Beach v. Kerr Turbine Co.

• Citation: 243 F. 706
• Decision Date: 04 April 1917
• Docket Number: 9278.
• Parties: BEACH v. KERR TURBINE CO.
• Court: United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio

243 F. 706

BEACH v. KERR TURBINE CO.

No. 9278.

United States District Court, N.D. Ohio.

April 4, 1917

E. H Moore and William J. Kenealy, both of Youngstown, Ohio, for plaintiff.

Hine Kennedy & Manchester, of Youngstown, Ohio, for defendant.

WESTENHAVER District Judge.

This action was begun in the state court, and after removal here by the defendant, a foreign corporation, it moves to set aside the summons. The return shows it was served on one J W. Storer, describing him as 'managing agent of said defendant company at Youngstown, Ohio. ' Affidavits have been filed in support of the motion and in opposition thereto.

The affidavits in opposition state merely that Storer was the managing agent of the defendant, and as such managing agent had full charge and control of the work of installing certain turbines at Youngstown, Ohio. This is a legal conclusion, except as to the fact that Storer had full charge and control of the work of installation. From defendant's affidavits it appears that defendant bid upon and was awarded the contract for supplying, setting up, and installing three turbine pumps for the waterworks department of the city of Youngstown; that these pumps were manufactured outside of the state of Ohio, at the defendant's factory; that the foundations upon which the same were to be installed were constructed by the city; that the pumps were shipped, delivered, and set in place and installed by the defendant; that the work of installation consisted of putting said turbine pumps in place, making the necessary connections, and seeing that they performed the functions for which they had been purchased and installed; that, in setting up and installing the same, J. W. Storer was sent from defendant's plant with authority to hire help, do what was necessary in the matter of setting up, installing, and connecting the same, and seeing that they performed their functions; that said Storer had authority to hire from one to three men to aid him; that at no time did he employ and have assisting him more than three men; that said Storer was paid a daily wage of approximately $4 per day, and was not regularly employed by the defendant in Ohio, but at its plant in Wellsville, N.Y., and was not its managing agent in Ohio. Plaintiff was one of the men so employed, and was injured while engaged with Storer in this work. It further appears from these affidavits that the defendant, except as may be inferred from the above statement, was not doing business in Ohio, that its principal office and place of business was outside of the state, and that it had not obtained authority to do business nor appointed an agent in the state, as is required by sections 178, 179, General Code of Ohio.

Whether the service thus made is good is not free from uncertainty. If, however, a foreign corporation, on this state of facts, is not doing business within the state, and its agent or representative in charge is not a managing agent upon whom processes may be served, then manifestly a foreign corporation, undertaking a similar work requiring the employment of many men and months or even years for its performance, could not be served within the state in actions growing out of its acts or transactions in connection therewith. Situations occur to the court, and will, no doubt, occur to counsel, in which foreign corporations have obtained contracts requiring one or two years to perform. The facts of the present case present a similar question. The difference is only one of degree, and the rule of law must apply equally to both.

This action having been begun in the state court, service of process is controlled by section 11290, General Code of Ohio, which is as follows:

'When the defendant is a foreign corporation, having a managing agent in this state, the service may be upon such agent.' It is proper to make this motion here after removal, and defects in the service may be taken advantage of by motion. Cain v. Commercial Publishing Co., 232 U.S. 124, 34 Sup.Ct. 284, 58 L.Ed. 534.

The section above quoted is the Ohio law relating to service on foreign corporations. In Goode v. Druggists' Ass'n, 16 Ohio Dec. 586, it is said by Judge Spiegel that section 11290 (former R.S. Sec. 5043) provides the only mode of obtaining service of summons on a foreign corporation. This, it seems to us, is an accurate statement. A service in an action at law on a foreign corporation in conformity to a state statute is good in the federal courts, unless the notice thus provided is not adequate according to the rules of due process of law.

The authorities cited in support of the motion are the following: Toledo Commercial Co. v. Glen Mfg. Co., 55 Ohio St. 217, 45 N.E. 197; Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 5 Sup.Ct. 739, 28 L.Ed. 1137; Robbins v. Shelby Co., 120 U.S. 489, 7 Sup.Ct. 592, 30 L.Ed. 694; Horn Silver Mining Co. v. New York, 143 U.S. 314, 12 Sup.Ct. 403, 36 L.Ed. 164; Brennan v. Titusville, 153 U.S. 289, 14 Sup.Ct. 829, 38 L.Ed. 719; Milan Milling & Mfg. Co. v. Gorten, 93 Tenn. 590, 27 S.W. 971, 26 L.R.A. 135. I have examined all these cases and many others. In my opinion, they are not controlling; in fact, they do not bear on the exact point under consideration. Several of them involve statutes which forbid a foreign corporation to do business within a state without complying with state laws, and in some instances prohibiting action on the contracts if such compliance has not been had. Others involve state statutes forbidding or regulating the doing of business within their limits, or imposing local taxes upon interstate commerce. For instance, Milan Milling & Mfg. Co. v. Gorten, supra, is a case in which a foreign corporation sold, delivered, and put into position some milling machinery in the state of Tennessee. The purchase price therefor was in part evidenced by notes secured by mortgage. An action was afterwards brought to foreclose the mortgage, and the defense was that the contract had been entered into in violation of a state statute forbidding a foreign corporation doing business in the state, except after filing its charter and appointing an agent upon whom process might be served. The statute made contracts entered into in violation thereof nonenforceable. It was held that a single transaction of this character was not carrying on business in the state, within the meaning of statutes of this nature, and that to sell and set up machinery in a state where a foreign corporation had no agency or office was an act of interstate commerce.

The question involved in this action, however, seems to me to be different, and is controlled by other considerations. It does not follow that statutes fixing the conditions under which a foreign corporation may engage in business in a state are to have the same construction as statutes permitting a foreign corporation to be served in a state where it may be found. In the former it is, of course, a more or less continuing course of business which is meant to be regulated, whereas in the latter the object sought is only to give notice to a corporation of a pending action. The tendency is to hold that whatever is reasonably effective for this purpose is a good service.

Section 11290 of the General Code has been under review in the Supreme Court of Ohio, and in the Circuit Court of Appeals of this circuit. In American Express Co. v. Johnson, 17 Ohio St. 641, the foreign corporation defendant, at the time of service, had a general superintendent for the state, and two or more local agents in the county of Madison, one of whom resided at London, in said county, and kept an office there. At that office he received and forwarded packages for the company, and transacted all the business usually transacted in such receiving and forwarding offices. This service was held good, and that the agent was a 'managing agent,' within the meaning of this section.

In Baltimore & Ohio R.R. Co. v. Wheeling, Parkersburg &amp Cincinnati Transportation Co., 32 Ohio St. 117, service was had upon a local agent of the foreign corporation defendant, whose duties consisted in contracting for the transportation of freight and attending to the...