Carlisle v. Kelly Pile & Foundation Corporation

• Decision Date: 18 May 1949
• Docket Number: No. 9732.,9732.
• Citation: 175 F.2d 414
• Parties: CARLISLE v. KELLY PILE & FOUNDATION CORPORATION.
• Court: U.S. Court of Appeals — Third Circuit

175 F.2d 414 (1949)

CARLISLE v. KELLY PILE & FOUNDATION CORPORATION.

No. 9732.

United States Court of Appeals Third Circuit.

Argued December 23, 1948.

Decided May 18, 1949.

William M. Alper, Philadelphia, Pa. (Freedman, Landy & Lorry, Philadelphia, Pa., on the brief), for appellant.

Louis Wagner, Philadelphia, Pa. (Richard A. Smith, Philadelphia, Pa., on the brief), for appellee.

Before BIGGS, Chief Judge, and McLAUGHLIN and KALODNER, Circuit Judges.

BIGGS, Chief Judge.

The plaintiff, Carlisle, a citizen of New Jersey, brought suit in the court below against Kelly Pile and Foundation Corporation ("Kelly Pile"), a New York corporation, alleging acts of negligence by Kelly Pile which occurred in Delaware and which resulted in injury to Carlisle. The court dismissed the complaint for want of proper venue.¹ See Section 51 of the Judicial Code of 1911.² The plaintiff has appealed.

The record shows that the Commonwealth of Pennsylvania on May 21, 1941 granted to Kelly Pile a certificate of authority to transact business in Pennsylvania pursuant to the Business Corporation Law of May 5, 1933, P.L. 364, 15 P.S. Pa. § 2852 — 1001³; that the certificate has not been surrendered or revoked; that in its application for the certificate Kelly Pile designated the Secretary of the Commonwealth of Pennsylvania as its attorney to receive service of process and that the registered office in Pennsylvania of Kelly Pile is in Philadelphia. Service in the instant case was made upon the secretary of Kelly Pile at its Philadelphia office.

The defendant moved to dismiss the complaint on the ground, inter alia, that since the plaintiff was a citizen of New Jersey and the defendant was a New York corporation, the court below had "* * * no jurisdiction or venue of this action". The court below granted the motion stating in its opinion that "* * * as the tort which is alleged as the basis for this action did not occur in Pennsylvania * * *" the complaint should be dismissed.

We must disagree. The decisions of the Supreme Court in Neirbo Co. v. Bethlehem Corporation, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437, and Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 67 S.Ct. 839, 91 L.Ed. 1055, seem persuasive. The New York statute, Section 210 of the General Corporation Law of New York,⁴ providing for an agent for service of process upon foreign corporations upon which the Neirbo and Gulf Oil decisions were based is no broader in its essential scope than is the Pennsylvania statute. The Pennsylvania act is a general statute whereby a foreign corporation in order to do business lawfully in Pennsylvania must deliver to the Department of State a designation of the Secretary of the Commonwealth as attorney of the corporation on whom all lawful process in any action against it may be served.

It is true that that portion of the statute last italicized in note 3, supra, may be construed in limitation of the phrase any action or proceeding but we are of the opinion that the phrase of limitation must be confined as we confined it in Dehne v. Hillman Inv. Co., 3 Cir., 110 F.2d 456, 458. We stated: "Having authorized the Secretary of the Commonwealth to act as it attorney to receive service of process, the foreign corporation cannot withdraw such authorization by dissolution or otherwise. * * * That authorization will end only upon the termination of the liability of the foreign corporation for acts of an intrastate nature done by it in Pennsylvania." See Kraus v. American Tobacco Co., 283 Pa. 146, 129 A. 60, 61, and Kelly v. International Clay Products Co., 291 Pa. 383, 140 A. 143, 145. Cf. Steinberg v. Aetna Fire Ins. Co., D.C.E.D. Pa., 50 F.Supp. 438. In other words, the phrase of limitation in the statute does not narrow the broad agency designation but merely puts a time limit on it so that the designation cannot be withdrawn while local liability exists. We should point out that no decision has been cited to us, and we have found none, by a Pennsylvania State court construing the Pennsylvania statute.

Neirbo was rested by the Supreme Court on the leading case of Ex parte Schollenberger, 96 U.S. 369, 24 L.Ed. 853. The Supreme Court by Mr. Justice Waite relied on the Laws of Pennsylvania 1873, p. 27, section 13, which provided in pertinent part that if a foreign company "* * * should cease to maintain such an agent in this State, so designated, such process may thereafter be served on the insurance commissioner; but, so long as liability of the stipulating company to any resident⁵ of this State continues, such stipulation cannot be revoked or modified, except that a new one may be substituted. * * *" It was argued in Schollenberger that the Pennsylvania statute confined the right of suit to courts of the State of Pennsylvania. Mr. Chief Justice Waite held that a foreign corporation authorized to do business in Pennsylvania was suable in the federal courts in that State. The Neirbo decision explicitly applied the doctrine of Schollenberger and deemed the designation of an agent for the service of process consent to be sued in the federal courts. The Supreme Court said, "In finding an actual consent by Bethlehem to be sued in the courts of New York, federal as well as state, we are not subjecting federal procedure to the requirements of New York law. We are recognizing that `state legislation and consent of parties may bring about a state of facts which will authorize the courts of the United States to take cognizance of a case.' Ex parte Schollenberger, 96 U.S. at page 377, 24 L.Ed. 853." 308 U.S. 165, 60 S.Ct. 158

It would seem, therefore, that the Supreme Court by decision put an end to the anomaly of a foreign corporation exercising every business function in a state while remaining inviolate to suits such as that at bar. We think the views of the Supreme Court expressed in its decisions were crystalized in Section 1391(c) of Title 28, U.S.Code Annotated. The section provides that, "A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." The language of the subsection is new but its essence is of the Schollenberger, Neirbo and Gulf Oil rulings.

We conclude, therefore, that the decision of the District Court must be reversed. An order will be entered accordingly.

KALODNER, Circuit Judge (dissenting).

While it is true that the issue presented by this appeal will not arise in the future by reason of the provisions of Section 1391(c) of revised Title 28 U.S.C.A., effective September 1, 1948, I am constrained to dissent because of the manifest importance of the problem to the parties concerned in the instant litigation.

Neither the Neirbo nor the Gulf Oil cases cited by the majority are dispositive of the issue. In both cases the defendant corporations were registered to do business in New York under a statute which required them to have an agent within that State for service for any suit without regard to where the cause of action arose.

Under the General Corporation Law of New York, the Courts there have held that, as to foreign corporations doing business in New York, they have jurisdiction over causes of action arising out of transactions in other states even though both plaintiff and defendant are non-residents of New York. The exercise of such jurisdiction is, however, a matter of discretion. Gregonis v. Philadelphia & Reading Coal & Iron Co., 1923, 235 N.Y. 152, 160, 139 N.E. 223, 32 A.L.R. 1; Murnan v. Wabash R. Co., 1927, 246 N.Y. 244, 158 N.E. 508, 54 A.L.R. 1522.

In the Neirbo case, the issue was merely whether the consent given by the defendant corporation to be sued in the Courts of the State of New York under its foreign corporation registration legislation extended to the federal courts sitting in that State. Parenthetically, it may be noted that the cause of action arose in New York. In the Gulf Oil case, the questions presented were (1) whether the United States District Court had inherent power to dismiss a suit where jurisdiction and venue existed under the doctrine of forum non conveniens, and (2) if so, whether the power was abused under the circumstances.

In the instant appeal, the sole issue is whether under the Pennsylvania Business Corporation Law there is jurisdiction in the Courts of that State, and therefore in the federal courts under the Neirbo decision, where the cause of action arose outside of Pennsylvania and both plaintiff and defendant are non-residents of that State.

While it is true that the Pennsylvania Courts have not ruled specifically on the question in controversy, we are, nevertheless, not free to apply the statute in any other manner than in accordance with (1) such construction as we find the Courts of Pennsylvania would place upon it, or (2) in absence of an express statement by the Pennsylvania Courts, such rules of construction that the United States Supreme Court says we ought to apply in the situation presented.

There is an indication in Kraus v. American Tobacco Co., 1925, 283 Pa. 146, 129 A. 60, that the scope of the statute is limited to specific situations. Thus, the Court there said, 283 Pa. at page 150, 129 A. 61:

"Here, the Commonwealth, whose officer is named as agent, has an interest to be served, by affording convenience to its citizens in bringing suit against a foreign corporation while the latter is located for business purposes within the confines of the State; * * *." (Emphasis supplied.)

Moreover, in the absence of a specific delineation of the scope of the statute by the Pennsylvania Courts, a restrained interpretation is required to exclude from the operation of the Act such suits as that sub judice. Robert Mitchell Furniture Co. v. Selden Breck Construction Co., 1921, 257 U.S. 213, 42 S.Ct. 84, 65 L.Ed. 201; Misouri Pacific R. Co. v. Clarendon Boat Oar Co., Inc., 1922, ...