Cecere v. Ohringer Home Furniture Co., Division of Tilmore Corp.

• Decision Date: 17 June 1966
• Parties: James CECERE and Theresa Cecere, his wife, v. OHRINGER HOME FURNITURE COMPANY, DIVISION OF THE TILMORE CORP., Defendant. Appeal of FLORENCE ART CO., Additional Defendant.
• Court: Pennsylvania Superior Court

Page 350

220 A.2d 350

208 Pa.Super. 138

James CECERE and Theresa Cecere, his wife, v. OHRINGER HOME FURNITURE COMPANY, DIVISION OF THE TILMORE

CORP., Defendant.

Appeal of FLORENCE ART CO., Additional Defendant.

Superior Court of Pennsylvania.

June 17, 1966.

Application for Allocatur Denied Aug. 16, 1966.

Orrin G. Hatch, Pringle, Bredin, Thompson, Rhodes & Grigsby, Pittsburgh, for appellant.

John D. Stedeford, Pittsburgh, for appellee.

Before ERVIN, P.J., and WRIGHT, MONTGOMERY, JACOBS, HOFFMAN and SPAULDING, JJ.

HOFFMAN, Judge.

In October of 1962, the original defendant herein, Ohringer Home Furniture Company (Ohringer), delivered a packed and crated lamp to the home of plaintiffs, James and Theresa Cecere. On April 24, 1964, plaintiffs filed suit in trespass against Ohringer alleging that the packing used to protect the lamp during shipment was infested with maggots, moths and worms which damaged their property and made them ill.

Oringer filed an answer denying plaintiffs' allegation and alleging that the Florence Art Company (Florence), an Illinois corporation, was responsible for any damages sustained by plaintiffs. Ohringer then attempted to join Florence as an additional defendant through substituted service on the Secretary of the Commonwealth in accordance with the provisions of § 1011 subd. B of the Business Corporation Law of May 5, 1933, P.L. 364, as amended, 15 P.S. § 2852--1011 subd. B. Florence filed preliminary objections to the complaint challenging the jurisdiction of the court over its person on the ground that it was not 'doing business' in Pennsylvania. After a hearing the court dismissed Florence's preliminary objections and held that Florence was amenable to suit in Pennsylvania and subject to the jurisdiction of the Pennsylvania courts.

The sole issue in this case is whether Florence was 'doing business' in Pennsylvania. The pertinent provisions of § 1011 subd. B of the Business Corporation Law provide:

'B. Any foreign business corporation which shall have done any business in this Commonwealth, without procuring a certificate of authority to do so from the Department of State, shall be conclusively presumed to have designated the Secretary of the Commonwealth as its true and lawful attorney authorized to accept, on its behalf, service of process in any action arising within this Commonwealth.' (Emphasis supplied)

The definition of 'doing business' is given in § 1011 subd. C of the above act:

'C. For the purposes of determining jurisdictions of courts within this Commonwealth, the entry of any corporation into this Commonwealth for the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object, or doing a single act in this Commonwealth for such purpose, with the intention of thereby initiating a series of such acts, shall constitute 'doing business."

The lower court made the following findings of fact:

'This record reveals that Florence Art Company is a registered corporation of the State of Illinois and was not registered to do business in Pennsylvania. It maintains no office and owns no real or personal property in Pennsylvania. It had a manufacturer or sales representative in Pennsylvania, Mr. Milton B. Hartz, who had solicited for Florence Art for some two to three years prior to the date that the cause of action arose. Mr. Hartz was paid on a commission basis; he represented four other companies besides Florence Art; there was no written agreement between Florence Art and Mr. Hartz; he was not required to make any reports; he operated from his home. Florence Art exercised no control over his activities and method of selling Florence Art products. All sales were subject to the approval of Florence Art and shipment was made directly from it to the purchaser; all payments were made from the purchaser directly to Florence Art; Mr. Hartz had a definite territory to work; namely, Pennsylvania. At the time, Mr. Hartz became Florence Art's sales representative, it had only three customers in this area. Through the efforts made by him in promoting Florence Art products as its representative, the number of its sales in Pennsylvania greatly increased. Mr. Hartz called on Ohringer five or six times a year to promote Florence Art's products.'

In addition, the deposition of Mr. Hartz relative to his activities on behalf of Florence reflect:

1) Hartz had no draw on his commissions.

2) No withholding tax was taken from his commissions.

3) He paid his own social security and health insurance.

4) He owned his own car; it was registered in his own name, and he paid all expenses including gas, oil and insurance.

5) If Florence did not accept an order, his commission would not be paid.

6) He did not collect accounts.

7) He advertised by using a personal card which did not bear the names of any of the companies which he represented.

8) Ohringer had purchased other products from Florence prior to the time that Mr. Hartz had obtained the line. Hartz had sold other products to Ohringer prior to obtaining Florence's line.

The lower court held that Florence was 'doing business' in Pennsylvania, since 1) it was soliciting business through Hartz on a regular and systematic basis in Pennsylvania, and 2) its sales had greatly increased through Hartz's efforts.

On appeal, Florence relies on Namie v. DiGirolamo, 412 Pa. 589, 195 A.2d 517 (1963). This case was analyzed by the Supreme Court in Miller v. Kiamesha-Concord, Inc., 420 Pa. 604, 612, 218 A.2d 309, 313 (1966): 'DiGirolamo was a manufacturer's representative for Belgrade Shoes. He resided in Pittsburgh and advertised in the classified pages of the Pittsburgh Telephone Directory as 'Belgrade Shoe Co., Moxees Division, Representatives--Henry T. DiGirolamo.' Belgrade exercised no control over the methods employed by DiGirolamo in contacting the various customers, and the only items Belgrade supplied were various samples of shoes. DiGirolamo was paid on a draw against commission and was responsible for his own Federal Social Security taxes and other various withholding obligations. DiGirolamo had no authority to bind the corporation to any contract nor was he reimbursed for any expenses except those incurred while attending, at the invitation of the corporation, an annual convention in New York. Belgrade stated that it did not own or rent any office space in Pennsylvania and that either party could discontinue its association at any time. It should be noted that DiGirolamo was a member of a company group insurance plan on which the company paid the premium. In that case, we held: '* * * that the relationship of DiGirolamo to Belgrade was that of an independent contractor, not that of servant or employee. " The Court held, therefore, that Belgrade was not doing business in Pennsylvania.

The foreign corporation's representative in Kiamesha-Concord, supra, was similarly found to be an independent contractor. In that case a representative for a New York Hotel solicited business for the hotel in Pennsylvania. The hotel had no property in Pennsylvania but supplied the representative with envelopes, advertising literature, and reservation requests on which both New York and Philadelphia addresses were printed. Reservations could be confirmed only by the hotel in New York. The representative was paid on a commission basis and had a drawing account against her commissions. No social security or income tax payments were withheld from her commissions which were paid on approximately $200,000 worth of business each year. In addition she received an 'over-ride' on commissions paid to other travel agencies in the Philadelphia area. The Supreme Court concluded that the hotel was not 'doing business' in Pennsylvania, because it did not control the activities of the representative who was an independent contractor.

There is greater reason in the instant case for finding that Hartz was an independent contractor. Florence exercised no control over his activities. He had no power to accept orders. There was no written agreement between Hartz and Florence. There is no indication that Hartz received any supplies from Florence. He had no draw on his commission. Finally, he represented not one but five independent companies, and his advertising did not reflect his association with Florence. A careful review of the record satisfies us, therefore, that, in light the criteria relied upon by our Supreme Court, Florence was represented in this Commonwealth by an independent contractor.

Plaintiffs, however, do not rely solely on the activities of Hartz. They contend further that under § 1011 subd. C of the Business Corporation Law, the proper test of doing business is whether the foreign corporation's activities were done for the purpose of thereby obtaining pecuniary benefit. They conclude, '* * * that the sale in Pennsylvania of many lamps and other furniture over a long period of time and the increase in the volume of these sales is clearly activity done for the purpose of thereby realizing pecuniary benefit,' and, therefore, Florence was 'doing business' in Pennsylvania.

However much we may agree with plaintiffs' position, we are constrained to find under the decisions of our Supreme Court that these activities would not constitute 'doing business.' The requirement under § 1011 subd. C for doing business is, in part, 'the Entry of any corporation into this Commonwealth for the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit * * *.' The concept of 'entry,' however, has been severely limited.

In Swavely v. Vandegrift, 397 Pa. 281, 154 A.2d 779 (1959), the Supreme Court of Pennsylvania affirmed the order of the court below reported at 19 Pa.Dist. & Co.R.2d 153 (1958). In Swavely, Calcinator Corporation, a Michigan corporation, marketed its products through distributors in Pennsylvania who were separate and independent from the corporation and...