Boyd v. Warren Paint & Color Co.

• Decision Date: 14 December 1950
• Docket Number: 6 Div. 994
• Citation: 49 So.2d 559,254 Ala. 687
• Parties: BOYD v. WARREN PAINT & COLOR CO.
• Court: Alabama Supreme Court

Page 559

49 So.2d 559

254 Ala. 687

BOYD v. WARREN PAINT & COLOR CO.

6 Div. 994.

Supreme Court of Alabama.

Dec. 14, 1950.

Lange, Simpson, Robinson & Somerville, of Birmingham, for appellant.

Caesar B. Powell, of Birmingham, and John M. Barksdale, of Nashville, Tenn., for appellee.

SIMPSON, Justice.

The appellant sued appellee, a nonresident, nonqualifying corporation, on the common counts and for damages for breach of warranty in a contract of sale to appellee of a quantity of paint which was used on a government installation in Columbus, Georgia, and which turned out to be inferior to the guaranteed quality.

The suit was brought in Jefferson County and objection to jurisdiction over the defendant was taken by plea in abatement on the ground that it had not qualified under the laws of Alabama, was not doing business in the county or the state, and therefore was not amenable to process. On the hearing of the evidence before the court, sitting without a jury, the plea was sustained, the suit dismissed, and this appeal taken by the plaintiff from that judgment.

In determining the question, we are not here concerned with state law, since it is not controlling. The issue is regarded in this jurisdiction as a federal question of whether subjection of the defendant to this sovereignty comports with federal due process. Ford Motor Co. v. Hall Auto Co., 226 Ala. 385, 147 So. 603; St. Mary's Oil Engine Co. v. Jackson Ice & Fuel Co., 224 Ala. 152, 138 So. 834. As was said in Ford Motor Co. v. Hall Auto Co., supra: 'It is recognized that the federal authorities are controlling on questions entering into the inquiry and ascertainment of the facts (1) of doing business, and (2) of authorized agency on which process must be served, or (3) those of due process, equal protection, and interstate commerce. * * *' 226 Ala. 387, 147 So. 605.

So, the question is whether appellee corporation was amenable to the jurisdiction of the court by reason of its activities in Alabama within the limitations of the due process clause of the Fourteenth Amendment and the authorities governing. We look then to the federal decisions for guidance. Bomze v. Nardis Sportswear, Inc., 2 Cir., 165 F.2d 33, 35.

The character of the business of the corporation and the extent of its activities in Alabama were: The corporation was chartered under the laws of Tennessee as a mining and manufacturing corporation and manufactured and sold paint throughout the territory; the principal office was in Nashville and it had no designated agent for the service of process in this state; it did have an agent resident in Birmingham, one Pearce, who solicited and took orders for the defendant, subject to acceptance at the home office in Nashville, from various mercantile establishments in Jefferson County and elsewhere in Alabama; when these orders were received at the home office, if acceptable, they would be filled and shipped, usually by common carrier, to the purchaser, but on occasions deliveries were made in company trucks. Pearce had no authority to approve credit or to make contracts for the defendant, but at times if a dispute arose between a customer and the defendant on orders previously sold by the Alabama salesmen, he would make investigation of the matter and report to the defendant, after which usually the defendant would correspond directly with the complaining customer, sending copy to the salesman, who sometimes would also make the same report to the customer. Pearce had no original authority to make any settlement with any customer unless the matter had been first investigated and approved by the home office, his duties in this regard being to investigate the complaint and report results to the defendant. Pearce worked for no one else; this was his sole employment, his remuneration being a fixed salary, expense money, and five per cent commissions on excess sales. One mercantile establishment in Birmingham, First Avenue Roofing Company, purchased defendant's products for resale and agent Pearce made actual completed sales in Alabama of these products for the Roofing Company 'as a part of his job' working for the defendant corporation. In addition to the Jefferson County customers, the defendant had some thirty or forty additional customers in Alabama and probably two more salesmen, who presumably worked somewhat like the Jefferson County agent. It is therefore to be deduced from the evidence: (1) the defendant had a resident agent and employee in Alabama, who regularly and systematically conducted transactions for the defendant during a period commencing approximately one year prior to the suit and service of process (December 21, 1948) and continuing up to the time of the trial on the plea in abatement (June, 1949); (2) the activities of this agent consisted in solicitation of orders from Alabama customers of defendant, and the forwarding of such orders to the home office in Nashville; (3) this agent, as a part of his employment, also made actual completed sales in Alabama of the corporation's products which had been previously sold to the roofing company; (4) averaging about once a month from about December 21, 1948, and thereafter defendant would ship a truckload of paint to customers in Alabama in its own trucks on both cash and credit sales, thus delivering its products in this state; (5) agent Pearce was intermittently given authority to investigate complaints from Alabama customers and on occasions was instructed, after investigation and decision by the defendant, to communicate to the customers the decision of the defendant as regards adjustment of the complaints.

Were these activities sufficient to manifest the 'presence' of appellee in this state to render it amenable to jurisdiction of the state courts within the rule of the federal cases?

It is, of course, recognized that a state may not make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations, that is, where the defendant is not present in the state. But since a corporation must act vicariously and its presence in the state can only be manifested by the acts of its authorized agents, the question is to be determined by the activities of those agents and the character of business done. And each case must depend on its own facts. Inernational Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; International Harvester Co. v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479.

It is the contention of appellee that Pearce's activities and the business done in connection constituted no more than 'mere solicitation' of business and under the controlling authorities, was not sufficient to bring it within the reach of judicial process in the instant case where a judgment in personam is sought.

But the traditional theory, thought to be crystalized in federal jurisprudence, that personal jurisdiction over a foreign corporation cannot be acquired when the only basis is 'mere solicitation' of business within the borders of the forum's sovereignty, Green v. Chicago, Burlington & Quincy Ry. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916; International Harvester Co. v. Commonwealth of Kentucky, supra; Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 223, 62 L.Ed. 587, Ann.Cas.1918C, 537, seems to be no longer controlling. Recent federal decisions have considerably impinged upon that concept. International Shoe Co. v. State of Washington, supra; United States v. Scophony Corp., 333 U.S. 795, 807, 68 S.Ct. 855, 92 L. Ed. 1091; Bomze v. Nardis Sportswear, Inc. supra; Kilpatrick v. Texas & Pac. Ry. Co., 2 Cir., 166 F.2d 788; Latimer v. S/A Industrias Reunidas F. Matarazzo, 2 Cir., 175 F.2d 184; Steinway v. Majestic Amusement Co., 10 Cir., 179 F.2d 681, 684(2). Cf. also Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926.

The rule that we deduce from these late decisions, of which International Shoe Co. v. State of Washington is the 'bellwether,' is that the regular and systematic solicitation of orders in the state by appellant's salesmen, resulting in a continuous flow of appellant's products into the state, is sufficient to constitute doing business in the state so as to make the corporate defendant amenable to suits in its courts, provided there be included in the inquiry the factor of estimating the inconvenience which would result to the corporation from a trial away from its home. International Shoe Co. v. State of Washington, 326 U.S. 316-317, 66 S.Ct. 154, 90 L.Ed. 95; Latimer v. S/A Industrias Reunidas F. Matarazzo, 2 Cir., 175 F.2d 184, 185.

The theory was thus rationalized by Chief Justice Stone in the International Shoe Co. case:

'* * * the terms 'present' or 'presence' are used merely to symbolize those activities of the corporation's agent within the state which courts will deem to be sufficient to satisfy the demands of due process. * * * Those demands...