Frene v. Louisville Cement Co.

• Decision Date: 25 January 1943
• Docket Number: No. 8009.,8009.
• Citation: 134 F.2d 511,77 US App. DC 129
• Parties: FRENE et al. v. LOUISVILLE CEMENT CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

77 US App. DC 129, 134 F.2d 511 (1943)

FRENE et al. v. LOUISVILLE CEMENT CO.

No. 8009.

United States Court of Appeals for the District of Columbia.

Decided January 25, 1943.

Mr. Vincent L. Toomey, of Washington, D. C., for appellants.

Mr. George E. Hamilton, Jr., with whom Messrs. George E. Hamilton, John J. Hamilton, and Henry R. Gower, all of Washington, D. C., were on the brief, for appellee.

Before STEPHENS, EDGERTON, and RUTLEDGE, Associate Justices.

RUTLEDGE, Associate Justice.

The special appeal is from a judgment quashing the service of process upon the defendant, appellee here, a Kentucky corporation.

Plaintiffs' suit for damages was founded on defendant's alleged false representations inducing them to use its product "Brixment" in constructing their residence in Washington. Brixment was represented as a waterproofed mortar or cement used in masonry work. Process was served by delivery to defendant's employee, C. E. Lovewell, within the District of Columbia. Appearing specially, defendant moved to quash the service on the ground it was not doing or transacting business within the District at or prior to the time of service, within the meaning of Section 13-103, D.C.Code 1940. After hearing upon affidavits and the testimony of Lovewell, the court made findings of fact and conclusions of law in defendant's favor and entered judgment accordingly.

The principal questions are whether Section 13-103 is applicable to the facts of this case and, if so, is valid in this application. On the record this comes down to whether Lovewell's activities on defendant's behalf constitute "doing business" or "transacting business" within the District so as to make it amenable to process in this jurisdiction. We think the answer should be in the affirmative and the judgment should be reversed.

Section 13-103 is as follows:

"In actions against foreign corporations doing business in the District all process may be served on the agent of such corporation or person conducting its business, or, in case he is absent and can not be found, by leaving a copy at the principal place of business in the District, or, if there be no such place of business, by leaving the same at the place of business or residence of such agent in said District, and such service shall be effectual to bring the corporation before the court.

"When a foreign corporation shall transact business in the District without having any place of business or resident agent therein, service upon any officer or agent or employee of such corporation in the District shall be effectual as to suits growing out of contracts entered into or to be performed, in whole or in part, in the District of Columbia or growing out of any tort committed in the said District."

The facts are largely undisputed. Defendant is a Kentucky corporation. Its principal office and place of business are at Louisville in that state. It maintains no office or place of business in the District of Columbia. Defendant's business is selling cement and cement products, including Brixment. Lovewell resides in Chevy Chase, Maryland, a suburb of Washington. His telephone number, which is displayed together with his home address, his name and defendant's, upon his business card, is listed in the Washington directory. There is no evidence he or defendant has any other in this vicinity. Lovewell is a graduate engineer and uses this training in his work for the defendant, to which he devotes his entire time. He has authority to solicit orders for defendant's products, and his territory comprises all of Maryland, except the two western counties, the District of Columbia, and the eastern part of Virginia. He spends two-thirds to three-fourths of his time in Washington, which he characterizes as "the biggest market in my territory." The volume of business must be considerable in view of his statement: "We sell quite a quantity of this material * * *. If this were a nice construction day, there would be literally hundreds of jobs going on in the District of Columbia using our material."

According to the evidence for defendant, Lovewell had no authority to conclude contracts or make binding sales. When he secured orders he forwarded them to the home office in Louisville where they were accepted or rejected. Shipments on orders accepted were made "in interstate commerce" to building supply dealers in the vicinity of the job, who in turn supplied them to contractors or other consumers. In this case the order was stimulated by Lovewell's energetic selling methods, but the shipment by defendant was to the Hudson Supply and Equipment Company, a Washington dealer, which billed and delivered the merchandise to the plaintiffs. Defendant asserts that Lovewell's authority over orders he transmits ceases with that act and his duties to the company respecting them end then.

However, it is admitted that he frequently visits jobs in course of construction where the defendant's products are being used. On these occasions he "would note the manner in which the products were being installed or used and if any difficulties were being experienced, he would make suggestions as to how to overcome them; he would also go over any complaints with regard to the materials" and report them to the home office. He had no authority finally to make adjustments or compromises. Lovewell called at the plaintiffs' house three or four times during the course of construction and "half a dozen times" at another job then being done in the District for the Government. In connection with the latter, he took specimens of the work to government agents "for testing purposes * * * to have approval by the Government." During these visits he inspected the work as it progressed, saw that the Brixment was properly mixed, was being properly spread, was being used as the defendant intended, and pointed out the values of different brick textures and bondings when used with Brixment. According to the plaintiff Leo Frene, Lovewell carefully looked over the plans and specifications for his house, "visited the work regularly while in course of construction, and pointed out minor and major details to the brickmasons." Frene also stated he knew "of many other jobs where said Lovewell has not alone sold the Brixment, but has participated in and exhibited his engineering ability and fitness in order to promote and advance the general scheme of the work."

Lovewell testified that his employer "told me to go on the job and see how they are progressing, how they like the material, how they are satisfied with it, and so forth" and "the idea is to use my best judgment in promoting satisfactory use of this material." The record further shows that Lovewell regularly secured information for his employer from various governmental agencies and departments, including the Bureau of Standards, the Procurement Division of the Treasury Department, and the Government Printing Office. He admitted this work called upon "his engineering ability and not his sales ability," that it related in part to specific matters affecting his employer's work, such as failure of its materials to pass government specification with resulting throwback by the contractor, and that the defendant would write instructing him to check up on the matter. He was useful also in securing more general information.

All this activity subsequent to the soliciting phase of his work defendant and Lovewell say constituted no part of his duty to itself or authority granted by it. On the contrary it is said this work was done entirely on Lovewell's initiative and "with the exception of the solicitation of orders for the products of the Company he has no authority to represent said Louisville Cement Company in any wise whatsoever." Lovewell testified, in support of this view, that his work, after the sale is effected, is "just to maintain the good relations between ourselves, as a producer of a product, and the user," but this was not part of his duties to the defendant and he "did not think" it would be a breach of his employment if he should fail to visit any of "a hundred jobs going on." Uncertainty regarding this, however, is reflected variously in his testimony that the phases of his work following solicitation proper were done "only in a reporting capacity," "merely of my own discretion," and "No duty, no sir — not unless I am told to go and see the man or call on the job." The record discloses a convenient vagueness of memory when Lovewell was pressed for details concerning his actual performance of these parts of his work.

The trial court accepted defendant's view of the nature of Lovewell's activities, first, while he was testifying in response to inquiry concerning what he did in connection with a sale after it was effected, by stating: "I do not think what you do is important. It is what you are authorized and directed to do by your corporation and what they expect you to do." And in its memorandum opinion the court said that "all the duties that he performed in Washington were tied in with the matter of soliciting business," concluding that the services rendered after delivery "would not in any sense be the business of the company," since they were not required by it, but rather were his own work which "would help him get additional orders."

The findings of fact reflect these views, as does the conclusion of law. They are set forth in the margin.¹ In brief the position taken by defendant and the trial court is that Lovewell's activities, including what he did in the stage of performance of defendant's obligations, constitute nothing more than "mere solicitation" of business and, under the controlling authorities,² this is not sufficient to bring the defendant within the reach of judicial process in a suit brought against it in personam in this jurisdiction. Implicit in this position are two subordinate, but hardly consistent propositions: first, that Lovewell's activities after the stage of...