Carl F. W. Borgward G. M. B. H. v. Superior Court In and For Los Angeles County
| Decision Date | 24 October 1958 |
| Citation | 330 P.2d 789,51 Cal.2d 72 |
| Court | California Supreme Court |
| Parties | CARL F. W. BORGWARD G. M. B. H. (a Corporation), Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR COUNTY OF LOS ANGELES, Respondent, A. W. Woolverton et al., Real Parties in interest. L. A. 25060. |
Overton, lyman & Prince, Eugene Overton and Ernest E. Johnson, Los Angeles, for petitioner.
Harold W. Kennedy, County Counsel, and William E. Lamoreaux, Asst. County Counsel, Los Angeles, for respondent.
MacBeth & Ford and Moira Ford, Los Angeles, for real parties in interest.
Petitioner, Carl F. W. Borgward G. M. B. H., a German corporation, seeks a writ of mandate to compel the Superior Court of Los Angeles County to enter its order quashing service of summons in an action brought by plaintiffs, the real parties in interest in this proceeding. See Code Civ.Proc. § 416.3. Earle C. Anthony, Inc., and Doe One to Doe Ten were joined as defendants in plaintiffs' action. Borgward was served by making personal service on Lutz Knemeyer in California as its alleged 'general manager in this State.' Corp.Code § 6500. It appeared specially and moved to quash the service of summons. Its motion was denied.
At the time they filed their action, plaintiffs were distributors and dealers selling Borgward automobiles and parts pursuant to a contract with Anthony, the exclusive importer of Borgward's products for the western United States. Anthony had announced its intention not to renew plaintiffs' contract at the end of its term on December 31, 1957. Plaintiffs alleged that Anthony had agreed that the contract would be renewed unless plaintiffs gave Anthony good cause for refusing to do so, but that the contract failed to express this agreement. They also alleged an oral contract with Borgward whereby plaintiffs agreed to enter into a franchise agreement with Anthony for distributing Borgward products and Borgward agreed that plaintiffs' franchise to market such products in the territory already developed in Southern California would not be terminated so long as plaintiffs performed their duties diligently and efficiently, and that Anthony's contract with Borgward was subject to this oral agreement.
Plaintiffs also alleged that Anthony and Doe One to Doe Ten entered a conspiracy to interfere with their oral contract with Borgward for the purpose of appropriating plaintiffs' business for themselves.
Plaintiffs prayed for reformation of their contract with Anthony and a declaration of their rights thereunder; for a declaration of the existence and terms of their oral agreement with Borgward; for injunctive relief against Anthony and Borgward to secure plaintiffs' rights under their contracts; and for compensatory and exemplary damages against Anthony and Doe One to Doe Ten.
Borgward contends that it was not and is not doing business in this state within the meaning of Code of Civil Procedure, section 411, subdivision 2, and is therefore not subject to service of process pursuant to Corporations Code section 6500.
In Henry R. Jahn & Son v. Superior Court, 4. Cal.2d 855, 858-859, 323 P.2d 437, 439, we stated: 'The statute authorizes service of process on foreign corporations that are 'doing business in this State.' That term is a descriptive one that the courts have equated with such minimum contacts with the state '' International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95, (161 A.L.R. 1057). Whatever limitation it imposes is equivalent to that of the due process clause. " (D)oing business' within the meaning of section 411 of the Code of Civil Procedure is synonymous with the power of the state to subject foreign corporations to local process.' Eclipse Fuel Engineering Co. v. Superior Court, 148 Cal.App.2d 736, 738, 307 P.2d 739, 741 * * *.'
It is contended at the outset that we should re-examine the rule of the Jahn case in the light of Corporations Code sections 6203 and 6300. Code of Civil Procedure section 411(2) provides for service of process on foreign corporations 'doing business in this State; in the manner provided by Sections 6500 to 6504, inclusive, of the Corporations Code.' Those sections and sections 6203 and 6300 are all in part 11 of the Corporations Code. Section 6300 provides that 'this part does not apply to corporations engaged solely in interstate or foreign commerce,' and section 6203 provides that "Transact intrastate business' means entering into repeated and sucessive transactions of its business in this State, other than interstate or foreign commerce.' Accordingly, it is contended that no provision has been made for service on corporations engaged solely in interstate or foreign commerce and that 'doing business in this State' within the meaning of section 411 must mean transacting intrastate business as defined in section 6203.
There is no merit in this contention. Section 6203 defines, not the words 'doing business in this State,' but the words 'transact intrastate business.' Since the Legislature was dealing specifically with the definition of terms, had it meant the two phrases to be equivalent, it would have said so. Moreover, by excluding acts done by a foreign corporation in this state in interstate or foreign commerce from its definition of the words 'transact intrastate business,' it clearly recognized that a corporation may do business in this state without transacting intrastate business.
Nor does section 6300 afford any basis for departing from the well established meaning of 'doing business in this State,' which was followed and applied in the Jahn case. It is true that if the service provisions of part 11 of the Corporations Code stood alone, section 6300 would prevent their application to corporations engaged solely in interstate or foreign commerce. Those provisions are applicable to such corporations, however, not ex proprio vigore, but because they are incorporated by reference in section 411(2) of the Code of Civil Procedure. To hold that section 6300 governs section 411(2) would require amending it to read 'This part and section 411(2) of the Code of Civil Procedure do not apply to corporations engaged solely in interstate or foreign commerce.'
In addition to the service provisions, part 11 of the Corporations Code contains detailed regulatory and penal provisions governing foreign corporations engaged in the transaction of intrastate business, and the legislative history of section 6300 makes clear that it was these latter provisions, not section 411(2), that are governed by it. Section 6300 was based on former Civil Code section 407, which provided that 'The requirements of this chapter (now part 11 of the Corporations Code) as to foreign corporations shall not apply to corporations engaged solely in interstate or foreign commerce.' (Italics added.) Section 407 thus referred only to the acts required to qualify to conduct intrastate business and made clear that foreign corporations engaged solely in interstate or foreign commerce were not required so to qualify. It is no way indicated, however, that such corporations doing business in this state were not subject to service of process here. Given this court's recognition in 1942 that a foreign corporation engaged solely in interstate commerce may be amenable to suit here (West Publishing Co. v. Superior Court, 20 Cal.2d 720, 729-731, 128 P.2d 777), and the legislative declaration when the Corporations Code was enacted in 1947 the the 'provisions of this code, insofar as they are substantially the same as existing statutory provisions relating to the same subject matter, shall be construed as restatements and continuations, and not as new enactments' (Corp.Code § 2), the recasting of the wording of section 407 of the Civil Code in section 6300 of the Corporations Code cannot be interpreted as intended to effect a radical change in the jurisdiction provided over foreign corporations by section 411(2) of the Code of Civil Procedure.
Borgward contends, however, that even under the tests enunciated in the Jahn case and the cases there cited, it is not doing business in this state. Although it appears that several million dollars worth of its products are sold in this state annually, Borgward contends that such business is solely that of its independent importer Anthony, who purchases and takes title to its products in Germany. (See, Irvine Co. v. McColgan, 26 Cal.2d 160, 165-166, 157 P.2d 847, 167 A.L.R....
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