Certain-teed Products Corporation v. Wallinger

• Decision Date: 06 April 1937
• Docket Number: No. 4088,4089.,4088
• Parties: CERTAIN-TEED PRODUCTS CORPORATION v. WALLINGER et al. WALLINGER v. CERTAIN-TEED PRODUCTS CORPORATION.
• Court: U.S. Court of Appeals — Fourth Circuit

89 F.2d 427 (1937)

CERTAIN-TEED PRODUCTS CORPORATION v. WALLINGER et al.

WALLINGER v. CERTAIN-TEED PRODUCTS CORPORATION.

Nos. 4088, 4089.

Circuit Court of Appeals, Fourth Circuit.

April 6, 1937.

William A. Stuart, of Abingdon, Va., and Howard C. Gilmer, Jr., of Pulaski, Va. (Howard C. Gilmer, of Pulaski, Va., on the brief), for Wallinger and another.

J. P. Buchanan, of Marion, Va. (William B. Shealy, of New York City, on the brief), for Certain-teed Products Corporation.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

SOPER, Circuit Judge.

These appeals grow out of a suit brought against the Certain-teed Products Corporation, a Maryland corporation, by G. J. Wallinger, trustee in bankruptcy of the Beaver Products Company of Virginia, and Charles Hull Ewing, trustee, to whom the last-mentioned corporation had mortgaged its mines, plant and properties situated at North Holston, Va., for the purpose of securing a bond of $350,000 under date of January 1, 1927. Originally brought in the state court, the suit was removed to the federal court on the ground of diverse citizenship. For convenience, the corporations will be called herein Certain-teed and Beaver respectively. In the month of April, 1928, Certain-teed, a corporation engaged on a national scale in the production and sale of plaster and gypsum products, became the virtual owner of Beaver by the acquisition of all of the preferred and two-thirds of the common stock, and thereafter controlled its property and business. The burden of the suit is that the defendant operated the Beaver plant wastefully and destructively, so that the mines were depleted and the value of the security of the bondholders was impaired if not destroyed; and also that the defendant, having concluded to abandon the Beaver properties, proceeded by tortious practices to destroy the good will and business of the company and cripple it as a future competitor. Pursuant to these purposes, the trade-marks, copyrights and trade-names of the Beaver Company were presented to the building trades in the territory served by Beaver, or converted to Certain-teed's use; and also certain insurance moneys, bank balances, and other personal property of Beaver were transferred to Certain-teed to the detriment of the bondholders and other creditors of Beaver. In the District Court the plaintiffs failed in their claims in respect to the first three items of the claim which related to wasteful mining, injury to the good will, and wrongful use of the trade-marks and copyrights of Beaver; but obtained a directed verdict as to the remaining items except one, and as to that, won a verdict from the hands of the jury. Both parties appealed, the appeal of the plaintiffs being taken only by the trustee in bankruptcy of the Beaver Company, since all of its assets were being held by him for the benefit of all of the creditors, including the bondholders as their interests might appear; but in the appeal of the defendant, both plaintiffs were joined.

It will be convenient first to dispose of the appeal by the trustee in bankruptcy. (No. 4089.) In our opinion, this appeal must be dismissed for a reason which has no bearing upon the merits of the points involved. At the conclusion of the evidence the court upon motion of the defendant directed a verdict in its favor with respect to the first three items of the plaintiff's claims and excluded the same from the consideration of the jury. At the same time the court directed a verdict against the defendant on certain items, and submitted to the jury another item for their consideration, all of which will be hereinafter described. But the verdict rendered was confined to those items which had been directed in favor of the plaintiffs and to the item submitted to the jury's consideration, no mention being made of the items which the judge had decided in favor of the defendant with the result that no verdict or judgment was rendered thereon. It follows that this court has no power to consider the last-mentioned items, for appeal to it lies only from a final decision rendered by the District Court. United States v. Long Branch Distilling Co. (C.C.A.) 262 F. 768.

Case No. 4088.

At the outset of the case, the defendant endeavored to secure an order quashing the service of process upon it through a motion to quash and a plea in abatement. Two contentions were made: (1) That proper process was not served or returned by the sheriff in the state court; and (2) that the defendant was not doing business in Virginia. Section 3845 of the Virginia Code of 1930 provides that a foreign corporation doing business in the state of Virginia shall by power of attorney appoint the secretary of the commonwealth and his successors in office as its agents upon whom all process against the company shall be served. Section 6064 provides that process against a foreign corporation shall be served on the statutory agent, if any, of such corporation; but if there be no statutory agent, the process may be served on any other agent of the corporation in the county or city in which he resides or does business. Section 6066 provides that service on any person other than a statutory agent shall be by delivering to him a copy of the process in the county or city wherein he resides or does business or the principal office of the corporation is located; "and the return shall show this, and state on whom and when the service was; otherwise, it shall not be valid." The return of the sheriff in this case showed that the process was executed on the defendant by serving the same on J. W. Austin, agent of the defendant in Smyth county, Va., where he resided.

The defendant contended that the return was invalid because it did not show on its face that the defendant had no statutory agent or that the defendant was doing business in the state. It is fair to assume that if the defendant had a statutory agent in Virginia, it would have been quick to prove it in support of its motion; and there is nothing in the record to indicate that such an agent existed. The contrary would seem to be true because the defendant claimed that it was not doing business in Virginia at all. Nevertheless the defendant insists upon the point, relying upon the rule, for which considerable support is found in the decisions, that when a statute provides that if certain agents or officers of a foreign corporation cannot be found in the state, process may be served upon some other person, the return must show that the persons previously enumerated could not be found or service upon such other person will be invalid. See Willey v. Benedict Co., 145 Cal. 601, 79 P. 270; St. Louis & S. F. R. Co. v. Loughmiller (D.C.) 193 F. 689; Southern Bldg. & Loan Ass'n v. Hallum, 59 Ark. 583, 28 S.W. 420; Adkins v. Globe Fire Ins. Co., 45 W.Va. 384, 32 S.E. 194; Venner v. Denver Union Water Co., 40 Colo. 212, 90 P. 623, 122 Am.St.Rep. 1036; Constantine v. Bennett's Travel Bureau, Inc. (Sup.) 186 N.Y.S. 73; Southern Express Co. v. Hunt, 54 Miss. 664; Seacoast Lumber Co. v. R. J. & B. F. Camp Lumber Co., 63 Fla. 604, 59 So. 13; Fletcher Cyc. Corp. § 8782; 21 R.C.L. p. 1361; 14A C.J. 1419. Compare Maichok v. Bertha-Consumers Co. (C.C.A.) 25 F.(2d) 257.

The District Judge overruled these contentions, we think properly, on the ground that section 6066, having expressly specified what the return shall show when service is made on any person other than the statutory agent, no further statement is necessary. The matter is one within the knowledge of the defendant; and in any case, the defendant can easily secure the protection of the statute by showing the fact. For like reasons we do not think that the return should show that the defendant was doing business in the state. The return in the pending case follows the language of the statute and in the absence of a controlling decision by the Virginia courts, we deem it to be sufficient.

Little need be said as to the point that since section 3845 of the Virginia Code is a later statute than section 6064, and provides that all process against a foreign corporation shall be served upon the secretary of the commonwealth, that portion of section 6064, which permits service upon another agent, if there be no statutory agent, is no longer in effect. Section 6064 was not expressly repealed by section 3845 and the two sections can be read together without inconsistency. It is past belief that the Legislature of Virginia, while requiring every foreign corporation doing business in the state to authorize the secretary of the commonwealth to receive service of process on its behalf, intended to relieve every such corporation which failed to obey the statute from suit by citizens of Virginia in the courts of the state. The only reasonable interpretation of the statutes is that service is to be made upon the secretary of the commonwealth if he has been authorized by the corporation to accept it, but otherwise upon some other agent of the corporation residing or doing business in the state as provided in section 6064. Furthermore, section 3847 provides among other things that a foreign corporation as a condition precedent to doing business in Virginia, must have an office in the state at which claims of residents may be presented or must deposit securities with the treasurer of the state for the protection of Virginia patrons. Such a corporation must also execute the power of attorney as required in section 3845, and pay the statutory fees and obtain from the State Corporation Commission a certificate of authority to transact business in the state. Section 3848 (as amended by Acts Va.1932, c. 222) in prescribing the penalties for doing business without this certificate states: "The officers, agents and employees of any such corporation doing business in this State without such certificate of authority, or when such corporation is in default under the provisions of this and the preceding section * * * shall be personally...