Electrical Equipment Company v. Hamm

• Decision Date: 22 December 1954
• Docket Number: No. 15021.,15021.
• Citation: 217 F.2d 656
• Parties: ELECTRICAL EQUIPMENT COMPANY, Inc., Appellant, v. DANIEL HAMM DRAYAGE COMPANY, d/b/a Daniel Hamm Company, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

217 F.2d 656 (1954)

ELECTRICAL EQUIPMENT COMPANY, Inc., Appellant, v. DANIEL HAMM DRAYAGE COMPANY, d/b/a Daniel Hamm Company, Appellee.

No. 15021.

United States Court of Appeals Eighth Circuit.

December 22, 1954.

Walter A. Newport Jr., Davenport, Iowa (Wayne G. Cook, John E. Nagle, and Cook, Blair & Balluff, Davenport, Iowa, on the brief), for appellant.

J. Francis Phelan, Fort Madison, Iowa (Ernest E. Baker, L. A. Robertson, St. Louis, Mo., Johnson & Phelan, Fort Madison, Iowa, and Alexander & Robertson, St. Louis, Mo., on the brief), for appellee.

Before GARDNER, Chief Judge, and COLLET and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal from a final judgment dismissing plaintiff's complaint for want of jurisdiction. Defendant (appellee) is a Missouri corporation. Process was served upon it in Iowa by service on the Secretary of State on June 25, 1953, who, in turn, sent copy of summons and complaint to defendant by registered mail addressed to it at its home office in St. Louis, said service being in the manner directed by section 494.2, subsection 6, Iowa Code Annotated.¹ A foreign corporation transacting business in Iowa is required by section 494.1, Iowa Code Annotated,² to apply for a permit. Rule 4(d) (3) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides for service on foreign corporations by serving an authorized resident officer or agent. Rule 4(d) (7) provides:

"(d) Summons: Personal Service. The summons and complaint shall be served together. The plaintiff shall furnish the person making service with such copies as are necessary. Service shall be made as follows: * * *

"(7) Upon a defendant of any class referred to in paragraph (1) or (3) of this subdivision of this rule, it is also sufficient if the summons and complaint are served in the manner prescribed by any statute of the United States or in the manner prescribed by the law of the state in which the service is made for the service of summons or other like process upon any such defendant in an action brought in the courts of general jurisdiction of that state."

Defendant filed a motion to quash service and dismiss the complaint on the ground that it was a foreign corporation and that it had not been served with process in the manner provided by the Federal Rules of Civil Procedure, that it had not transacted business in Iowa within the meaning of Chapter 494 of the Iowa Code, and, consequently, the Secretary of State of Iowa is not an agent authorized by statute to receive service of process as an agent of the defendant.

In the record appear answers of defendant to plaintiff's interrogatories, and depositions of the defendant's employees, Keough, sales manager; Lammering, superintendent of work done in Iowa; Cripps, rigger foreman; and Dallwitz, general foreman at home office, taken pursuant to Rule 34. The record discloses that defendant's principal business is the moving of heavy machinery and equipment. It contracted to move two 40-ton frequency changers for plaintiff from the DuPont plant at Fort Madison, Iowa, to flat cars on an adjoining siding. Keough, defendant's authorized representative, made several visits to Iowa to solicit the contract of employment entered into. Subsequently, the defendant sent to Iowa a foreman, a rigger foreman, and heavy equipment needed to perform the work. Its general superintendent was in Iowa twice to check on the work. Iowa workmen were employed and were paid in Iowa by checks issued in St. Louis. Lumber and other materials and gas and oil were purchased in Iowa. Skids and ramps were built to facilitate the moving of the frequency changers, and necessary repairs were made on defendant's equipment during the progress of the Iowa work. No office was maintained in Iowa, but necessary records were kept by the foreman in his rented Iowa living quarters. The contract called only for the defendant to properly load the frequency changers upon the flat cars, defendant being under no obligation in connection with their further transportation.

Plaintiff's cause of action is based on the alleged negligence of the defendant in loading and failing to properly secure a frequency changer on the flat car, as the result of which it fell to the ground and was damaged.

During the past five years defendant has been in Iowa to do three pieces of work, including the one hereinabove described, each of which involved similar moving of frequency changers. All of this work was done consecutively and the time consumed to do the three jobs was about five and one-half weeks. Defendant worked on plaintiff's contract for approximately a week before the accident. Defendant has done no work in Iowa since October of 1952. Defendant has authority to move its trucks and equipment in eight states including Iowa, and does a considerable amount of business outside of its home state.

The trial court sustained defendant's motion to quash the service and dismiss the complaint upon the basis that the record did not show defendant was doing business in Iowa to such an extent that it may be said to have been present in the state at the time of service.

The record clearly shows that the defendant is a Missouri corporation, that it never appointed a process agent in Iowa, and that it has never made application for a permit to do business in Iowa. The decisive issue in this case then is whether defendant was doing business in the state of Iowa to such an extent as to make it amenable to process in Iowa.

If defendant was actually doing business in Iowa, and hence required to comply with Chapter 494 of the Iowa Code, such compliance will be conclusively presumed to justify the service of process made. Darling Stores Corporation v. Young Realty Co., 8 Cir., 121 F.2d 112, 116; Nickerson v. Warren City Tank & Boiler Co., D.C.E.D.Pa., 223 F. 843. In the Darling Stores case, supra, 121 F.2d at page 116, the court said:

"* * * Perhaps the clearest and most exhaustive statement of the Supreme Court of Iowa with respect to the policy of the State of Iowa in relationship to such statutes is found in Sparks v. National Masonic Acc. Ass\'n, 100 Iowa 458, 69 N.W. 678, 682, construing a Missouri statute similar in its provisions to the Iowa statute upon the same subject-matter. It is there held a foreign company which is shown to have transacted business in the state cannot question the validity of the service of process upon it on the ground that it has not complied with the law, such compliance being conclusively presumed from the fact of doing business in the state. With respect to this phase of the question the Supreme Court of Iowa said:

"`There can be no valid reason why this company, which voluntarily entered the state of Missouri, and solicited and obtained business there, in defiance of the laws of that state, should be permitted to shield itself from liability in this action behind the very illegal act by means of which it was enabled to obtain the money of the deceased. To so hold would be equivalent to offering a premium for the continuance of such illegal practices.\'"

Accordingly, if the defendant was actually doing business in Iowa, it would be conclusively presumed to have complied with the pertinent Iowa statutes to justify the service of process made in this case.

The question of whether a corporation is doing business in a state so as to be subject to the jurisdiction of the courts thereof is one of fact, and is ordinarily to be determined according to the facts of each individual case rather than by the application of fixed or definite rules. 20 C.J.S., Corporations § 1920, p. 151; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 86, 38 S.Ct. 233, 62 L.Ed. 587; International Harvester Co. of America v. Commonwealth of Kentucky, 234 U.S. 579, 583, 34 S.Ct. 944, 58 L.Ed. 1479; In Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 142, Judge L. Hand, after analyzing some of the cases on the subject, states, "It is quite impossible to establish any rule from the decided cases; we must step from tuft to tuft across the morass." In the last cited case the decision is based, at least in part, on the estimate of the inconveniences which would result to the corporation from a trial away from home. In International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, the Supreme Court holds that an estimate of inconvenience is relevant in determining the problem, citing as authority the Hutchinson case. In Echeverry v. Kellogg Switchboard & Supply Co., 2 Cir., 175 F.2d 900, 902-903, it is stated:

"The published decisions on what constitutes `doing business\' in a State by a foreign corporation are literally legion. Yet, in spite of this vast array of judicial authority, border-line cases still have to be decided each on its own peculiar set of facts, which too often cannot be fitted into a stereotyped pattern. In this field realism, not formalism, should be dominant; the problem must be solved in the light of commercial actuality, not in the aura of juristic semantics. In United States v. Scophony Corporation, 333 U.S. 795, 810, 68 S.Ct. 855, 863, 92 L.Ed. 1091, Mr. Justice Rutledge spoke of `the practical, nontechnical, business standard.\'"

Some general standards have, however, been established. In People's Tobacco Co. v. American Tobacco Co., supra, 246 U.S. at page 87, 38 S.Ct. at page 235, it is said:

"The general rule deducible from all our decisions is that the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state or district where service is attempted."

In International Shoe Co. v. Washington, supra, 326 U.S. at pages 316-319, 66 S.Ct. at page 158, the Court reviews many cases on the subject now under consideration, and lays down a number of guides for determining our present problem,...