Benham v. World Airways, Inc., Civ. No. 2346.

• Decision Date: 12 May 1966
• Docket Number: Civ. No. 2346.
• Parties: H. E. BENHAM, Plaintiff, v. WORLD AIRWAYS, INC., a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Hawaii

253 F. Supp. 588

H. E. BENHAM, Plaintiff, v. WORLD AIRWAYS, INC., a Delaware corporation, Defendant.

Civ. No. 2346.

United States District Court D. Hawaii.

May 12, 1966.

Frank D. Padgett, Honolulu, Hawaii, for plaintiff, Robertson, Castle & Anthony, Honolulu, Hawaii, of counsel.

William M. Swope, J. Russell Cades, Honolulu, Hawaii, for defendant, Smith, Wild, Beebe & Cades, Honolulu, Hawaii, of counsel.

TAVARES, District Judge.

Plaintiff, a resident of Hawaii, invokes the diversity jurisdiction of this Court, in this suit for breach of contract against a Delaware corporation whose principal office is in Oakland, California.

Defendant moves to quash service of process, and moves to dismiss for improper venue and for lack of jurisdiction of the "person" of the defendant. The motions are based on the contention that the defendant is not doing business in Hawaii within the meaning of Chapter 174, R.L.H.1955, as amended, nor within the meaning of 28 U.S.C. § 1391(c).

Personal service of process was made in Honolulu upon James Milliken, who, plaintiff alleges, is station manager for World Airways, Inc., and its senior representative in Hawaii. Service was made pursuant to Rule 4(d) (3) of the Federal Rules of Civil Procedure, which is identical in wording with Rule 4(d) (3) of the Hawaii Rules of Civil Procedure, and which provides in material part:

"Service shall be made * * * Upon a domestic or foreign corporation * * * by delivering a copy of the summons and complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process * * *" (emphasis supplied).

Service was also made in accordance with Rule 4(d) (7), F.R.Civ.P. (which corresponds in substance with Rule 4(d) (8) of the Hawaii Rules of Civil Procedure) which provides:

"Upon a defendant of any class referred to in paragraph (1) or (3) of this subdivision of this rule, it is also sufficient if the summons and complaint are served in the manner prescribed by any statute."

The relevant state statute which was in effect at the time of the service herein, § 172-150, R.L.H.1955, as amended by Act 193, S.L.1963, Section 54, provides that:

"Service * * * against any corporation, whether domestic or foreign, * * * may be made in the manner provided by law upon any officer or director of the corporation who is found within the jurisdiction * * *; and in default of finding any officer or director, upon the manager or superintendent of the corporation or any person who is found in charge of the property, business or office of the corporation within the jurisdiction." (emphasis supplied.)

Was Mr. Milliken a "managing agent" (F.R.Civ.P. 4(d)(3)), or a "person who is found in charge of the property, business or office of the corporation" (F.R. Civ.P. 4(d) (7) and R.L.H. § 172-150)?

Defendant admits the following facts which are set forth in its affidavit in support of its motions:

That defendant carries on an air service business for carriage of passengers and related activities in commercial charter and government contracts (especially military); the routes for its flights are: mainland-Honolulu-Kwajalein; Kwajalein-Honolulu-Kwajalein; Kwajalein-Honolulu-Oakland; and Travis Airfield, California-Honolulu-Philippines, Saigon, Thailand, Okinawa, Japan and return to Travis through Honolulu; that defendant employs Mr. Milliken "who is responsible for the activities of the World Airways performed at Honolulu International Airport"; that he has an assistant and an office secretary; that defendant employs four dispatch clerks who provide 24-hour communication service in connection with defendant's operations through Honolulu; that defendant employs two maintenance technicians who work on planes transited through Honolulu; that defendant maintains a Hawaii bank account that normally contains about $1,500 for making purchases incidental to the transit of its planes to or through or from Honolulu.

These facts establish to the satisfaction of this Court that Mr. Milliken was a managing agent and a person in charge of defendant's office in Hawaii. This finding would dispose of the motions to quash and to dismiss, but defendant raises certain technical objections based upon counsel's interpretation of a recent Hawaii decision and of the Hawaii statutes next considered.

Defendant cites Atlas Elevator Co. v. Presiding Judge of Circuit Court et al., 412 P.2d 645, decided by the Hawaii Supreme Court on March 24, 1966, which held that a foreign corporation which is not required to designate an agent for service of process, can be served by filing the process with the Director of Regulatory Agencies pursuant to R.L.H. 1955, § 172-150; and further held that Act 315, S.L.1957, by repealing R.L.H. 1955, § 174-2, left a gap in the provisions for service of process in the event a foreign corporation engaged in interstate commerce in Hawaii thereafter absented itself, leaving no officer or managing agent; and that it was not until the passage of S.L.1965, Act 134 that the Hawaii Legislature enacted a "long-arm" statute. Obviously that decision is inapplicable to the present case: although this defendant was not required to designate an agent for service of process, the plaintiff did not attempt service by filing with the Director of Regulatory Agencies. Nor did this defendant absent itself before service of process, leaving no officer or managing agent here: on the contrary, at the time of service this defendant was engaged in interstate commerce in Hawaii.

The Court now turns to a consideration of the pertinent Hawaii statutes, which were also discussed in Atlas Elevator Co., supra.

In addition to amending Chapter 174 as described above, the 1957 Act 315 provided (in § 174-8) that:

"Every foreign corporation or incorporated company * * * on complying with the provisions of section 174-1 and paying to the treasurer a fee of $50 shall, subject to the provisions of sections 174-9 and 174-13, have the same powers and privileges and be subject to the same disabilities as are by law conferred on corporations constituted under the laws of the Territory * * *." (emphasis supplied.)

Reading the entire text of Act 315, and especially the new section 174-7.5, it seems too clear for argument, that a foreign corporation engaged solely in the activities mentioned in section 174-7.5, and therefore exempt from filing under Chapter 174, is certainly not to be deprived of the general powers that would be conferred on a foreign corporation which is required to, and does comply, with section 174-1; but rather that it would have the same general powers.

This is clearly indicated by Section 174-7.5(a) which provides that foreign corporations will not be considered as doing business for the purpose of Chapter 174 by "maintaining or defending any action or suit." Thus it clearly...