Bach v. Friden Calculating Mach. Co.

• Decision Date: 07 April 1948
• Docket Number: No. 10556.,10556.
• Citation: 167 F.2d 679
• Parties: BACH et al. v. FRIDEN CALCULATING MACH. CO., Inc.
• Court: U.S. Court of Appeals — Sixth Circuit

167 F.2d 679 (1948)

BACH et al. v. FRIDEN CALCULATING MACH. CO., Inc.

No. 10556.

Circuit Court of Appeals, Sixth Circuit.

April 7, 1948.

Nelson Schwab, Jr., of Cincinnati, Ohio (Joseph S. Graydon, Joseph H. Head, Hugh McD. Ritchey and Nelson Schwab, Jr., all of Cincinnati, Ohio, on the brief; Graydon, Head & Ritchey, of Cincinnati, Ohio, of counsel), for appellants.

Carl M. Jacobs, of Cincinnati, Ohio (Carl M. Jacobs and Carl Phares, both of Cincinnati, Ohio, on the brief; Frost & Jacobs of Cincinnati, Ohio, of counsel), for appellee.

Before ALLEN, MARTIN and McALLISTER, Circuit Judges.

MARTIN, Circuit Judge.

This prolonged litigation has been before us on two previous occasions. Its former appearances are reported in Bach v. Friden, 6 Cir., 148 F.2d 407, and Bach v. Friden, 6 Cir., 155 F.2d 361. In the instant case, the district court sustained the motion of appellee to quash the return of service of summons. The consequence is that, on the present appeal, the only question to be answered is whether the appellee, a California corporation, so transacted its business in Ohio as to make valid and effective service of process upon the particular person served as its "managing agent."

This action was instituted in the United States District Court for the Southern District of Ohio. The Federal Rules of Civil Procedure authorize, under prescribed condition, service of process upon the managing agent of a foreign corporation, Rule 4(d) (3), 28 U.S.C.A. following section 723c; and permit service of process, not only in the manner prescribed by any statute of the United States, but also in the manner prescribed by the laws of the state in which the service is made, Rule 4(d) (7).

Ohio General Code, Section 11290, provides: "When the defendant is a foreign corporation, having a managing agent in this state, the service may be upon such agent." The courts of Ohio have declared that this statute should be liberally construed to facilitate the obtaining of jurisdiction over a foreign corporation doing business in Ohio, where a citizen of that state seeks redress upon a transaction with such foreign corporation. Simonson v. Gulf Refining Co., Com. Pl., 9 Ohio Supp. 81; 23 O.O. 486, Israel v. Champion Shoe Machinery Co., 25 Ohio N.P. (N.S.) 507. This liberality of interpretation was indulged, in the cases cited, in construing the activities of representative of foreign corporations as those of a "managing agent." See also Sprung v. E. I. du Pont de Nemours & Co., Ohio App., 34 N.E.2d 41, 16 O.O. 352, appeal dismissed, 136 Ohio St. 94, 23 N.E.2d 947; Beach v. Kerr Turbine Co., D.C.N.D. Ohio, 243 F. 706, 711; Toledo Computing Scale Co. v. Computing Scale Co., 6 Cir., 142 F. 919, 922. In the last cited case, this court sustained the action of the trial judge in overruling a motion to dismiss, made upon the ground that the person served was not a managing agent of the foreign corporation sued in the United States District Court. Judge Severens commented upon the liberality of interpretation which had been accorded the Ohio statute by the Supreme Court of that state.

In well prepared briefs, containing elaborate citation and discussion of authorities, attorneys for the contending parties have presented their conflicting conclusions. Myriads of opinions have been published upon the often debated issue of the validity of service of process upon foreign corporations in varying factual settings. There would seem to be no benefit to be derived from an extended discussion of other cases merely to point out circumstances either analogous to or distinguishable from those confronted in the case at bar. We would refer to an erudite opinion upon the general topic written by Judge now Mr. Justice Rutledge in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 515, 146 A.L.R. 926, wherein he asserted that the fundamental principle underlying the "doing business" concept seems to be the maintenance within the jurisdiction of a regular, continuous course of business activities, whether or not inclusive of the final stage of contracting; and that very little more than "mere solicitation" is now required to effectuate the result that a foreign corporation is "present" in a state for jurisdictional purposes. We see no guiding light in two opinions of this court which have been stressed by appellee. Mathews Conveyer Co. v. Palmer-Bee Co., 6 Cir., 135 F.2d 73; Ken-Rad Corporation v. R. C. Bohannan, Inc., 6 Cir., 80 F.2d 251. In neither case was an issue of service of process involved. Both cases are, moreover, plainly differentiable upon their facts from the over-all situation confronted here.

Two of the earlier opinions which may be found interesting for comparison here are Carroll Electric Co. v. Freed-Eisemann Radio Corp., 60 App.D.C. 228, 50 F.2d 993 (D.C.App.); and Real Silk Hosiery Mills v. Philadelphia Knitting Mills Co., 3 Cir., 46 F.2d 25. Two recent opinions reversing district court orders which quashed service of progress on foreign corporations are illuminative: that of Judge Evan Evans in Clover Leaf Freight Lines, Inc. v. Pacific Coast Wholesalers Association, 7 Cir., 166 F.2d 626, and that of Judge Learned Hand in Hyman Bomze et al. v. Nardis Sportswear, Inc., 2 Cir., 165 F.2d 33. Each jurist placed emphasis, as we do, upon the import and controlling effect of the opinion of Chief Justice Stone in International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.

In our own case of Lasky v. Norfolk & W. Ry. Co., 6 Cir., 157 F.2d 674, the district court had set aside the service of a summons and dismissed the case, where the service had been made upon the agent of a railway company, no part of its lines being located within the district in which the action was brought. The railway company, however, maintained an office within the district for the solicitation of freight and passenger business, and service of the summons was made upon its district manager there. We reversed, upon the authority of the International Shoe Company case, supra, pointing to the holding there that a foreign corporation, systematically and continuously employing residents of a state to canvass for orders, may be sued in the state canvassed. We called attention to the elaborate review of the authorities by the Chief Justice and to his statement that the "presence" of a corporation in a state, other than that of its origin, as well as within the borders of that state, can be manifested only by activities carried on in its behalf by those authorized to act for it; and that such contacts of a corporation as make it reasonable, in the context of our federal system of government, to require the corporation to defend a particular suit brought elsewhere than in the state which chartered it may satisfy the demands of due process.

It was not to be doubted that the opinion of the Supreme Court in the International Shoe Company case manifested a broadened viewpoint toward the right of citizens to sue a non-resident corporation by service of process upon its representatives, whose activities formerly frequently were considered not to constitute "doing business" by the corporation or to render it "present" for jurisdictional purposes within the state of the forum. Chief Justice Stone asserted that the boundary line between activities which justify the subjection of a corporation to suit and those which do not cannot be simply mechanical or quantitative; that the test is not merely whether the activity which the corporation has seen fit to secure through its agents in another state is a little more or a little less; but that whether due process is satisfied must depend rather upon the quality and nature of the activity in relation...