case made upon the Commissioner of Corporations, as was done in the case at bar under § 3, of c. 181, would also be valid. We see no reason why one method of service should be held to be valid in actions like the present and the alternative method of service should not. The foregoing considerations lead us to believe that the Massachusetts Court would interpret the statute under consideration to include actions like the present in so far as constitutional limitations permit. Thurman v. Chicago, M. & St. P. Ry. Co., 254 Mass. 569, 151 N.E. 63, 46 A.L.R. 563.

This brings us to the constitutional questions involved, and these questions are still open to the defendant in spite of its having designated the Commissioner of Corporations as its agent to receive service, as required by the Massachusetts statute. "It is established that a corporation, by seeking and obtaining permission to do business in a state, does not thereby become bound to comply with, or estopped from objecting to, the enforcement of its enactments that conflict with the Constitution of the United States." Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 400, 401, 48 S.Ct. 553, 554, 72 L.Ed. 927; Power Mfg. Co. v. Saunders, 274 U.S. 490, 47 S.Ct. 678, 71 L.Ed. 1165.

Two constitutional provisions are involved, — the due process clause and the commerce clause. We shall consider the applicability of the due process clause first.

In Green v. Chicago, Burlington & Quincy Ry. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, the Supreme Court of the United States held that under this clause a foreign corporation could not be subjected to suit in a state in which it did business only to the extent of employing a local agent whose only duty was to solicit business to be transacted elsewhere. But this case, if it is still the law (see International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479; Hutchinson v. Chase & Gilbert, Inc., 2 Cir., 45 F.2d 139, 141), is not in point for the reason that the defendant in the case at bar did more in Massachusetts than merely to solicit. With respect to the nature and extent of this business the District Court made the following findings:

"The defendant called Louis R. Hart, on whose testimony I find that as an employee of the defendant, in charge of its passenger office in Boston, his duties were to solicit passenger business for the defendant, to supervise a staff of solicitors, to make up, issue and receive money for tickets, and to arrange for the transportation of passengers. He conferred with local ticket agents of other companies concerning travel and accommodations, gave them advice...