Atkinson v. United States Operating Company
| Decision Date | 30 April 1915 |
| Docket Number | 19,115 - (58) |
| Citation | 152 N.W. 410,129 Minn. 232 |
| Parties | WILLIAM N. ATKINSON v. UNITED STATES OPERATING COMPANY |
| Court | Minnesota Supreme Court |
Action in the district court for Houston county to recover $2,625 for false representations in the sale of defendant's stock. Defendant appeared specially and moved to set aside the service of the summons and to dismiss the action on the ground that defendant was a foreign corporation, that the person on whom the summons was served was in fact only nominally an officer of the corporation and transacted no business for the corporation, and that the corporation did no business in the state. The motion was heard before Kingsley J., who denied it. Plaintiff's motion for an order striking out the answer was granted, with leave to the defendant to answer upon the merits within 15 days. From the order granting plaintiff's motion to strike out the answer and from the order denying defendant's motion to set aside the service of the summons, defendant appealed. Affirmed.
Jurisdiction over foreign corporation.
Defendant a Maine corporation with its place of business in Illinois, sent agents into Minnesota to sell its own corporate stock. One of these agents sold stock to plaintiff in Minnesota and in the course of the negotiations made representations out of which this cause of action arose. Defendant's principal executive officer came several times to Minnesota for the purpose of adjusting this and other claims, and did adjust some claims here. The president of the corporation resided in Minnesota and occasionally performed official acts in the state. Summons in this action was served upon the president in this state. Held, the corporation had brought itself within the state and the court acquired jurisdiction by the service.
L. L. Duxbury, Frank Winter and Lewis A. Stebbins, for appellant.
Edward Lees and Lees & Bunge, for respondent.
Defendant is incorporated in Maine. Its place of business is in Chicago, Illinois. Its president resides at Minneapolis, Minnesota. Its business is the handling of the agency business of a life insurance company which does no business in Minnesota. This action is brought to recover the price paid for stock of defendant company alleged to have been sold by defendant to plaintiff, the sale having been rescinded by plaintiff for fraudulent representations made by the agent negotiating the sale. Summons was served on the president in this state. Defendant moved to set aside the service of the summons, alleging that service upon the president in this state gave the court no jurisdiction over the corporation. The trial court denied the motion and defendant appeals.
The statutes of this state provide that in an action against a foreign corporation "the summons may be served by delivering a copy to any of its officers or agents within the state." G.S. 1913, § 7735, subd. 3. The method of service prescribed by the statutes of the state was accordingly followed. But this is not determinative of the question of jurisdiction. The service of process upon the agent designated by a state statute in order to confer jurisdiction must constitute due process of law under the requirements of the Fourteenth amendment to the Constitution of the United States. Connecticut Mutual Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569; Armstrong Co. v. New York Central & H.R.R. Co. supra, page 104, 151 N.W. 917, and cases cited. Whether it does or not is a Federal question, ruled by Federal decisions. To meet the requirement of due process of law in an action against a foreign corporation there must not only be service of process upon an officer or agent within the state, but the corporation must be doing business in the state. Goldey v. Morning News, 156 U.S. 518, 15 S.Ct. 559, 39 L.Ed. 517; Connecticut Mutual Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569. No general rule has been formulated defining what transactions constitute doing business so as to render the corporation liable to service, but in general the business "must be such in character and extent as to warrant the inference that the corporation has subjected itself to the jurisdiction and laws" of the state, or, as often stated in other language which is perhaps more explicit, the transaction of business must be such that the corporation is for the time being within the state in which it is sued. St. Louis S.W. Ry. Co. v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486; International Harvester Co. of America v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479.
In this case the president conducted some necessary correspondence from his home in Minneapolis, and from time to time signed papers there, the nature of which does not appear. The other business transacted in this state related to the sale by the defendant of its own stock. It appears that defendant had three different agents in this state engaged in the business of selling its stock. One of these was so engaged for the period of seven months and up to a short time before the commencement of this action. It was this agent who negotiated the sale to plaintiff and who made the representations here relied upon. When the defendant was incorporated does not appear, but from facts which are stated it must have been incorporated some years before this cause of action arose. These sales of stock were in no sense preliminary to the organization of the corporation or to the commencement of its business, but occurred long after the corporation commenced to be a going concern. When plaintiff and the others, whose claims have been assigned to plaintiff, concluded to rescind their subscription contracts, their attorney mailed their demand for rescission to the president at Minneapolis. In response thereto the secretary and general manager of the company came from Chicago to Minnesota to negotiate for a settlement of the demands of these parties. Numerous other controversies arose out of contracts for sale of stock in Minnesota, and on several occasions the secretary came to Minnesota to negotiate settlements, both before and after the time of service of the summons in this action, and made several settlements of such disputes.
It is contended that no one of these acts nor all of them together, constituted such transaction of business in the state that the defendant could be said to have ever been in the state. We are of the opinion that this contention should not be sustained.
The business transacted by the president in this state, so far as proven, was not considerable, but it was not necessary in order to confer jurisdiction by service upon him that he should have transacted any business at all in this state. Service within the state upon a resident officer of a foreign corporation is sufficient to confer jurisdiction where the corporation is doing business in the state, even though the business is not done by the officer served. Pennsylvania Lumbermen's Ins. Co. v. Meyer, 197 U.S. 407, 25 S.Ct. 483, 49 L.Ed. 810; Kendall v. American Automatic...
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