Agalite-Bronson Co. v. K. G. Limited

• Decision Date: 28 February 1969
• Docket Number: AGALITE-BRONSON
• Citation: 270 Cal.App.2d 308,75 Cal.Rptr. 527
• Court: California Court of Appeals Court of Appeals
• Parties: COMPANY, a California corporation, Plaintiff and Appellant, v. K.G. LIMITED, a corporation, Defendant and Respondent. Civ. 24432.

Page 527

75 Cal.Rptr. 527

270 Cal.App.2d 308

AGALITE-BRONSON COMPANY, a California corporation, Plaintiff and Appellant, v. K.G. LIMITED, a corporation, Defendant and Respondent.

Civ. 24432.

Court of Appeal, First District, Division 4, California.

Feb. 28, 1969.

Rehearing Denied March 28, 1969.

Hearing Denied April 23, 1969.

Breed, Robinson & Stewart, Oakland, for appellant.

Thelen, Marrin, Johnson & Bridges, San Francisco, for respondent.

DEVINE, Presiding Justice.

Plaintiff corporation, herein called 'Agalite,' appeals from an order granting a motion to quash service of summons on K.G. Limited, herein called 'K.G.' The question is whether K.G., a Danish corporation, was doing business in California, thus making it subject to process under section 411, subdivision 2 of the Code of Civil Procedure.

The complaint on which the summons was issued contains allegations under nine counts against K. G. and M. L. Burke Company, a California corporation (which, having acted throughout by its president, M. L. Burke, is referred to herein simply as 'Burke'). The counts are upon various alleged warranties, express or implied, on fraud connected with the warranties, and on negligent manufacture of a product.

The motion to dismiss was heard upon a mass of evidence: declarations under penalty, voluminous correspondence, a diary and nine depositions. The depositions were not actually put into evidence (it seems, from remarks of counsel, out of mercy for the trial judge) and are not before us; but each counsel makes reference in the briefs, without objection from his adversary, to parts of the depositions. The motion was granted without any memorandum, and although the judge made certain comments as the hearing progressed, which are referred to in the briefs, they are not very significant at this point, because, the comments having been made during the flow of argument, we cannot be sure what were the final views of the judge, except his single dispository conclusion. The rules of proof which guide us are:

1. The burden of showing that a corporate defendant is doing business in this state lies on the plaintiff. (Brown v. Birchfield Boiler, Inc., 226 Cal.App.2d 487, 38 Cal.Rptr. 92; Brunzell Constr. Co. of Nevada v. Harrah's Club, 225 Cal.App.2d 734, 742, 37 Cal.Rptr. 659; Yeck Mfg. Corp. v. Superior Court, 202 Cal.App.2d 645, 649, 21 Cal.Rptr. 51; Holtkamp v. States Marine Corp., 165 Cal.App.2d 131, 137, 331 P.2d 679.)

2. The question before the appellate court is one of law in so far as the facts are not in dispute. (Cosper v. Smith & Wesson Arms Co., 53 Cal.2d 77, 81, 346 P.2d 409; Long v. Mishicot Modern Dairy, Inc., 252 Cal.App.2d 425, 427--428, 60 Cal.Rptr. 432; H. Liebes & Co. v. Erica Shoes, Inc., 237 Cal.App.2d 25, 30--31, 46 Cal.Rptr. 470; Sims v. National Engineerng Co., 221 Cal.App.2d 511, 513, 34 Cal.Rptr. 537; Emsco Pavement etc. Corp. v. City of Los Angeles, 176 Cal.App.2d 760, 766, 1 Cal.Rptr. 814.)

3. To the extent that the trial court has adjudged disputed factual contentions, the appellate court is bound by its implied findings in favor of the prevailing party. (Griffith Co. v. San Diego College For Women, 45 Cal.2d 501, 507--508, 289 P.2d 476, 47 A.L.R.2d 1349.)

K.G. is not formally qualified to do business in California. It does not have employees inventory, bank accounts, or offices here. The activities in this state which appellant relies upon to establish the doing of business are narrated below with our comments about them as they are given in sequence, so that repetition of facts may be minimized.

K.G. manufactures, among other products, a plant for the tempering of shock-resistant glass of the kind used in patio and shower-stall doors. Agalite, being interested in such a plant, came into contact with Burke, who told Agalite's president, Casebolt, that Burke was the exclusive representative in the United States for K.G. and that Casebolt must deal with him. Thus, Agalite had to deal with Burke in California. Burke's statement is supported by evidence. Harald Stenfeldt Hansen, subdirector of K.G., conceded that there was an agreement whereby K.G. would not sell a plant to anybody in the United States but Burke. Moreover, Burke had advertised, with K.G.'s authorization. An advertisement in Glass Digest, a nationwide trade publication, says: 'The M. L. BURKE COMPANY is the exclusive U.S. representative for K.G. Ltd., of Denmark, world leaders in the manufacturing of glass tempering plants.' Copy of this had been supplied to K. G. The advertisement says, further: 'Our fully trained engineering department supervises the complete design and installation of K.G. plants and fully trains your personnel in all phases of the tempering operation.' Thus, it was made known to the public in California and elsewhere that Burke, exclusive representative of K.G., would take an active part in commencing the operation of any plant sold. It is not contended by Agalite that its contact with Burke was brought about by the advertisement. But the publication is evidence that Burke was recognized as K.G.'s exclusive representative, as Burke told Casebolt he was, and it is also evidence of activity in California, to the extent that the advertising was circulated in this state.

In April 1964, K.G. delivered to Burke an agreement stating that the Burke Company was appointed representative for K.G. tempering plants, authorizing Burke to advertise the plants, and agreeing to refer all inquiries about them to Burke. In August 1964, the agreement was extended to July 1968.

In 1962, K.G. and Burke made an agreement whereby Burke would purchase a tempering plant. K.G. set forth particular warranties in the contract and agreed to send an English-speaking specialist to help. In March 1964, this contract was assigned by Burke to Agalite. The agreement between Burke and Agalite provided that Burke would supply his 'know-how' in the installation of the plant and would supply the services (to be paid for by Agalite) of a Danish expert, as K.G. had agreed with Burke to do. K.G. gave the name of an expert, Riisberg, who had formerly worked for K. G. The agreement between Agalite and Burke bound the former 'to show the tempering machine while it is in operation to prospective customers of K.G. Limited of Denmark.'

Casebolt and Burke went to Copenhagen and observed testing of the plant. Arrangements were made for shipping. The K.G. contract with Burke describes delivery as 'f.o.b. Copenhagen.' The price from K. G. to Burke was $32,800; that from Burke to Agalite, $82,800.

Despite the mass of evidence which has been presented, it is not clear whether the sale at Copenhagen must be regarded as one from K.G. to Burke, or K.G. to Agalite, or K.G. to both. K.G. in later correspondence refers to the sale as for Burke's account; but K.G. directly invoiced Agalite for the whole of the balance due, referring to 'Your order of April 4th by Mr. M. Burke/M. L. Burke Comp. of Union City, Calif. U.S.A.' No doubt this subject will be a relevant one at trial, as will the subject of what warranties were given, and to whom: to Burke, to Agalite, or to both.

But the complete resolution of whatever problems these matters present is not for us now; it is sufficient for us to see what contacts with California appear. Although it seems that title passed from K.G. at Copenhagen, there was a certain residuary interest following the plant into this state. The invoice refers to insurance which Agalite was to pay for in favor of K.G., during the shipping. It was further agreed that a letter of credit in amount $10,000, the balance of K.G.'s purchase price, would be opened with a bank in San Francisco. The letter of credit was to be cashed by K.G. when '(n)otice that the plant is operating and can produce tempering glass according to American Tempering Association's specification for warpage, bow, etc.' was signed by Riisberg or by Burke or by Hansen. ¹ This required work and testing which could be done Only in California before certification and final payment.

This brings us to Riisberg. He was an employee of Burke for the purpose of assisting in the commencement of the operation of the plant in Oakland. But Burke in turn was K.G.'s representative for sales. The work which Riisberg would do in California would, if successful, be helpful to K.G., not only in making possible the final payment on this particular sale, but also in providing a showpiece for prospective customers. Even before the assignment of the Burke contract to Agalite, K.G. had written: 'We are quite aware of the fact that further orders might result as soon as the actual Plant is installed.' The delegation by K.G. to Riisberg to certify the operational competency of the plant is also to be considered. It is to be noted that he kept reporting to K.G. during his stay in Oakland, and receiving advice from K. G. Whether Riisberg was an agent of K.G. in the full sense of the word, it is not necessary to decide at this point. He was an instrument for certain purposes of K.G. in California, and was, therefore, one of the 'contacts' of the corporation with this state.

Riisberg did not certify the plant to be satisfactory. Harald Hansen did so, from Copenhagen, representing to the bank in San Francisco that the plant is operating and can produce glass according to American Tempering Association's standards; and the payment on the letter of credit was made to K. G. Indeed, Riisberg had grave misgivings, and had noted in his diary that he agreed with Casebolt that the layout did not work; that they had tried everything and had achieved nothing; that he had promised he would ask Harald Stenfeldt Hansen to come right away.

We come now to the visit of K.G.'s Harald Stenfeldt Hansen to California. This subject may be considered under two aspects: 1) whether 'trickery' was used by Agalite and, perhaps, by Burke, too, to bring Hansen into this state, and, if so, what effect this would have...