Toedman v. Nooter Corp.

Decision Date09 March 1957
Docket NumberNo. 40220,40220
PartiesNeil L. TOEDMAN, Director of Revenue, State Commission of Revenue and Taxation, Appellant, v. NOOTER CORPORATION, Appellee.
CourtKansas Supreme Court

Syllabus by the Court.

In an action against a foreign corporation which did not have authority to do business in this state and had not appointed the Secretary of State as agent upon whom service of summons could be had to collect a use tax, where service was had upon the corporation under the provisions of G.S.1949 17-509, under all the facts and circumstances stated in this opinion the defendant was actually doing business in the state as defined by G.S.1949, 17-506, and the court erred in quashing the service.

Michael A. Barbara, Topeka, Paul Hurd, Topeka, on the brief, for appellant.

William B. McElhenny, Topeka, Willard N. VanSlyck, Jr., Clayton E. Kline, M. F. Cosgrove, and Robert E. Russell, Topeka, on the brief, for appellee.

HALL, Justice.

This action was brought by the Director of Revenue of the State Commission of Revenue and Taxation to collect state use taxes assessed by the Commission against the Nooter Corporation, a foreign corporation, not authorized to do business in this state. The trial court sustained a motion of defendant corporation to quash the service of summons. The director has appealed. Service was attempted pursuant to G.S.1949, 17-509. It provides in part as follows:

'In the event of any foreign corporation doing business within the state of Kansas, and failing to appoint the secretary of state as agent upon whom service of summons or other process can be had, or failing to file in the office of the secretary of state duly certified copies of its charter, or failing to pay the license as required by law, any person having any cause of action against such foreign corporation, which cause of action arose in Kansas out of the said foreign corporation's doing business within the state of Kansas, or while such foreign corporation was doing business within the state of Kansas, may file suit against such foreign corporation in the county in this state where such cause of action arose, or in the county in which the plaintiff may reside, and service of summons or any process upon the secretary of state shall be sufficient to warrant the rendition of personal judgment against said corporation.'

The remainder of the section is not important to the decision here because it is conceded that all the procedural steps under the statute were properly taken.

It will be noted the applicability of this section depends on whether the corporation, upon which service is sought, pursuant to it, was or was not doing business in the state. Our inquiry is--Was the defendant corporation doing business in this state? Here we must first consider G.S.1949, 17-506. That section provides as follows:

'Every corporation organized under the laws of another state, territory or foreign country that has an office or place of business within this state, or a distributing point herein, or that delivers its wares or products to resident agents for sale, delivery, or distribution, shall be held to be doing business in this state within the meaning of this act.'

The defendant argues here and the trial court held the transaction in question could not be interpreted in such a manner as to hold defendant was doing business within the state, as defined by G.S.1949, 17-506. Upon that theory the defendant moved to quash the service of summons and the court sustained it. The court said:

'* * * I have come to the conclusion that the transaction involved in this action cannot be interpreted in such a manner as to find that the defendant corporation was doing business within the state as defined in Section 17-506 of the Revised Statutes of Kansas of 1949. It is my judgment that the authorities clearly hold that this transaction is merely a part of an interstate transaction and that service cannot be had upon the defendant in the manner obtained in this case.'

At the hearing on the motion to quash, the defendant supported it by affidavits of two officers of the company. Plaintiff objected to this, served notice and took depositions at the office of the defendant at St. Louis.

There really is no dispute as to the ultimate facts in this case. An examination of the contract between defendant and Leonard Construction Company and the testimony of officers of defendant as to what it agreed to do in this state and how the work was carried on is as follows:

Defendant Nooter Corporation, a subcontractor, with its plant located at St. Louis, Missouri, entered into a contract with the Leonard Construction Company of St. Louis, Missouri, the general contractor. The contract was to erect a plant for the Eagle Pitcher Lead Company at Galena, Kansas. Defendant agreed with Leonard to fabricate at its St. Louis plant certain storage tanks and accessories and to erect them at Galena. Construction began about August 24, 1953, and was completed about December 30, 1953, with final tests and acceptance from February 3, 1954 to February 16, 1954.

Defendant agreed with the Leonard Construction Company to provide all the material and perform all of the work furnishing, fabricating, delivering and erecting a Contract Sulfuric Acid Plant for Eagle Pitcher at Galena, Kansas; the price was $253,833; that before any payment should be made defendant should submit evidence that all payrolls, material, bills and other indebtedness had been paid and that any and all sales and use taxes, which might be levied upon the work or upon any materials furnished, were included in the contract price unless otherwise provided in the agreement; that the subcontractor should pay all contributions or taxes measured by the wages of his employees, which might be assessed for old age security, unemployment insurance by the federal government and any state having jurisdiction and agreed to accept exclusive liability for such contributions and taxes; the subcontractor agreed to provide and pay compensation for injuries and occupational diseases sustained by any of his employees arising out of or in the course of his employment in accordance with the laws of any state having jurisdiction and to carry insurance fully itself; that the subcontractor should carry public liability insurance in the amount of not less than $100,000 to protect himself, the general contractor, architect, engineer and the owner against all claims for damages for personal injuries arising from operations carried on by the subcontractors; that the subcontractor should provide for property damage insurance in the amount of $100,000 to protect the owner, the general contractor, the architect and the engineer from any loss in suits; that the subcontractor should elect to become an employer as that term was defined under the unemployment compensation laws of Kansas; that the field erection was based upon A. F. of L. labor rates governing in Galena and on a forty-hour week. (Emphasis ours.)

The first witness whose deposition was taken testified, identifying the above contract; that the work was done pursuant to it and the work was typical of that done by defendant.

The other witness testified that he was vice president in charge of construction for defendant and supervisor of the work at Galena; that defendant brought into the state welding machines, electric hoists and braces for scaffolds; that they rented in Galena a crane, a big rig and some other equipment; that they shipped the steel plates to Galena, welded them and sometimes tested the vessels; the pieces were shipped knocked down and assembled at Galena; that pending construction the material was stored as near the foundations as possible; that they hired from thirteen to twenty men from around Galena; that they paid the men by check, and usually had an account in a local bank, but might have had it in Joplin on this occasion; that usually the customer would furnish some kind of a room for the men to change clothes; that they had some phone calls and usually handled them through the Leonard Construction office; they had no city telephone listing; they mailed their paper work in care of Leonard Construction at a post office box; the time of workmen was taken on the job; the men made out the time sheets at night at home; that Clampitt, the foreman, carried the blue prints around in his hip pocket and if he wanted...

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12 cases
  • Woodring v. Hall
    • United States
    • United States State Supreme Court of Kansas
    • March 9, 1968
    ...158, cert. den. 30 Ill.2d 627, cert. den., Rupe v. Wallace, 380 U.S. 964, 85 S.Ct. 1108, 14 L.Ed.2d 154.) See, also, Toedman v. Nooter Corporation, 180 Kan. 703, on p. 707, 308 P.2d 138, on p. 142, and the quotation from 20 C.J.S. Corporations § 1920; 5 Washburn L.J. pp. 246-248; 13 Kan.L.R......
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    ...be considered in conjunction with and cumulative of the method of service upon nonqualified foreign corporations. Toedman v. Nooter Corporation, 180 Kan. 703, 308 P.2d 138, 143.' Doing The facts are not materially in dispute on the issue as to whether Cessna was 'doing business' in Idaho. 1......
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    • June 19, 1963
    ...considered in conjunction with and cumulative of the method of service upon non-qualified foreign corporations. Toedman v. Nooter Corporation, 180 Kan. 703, 308 P.2d 138, 143. Ford relies principally upon Fletcher, Cyclopedia of Corporations (Perm.Ed.), and upon Goodman v. Leitman, 20 Misc.......
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