Cone v. New Britain Mach. Co.

• Decision Date: 05 July 1927
• Docket Number: No. 4615.,4615.
• Citation: 20 F.2d 593
• Parties: CONE v. NEW BRITAIN MACH. CO.
• Court: U.S. Court of Appeals — Sixth Circuit

20 F.2d 593 (1927)

CONE v. NEW BRITAIN MACH. CO.

No. 4615.

Circuit Court of Appeals, Sixth Circuit.

July 5, 1927.

James G. Stewart and Hugh L. Nichols (of Nichols, Morrill, Stewart & Ginter), both of Cincinnati, Ohio (Loren Gatch, McLaughlin & Gatch, of Cincinnati, Ohio, on the brief), for appellant.

Murray Seasongood (of Paxton, Warrington & Seasongood), of Cincinnati, Ohio (Robert P. Goldman, of Cincinnati, Ohio), and Kirkham, Cooper, Hungerford & Camp, of New Britain, Conn., on the brief), for appellee.

Before DENISON, DONAHUE, and MOORMAN, Circuit Judges.

MOORMAN, Circuit Judge.

This case was brought up on appeal, but under the Act of February 13, 1925 (43 Stat. 936), is to be treated as a proceeding in error. The record is appropriate to a revision at law, and we assume that a writ of error is the appropriate remedy. The case involves the sufficiency of the service of a summons, the return thereon being quashed on the ground that the defendant was not engaged in such business in the state as made it amenable to the service of process therein.

The defendant is a Connecticut corporation, with its factory and executive offices in New Britain, Conn.; it has no office or factory or repair shop located in Ohio. It manufactures and sells machines at New Britain, shipping them f. o. b. cars at that point to points in Ohio and other states. Its employee, who was served with the summons, resides in Ohio and is its sales representative in that state. His sole duty is to solicit orders for machines and show the purchasers thereof how to use them; he does not make or conclude contracts, or collect payments on or adjust disputes as to contract prices. His business card states that he is the "representative in Ohio of the New Britain Machine Company." The company also employs an expert mechanic, who resides in Columbus, Ohio, and whose duty it is to visit the plants of Ohio customers from time to time and adjust the machines, so that they may be operated at their maximum efficiency. He is known as a demonstrator, but is in fact a service man, and he has no authority to do anything, except adjust machines after they have been installed and demonstrated and make minor repairs incident to adjustments, for which he is paid by the machine company.

The question is whether the work this demonstrator performs is doing business in the state by the defendant for the purpose of service of process. The lower court thought that it was not, and this position is urged upon us on the authority, among others, of Green v. C. B. & Q. Ry. Co., 205 U. S. 530, 27 S. Ct. 595, 51 L. Ed. 916, and Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U. S. 516, 43 S. Ct. 170, 67 L. Ed. 372. In the first of these cases it was held that a railway company which had no tracks within the district where the suit was brought, but which, as an incident to its freight and passenger business outside the district, employed "district freight and passenger agent," and hired an office in the district to be used in soliciting freight and passenger traffic, was not doing such business in the district as rendered it subject to service of process therein. The other involved the service of a summons on the president of a foreign corporation while he was temporarily within the jurisdiction of the court making purchases of merchandise, and it was held that he was not amenable to the service.

Plaintiff relies upon Fire Insurance Co. v. Meyer, 197 U. S. 407, 25 S. Ct. 483, 49 L. Ed. 810, and Browning v. Waycross, 233 U. S. 16, 34 S. Ct. 578, 58 L. Ed. 828. In the Meyer Case the defendant, an insurance company, was domiciled in Pennsylvania. Suit was filed against it in New York. It had no agent or office within the state of New York and had not been licensed by the insurance department of that state. At the time of the service of summons it had a large amount of outstanding insurance on property within the state, "something less than one-third of its total risk." It had engaged in the business of insuring property in that state from its organization, soliciting the business from Philadelphia, and when losses occurred sending its adjusters into the state to adjust them. It was decided that, as the policy that the company regularly issued clearly contemplated the presence of one of its agents in the state at the place of loss after it had occurred, to determine the extent of liability and, if possible, to adjust the loss, the company was doing business in the state. The Waycross Case involved an occupation tax placed by the municipality upon "lightning rod agents or dealers engaged in putting up or erecting lightning rods within the corporate limits" of the city of Waycross, and it was held that the erecting of the rods, which the seller's agent did under the contract of sale, "without further charge," was not so associated with the interstate commerce, through which the rods were brought into the state, as to be a part thereof, but that it concerned itself in its dominant characteristics with the doing of a local act, after the interstate commerce had terminated, and was therefore subject to the municipal tax.

It is settled that the mere solicitation of business through agents sent into the state, who are not permitted to conclude bargains, is not doing business in the state in the sense that the employer is within it. This was the ruling in the Green Case and in People's Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537. On the other hand, in the International Harvester Co. Case, 234 U. S. 579, 34 S. Ct. 944, 58 L. Ed. 1479, it was held that there was a "doing of business" when, in addition to the solicitation, authority was given the agents of the Harvester Company to receive payments in money, checks, or drafts, and to take notes payable at banks in the state. These latter cases, however, deal with facts quite different from those under consideration. Neither they nor the other cases cited are in point. Each of them was and necessarily must have been decided upon its own facts. Browning v. Waycross, already referred to, and York Manufacturing Co. v. Colley, 247 U. S. 21, 38 S. Ct. 430, 62 L. Ed. 963, 11 A. L. R. 611, are more nearly representative in decision of the opposing views of the case at bar than any other case to which our attention has been called.

In the York Manufacturing Co. Case the contract was for an ice machine to be shipped into the state. It was to be installed "under the supervision of an engineer to be sent by the York Manufacturing Company, for whose services a fixed per diem charge of $6 was to be paid by the purchasers, and who should have the assistance of mechanics furnished by the purchasers, the supervision to include not only the erection, but the submitting of the machinery to a practical test in operation before the obligation to finally receive it would arise." It appeared that "these provisions were carried out, that about three weeks were consumed in erecting the machinery and about a week in practically testing it, when after a demonstration of its successful operation it was accepted by the purchasers." After pointing out that in the Waycross Case the business of erecting the lightning rods bore "no relevant or appropriate relation to the contract" for the sale of the rods, and hence the former was subject to local control, the court said, with reference to the York Case: "The only possible question open, therefore, is — was the particular provision of the contract for the service of an engineer to assemble and erect the machinery in question at the point of destination, and to practically test its efficiency before complete delivery, relevant and appropriate to the interstate sale of the machinery?" This question was answered affirmatively; but as we construe the opinion it was considered significant, if not of controlling importance, that the seller was obliged to install and successfully operate the machinery before it was "accepted by the purchasers" or before "complete delivery."

If in the case at bar the question were restricted to such relation between the installation and the sale that the latter depended upon the correct and efficient doing of the former, the intrinsic value of the machinery depending largely upon its being united and operated as a whole, or if the company had done no more than furnish a man to supervise the installing of the machine and to give it a practical test "before the obligation finally to receive it would arise," the question would be less difficult and, indeed, would be within the reasoning, if not the express terms, of the York Case. Defendant's demonstrator, however, does not merely install, test, and demonstrate the machine. After all of that has been done by some one else, he visits the plant "with more or less frequency to service the machine, and to make any adjustment and do any work on the machine made necessary by any later trouble developing in the working of said machine." Thus it appears that defendant maintains an expert mechanic in Ohio, who periodically visits the plants where defendant's machines are used, and adjusts and repairs them so that they will render the maximum service of which they are capable — this whether they were sold by defendant to the plant, or whether they were acquired secondhand, and also regardless of when they were installed; that is, after they have been installed, successfully tested, demonstrated, and paid for. The difference between this course of conduct and that in the York Case is marked. What was done in that case was so inherently related to the contract of sale as to be dominated by it; there was in fact no final delivery of the machine and no completion of the sale until that service was performed. What defendant's demonstrator does is keep the machines in order after they have been installed, tested, demonstrated, and paid for, whether they were bought directly from his company or...