Massachusetts Bonding & Ins. Co. v. Concrete Steel Bridge Co.

• Decision Date: 15 January 1930
• Docket Number: No. 2875.,2875.
• Citation: 37 F.2d 695
• Parties: MASSACHUSETTS BONDING & INS. CO. v. CONCRETE STEEL BRIDGE CO.
• Court: U.S. Court of Appeals — Fourth Circuit

37 F.2d 695 (1930)

MASSACHUSETTS BONDING & INS. CO. v. CONCRETE STEEL BRIDGE CO.

No. 2875.

Circuit Court of Appeals, Fourth Circuit.

January 15, 1930.

E. A. Bowers, of Elkins, W. Va. (Arthur H. Hull, of Harrisburg, Pa., on the brief), for appellant.

James M. Guiher, of Clarksburg, W. Va. (Philip P. Steptoe and Steptoe & Johnson, all of Clarksburg, W. Va., on the brief), for appellee.

Before WADDILL, PARKER, and NORTHCOTT, Circuit Judges.

NORTHCOTT, Circuit Judge.

This is an appeal from a judgment for $17,424.82, rendered in favor of the appellee, the Concrete Steel Bridge Company, a West Virginia corporation, by the District Court of the United States for the Northern District of West Virginia, at Elkins, in an action of assumpsit, brought by appellee, who was plaintiff below, against appellant, Massachusetts Bonding & Insurance Company, who was defendant below.

In May, 1925, one W. A. Palmer, Inc., a Pennsylvania corporation, entered into a contract with the highway department of the commonwealth of Pennsylvania, whereby the former undertook to perform certain work in and about the construction of a state highway in Pike county, Pennsylvania, which work included the erection of a number of concrete bridges. The defendant bonding company became surety for the performance of the contract. The contractor entered into a subcontract with the plaintiff bridge company for a construction of the bridges included in the contract. The contractor and the subcontractor both began construction, and a large amount of work was done by each of them, extending into the late fall of the year 1925, when the contractor was ousted from the job because of its failure to comply with the contract. The defendant bonding company, in recognition of its suretyship, took over the completion of the contract.

In the spring of 1926, the bonding company entered into a separate and special contract with the plaintiff, under date of April 1, for the completion of the bridges. Following the making of the special contract with the bridge company the work progressed to completion; the plaintiff completed its bridges and the bonding company completed the remainder of the work, so far as this record shows, to the entire satisfaction to both the Pennsylvania Highway Company and the defendant.

A controversy having arisen between the bonding company and the bridge company over the sum due from the bonding company to the bridge company, the bridge company, in August, 1928, instituted this action, and the præcipe, filed by the attorneys for the plaintiff, requested the clerk to issue process returnable to September rules, 1928. By inadvertency or mistake, the clerk for the District Court of the Northern District directed the process to the marshal of the Southern District of West Virginia.

The defendant bonding company had qualified to do business in the state of West Virginia, and under the West Virginia statute the auditor of the state was attorney in fact, upon whom service could be had in suits against foreign corporations doing business with the state. The marshal of the Southern District of West Virginia served the process upon the state auditor and made return thereof. The state auditor, as authorized by the statute, also accepted service of the process in words and language as follows:

"Service of this process accepted at my office in Charleston, state of West Virginia, on the 21st day of August, 1928, on behalf of Massachusetts Bonding & Insurance Company, a foreign corporation, which has been authorized to do business in this state, in accordance with the provisions of chapter 54 of Barnes Code of West Virginia, and which has appointed the auditor of West Virginia its attorney in fact to accept service of process and notice in this state.

"Sam T. Mallison "Auditor of West Virginia."

On September 3, 1928, plaintiff filed at rules its declaration and account, accompanied by a bill of particulars. On October 2, 1928, the defendant, appearing specially for the purpose, filed a plea in abatement at rules denying that the cause of action arose in the Northern District of West Virginia, and alleging that it arose in Pennsylvania, and that the District Court of the United States for the Northern District of West Virginia was for that reason without jurisdiction. On November 16, the defendant filed in court a notice for a production of certain documents craving oyer of them. On November 27th, the defendant appearing solely for the purpose, moved to quash the writ and the return. Defendant's written motion to quash made no reference whatever to the acceptance of service by the auditor. On December 7th, the court below overruled the motion to quash the summons and return, and struck out the plea of the defendant as to the jurisdiction, to which action of the court, in both instances, the defendant excepted. Thereupon trial was had and the jury returned a verdict for the plaintiff in the sum above mentioned, and the court entered judgment for the plaintiff upon the verdict, from which action of the court this appeal was taken.

Three points are raised by the bonding company: First, that the court did not have jurisdiction to try the suit because the cause of action did not arise in the district in which the suit was brought; second, that the service was bad and that the defendant was not properly brought into court; and, third, that the court below erred in its construction of the contract between the bonding company and the bridge company.

In considering the question of jurisdiction raised by defendant's plea in abatement at rules, we are confronted at the outset with the fact that the record is silent as to where the contract between the bonding company and the bridge company of April 1, 1926, was executed. It was upon this contract, and not upon the bond given by the defendant for Palmer, Inc., that the plaintiff sued. The theory of the defendant, as evidenced by the written plea in abatement, as to the jurisdiction, seems to be based at least partly upon the assumption that this was a suit on the bond given by the defendant as surety for the Palmer, Inc., which assumption is erroneous. Had it been proven that the contract of April 1, 1926, was executed in the Northern District of West Virginia upon failure to make payment as stipulated in the contract, there could be no doubt about the fact that the cause of action arose there. It is not alleged, nor is it shown, that the contract was not executed there. The cause of action for breach of contract, however, arose, not upon the execution of the contract, but upon the failure to make the payments therein provided for. As there was no stipulation in the contract as to where they should be made, the law implies that they should be made at the place of residence of the creditor. Harvey v. Parkersburg Insurance Company, 37 W. Va. 272, 16 S. E. 580; Danser v. Dorr, 72 W. Va. 430, 78 S. E. 367; Jones v. Coal Company, 84 W. Va. 245, 99 S. E. 462. And as they were not made at all, it would seem that the cause of action arose in favor of plaintiff where they should have been made. Not only is it not shown, therefore, that the contract sued on was not made in West Virginia, but it would seem, also, that the cause of action for its breach arose in that state. But irrespective of where the cause of action arose, there can be no question of the jurisdiction of the court to entertain the suit, which was the point raised by plea No. 1, for diversity of citizenship unquestionably existed and the suit was instituted in the district of residence of the plaintiff. Judicial Code § 24 (1), 28 USCA § 41 (1); Judicial Code § 51(a), 28 USCA § 112(a).

It may be contended that plea No. 1 should be construed as raising the point that jurisdiction was not obtained over the defendant by acceptance of service by the state auditor, on the ground that the cause of action did not arise within the state. We do not think that plea No. 1 can be construed to raise this point, but, even if so construed, it will not avail defendant anything. In the first place, as shown above, it does not appear that the cause of action did not arise within the state. In the second place, we do not think that under the statute of West Virginia the authority of the auditor is limited to accepting service in cases where the cause of action so arose.

Chapter 54, § 24a of the West Virginia Code, provides as follows:

"The auditor of this state shall be, and he is hereby, constituted the attorney in fact for and on behalf of every foreign corporation doing business in this state and of every nonresident domestic corporation, with authority to accept service of process on behalf of and upon whom service of process may be made in this state for and against every such corporation. No act of such corporation appointing the auditor such attorney in fact shall be necessary."

Chapter 54c, § 20, of the West Virginia Code relating to the surety and bonding companies, provides:

"Said company shall, by power of attorney duly acknowledged and authenticated, and filed by it in the office of the auditor, appoint some person residing in the state to accept service of process and notice, in this state, for the said company; and by the same instrument shall declare its consent that service of any process or notice in this state on said attorney, or his acceptance of service indorsed thereon, shall have the same effect as if served on him in the county where the surety is given or where the suit is instituted, and shall, in all respects, have the same effect as service thereof upon the company. And thereafter such acceptance by the said attorney, or service upon him, anywhere in this state, shall be equivalent to service in the county where the suit was brought, and for all purposes, to service upon its principal."

The West Virginia courts have held that a foreign corporation may be sued upon a transitory cause of action in any county wherein the...