Mooney Aircraft, Inc. v. Donnelly

• Decision Date: 08 November 1968
• Docket Number: No. 24507.,24507.
• Parties: MOONEY AIRCRAFT, INC., Appellant, v. Dennis J. DONNELLY, Administrator of the Estate of Joseph M. Donnelly, Deceased, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

402 F.2d 400 (1968)

MOONEY AIRCRAFT, INC., Appellant, v. Dennis J. DONNELLY, Administrator of the Estate of Joseph M. Donnelly, Deceased, Appellee.

No. 24507.

United States Court of Appeals Fifth Circuit.

September 18, 1968.

Rehearing Denied November 8, 1968.

James W. Wilson, Austin, Tex., for appellant.

Franklin S. Spears, San Antonio, Tex., for appellee.

Before RIVES, BELL and GOLDBERG, Circuit Judges.

Rehearing En Banc Denied November 8, 1968.

GOLDBERG, Circuit Judge:

State statutes authorizing service of process on corporations far from home have filled the reporter system with a cornucopia of decisions. Of these decisions, Mooney Aircraft, Inc., has had its plethoric share. In Delray Beach Aviation Corp. v. Mooney Aircraft, 5 Cir. 1964, 332 F.2d 135, cert. den., 379 U.S. 915, 85 S.Ct. 262, 13 L.Ed.2d 185, we inspected the Florida long-arm service of process statute and found that it "reaches as far as Texas." 332 F.2d at 137. Here, however, we measure the Pennsylvania long-arm service of process and find that Mooney lies outside its reach.

On June 23, 1962, Joseph M. Donnelly, a resident of Pennsylvania, died in the crash of his private aircraft near Meadowville, Virginia. In May, 1963, Dennis J. Donnelly, Administrator of the Estate of Joseph M. Donnelly, filed suit for negligence and breach of warranty against the manufacturer of the aircraft, Mooney Aircraft, a Texas corporation. The suit was filed in the United States District Court for the Western District of Pennsylvania. Although notified of the suit, Mooney chose not to enter the district court proceedings, and the administrator was subsequently awarded a default judgment in the amount of $175,000.00.

On July 1, 1964, the default judgment against Mooney was registered in the District Court for the Western District of Texas pursuant to 28 U.S.C. § 1963.¹ Mooney then filed a Motion to Quash Registration and to Quash Execution, contending that this judgment had not been brought under the jurisdiction of the Pennsylvania district court. On March 16, 1966, the Texas district court denied Mooney's motion, which action precipitated this appeal.

As provided in Fed.R.Civ.P. 4(d) (3) and (7),² the Administrator elected to serve Mooney through procedures prescribed by Pennsylvania law. Service of process was initially attempted on June 11, 1963, by personal service upon Charles E. Campbell, a Pennsylvania distributor of aircraft manufactured by Mooney. In addition, on July 5, 1963, substituted service was made on the Secretary of the Commonwealth of Pennsylvania by certified mail. Mooney does not challenge either attempt on procedural technicalities. Rather, Mooney contends that neither attempt at service was authorized by Pennsylvania law.

We need not search far for an authoritative commentary of Pennsylvania law as it relates to the issues at bar. On November 14, 1967, the Pennsylvania Supreme Court handed down yet another Mooney long-arm decision, Myers v. Mooney Aircraft, 1967, 429 Pa. 177, 240 A.2d 505, involving two similar actions in the state courts caused by the crash of another of Mooney's airplanes. In one of the actions, instituted by the executor of the estate of Helen E. Myers, the pilot, Mooney filed preliminary objections denying personal jurisdiction (over two and one-half years after service was made); the Court of Common Pleas overruled such objections; and Mooney appealed to the Pennsylvania Supreme Court. In the other action, instituted by the executor of the estate of Maurice F. Wilhere, the passenger accompanying Myers, Mooney filed no appearance or answer; a default judgment was taken by the plaintiff; Mooney, one year later, filed a petition to strike off the default judgment for lack of personal jurisdiction; the court denied such motion; and Mooney appealed. The Myers and Wilhere cases were consolidated on appeal. In both actions the record before the Pennsylvania Supreme Court consisted solely of certain depositions, affidavits, and exhibits which had been introduced in the Donnelly controversy at bar. Therefore, our analysis of both attempts by the Administrator to serve Mooney will be founded upon the respective statutes as interpreted by the Pennsylvania opinion.

I. Substituted Service on the Secretary of the Commonwealth, July 5, 1963

Section 1011, subd. B of the Pennsylvania Business Corporation law of 1933, 15 P.S. § 2852-1011, subd. B, authorizes the Secretary of the Commonwealth to accept substituted service of process for "any foreign business corporation which shall have done any business in this Commonwealth, without procuring a certificate of authority to do so from the Department of State." However, on July 5, 1963, when the administrator's attempt was made, the availability of such service was severely restricted in that the statute allowed substituted service only in an "action arising out of acts or omissions of such corporation within this Commonwealth."³ (An amendment to the statute, which became effective August 13, 1963, omitted the "acts or omissions" requirement and prescribed substituted service as now authorized "in any action arising within this Commonwealth,"⁴ but, as we shall discuss, such amendment is inapplicable to the case at bar.)

The Pennsylvania court in Myers, as well as the district court below, found affirmatively that Mooney, which had obtained no certificate of authority from the Department of State, was "doing business" as that term was used in Section 1011, subd. B and defined in Section 1011, subd. C.⁵ Mooney does not contest this finding on appeal. Instead, it stresses that none of the "acts or omissions" which precipitated this suit occurred in Pennsylvania and, therefore, that the substituted service on July 5, 1963, was void for lack of statutory authority. The district court below accepted Mooney's defense, relying on Rufo v. Bastian-Blessing Company, 1961, 405 Pa. 12, 173 A.2d 123, in which the Pennsylvania Supreme Court held:

"The question is not where the injury occurred or where the cause of action arose; where did the company\'s negligent acts or omissions take place?" 173 A.2d at 127.

See also Frisch v. Alexson Equipment Corp., 1966, 423 Pa. 247, 224 A.2d 183, 187.

In Myers the Pennsylvania Supreme Court acknowledged the Rufo holding as the law before August 13, 1963 (see 240 A.2d at 508 n. 5) even though it ruled that service after that date would be judged by the more pervasive amendment. In the case at bar no service was attempted after August 13, 1963, and so the Myers refinement is inapplicable. We thus affirm that portion of the district court's opinion which denied the validity of the July 5 substituted service.

II. Personal Service Upon Charles E. Campbell, June 11, 1963

Rule 2180(a) (2) of the Pennsylvania Rules of Civil Procedure, 12 P.S. Appendix authorizes service of process upon a corporation by personal service upon an agent or person who, for the time being, is in charge of an office or usual place of business of that corporation.⁶ The district court in the case at bar held that the June 11, 1963, personal service upon Charles E. Campbell satisfied the requirements of Rule 2180(a) (2). We must reexamine that finding in light of the express holding by the Pennsylvania Supreme Court that Campbell's counterpart in the Myers litigation, Henry S. Weber, was not an agent of Mooney but rather was an independent contractor. 240 A.2d at 512.

We turn first to the Pennsylvania decision, in which the relationship between Mooney and Weber was set out as follows:

"Summarized, the court below found that: Mooney manufactures aircraft and aircraft parts at Kerrville, Texas, and with each new aircraft furnishes a written warranty for replacement of defective parts; Mooney in Pennsylvania had two distributors each of whom had a distinct and separate area of endeavor and one of whom was Henry Weber in Lancaster; Weber, as a Mooney distributor, had certain definite obligations such as (a) providing warranty service free of charge to Pennsylvania purchasers of Mooney products, (b) advertising himself as a Mooney representative by a large sign `Mooney\' above his place of business and displaying `Mooney\' signs and displays, (c) soliciting and appointing dealers to sell Mooney products, (d) maintaining adequate sales facilities, sales staff, etc. to advertise and promote Mooney sales in his territory, (e) owning at least one Mooney demonstrator aircraft of each current model, (f) purchasing at least four new aircraft from Mooney each year and (g) maintaining a comfortable pilot lounge and private sales office identified by a lighted `Mooney\' sign; between 1958 and 1964, Mooney products sales in Pennsylvania totalled $2,274,000 of which Weber sold $1,416,000; Mooney employs regional sales managers who make numerous trips into Pennsylvania and makes available to its two Pennsylvania distributors the assistance of its experts in various fields; since 1959 Weber has dealt exclusively in Mooney aircraft; Mooney assists its distributors in financing aircraft purchases from it by making known the availability of certain banks who would finance Mooney aircraft. Such, in capsule form, constitutes the extent of Mooney\'s contacts in Pennsylvania." 240 A.2d at 510.

The Court then discussed the concept of "doing business" under Sections 1011, subds. B and C, after which it returned to a consideration of the service upon Weber. In words that do not need interpretive commentary, the Court held that Weber's relationship with Mooney did not create 2180 agency:

"Service of process in both actions was made under Rule 2180(a) (2) by handing a copy of the process to Henry Weber as `an agent or person for the time being in charge of, and only at, any office or usual place of business of the corporation or similar entity\'.

Initially, we express our agreement with the statement of the court below that: `Plaintiff\'s service upon Weber as the person in charge of Mooney\'s usual

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