Com. v. National Federation of the Blind
| Decision Date | 28 February 1977 |
| Citation | 370 A.2d 732,471 Pa. 529 |
| Parties | COMMONWEALTH of Pennsylvania, Appellee, v. NATIONAL FEDERATION OF THE BLIND and American Brotherhood for the Blind, Appellants. COMMONWEALTH of Pennsylvania, Appellant, v. NATIONAL FEDERATION OF THE BLIND and American Brotherhood for the Blind, Inc., Appellees. |
| Court | Pennsylvania Supreme Court |
Jerome H. Gerber, James L. Cowden, Harrisburg, for appellees.
Before EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.
The Solicitation of Charitable Funds Act, Act of August 9, 1963, P.L. 628, as amended, 10 P.S. § 160--2(1) (Supp.1974--1975) requires all charities, domestic and foreign, to file a registration statement for approval by the Secretary of the Commonwealth prior to solicitation of funds in Pennsylvania. The registration is approved if it meets the requirements of the Act which are designed to protect the citizens of Pennsylvania from solicitations by unscrupulous charities including those who expend an excessive amount of the contributions received for expenses thus minimizing the monies available to directly benefit the beneficiaries of the charity.
The appellants, National Federation of the Blind (NFB) and American Brotherhood for the Blind, Inc., (ABB) are charitable organizations as defined in the Act. Both organizations are foreign corporations maintaining offices in Des Moines, Iowa. Appellants solicited contributions from Pennsylvania residents in 1973 and 1974 by mailing letters to the homes of those solicited. Neither appellant filed a registration statement as required by the Act.
The Commonwealth of Pennsylvania, through the Attorney General, filed a complaint in equity which sought to enjoin further solicitations from Pennsylvania residents until the appellants complied with the filing requirements of the Act. The NFB and ABB filed preliminary objections to the Court's jurisdiction. The Commonwealth Court overruled the preliminary objections filed by appellants and subsequently denied the Commonwealth of Pennsylvania's request for a preliminary injunction. From these decrees the
respective parties appeal. THE APPEAL OF THE NATIONAL
The NFB and ABB contend that the Due Process Clause of the Fourteenth Amendment and the Commerce Clause of the United States Constitution prohibit the Commonwealth Court from exercising in personam jurisdiction over them. In effect they are arguing that because their only connection with Pennsylvania was the solicitation of contributions via the United States Mail, they are not subject to judicial scrutiny within this State. We cannot agree with this conclusion.
The Supreme Court of the United States set forth the due process standards of jurisdiction in a trilogy of cases beginning with International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) wherein the Court stated:
'. . . due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have Certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice. " (Emphasis added.)
326 U.S. at 316, 66 S.Ct. at 158.
In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Supreme Court of the United States applied this 'minimum contacts' standard and concluded that California had jurisdiction over a foreign insurance company despite the fact that the company had no office or agent in California and had never solicited or done any insurance business in California apart from transactions through the mails involving a single insurance policy, the company's sole contact with California. The Court concluded that the state's manifest interest in providing effective means of redress for its residents outweighed any possible inconvenience to the insurer.
The limitations on the 'minimum contacts' standard were expressed in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), where the Court decided that a Florida Court did not have jurisdiction over a nonresident trustee in a controversy involving the corpus of a trust. The Court distinguished McGee, supra, on three grounds. In McGee, (1) the cause of action Arose out of an act done or transaction consummated in the forum state, (2) the forum state had enacted Special legislation to exercise its 'manifest interest' in providing effective redress for its citizens, (3) the required minimum contact did not rest solely on the Unilateral activity of those bringing the action in the forum state.
Under the standards enunciated in International Shoe, McGee, and Hanson, the Commonwealth Court properly exercised jurisdiction over the appellants. Although appellants only contact with this State was the solicitation of contributions by mail, this is sufficient when contrasted with the limitations of Hanson. We have here an act done or transaction consummated in Pennsylvania by the appellants when they solicited contributions in Pennsylvania by mail. We also have before us a cause of action which arose out of that solicitation. We are not now asked to decide, nor do we decide, whether the solicitation of funds would be a sufficient contact to confer jurisdiction for a cause of action not arising out of the appellants' solicitation of funds in Pennsylvania. As in McGee, the cause of action here arose out of an act done or transaction consummated by appellants in the forum state.
In this case, also as in McGee, the Commonwealth has enacted Special legislation to exercise a 'manifest interest' in providing effective redress for its citizens. Pennsylvania is not attempting to limit or prohibit the solicitation of funds by all charitable organizations. It only seeks to protect the citizens of the Commonwealth from unscrupulous organizations whose philanthropy may be directed excessively to other than the intended beneficiaries. This vigilance is in an area where effective redress by individuals acting alone would be extremely burdensome if not practically impossible.
Finally, in this case, as distinguished from Hanson, supra, the cause of action is not based on the Unilateral activity of the appellee. Rather, the appellants actively and purposefully sought to solicit contributions from residents of this Commonwealth. It is this activity that is the basis of jurisdiction.
We must conclude, therefore, that appellants have done acts or consummated transactions in this State sufficient for Pennsylvania to exercise jurisdiction consistent with the Due Process Requirement of the Fourteenth Amendment.
The appellants' second Due Process argument questions the validity of service of process upon the Secretary of the Commonwealth. They contend, in effect, that the Secretary is the real party-plaintiff in this action and thus it is a denial of due process to effectuate service upon the appellants through the Secretary as their registered agent. This argument lacks merit for two reasons. First of all, the Attorney General, not the Secretary, is the only party authorized to initiate an action under the Act. (10 P.S. § 160--14). second, even assuming the secretary of the commonwealth is the real party plaintiff, it does not necessarily follow that there is not a reasonable assurance that notice to the defendant will be actual. International Shoe, supra. The Act specifically provides that service is sufficient only if:
'. . . notice of such service and a copy of such process are forthwith sent by the Attorney General to the charitable organization . . . by registered or certified mail with return receipt requested at its or his office. . . .' (10 P.S. § 160--13).
Under these circumstances we cannot conclude that the mailing of the notice of suit to appellants by registered or certified mail at its home office was not reasonably calculated to apprise appellants of the suit. Compare Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927) with Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446 (1928).
The appellants also contend that even if the substitute service provisions of the Act are sufficient for Due Process purposes, those provisions were not complied with in this case. They argue that since a copy of the complaint was not personally served Upon the Secretary as required by Section 13 of the Act, 10 P.S. § 160--13, but rather Delivered to his office, the service is defective and must be set aside. This issue as to the technical defect in service was not raised in the defendants' preliminary objections nor otherwise presented to the trial court. A matter not raised in the trial court will not be considered on appeal. Wenzel v. Morris Distributing Co., 439 Pa. 364, 266 A.2d 662 (1970).
Finally, the NFB and the ABB contend that their preliminary objections to the court's jurisdiction should have been sustained because imposing Pennsylvania's regulatory scheme upon them is forbidden by the Commerce Clause of the United States Constitution (U.S.Const. art. I, § 8).
The Supreme Court of the United States has defined and delineated the limits of the Commerce Clause in a multitude of cases over the past two hundred years. In Aldens, Inc. v. Packel, 524 F.2d 38 at 45 (3d Cir. 1975) the Third Circuit Court of Appeals presented an accurate and concise analysis of the factors considered by the United States Supreme Court in determining whether a state statute violates the Commerce Clause:
'. . . the commerce clause limits the power of a state to impose its choice of law on any transaction that is within the broad ambit of congressional power to regulate interstate commerce, and
(1) is one in which Congress has made its own choice of law, or
(2) is one in...
To continue reading
Request your trial