Bagdon v. Philadelphia & Reading Coal & Iron Co.

• Court: New York Court of Appeals
• Writing for the Court: CARDOZO
• Citation: 217 N.Y. 432,111 N.E. 1075
• Parties: BAGDON v. PHILADELPHIA & READING COAL & IRON CO.
• Decision Date: 14 March 1916

217 N.Y. 432
111 N.E. 1075

BAGDON
v.
PHILADELPHIA & READING COAL & IRON CO.

Court of Appeals of New York.

March 14, 1916.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by George Bagdon against the Philadelphia & Reading Coal & Iron Company. From an order of the Appellate Division (170 App. Div. 594, 156 N.Y. Supp. 647), affirming an order setting aside the service of summons, plaintiff appeals, and the Appellate Division certifies a question. Order reversed, and question certified answered in the negative.

See, also, 156 N.Y. Supp. 1114.

The Appellate Division certified the following question: “Should service of the summons in this action upon the defendant be set aside?”

Ralph G. Barclay, of Brooklyn, for appellant.

Edgar T. Brackett, of Saratoga Springs, for interveners.

William F. Purdy, of New York City, for respondent.

CARDOZO, J.

[1] The plaintiff is a resident of this state; the defendant, a Pennsylvania corporation; and the cause of action, a breach of contract. The plaintiff, while working for the defendant in Pennsylvania, was injured through the defendant's negligence. A contract was then made to compensate him for his injuries. The plaintiff complains that this contract has been broken. He has served the summons on an agent designated by the defendant as “a person upon whom process against the corporation may be served within the state.” General Corporation Law, § 16 (Consol.Laws, c. 23). The defendant concedes that it is engaged in business in New York. It concedes that its appointment of an agent has never been revoked. It insists, however, that his agency must be limited to actions which arise out of the business transacted in New York. It says that any other construction would do violence to its rights under the federal Constitution. But the plaintiff's cause of action has no relation to business transacted in New York. His cause of action owes its origin to business transacted in Pennsylvania. The defendant says that for this reason the service is invalid; and both at the Special Term and at the Appellate Division its position has been sustained.

Two cases in the Supreme Court of the United States are said to be authority for that conclusion. They are Old Wayne Life Ass'n v. McDonough, 204 U.S. 8, 27 Sup.Ct. 236, 51 L.Ed. 345, and Simon v. Southern Railway Co., 236 U.S. 115, 35 Sup.Ct. 255, 59 L.Ed. 492. In neither case had any agent for the service of process been appointed. In each the court was dealing with the consequences that attach to the refusal to appoint an agent. There was no attempt to decide anything but the precise question involved. In Old Wayne Life Ass'n v. McDonough, supra, an action was brought in Pennsylvania against an insurance company organized in Indiana. The laws of Pennsylvania provide that no foreign insurance company shall do business in that state until it has filed a stipulation that any legal process affecting the company may be served either on a designated agent or on the insurance commissioner, with the same effect as if served personally on the company. The Old Wayne Life Association did business in Pennsylvania; but it did not file the stipulation. A creditor sued it on a claim having no relation to its Pennsylvania business, and served the insurance commissioner. This service was held invalid. The court said that, if the cause of action had relation to business transacted in Pennsylvania, the insurance company would be estopped to take advantage of its failure to file the stipulation required by the statute. Even though it had not consented to be bound by service on a public officer, it would in such a situation be charged with the same consequences as if it had consented. But the court refused to extend the estoppel to a case where the transaction of business in Pennsylvania had no relation to the cause of action. In such a case it held that:

The company had the right to show the truth, and the truth was that it had not given its consent. “While the highest considerations of public policy demand that an insurance corporation, entering a state in defiance of a statute which lawfully prescribes the terms upon which it may exert its powers there, should be held to have assented to such terms as to business there transacted by it, it would be going very far to imply, and we do not imply, such assent as to business transacted in another state, although citizens of the former state may be interested in such business.” 204 U.S. at page 22, 27 Sup.Ct. at page 241 [51 L.Ed. 345].

Old Wayne Life Ass'n v. McDonough was followed in Simon v. Southern Ry. Co., 236 U.S. 115, 35 Sup.Ct. 255, 59 L.Ed. 492, which brought up the same question. The plaintiff sued the Southern Railway Company, a Virginia corporation, in the courts of Louisiana. That state makes it the duty of every foreign corporation doing business within its borders to file a written declaration setting forth the places in the state where it is doing business and the name of an agent upon whom process may be served. If business is done without compliance with that condition, process may be served upon the secretary of state. The Southern Railway Company did not file the required declaration. There was some question whether it did business in Louisiana at all. At all events, the cause of action had no relation to that business. It grew out of a collision in the state of Alabama. The court held that service on the secretary of state of Louisiana was not service on the railway company. It expressly refused to pass upon the effect of a voluntary appointment of an agent for the service of process:

“Without discussing the right to sue on a...