Curtis Publishing Company v. Cassel, 6876.

• Decision Date: 20 March 1962
• Docket Number: No. 6876.,6876.
• Citation: 302 F.2d 132
• Parties: CURTIS PUBLISHING COMPANY, a corporation, Appellant, v. Louis CASSEL, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

302 F.2d 132 (1962)

CURTIS PUBLISHING COMPANY, a corporation, Appellant, v. Louis CASSEL, Appellee.

No. 6876.

United States Court of Appeals Tenth Circuit.

March 20, 1962.

Malcolm Miller, Wichita, Kan. (Wilbur H. Haines, Jr., Philadelphia, Pa., George B. Powers and Gerald Sawatzky, Wichita, Kan., and Pepper, Hamilton & Scheetz, Philadelphia, Pa., and Foulston, Siefkin, Schoeppel, Bartlett & Powers, Wichita, Kan., of counsel, were with him on the brief), for appellant.

Wayne Coulson, Wichita, Kan. (Jack B. Sellers, Drumright, Okl., Thos. A. Wallace, Sapulpa, Okl., and Byron W. Tabor, Tulsa, Okl., were with him on the brief), for appellee.

Before MURRAH, Chief Judge, BREITENSTEIN, Circuit Judge, and RICE, District Judge.

BREITENSTEIN, Circuit Judge.

In this libel action appellant, Curtis Publishing Company (Curtis), asserts that it is not subject to service of process in Kansas. Suit was begun in a Kansas state court and removed on the ground of diversity. An appropriate motion to quash service of summons was denied. Pursuant to 28 U.S.C. § 1292(b) we allowed an appeal to be taken from such interlocutory order.

There is no dispute in the facts which were established by affidavits and answers to interrogatories. The claim of libel is based on an article appearing in the November 22, 1958, issue of the weekly magazine, The Saturday Evening Post, published by Curtis.

Curtis is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania. It publishes five magazines, The Saturday Evening Post, Ladies' Home Journal, Holiday, Jack and Jill, and The American Home, all of which, except The American Home, are edited, published, and printed in the Philadelphia area. Such work for The American Home is done at New York, New York, and Chicago, Illinois. Distribution to Kansas subscribers as accomplished by mail from Philadelphia and Chicago or by common carrier to Kansas City, Missouri, or Kansas City, Kansas, and mail from those points. The national distributor for Curtis publications is Curtis Circulation Company (Distributor), a wholly owned subsidiary of Curtis. Kansas newsstand copies are handled by the sale and delivery of the magazines to Distributor in Philadelphia or Chicago. Distributor resells to independent magazine wholesalers who in turn sell to retailers.

During the period July 1, 1957, to December 31, 1959, the average Kansas subscription circulation per issue of The Saturday Evening Post was 81,013 and the newsstand sales were 13,700. For the other four Curtis publications the figures were 148,191 and 23,829, respectively. In the period November, 1957, to November, 1959, Curtis on four occasions sent personnel to Kansas to assemble material for feature articles and such personnel remained in Kansas for periods varying from four days to two weeks on each assignment. There were 39 instances of the purchase of editorial material from Kansas contributors. In the same period Curtis advertising solicitors visited Kansas on three occasions in unsuccessful efforts to sell advertising space. While Curtis had no office in Kansas, Distributor rented and maintained an office there.

Service was made on Curtis by service on the Secretary of State in accordance with Kan.G.S.1949, § 17-509.¹ In this removed case jurisdiction of the federal court over Curtis depends on whether the service was sufficient to give the state court jurisdiction.² Curtis says that the service was invalid because it was not doing business in Kansas and because there would be a violation of due process if it were subjected to a personal judgment in Kansas.

Curtis argues that Kansas has defined what constitutes doing business within the state by Kan.G.S.1949, § 17-506,³ and that Curtis and its activities do not come within that definition. The applicability of the § 17-506 definition is confined to "doing business in this state within the meaning of this act," and the act of which it was a part was passed in 1907.⁴ Section 17-509 was enacted in 1933⁵ and is a new and distinct act not amendatory of any prior statute.

In Toedman v. Nooter Corporation, 180 Kan. 703, 308 P.2d 138, 143, the Kansas Supreme Court said that a foreign corporation may be doing business in the state and amenable to process under § 17-509 although it is not doing business as defined in § 17-506 relative to qualification for registration. Curtis seeks to avoid the effect of this decision by arguing that in Kansas the syllabus is the holding of the court⁶ and that the language above-mentioned, while appearing in the body of the opinion, is not in the syllabus. We are entitled to "look to the opinion for the original and authentic statement of the grounds of decision."⁷ The excerpt in question is a clear and unequivocal exposition of the law and has at least the standing of dictum. Unless it conflicts with other decisions of the Kansas Supreme Court, it must be followed.⁸

Curtis relies on Williams v. J. F. Ball Bros. Lumber Co., 105 Kan. 284, 182 P. 552. That action was brought against a Louisiana corporation for breach of contract. Service on the Secretary of State was held insufficient on the ground that the activities of an agent authorized to find purchasers for real estate of the corporation but not authorized to execute contracts of sale did not constitute doing business by the corporation in Kansas. The court disposed of the defendant's contention that since it had not qualified to do business in the state service on the Secretary of State was invalid by saying that a corporation might be engaged in doing business in the state without having complied with the statute on qualification. In Weishaar v. Butters Pump & Equipment Co., 149 Kan. 842, 89 P.2d 864, 122 A.L.R. 1190, it was held that the Kansas statute of limitations was not available to a corporation which had not qualified in Kansas and which had conducted business there although not such as to come within § 17-506. Neither of these decisions detracts from the rule stated in Toedman and we are cited to no other Kansas authority.

We conclude that the Kansas statutes do not define doing business for the purposes of amenability to service under § 17-509 and that the term doing business must be given such practical definition as is consonant with the constitutional requirements of due process.

The impact of the due process clause on the in personam jurisdiction of state courts has presented a continuing problem to the courts which has resulted in a multitude of decisions, none of which, as yet, lay down definitive standards for universal application.⁹ The "consent" basis for jurisdiction recognized in Lafayette Insurance Company v. French, 18 How. 404, 59 U.S. 404, 407, 15 L.Ed. 451, and the "presence" doctrine appearing in such cases as Rosenberg Bros. & Company v. Curtis Brown Company, 260 U.S. 516, 517, 43 S.Ct. 170, 67 L.Ed. 372, were succeeded by the "minimum contacts with assurance of fair play and substantial justice" thesis of International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95.

Following International Shoe, jurisdiction was upheld in the insurance cases of Travelers Health Association v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154, and McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223. Jurisdiction was also upheld in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485, wherein the corporate activities were within the state and the cause of action arose out of the state. Jurisdiction was denied in Vanderbilt v. Vanderbilt, 354 U.S. 416, 77 S.Ct. 1360, 1 L.Ed.2d 1456, a divorce case, and in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283, a suit involving a trust. While these last two decisions disclose that the concept of territorial limitations on state power has not been discarded, it is noteworthy that each of them involved private rather than corporate activities¹⁰ and that neither questioned the validity of the "minimum contact-fair treatment" rule of the International Shoe decision.

We believe that International Shoe is controlling and that the instant controversy must be resolved by the application of the principles there announced. Those principles are stated as conclusions and do not provide the criteria required to sustain themselves. We followed International Shoe in Steinway v. Majestic Amusement Co., 10 Cir., 179 F.2d 681, 682-684, 18 A.L.R.2d 179, certiorari denied 339 U.S. 947, 70 S.Ct. 802, 94 L.Ed. 1362 and there said that, leaving every case to its own facts, to constitute doing business a nonresident corporation's activities must be substantial, continuous, and regular as distinguished from casual, single, or isolated. We shall apply these standards here.

As said in Sonnier v. Time, Inc., W.D. La., 172 F.Supp. 576, 579, circulation is the source of life to the magazine publisher because the readers provide revenue and their number is an important factor in attracting advertising and in determining rates therefor. The Curtis publications are in themselves advertising media. They advertise in Kansas to their Kansas readers the products of those who purchase advertising space.

Curtis has chosen to turn over the circulation of its publications to its wholly owned subsidiary, Distributor. The written contract between the parent and the subsidiary provides that Distributor "shall have the exclusive right throughout the world to solicit and make subscription sales" of Curtis' magazines. Distributor pays to Curtis monthly "the full subscription price for all subscription sales made during the month" and Curtis pays to Distributor monthly "the prescribed commission on all paid subscription orders."

Distributor also has "the exclusive right throughout the world to distribute and sell single (newsstand) copies" of Curtis' magazines. As to such sales Distributor furnishes Curtis with estimates of its requirements and Curtis...