American Asphalt Roof Corp. v. Shankland

• Decision Date: 03 April 1928
• Docket Number: 39185
• Citation: 219 N.W. 28,205 Iowa 862
• Parties: AMERICAN ASPHALT ROOF CORPORATION, Petitioner, v. FRANK S. SHANKLAND, Judge, et al., Respondents
• Court: Iowa Supreme Court

219 N.W. 28

205 Iowa 862

AMERICAN ASPHALT ROOF CORPORATION, Petitioner, v. FRANK S. SHANKLAND, Judge, et al., Respondents

No. 39185

Supreme Court of Iowa, Des Moines

April 3, 1928

Certiorari to Polk District Court.--FRANK S. SHANKLAND Judge.

Original proceeding in certiorari, to test the jurisdiction of the district court of Polk County to hear and determine an action for damages against the American Asphalt Roof Corporation, a foreign corporation.--Writ annulled.

Writ annulled.

Sargent Gamble & Read, for petitioner.

C. C Putnam and Guy S. Calkins, for respondents.

OPINION

STEVENS, C. J.

The American Asphalt Roof Corporation, petitioner, is a corporation organized under the laws of, and having its principal place of business in, the state of Missouri, but has not been authorized to do business in this state. On a date prior to January 1, 1927, Verner Cooley, minor son of J. C. Cooley, was severely injured in a collision of the motor cycle upon which he was riding, with an automobile owned by petitioner, and being driven by J. L. Killingsworth, one of its sales agents in this state. An action for damages against Killingsworth and petitioner was commenced in the district court of Polk County, Iowa, by J. C. Cooley, as next friend of Verner. The return of the sheriff upon the original notice in said action discloses the manner of service thereof upon petitioner as follows:

"I hereby certify that I received the within notice on the 11th day of December, 1926, and on the 11th day of December, 1926, I personally served the same on the within named defendant, American Asphalt Roof Company, a corporation, by reading the original to J. L. Killingsworth, general agent of said corporation, and delivered to him a true copy thereof. All done in Polk County, Iowa."

The American Asphalt Roof Corporation appeared specially in that action, and moved the court to quash the service, upon the following grounds:

(1) That J. L. Killingsworth was not, at the time, a general agent of such defendant's, but merely a traveling salesman, authorized to solicit orders for the sale of the products of the defendant.

(2) That said defendant was not engaged in business in the state of Iowa, nor subject to personal service therein.

(3) That, if Sections 11077 and 11079 of the Code of 1924 are so construed as to authorize the service of an original notice upon a mere traveling salesman, the same are void, because in contravention of the Fourteenth Amendment to the Constitution of the United States and the due-process clause thereof.

(4) That the said Killingsworth was not such an agent, in any event, upon whom personal service of the defendant could be made.

The motion to quash was overruled, and the defendant given thirty days within which to plead. Thereupon, application was made to a judge of this court for a writ of certiorari, which was allowed and duly issued.

In addition to the foregoing matters, the return of respondents discloses the following material facts, all of which are without dispute: That petitioner is engaged in the manufacture and sale of asphalt shingles, asphalt roofing, roofing felts, and other products incident thereto, at its principal place of business in Kansas City, Missouri; that it maintains branch offices at Salt Lake City and East St. Louis, but that it does not have or maintain an office in this state; that Killingsworth is a resident of the city of Des Moines; that he has been such resident and connected with the petitioner for more than five years as a traveling salesman; that during all of said time he has had a definitely prescribed territory, which includes Polk County, assigned to him by petitioner; that he visits the various towns and cities within such territory, for the purpose of soliciting customers for, and selling the products manufactured by, petitioner; that he has secured a large number of regular purchasers of petitioner's products in various towns and cities in his territory; that among such customers are large concerns regularly and customarily engaged in the purchase and sale of products such as those manufactured by petitioner; that, in making trips over his territory, the said Killingsworth uses an automobile furnished to him by petitioner; that the expense of maintenance and repair of said automobile is borne by petitioner; that, on the day in question, while he was proceeding on his way to Des Moines from a trip during which he called upon various regular customers, the automobile collided with a motor cycle upon which Verner Cooley was riding, with the result already stated. In addition to the foregoing, Killingsworth voluntarily, with the knowledge and obvious acquiescence of petitioner, and for the purpose of increasing and facilitating the sale of its products, solicits customers for such products and refers same to the local dealer for attention.

The return further discloses that Killingsworth had at no time maintained an office in this state; that he had no sales force or other employees; that he is not authorized to receive or make collections or to handle or transmit money of the petitioner. All orders are subject to the approval of petitioner, and all deliveries are made F. O. B. Kansas City.

The points in dispute involve Federal questions, which must be determined in harmony with the decisions of the Supreme Court. Philadelphia & R. R. Co. v. McKibbin, 243 U.S. 264 (61 L.Ed. 710, 37 S.Ct. 280); Green v. Chicago, B. & Q. R. Co., 205 U.S. 530 (51 L.Ed. 916, 27 S.Ct. 595); Peterson v. Chicago, R. I. & P. R. Co., 205 U.S. 364 (51 L.Ed. 841, 27 S.Ct. 513); Thurman v. Chicago, M. & St. P. R. Co., 254 Mass. 569 (151 N.E. 63); Tauza v. Susquehanna Coal Co., 220 N.Y. 259 (115 N.E. 915); Hall v. Wilder Mfg. Co., 316 Mo. 812 (293 S.W. 760).

The right of each state to enact laws for the service of original notice or summons upon foreign corporations not authorized to do business in such state, within prescribed constitutional limitations, is well settled. People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79 (62 L.Ed. 587, 38 S.Ct. 233); Philadelphia & R. R. Co. v. McKibbin, supra; International Harv. Co. v. Commonwealth of Kentucky, 234 U.S. 579 (58 L.Ed. 1479, 34 S.Ct. 944).

Acting within clear constitutional authority, the legislature of this state has made provision for the service of notice upon foreign corporations transacting business therein, as follows:

"Sec. 11072 [Code of 1924]. If the action is against any corporation or person owning or operating any railway or canal, steamboat or other river craft, or any telegraph, telephone, stagecoach, or car line, or against any express company, or against any foreign corporation, service may be made upon any general agent of such corporation, company, or person, wherever found, or upon any station, ticket, or other agent, or person transacting the business thereof or selling tickets therefor in the county where the action is brought; if there is no such agent in said county, then service may be had upon any such agent or person transacting said business in any other county."

"Sec. 11079 [Code of 1924]. When a corporation, company, or individual has, for the transaction of any business, an office or agency in any county other than that in which the principal resides, service may be made on any agent or clerk employed in such office or agency, in all actions growing out of or connected with the business of that office or agency."

As applied to the facts of this case, Section 11072 may be paraphrased as follows:

"If any action is against * * * any foreign corporation, service may be made upon any general agent of such corporation * * * wherever found, or upon any * * * other agent or person transacting the business thereof * * * in the county where the action is brought."

The term "doing business" within a state foreign to the one in which the corporation is organized and has its principal place of business is substantially defined by the Supreme Court as follows:

"The general rule deducible from all our decisions is that the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction and is by its duly authorized officers or agents present within the state or district where service is attempted." People's Tobacco Co. v. American Tobacco Co., supra. See, also, Green v. Chicago, B. & Q. R. Co., supra; International Harv. Co. v. Commonwealth of Kentucky, supra; Jones v. Illinois Cent. R. Co., 188 Iowa 850, 175 N.W. 316; Dye Prod. Co. v. Davis, 202 Iowa 1008, 209 N.W. 744.

It has, in some of the cases cited supra, been repeatedly declared by the Supreme Court that a decision of the lower court, if duly challenged, is subject to review in this court, and the review extends to findings of fact, as well as to conclusions of law.

Two elements are always involved: namely, Was the foreign corporation doing business, within the meaning of that term as defined by the Supreme Court, within the state, and, Was service had upon a proper or duly authorized agent thereof? Many cases involving these questions have been decided by both state and Federal courts. Except for the general rules established or recognized thereby, they are, however, of aid only to the extent that they present analogous questions of fact.

One of the rules firmly fixed by these decisions is that the mere solicitation by an agent of a foreign corporation of orders for goods does not amount to doing business, within the meaning of the decisions of the Supreme Court. Green v Chicago, B. & Q. R. Co., supra; Philadelphia & R. R. Co. v. McKibbin, supra; People's Tobacco Co. v. American Tobacco Co., supra; International Harv. Co. v. Commonwealth of Kentucky, sup...