Gravely Motor Plow & Cultivator Co. v. HV Carter Co.

Decision Date28 December 1951
Docket NumberNo. 12844.,12844.
Citation193 F.2d 158
PartiesGRAVELY MOTOR PLOW & CULTIVATOR CO. v. H. V. CARTER CO., Inc.
CourtU.S. Court of Appeals — Ninth Circuit

Samuel S. Stevens, F. Whitney Tenney, Eugene S. Clifford and Heller, Ehrman, White & McAuliffe, all of San Francisco, Cal., for appellant.

David Freidenrich and Carroll, Davis & Freidenrich, all of San Francisco, Cal., for appellee.

Before DENMAN, Chief Judge, and BONE and POPE, Circuit Judges.

DENMAN, Chief Judge.

This is an appeal from a judgment awarding damages to appellee, hereafter called Carter Co., a California corporation, on a finding that the appellant, hereafter called Gravely Co., a West Virginia corporation, had broken its contract to deliver certain tractors to Carter Co.

Gravely Co. contends that no contract was entered into with Carter Co. for delivery to it of the tractors. Underlying this contention, Gravely claims that the district court lacked jurisdiction in personam over it because a service of summons on one John W. Heinen, general manager of Gravely Pacific, Inc., a corporate subsidiary of Gravely Co., was not a service on it, and that the court erred in denying its motion to quash that service.

We agree that the district court lacked such jurisdiction in personam. This is the view of the judge of the district court, who tried the case on its merits, but who held to the contrary because he felt that he was bound by the prior decision of another judge who had held the service to be a valid one on the Gravely Co.

The burden of proving a jurisdictional service within the California law is upon Carter Co. We agree with Gravely Co.'s contention that Carter Co. has not proved that Gravely Co., in the process of the sale and delivery of its tractors, was doing business in the State of California at the time of the purported service of summons relied upon.

A number of the exhibits in this case have been lost, but on the evidence we have before us, there is nothing to show that the tractors were not delivered to Pacific Co. at their place of manufacture in West Virginia with the title there passing to Pacific Co. and their transportation by rail or otherwise to California being by the agent of Pacific Co. We are not confronted with a case where Gravely Co. employed the railroad to deliver its tractors to Pacific Co. in California, transferring title in California, and hence are not required to determine the validity of a contention that such a transaction is doing business within the State of California within the meaning of California cases cited by Carter Co.

Carter's further contentions are (a) that Heinen was Gravely Co.'s agent for the service of summons and (b) that Pacific Co. is the alter ego of Gravely Co. and hence that the service on Heinen, valid as to Pacific Co., is upon Gravely Co.

(a) Gravely Co. had in California no designated agent, nor a president or other head of that corporation, nor a vice president, secretary or assistant secretary or general manager, persons named for the service of summons by § 6500 of the Corporations Code.1

The statute's remaining serviceable person must be one which Gravely Co. has "authorized to receive service of process". Carter Co. claims that Heinen as general manager of Gravely Pacific, Inc. is a person "authorized" by Gravely Co. to receive the service. There is no evidence that such an authorization was directly given him by Gravely. Carter Co. contends that the relationship between the two corporations warranted the district court inferring such an authorization as the basis of its denial of the motion to quash.

That motion was submitted on affidavits without viva voce testimony. They show that Gravely Co. owns the majority of the stock of Gravely Pacific, Inc., hereinafter called Pacific, Inc., a West Virginia corporation, having a chief office in South Charleston, West Virginia, and its principal place of business in California. Each corporation employs separate personnel, the books of account and other records of each corporation are kept at their respective offices, and each corporation has separate auditors. Each corporation has separate capitalization, issues separate financial statements and files separate income tax returns.

Gravely Co. sells tractors to Pacific Inc., which resells and delivers them to its Pacific Inc.'s customers there. The contract in evidence between the two parties states that Pacific Inc. is not the agent of Gravely in such sales. The contract specifically provides that "the distributor Pacific, Inc. is an independent contractor and is not empowered in any shape or form to bind Gravely Co. the manufacturer."

It appears that one D. Ray Hall, the president of Pacific, Inc., was also president of Gravely Co. Hall resided in Dunbar, West Virginia and had not been in California since 1945. Though the evidence does not show it, Carter Co. contends that Hall, in all likelihood, would be advised by letter from Heinen of the latter's receipt of the summons in February, 1947. Carter Co. says further that this is a sufficient service on Gravely Co. to bring it within the statement of Thew Shovel Co. v. Superior Court, 35 Cal.App.2d 183, 191, 95 P.2d 149, 154, as follows: "Having determined that the corporation petitioner was doing business in this state at the time of the service of the summons, the only question now before us is whether or not the party served was an official of sufficient representative capacity to insure the corporation defendant's being duly and regularly advised of the pendency of the Hudson action in order that proper appearance could be made therein. The party served was a vice-president and in addition thereto presumably acquainted with the general aspects of the case; he had for a period during his stay in California for pleasure assumed the role of an official in an attempt to transact the business of adjusting a claim against the corporation of which he was an officer. The purpose of section 406a, Civil Code, is fulfilled if one an officer of sufficient dignity is served to reasonably assure notice to the corporation. * * An officer of a foreign corporation present in this state on official business relating to the matter upon which he is served is amenable to process." (Bracketed matter and emphasis supplied.)

It is apparent that the person "of sufficient dignity" referred to, is one who is an officer of the corporation to be served. Since Heinen had no official or employee relationship with Gravely Co., the fact that Heinen might tell an officer of the Gravely Co. that he, Heinen, received a summons is not transferring the service to that...

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