Aldrich v. Anchor Coal & Development Co.

• Decision Date: 10 April 1893
• Citation: 32 P. 756,24 Or. 32
• Parties: ALDRICH et al. v. ANCHOR COAL & DEVELOPMENT CO. et al.
• Court: Oregon Supreme Court

32 P. 756

24 Or. 32

ALDRICH et al. v. ANCHOR COAL & DEVELOPMENT CO. et al.

Supreme Court of Oregon

April 10, 1893

Appeal from circuit court, Multnomah county; E.D. Shattuck, Judge.

Action by E.M. Aldrich and others against the Anchor Coal &amp Development Company, a California corporation, and B.E Loomis, to recover on a contract for work and labor performed for the corporation in the state of Washington. A demurrer interposed by defendant Loomis was sustained, and the service of summons on the corporation was set aside. Plaintiffs appeal. Affirmed in part, and reversed in part.

Milton W. Smith, for appellants.

E.B Watson, for respondents.

BEAN J.

This action was brought against the defendant, a California corporation, and B.E. Loomis, one of its stockholders, in the circuit court of Multnomah county, to recover the sum of $2,402.72 upon a contract for work and labor performed for the corporation in building a railway in the state of Washington. The complaint, after alleging a cause of action against the defendant corporation, avers, in order to charge the defendant Loomis individually, that he is a stockholder of such corporation; and the statute of California under which it was organized provides that "each stockholder of a corporation is individually and personally liable for such proportion of its debts and liabilities as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock or shares of the corporation, and for a like proportion only of each debt or claim against the corporation. Any creditor of the corporation may institute joint or several actions against any of its stockholders for the proportion of his claim payable by each; and in such action the court must ascertain the proportion of the claim or debt for which each defendant is liable, and a several judgment must be rendered against each in conformity therewith." The summons for the commencement of the action was served upon the defendant Loomis personally, and also upon him as vice president and general manager of the defendant corporation, while he was temporarily within the state of Oregon. The defendant Loomis demurred to the complaint on the grounds that the court had no jurisdiction and the complaint did not state a cause of action against him, and the defendant corporation appeared specially, and moved to set aside the service upon it on the ground that it was unauthorized and ineffectual for any purpose. Both the demurrer and motion were sustained by the court below, and the complaint and action dismissed, from which plaintiffs appeal.

The first question for our consideration is whether the service upon the general manager of the defendant corporation in the state of Oregon gave the court jurisdiction of the corporation. It appears, from the affidavits in support of and against the motion to vacate the service, that the defendant, being a corporation organized and existing under the laws of California, with its principal office in the city of Oakland in that state, transacted no corporate business had no property within this state, and had no agency for the transaction of any portion of its business therein, but that at the time its general manager was served he was temporarily within the state for the purpose of negotiating a sale of the stock and plant of the defendant company in the state of Washington to residents of Oregon, and that the contract under which the work was done by plaintiffs in Washington was made and entered into within this state. The claim is therefore made that under these facts the service upon Loomis could not bind the defendant corporation, or give the courts of this state jurisdiction of it. By the common law, process against a corporation must be served upon its head or principal officer within the jurisdiction of the sovereignty by whose laws it exists, and any authority for proceeding against it in any other manner must be conferred by statute of the state where process is served. Moulin v. Insurance Co., 24 N.J.Law, 222; McQueen v Manufacturing Co., 16 Johns. 4. The inconvenience and often manifest injustice of exempting a corporation from being sued in a state other than that in which it was created has caused the rule in modern times to be very much relaxed, and it is now generally held that where a corporation created in one jurisdiction is permitted, either by express enactment or by acquiescence, to do business in another, it is to be deemed a resident, and subject to the jurisdiction of the courts of the latter in all matters founded upon contracts made or causes of action arising there, and service may be made upon it in the same manner as a domestic corporation where the law does not provide otherwise. 2 Mor.Corp. 980; Miller v. Mining Co., 45 F. 345; St. Clair v. Cox, 106 U.S. 350, 1 S.Ct. 354. But where a foreign corporation is not engaged in business in the state, and has neither an agency established nor property therein, there is no way of reaching it with process, and service upon an officer or agent of the corporation residing in another jurisdiction, and only casually in the state, will not, in the absence of a statute authorizing such service, confer jurisdiction, it being deemed that his official character does not accompany him beyond the jurisdiction in which the corporation was created. Moulin v. Insurance Co., 24 N.J.Law, 234; McQueen v. Manufacturing Co., 16 Johns. 5; Peckham v. Haverhill Parish, 16 Pick. 286; Newell v. Railway Co., 19 Mich. 345; Latimer v. Railway Co., 43 Mo. 105; State v. District Court of Ramsey Co., 26 Minn. 234, 2 N.W. 698; Railway Co. v. McDermid, 91 Ill. 170; Phillips v. Library Co., (Pa.Sup.) 21 Atl.Rep. 640; Clews v. Iron Co., 44 F. 31. This state permits foreign corporations to transact business within her limits, and, either by express enactment, as in case of certain corporations, or by her acquiescence, they are as free to engage in legitimate business as corporations of her own creation. There is no statute expressly providing for service of process upon them, except in the case of certain named corporations not material to be noted in this connection; but it is expressly provided by section 516, Hill's Ann.Laws, that "no corporation is subject to the jurisdiction of a court of this state unless it appear in the court, or have been created by or under the laws of this state, or have an agency established therein for the transaction of some portion of its business, or have property therein, and in the last case only to the extent of such property at the time the jurisdiction attached." From the provisions of this section it seems clear that when service is made within the state upon the agent of a foreign corporation it is essential, in order to give the court jurisdiction to render a personal judgment, that it should appear somewhere in the record that the corporation has an agent in the state, conducting some portion of the business for which it was organized. ...