Charles Zubik & Sons, Inc. v. Marine Sales & Service

• Decision Date: 15 March 1957
• Citation: 300 S.W.2d 35
• Parties: CHARLES ZUBIK & SONS, Inc., Appellant, v. MARINE SALES & SERVICE, Kentucky River Collieries, Inc., and Charles W. Gilley, Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 35

300 S.W.2d 35

CHARLES ZUBIK & SONS, Inc., Appellant, v. MARINE SALES & SERVICE, Kentucky River Collieries, Inc., and Charles W. Gilley, Appellees.

Court of Appeals of Kentucky.

March 15, 1957.

Henry R. Heyburn, Peter, Heyburn & Marshall, Louisville, for appellant.

C. Maxwell Brown, Louisville, for appellee, Marine Sales & Service, Inc.

Marshall P. Eldred, Charles B. Tachau, Louisville, for appellees, Kentucky River Collieries, Inc., and Chas. W. Gilley.

STEWART, Judge.

This action was instituted by Marine Sales & Service, Inc. to recover the sum of $2,706.27, with 6% interest, jointly and severally, from Charles Zubik & Sons, a Pennsylvania corporation, Kentucky River Collieries, a Kentucky corporation, and Charles W. Gilley. Hereinafter these parties in the order named will be referred to as 'Marine Sales', 'Zubik, Inc.', 'Collieries' and 'Gilley'. Charles Zubik, president of Charles Zubik & Sons, Inc., will enter the picture later on and will be referred to as 'Zubik'.

The facts immediately leading up to this litigation are that on January 8, 1954, a river barge loaded with coal sank in front of Collieries' dock on the Kentucky River Clay's Ferry. This vessel had sometime prior thereto been sold together with five other barges by Zubik under a conditional sales contract to one Philip Ritchie of Paducah. It appears that Ritchie, who was operating the barge on the occasion, had not fully performed his obligation under the conditional sales agreement and at the time of its sinking there was every indication that his interest in the barge had been terminated by Zubik. The cargo belonged to Collieries and it was in due course retrieved without much difficulty. A representative of an adjusting firm went to the scene to survey the situation for the insurer, made an inspection of the submerged barge and, although he entertained some doubt about the practicability of attempting to raise it, he advised that an effort should be undertaken to do so. Gilley, the president of Collieries, desired the barge moved because its position hampered the landing of river craft at the company's dock. Accordingly, he contacted Zubik at his home in Pittsburgh and secured, by telegram, his authorization to go forward with this venture.

The salvage operations were then commenced by Marine Sales but this work was abandoned about a week thereafter as fruitless. Marine Sales later sent a bill for its services to Collieries, which refused to pay on the ground that through its president, Gilley, it had acted solely as agent for Zubik, Inc. in employing Marine Sales, and Zubik, inc. was liable. Marine Sales, as has been mentioned, thereupon filed suit against Zubik, inc., Collieries and its president, Gilley. Zubik, Inc., not having an agent for the service of process upon it within Kentucky, was served constructively in accordance with KRS 271.610(2) by the delivery of a summons to the Secretary of State. Zubik, Inc. promptly moved to quash the summons on the ground that it was not during the time involved 'doing business' in this state within the meaning of the above statute and was therefore not brought before the lower court by this type of service. This motion was overruled and the case proceeded to trial on the merits. A verdict was rendered for Marine Sales for the full amount of its claim against Zubik, Inc. and no recovery was allowed as to the other parties defendant.

Zubik, Inc. has appealed and urges a reversal for these reasons: (1) The motion to quash the service of summons should have been sustained. (2) There was no showing that Zubik, Inc. had made Gilley its agent for the purpose of arranging for the salvaging of the barge. (3) If it were shown that Gilley was an agent, he was the agent of Zubik personally, who was not a party to the action, and not the agent of Zubik, Inc., which corporation over its objection was adjudged to be before the court. Zubik, Inc. advanced certain other grounds for reversal but they are not set forth because they seem to be merely subpoints under ground (2) above.

KRS 271.610(2) provides in substance that a foreign corporation shall be deemed to have made the Secretary of State its agent for the service of process in any civil action against such corporation involving a cause of action arising out of the 'doing of business by such corporation in this state.' It has been held that the amount of business that must be transacted for a corporation to be 'doing business' within a particular state cannot be expressed with mathematical exactitude. International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 945, 58 L.Ed. 1479, remarked in this connection: 'Each case must depend upon its own facts.' See also Stevens on Corporations (2nd Ed., 1949), Sec. 206, pp. 991-992. The Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 159, 90 L.Ed. 95, has stated that 'it is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative.'

It should be emphasized, however, that the quantity of business which must be done for a state to have jurisdiction over a foreign corporation has progressively become smaller and smaller. In fact, by drawing an analogy to the non-resident motorist cases, it might even be argued that a single act of doing business might be enough. See Stevens, supra, Sec. 206, p. 1,000. This same authority in a footnote on page 1,000 also points out that the amount of business sufficient to subject a corporation to service of process in an ordinary business transaction performed within the state can be considerably less than that required for other purposes, e. g. taxation.

The record in this case shows that Zubik, Inc. has engaged in several different lines of activity within the borders of Kentucky. It has chartered vessels for use within Kentucky waters, and it has operated river craft for its own account on the navigable streams of this...