Smyth v. Twin State Imp. Corp.

• Decision Date: 01 May 1951
• Docket Number: No. 1025,1025
• Court: Vermont Supreme Court
• Parties: , 25 A.L.R.2d 1193 SMYTH v. TWIN STATE IMPROVEMENT CORP.

Page 664

80 A.2d 664

116 Vt. 569, 25 A.L.R.2d 1193

SMYTH v. TWIN STATE IMPROVEMENT CORP.

No. 1025.

Supreme Court of Vermont.

May 1, 1951.

Bloomer & Bloomer, Rutland, for plaintiff.

Charles J. Marro, Rutland, for defendant.

Before SHERBURNE, C. J., and JEFFORDS, CLEARY, ADAMS and BLACKMER, JJ.

BLACKMER, Justice.

This is an action of tort. The complaint sets forth these facts. The plaintiff, a resident of Rutland, this state, owned and occupied a house therein. The defendant, a builder and roofer by trade, endeavored to re-roof the house and put metal edgings on the sides thereof. While so doing it negligently placed holes in the roof and sides of the buildings which caused it to leak water, with specified damage to the plaintiff.

The defendant is a foreign corporation. Service on it was made by delivering a copy of the writ to the Secretary of State as process agent for the defendant under V.S.1947, § 1562; by forwarding a copy of the process, with the officer's return thereon showing such service, to the foreign corporation by registered mail at its principal place of business in Massachusetts, where it is incorporated, and by filing with the process an affidavit of compliance, both as required by V.S.1947, § 1563. The defendant appeared specially and moved to dismiss on the grounds (1) that the complaint did not show the commission of a tort in Vermont, as required by V.S.1947, § 1562; and (2) that V.S.1947, § 1562 is unconstitutional. After hearing the motion to dismiss was granted for want of allegation in the plaintiff's complaint of the requisite jurisdictional facts; the constitutional question was neither reached nor considered. The plaintiff carries her exceptions here.

The defendant seeks to support the ruling on the ground that the complaint does not allege the existence of a duty on the part of the defendant to the plaintiff. It is well established that before liability attaches for negligence such a duty must arise. Coburn v. Village of Swanton, 94 Vt. 168, 170, 109 A. 854; Terrill v. Spaulding, 115 Vt. 342, 346, 61 A.2d 611; Trudo v. Lazarus, 116 Vt. 221, 223, 73 A.2d 306; Agosta v. Granite City Real Estate Co., Inc., Vt., 80 A.2d 534.

The defendant thinks that if any duty existed it must have arisen under some contract. The complaint is silent as to any contract; for all that appears the defendant was a volunteer, grantuitously making repairs. But if it was, that is not fatal to the plaintiff's case. Even a volunteer or a stranger is liable for an injury negligently inflicted on the property of another; the law imposes an obligation upon everyone who attempts to do anything for another, even gratuitously, to exercise some degree of care and skill in the performance of what he has undertaken, for nonperformance of which duty an action lies. 38 Am.Jur.Negligence, § 17; 65 C.J.S., Negligence, § 4b; Restatement of the Law of Torts, Vol. 2, § 323(1) and Comment a. thereto. The ground upon which the trial court placed its ruling is not sound.

The second claim of the defendant, viz., that V.S.1947, § 1562 is unconstitutional presents a question of much more consequence, and much greater difficulty. The argument is that the statute 'abrogates the general rule' which is said to be that single or isolated acts will not ordinarily be regarded as such a doing or carrying on of business as to subject a foreign corporation to the jurisdiction of a state court via the medium of substituted service. It is not questioned that the method of notice employed by V.S.1947, § 1563 is reasonably calculated to give actual notice to the defendant of the pendency of the litigation; that subject is not a topic of discussion herein.

V.S.1947, § 1562, which is the focus of the defendant's attack reads as follows: '1562. Doing business, definition, service of process. If a foreign corporation makes a contract with a resident of Vermont to be performed in whole or in part by either party in Vermont, or if such foreign corporation commits a tort in whole or in part in Vermont against a resident of Vermont, such acts shall be deemed to be doing business in Vermont by such foreign corporation and shall be deemed equivalent to the appointment by such foreign corporation of the secretary of the state of Vermont and his successors to be its true and lawful attorney upon whom may be served all lawful process in any actions or proceedings against such foreign corporation arising from or growing out of such contract or tort. The making of such contract or the committing of such tort shall be deemed to be the agreement of such foreign corporation that any process against it which is so served upon the secretary of state shall be of the same legal force and effect as if served on the foreign corporation at its principal place of business in the state or county where it is incorporated and according to the law of that state or county.'

In our examination we shall limit ourselves to the precise problem presented: Has the State of Vermont the power to subject by statute to the jurisdiction of its courts a foreign corporation which commits a single tort in whole within the territorial limits of Vermont and against a resident of Vermont to actions and proceedings against it arising from or growing out of such tort? Does such a statute violate the due process clause of the Fourteenth Amendment to the Constitution of the United States of America?

The treatment must begin with International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. Prior to that case the power of a state to render a personal judgment against a foreign corporation was based on various concepts, the courts most often referring to 'implied consent' by the corporation to the exercise of jurisdiction, or to the 'presence' of the corporation wherever its activities are carried on. Under either fiction the extent of the activities of the foreign corporation within the state of the forum is of importance. The phrase 'doing business', so often used by the courts, expresses a conclusion of fact and denotes the result of a policy judgment. 16 U.Chi.L.Rev. 523, 524.

These fictions were expressly discarded by the United States Supreme Court speaking through Chief Justice Stone, in International Shoe Co. v. State of Washington, supra, 326 U.S. 316, 317, 66 S.Ct. 158. For them was substituted the test that the foreign corporation is required to have 'certain minimum contacts with it [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice''. 326 U.S. 316, 66 S.Ct. 158. The demands of due process 'may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.' 326 U.S. 317, 66 S.Ct. 158.

International Shoe Co. v. State of Washington notices, 326 U.S. at 318, 66 S.Ct. at page 159, that 'the commission of some single or occasional acts of the corporate agent in a state sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it, Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372'. The phraseology used hardly constitutes an enthusiastic endorsement of the case cited. Moreover the Rosenberg case appears to have involved contractual liability, whereas the instant case is concerned with tortious activity. The International Shoe case then goes on at page 318 of 326 U.S., at page 159 of 66 S.Ct. to point out that 'other such acts, because of their nature and quality and the circumstances of their commission, may be deemed sufficient to render the corporation liable to suit' citing cases. We emphasize that the cases cited illustrate the proposition that continuous activity within the state is not necessary as a prerequisite to jurisdiction.

We are of the opinion that the United States Supreme Court has left undecided whether isolated tortious activity could result in a proper subjection of a foreign corporation to suit in the forum when the cause of action arose out of that activity; no generally applicable standards can be ascertained from the decisions beyond the statements in the International Shoe case, supra. Anno. 94 L.Ed. 1181. The American Law Institute indicates that the issue is open as of 1948. Restatement of the Law of Judgments § 23 and caveat thereto; Restatement of the Law of Conflict of Laws, 1948 Supplement, § 88. The following additional language from the International Shoe case, 326 U.S. at page 319, 66 S.Ct. at page 159, is quoted in support of this conclusion: 'It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. * * * Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. * * *

'But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations; and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to...