Ark-La Feed & Fertilizer Co. v. Marco Chemical Co.

• Citation: 292 F.2d 197
• Decision Date: 26 June 1961
• Docket Number: No. 16614.,16614.
• Parties: ARK-LA FEED & FERTILIZER COMPANY, Appellant, v. MARCO CHEMICAL COMPANY, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

292 F.2d 197 (1961)

ARK-LA FEED & FERTILIZER COMPANY, Appellant, v. MARCO CHEMICAL COMPANY, Appellee.

No. 16614.

United States Court of Appeals Eighth Circuit.

June 26, 1961.

Oliver M. Clegg, Magnolia, Ark., Keith, Clegg & Eckert, Magnolia, Ark., on the brief, for appellant.

J. W. Barron, Little Rock, Ark., for appellee.

Before VOGEL and BLACKMUN, Circuit Judges, and BECK, District Judge.

BECK, District Judge.

This appeal, in a diversity suit, is from a final judgment quashing service of the summons and the complaint on the ground that the activities of the defendant corporation within Arkansas were not such as to permit service of process on the Secretary of State under Arkansas law.¹

The factual situation, relied on by both parties, except as shown in the footnote, and submitted as being material on all of the issues raised by the motion are agreed on and settled by stipulation and may be summarized as follows:

That Marco Chemical Company, the appellee, defendant below, hereinafter referred to as Marco, is a foreign corporation, organized and existing under the laws of Texas with its office in Fort Worth of that state. It is principally engaged in selling animal feeds and ingredients therefor, including a product used as an additive and known in the trade as B-75. Marco, at no time, has had, nor at the time this action arose, did it have or maintain in the state of Arkansas, any office, branch office, warehouse or any place of business whatsoever. Neither has it, within that state, had, or maintained any physical facilities, or any stock of merchandise, nor does it own or lease real or personal property therein situated. It has no bank account in that state and none of its salesmen, agents or representatives are residents thereof. Its dealings with the appellant, Ark-La Feed & Fertilizer Company of Magnolia, Arkansas, the plaintiff below, hereinafter referred to as Ark-La, followed a pattern under which Ark-La ordered the Marco products either by telephoning Marco's Fort Worth Office or by mail addressed to that place. Prices to Ark-La on the B-75 were on a F.O.B. Fort Worth basis, on all others, F.O.B., Magnolia. Payments were either by drawing and depositing in Fort Worth by Marco of drafts on Ark-La, or by its checks mailed to Marco at Fort Worth. Deliveries were direct from the Fort Worth plant to Ark-La at Magnolia, in Marco's own trucks manned by its drivers and the unloading into Ark-La's receiving tanks by a pumping process operated from the Marco trucks and by its drivers. Those drivers did not collect as they made delivery and had no authority to do so.

Another provision in the stipulation not covered by the foregoing summary is as follows:

"Defendant mailed from its office in Fort Worth, Texas to plaintiff Ark-La Feed & Fertilizer Company a copy of a drawing showing a proposed layout of pipes and tanks for receiving B-75 * * *".²

And one more, treated by counsel for Marco as immaterial, agreed on however as being true, but introduced into the record as though defendant had objected to its admissibility on grounds of immateriality and irrelevancy, provides:

"In compliance with Act 108 of 1951 of the General Assembly of Arkansas, defendant has registered with the Arkansas State Plant Board such of its products as it may have occasion to ship into Arkansas and which are required to be registered under said Act, and has filed the quarterly tonnage reports as required by said Act. The current registration is dated June 18, 1956. A true copy of the tonnage report so filed for the quarter ending December 31, 1959, is hereto attached as Exhibit "C". Said registration was accomplished by mail from Fort Worth, Texas to the Plant Board in Little Rock, Arkansas, while the quarterly reports were likewise mailed from Fort Worth, Texas to the Plant Board in Little Rock, accompanied by Marco\'s remittance covering the statutory inspection fee at the rate of ten cents per ton."

The District Judge alluding to and relying on his earlier decision in McAvoy v. Texas Eastern Transmission Corp., D.C.W.D.Ark.1960, 185 F.Supp. 784, and the authorities therein relied on, declared himself not convinced that the highest court in Arkansas was prepared to go as far as International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L. Ed. 95, and seemingly that this record required the application of the rules adhered to in Crawford v. Louisville Silo & Tank Co., 166 Ark. 88, 265 S.W. 355, Citizens' Union National Bank v. Thweatt, 166 Ark. 269, 265 S.W. 955 and Rodgers v. Howard, 1949, 215 Ark. 43, 219 S.W. 2d 240. With that holding he rejected as of little or any significance the fact of the situs of the alleged damage in this case having been in Arkansas, while in McAvoy he concluded otherwise as he said 185 F.Supp. 790:

"* * * had the explosion of the pipeline occurred here, the Court might be able to say, as a matter of Arkansas Law, that jurisdiction with respect to Rockwell exists * * *."

That difference and the emphasis given to it in McAvoy, in part are reasons, according to Ark-La's counsel why the results below should have been otherwise and therefore to be reversed.

"Historically", said the court, in International Shoe and as part of the background for the rule there announced as reported in 326 U.S. 310, 66 S.Ct. 158, 90 L.Ed. 95, 161 A.L.R. 1057:

"* * * the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant\'s person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U.S. 733, 24 L. Ed. 565, 572. But now that the capias ad respondum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.\' Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283, 132 A.L.R. 1357. See Holmes, J., in McDonald v. Mabee, 243 U.S. 90, 91, 37 S.Ct. 343, 61 L.Ed. 608, 609, L.R.A.1917F, 458. Compare Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316, 319, 63 S.Ct. 602, 604, 606, 87 L.Ed. 777, 781, 783, 145 A.L.R. 1113. See Blackmer v. United States, 284 U. S. 421, 52 S.Ct. 252, 76 L.Ed. 375; Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091; Young v. Masci, 289 U.S. 253, 53 S.Ct. 599, 77 L.Ed. 1158, 88 A.L.R. 170."

Such contacts by a noncomplying corporation are now under the impact of free flowing commerce and exigencies thereby created regarded as fully satisfied if its activities are continuous and systematic and such as to give rise to the liabilities asserted in the suit. International Shoe Co. v. Washington, supra, St. Clair v. Cox, 106 U.S. 350, 355, 1 S.Ct. 354, 27 L.Ed. 222; Connecticut Mutual Life Insurance Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569, Pennsylvania Lumbermen's Mutual Fire Insurance Co. v. Meyer, 197 U.S. 407, 414, 415, 25 S.Ct. 483, 49 L.Ed. 810, Commercial Mutual Accident Co. v. Davis, 213 U.S. 245, 255, 256, 29 S.Ct. 445, 53 L.Ed. 782, International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S. Ct. 944, 58 L.Ed. 1479 and St. Louis S. W. R. Co. v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486.

But while a state under that rule has a right to elect to what extent it will allow modifications of Pennoyer v. Neff, supra, and permit the activity within the state standards to control, it is not required to do so. A state can continue adherence to the earlier expressed concepts, but on the other hand, it may, if it affirmatively chooses to do so follow the more liberal rule or others more demanding. As said in Perkins v. Benguet Mining Co., 342 U.S. 437, 72 S.Ct. 413, 418, 96 L.Ed. 485:

"Using the tests mentioned above we find no requirement of federal due process that either prohibits Ohio from opening its courts to the cause of action here presented or compels Ohio to do so. This conforms to the realistic reasoning in International Shoe Co. v. Washington * * *."

Again, in Partin v. Michaels Art Bronze Co., 3 Cir., 1953, 202 F.2d 541, 542:

"Because a state may exercise jurisdiction it does not follow that it does do so, much less that it must. `A state does not necessarily exercise judicial jurisdiction through any particular court, and it may not choose to exercise the judicial jurisdiction which it has through any court.\' Restatement, Conflict of Laws, § 73, Comment a. `The existence of jurisdiction in a state does not depend upon its exercise. A state may have jurisdiction although it never exercises it.\' Restatement, Conflict of Laws, § 46, Comment f.

"This requirement that the state provide for the exercise of jurisdiction in a particular set of circumstances is emphasized by the language of Restatement, Judgments, §§ 22 and 23. Section 22 provides:

"`A court by proper service of process may acquire jurisdiction over an individual not domiciled within the State who carries on a business in the State, as to causes of action arising out of the business done in the State, if a statute of the State so provides at the time when the cause of action arises.\' (Italics supplied.)

"Section 23 provides:

"`A court by proper service of process may acquire jurisdiction over an individual not domiciled within the State who does acts or owns things in a State which are of a sort dangerous to life or property, as to causes of action arising out of such acts or such ownership, if a statute of the State so provides at the time when the cause of action arises.\'" (Italics supplied.)

Hence, we are in the first instance, not concerned if "doing of business", "performing of work" or "service", are terms embraced by Marco's operations within Arkansas, but only with the question, has...