Globig v. Greene & Gust Co.

• Decision Date: 13 April 1961
• Docket Number: No. 59-C-153.,59-C-153.
• Citation: 193 F. Supp. 544
• Parties: William GLOBIG, Jr., Plaintiff, v. GREENE & GUST CO., a foreign corporation, Defendant, and Burton Plumbing-Heating Co., Inc., a foreign corporation, Defendant and Third-Party Plaintiff, and ARMSTRONG CORK COMPANY, a foreign corporation, and United States of America, Third-Party Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

193 F. Supp. 544

William GLOBIG, Jr., Plaintiff, v. GREENE & GUST CO., a foreign corporation, Defendant, and Burton Plumbing-Heating Co., Inc., a foreign corporation, Defendant and Third-Party Plaintiff, and ARMSTRONG CORK COMPANY, a foreign corporation, and United States of America, Third-Party Defendants.

No. 59-C-153.

United States District Court E. D. Wisconsin.

April 13, 1961.

Albert J. Goldberg and Richard M. Goldberg, Milwaukee, Wis., for plaintiff.

Suel O. Arnold and James P. O'Neill, Milwaukee, Wis., for defendant, Greene & Gust Co.

Jack R. Wiedabach, Milwaukee, Wis., for defendant and third-party plaintiff, Burton Plumbing-Heating Co., Inc.

George D. Young, Milwaukee, Wis., for third-party defendant, Armstrong Cork Company.

Edward G. Minor, U. S. Atty., by Howard C. Equitz, Asst. U. S. Atty., Milwaukee, Wis., for third-party defendant, the United States.

GRUBB, District Judge.

Defendant, Burton Plumbing-Heating Co., Inc. (hereafter referred to as "Burton"), has moved to dismiss this action, or in lieu thereof to quash the return of the summons on the ground that there was no compliance with Section 180.847 (4), Wis.Stats.(1957).¹

Burton's motion to dismiss the action is further predicated on the ground that the applicable statute of limitations has allegedly barred the plaintiff's cause of action.

It is conceded that plaintiff did not comply with Section 180.847(4), which relates to substituted service of process on foreign corporations transacting business in Wisconsin without a certificate of authority. Plaintiff served copies of the summons and complaint on the Secretary of State of Wisconsin as the statute required. He also mailed to Burton a copy of the complaint, as well as notice of service on the Secretary of State, within the ten day period set by the statute. However, plaintiff failed to mail to Burton a copy of the summons as required by the statute. According to Burton, the statute of limitations on plaintiff's cause of action expired approximately one month after plaintiff had served the Secretary of State.

After receiving an extension of time in which to answer,² Burton filed its answer on October 13, 1959, one and a half months after the statute of limitations had allegedly run on plaintiff's cause of action.

In its answer, Burton raised a defense going to the merits of the case and also a defense going to the jurisdiction of the court over Burton. On the same date that it filed its answer, Burton filed a third-party complaint against Armstrong Cork Company. On April 9, 1960, Burton and its codefendant took a discovery deposition of the plaintiff, and on March 25 and April 22, 1960, Burton took depositions of persons connected with the third-party defendant, Armstrong Cork Company. One week later Burton served a third-party summons and complaint on the United States of America.

Two issues are presented:

1. Has the statute of limitations expired on plaintiff's cause of action against Burton?

2. Did Burton's third-party actions constitute a waiver of the jurisdictional defense which it had made in its answer?

According to the complaint, plaintiff was injured on August 28, 1953. Section 330.19(5), Wis.Stats. (1953),³ fixes the period of limitation on plaintiff's cause of action at six years. Because in Wisconsin the statute of limitations is tolled as of the date the summons is served, that date, and not the date the complaint is filed, governs the issue of whether the statute of limitations has run on an action commenced in a federal district court. Ragan v. Merchants Transfer & Warehouse Co., 1949, 337 U. S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520. As mentioned, plaintiff has never served a summons on Burton. Consequently, the statute of limitations on plaintiff's cause of action would seem to have expired.

Plaintiff argues that Section 330.30, Wis.Stats. (1953),⁴ has tolled the statute of limitations as against Burton. Section 330.30 tolls the statute of limitations against persons who are out of the state at the time that the cause of action accrues against them. One exception to the tolling is the case of a foreign corporation which is registered and authorized to do business in Wisconsin. Plaintiff contends that Burton, being a nonregistered foreign corporation, was at all times pertinent to this suit out of the state within the meaning of Section 330.30 and that, therefore, the statute of limitations has not yet begun to run on plaintiff's cause of action against Burton.

Burton claims that the purpose of Section 330.30 was to toll the statute of limitations where a Wisconsin resident could not get service in Wisconsin on a non-resident. Since plaintiff could have gotten substituted service on Burton through Section 180.847(4),⁵ Section 330.30 is not applicable.

The Wisconsin law favors plaintiff's contention. In Bode v. Flynn, 1934, 213 Wis. 509, 252 N.W. 284, 94 A.L.R. 480, the court held that Section 330.30 tolled the statute of limitations on the plaintiff's cause of action, notwithstanding that the plaintiff could have served the nonresident defendant motorist by serving the Secretary of State under the statute which subsequently became Section 85.05(3).⁶

According to the notes of the Legislative Revision Committee, 1951, Section 180.847(4) is similar to Section 85.05 (3).⁷ Consequently, the Bode case is applicable to this situation involving Section 180.847(4), unless Section 330.30 was changed so as to alter the effect of the Bode decision.

It is sufficient to say that the changes in Section 330.30 since the Bode opinion further support plaintiff's argument.⁸

Although the Bode case is the minority rule in the United States, it is binding on this court unless it conflicts with the Constitution of the United States. Zalatuka v. Metropolitan Life Ins. Co., 7 Cir., 1937, 90 F.2d 230, 232. Burton charges that the Bode construction applied to this case would be a denial of the equal protection of the laws.

On the basis of the record in this case, the court cannot say as a matter of law that the distinction made by the Wisconsin legislature regarding the tolling of the statute of limitations between registered and nonregistered corporations is arbitrary and, therefore, unconstitutional. A corporation does business in a state not under color of right but because of a privilege granted to it by that state. In granting this privilege, a state can require that a corporation fulfill certain prerequisites. One of the prerequisites generally found in all states is the requirement that a corporation procure a certificate of authority before it transacts business in that state. The fact that a foreign corporation has not received authority to do business in a state is on its face sufficient to constitutionally justify a distinction between authorized and unauthorized foreign corporations insofar as the statute of limitations runs as to causes of action against the former and is tolled as to causes against the latter. This would seem to be a penalty which the state exacts in order to induce the registering of foreign corporations doing business within the state, thereby promoting the state's ability to regulate such corporations.

We turn now to the issue of whether Burton's third-party actions waived any jurisdictional defenses which it may have had. Since the adoption of the Federal Rules of Civil Procedure, 28 U.S.C.A., the difference between a special and a general appearance has been abolished in the federal courts. Orange Theatre Corp. v. Rayherstz Amusement Corp., 3 Cir., 1944, 139 F.2d 871; 2 Moore's Federal Practice, Section 12.12 (2d Ed. 1948). This result followed from an interpretation of that part of Rule 12(b) which states: "No defense or objection is waived by being joined with one or more other defenses or objections in a responsive pleading or motion." The theory behind such an interpretation is that the quick presentation of defenses and objections should be encouraged and that successive motions which prolong such presentation should be carefully limited.

Although there have been no cases directly covering the issue in this dispute, there have been a few decisions involving the issue of whether a counterclaim serves to waive an objection going to personal jurisdiction.⁹ Suffice it to say that those cases are divided as to whether a counterclaim, compulsory or noncompulsory, serves to waive a party's jurisdictional defenses.

The division in the decisions indicates the difficulty of the problem. Essentially the question is: How sweeping were the procedural innovations inaugurated by the Federal Rules of Civil Procedure? Specifically, how far did Rule 12(b) go in abolishing the principle behind the distinction between special and general appearances?

A literal interpretation of Rule 12(b) tends toward a finding that a counterclaim, cross-claim, or third-party claim waives jurisdictional defenses, since those claims are not "defenses or objections" and, therefore, not within the scope of that part of Rule 12(b) previously quoted.¹⁰

Furthermore, a party, when he counterclaims, cross-claims, or impleads a third party, is seeking affirmative relief and is thereby invoking the jurisdiction of the court. He cannot at the same time deny that jurisdiction. Burton argues that a third-party action for contribution is not inconsistent with an objection to jurisdiction, as is a counterclaim, which is independent of the original claim. Burton's contention neglects to consider that a third-party claim, although conditional, is nevertheless as affirmative an assertion as a counterclaim.

Burton argues further that the cases holding a counterclaim to be a waiver of jurisdictional objections promote a result contrary to the philosophy behind the abolition of the distinction between special and general appearances. As already noted, the reason for allowing a defendant to plead jurisdictional defenses along with his other defenses is to eliminate unnecessary delay in...