Davidson v. Henry L. Doherty & Co.

• Decision Date: 08 March 1932
• Docket Number: 40451
• Citation: 241 N.W. 700,214 Iowa 739
• Parties: WILLIAM S. DAVIDSON, Appellee, v. HENRY L. DOHERTY & COMPANY, Appellant
• Court: Iowa Supreme Court

241 N.W. 700

214 Iowa 739

WILLIAM S. DAVIDSON, Appellee, v. HENRY L. DOHERTY & COMPANY, Appellant

No. 40451

Supreme Court of Iowa, Des Moines

March 8, 1932

REHEARING DENIED JUNE 24, 1932.

Appeal from Des Moines Municipal Court.--H. H. SAWYER, Judge.

Action by William S. Davidson against Henry L. Doherty & Company which is the trade name of Henry L. Doherty, an individual to recover the amount paid by plaintiff to defendant on the sale of shares of stock under an agreement which plaintiff alleges he has elected to rescind. Defendant appeared specially for the purpose of attacking the jurisdiction of the court. The plea to the jurisdiction under the special appearance was overruled. Defendant appeals.

Affirmed.

Deacon, Sargent, Spangler & Hutchison and Lehmann, Hurlburt & Hossfield, for appellant.

Brammer, Brody, Charlton & Parker, for appellee.

FAVILLE, J. EVANS, STEVENS, DE GRAFF, and ALBERT, JJ., concur. MORLING, J., WAGNER, C. J., and KINDIG and GRIMM, JJ., (dissenting).

OPINION

FAVILLE, J.

Henry L. Doherty is an individual and a resident of New York. He conducted business in this state under the trade name and style of Henry L. Doherty & Company. No question of a corporation or a partnership is involved in this case.

Appellant Henry L. Doherty had an office or agency in Des Moines, Polk County, Iowa, for the sale of shares of stock. It is alleged that on or about September 2, 1929, the appellant's agent in charge of said office or agency sold to the appellee certain shares of stock through said office or agency in Des Moines.

In this action the appellee seeks a personal judgment against appellant Henry L. Doherty for damages growing out of said sale of said shares of stock. On December 13, 1929, service of an original notice in proper form, duly addressed to appellant, was served on the said agent of appellant in Des Moines, Polk County, Iowa, which agent was then in charge of the said office or agency through which the business involved in this litigation was transacted. Appellant entered a special appearance alleging that Henry L. Doherty is an individual and a non-resident of Iowa, and challenging the jurisdiction of the court over said appellant in this action in personam. The lower court held that it had jurisdiction of appellant in said action and entered an order accordingly.

I. Code section 11079 is as follows:

"When a corporation, company, or individual has, for the transaction of any business, an office or agency in any county other than that in which the principal resides, service may be made on any agent or clerk employed in such office or agency, in all actions growing out of or connected with the business of that office or agency."

Service was made in this case in full compliance with this statute and under its express provisions.

It is contended that this statute is strictly a local statute, applicable only to residents of a county in this state who may be sued in some other county of the state under the circumstances set forth in the statute. In other words, it is contended that said statute is a venue statute applicable only to residents of Iowa. It is argued that not all non-residents of the state are residents of "any other county," as, for example, they may be residents of the District of Columbia or residents of Louisiana, where there are no counties. That question is, however, not involved in this appeal. Appellant did have an office or agency in another county than the one in which he resides. He comes within the very terms of the statute.

A similar contention was made in the early case of Gross v. Nichols, Shepard & Co., 72 Iowa 239, 33 N.W. 653, where service on a foreign corporation having an office or agency in this state was involved. We said:

"The defendant contends, however, that the statute does not apply to a foreign corporation, but to a corporation residing in some other county of Iowa. This, it is contended, is implied from the words, 'any county other than that in which the principal resides.' But we do not think that the defendant's position can be sustained. There is nothing in the words used to prevent us from construing the section as meaning that service upon the principal may be made by service upon the agent, when the principal resides elsewhere than in the county of the agency. The courts, we think, have invariably put this construction upon the section, and we see no good reason to think it is not correct."

By its terms, and under our holding, the statute is applicable to residents of "any other county" than that in which the principal resides, whether such county be situated in Iowa or in some other state. In other words, the statute does apply to non-residents of Iowa who come within its terms and provisions, as well as to residents. Our construction of the statute has stood since 1887. We are not disposed to depart from it.

II. Does the statute apply to non-resident individuals?

This statute had its origin in the Code of 1851, and in substantially the same language has been the law of the state ever since. We have repeatedly held that jurisdiction can be obtained of foreign corporations maintaining an office or agency in this state, by service in the manner provided by this statute. Locke v. Chicago Chronicle Co., 107 Iowa 390, 78 N.W. 49; Moffitt v. Chicago Chronicle Co., 107 Iowa 407, 78 N.W. 45; Bradshaw v. Des Moines Ins. Co., 154 Iowa 101, 134 N.W. 628; Little v. Threshing Mch. Co., 166 Iowa 651, 147 N.W. 872; Bell Jones Co. v. Erie R. R. Co., 168 Iowa 96, 97, 150 N.W. 7; Morey v. Standard Sep. Co., 174 Iowa 530, 156 N.W. 719; Pugh v. Bothne Co., 178 Iowa 601, 159 N.W. 1030; Duhigg v. Waterloo Gasoline Engine Co., 189 Iowa 547, 178 N.W. 530; American Asphalt Roof Corp. v. Shankland, 205 Iowa 862, 219 N.W. 28.

A somewhat similar statute when applied to a foreign corporation doing business within a state has been upheld by the Supreme Court of the United States. See International Harvester Company of America v. Commonwealth of Kentucky, 234 U.S. 579, 58 L.Ed. 1484.

By the very terms of the statute it is made applicable to individuals the same as to corporations. The legislative intent to make it so applicable is obvious. Such has been our construction of the statute. See Gross v. Nichols, Shepard & Co., supra, and Murphy v. Development Co., 169 Iowa 542, 151 N.W. 500.

We adhere to our former holdings that the statute is applicable to individual non-residents who come within its express terms and provisions.

III. The question then arises as to whether or not said statute, when applied to non-resident individuals, violates the provisions of the Constitution of the United States.

It is fundamental that a state has no power to arbitrarily exclude an individual citizen of the United States from doing business within the state. Article IV, Section 2, of the United States Constitution provides that "the citizens of each state shall be entitled to all privileges and immunities of citizens in the several states," and the XIV Amendment of said Constitution provides that "no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States."

Even though a state may not exclude a citizen of another state from doing business therein, the Constitution does not prohibit a state from imposing reasonable conditions upon the citizen of a foreign state who seeks to do business within its borders, and this is especially so when like conditions are imposed upon its own citizens.

The statute in question does not in any manner abridge the privileges or immunities of citizens of the several states. It treats residents of Iowa exactly as it treats residents of all other states. The citizens of each state of the United States are, under this statute, entitled to all the privileges and immunities accorded citizens of this state.

The justice of such a statute is obvious. It places no greater or different burden upon the non-resident than upon the resident of this state. If a corporation, company, or individual resident in one county of this state maintains an office or agency in another county of the state, such corporation, company, or individual may be sued under this statute in the latter county in actions in personam that come within the terms of the statute. No good reason can be urged against the justice of a rule that makes such a statute applicable to the non-resident as well as the resident of the state. The latter may, under this statute, be compelled to defend a personal action in another county very far removed from the county of his residence. Why should not the resident who may live merely across a boundary line be equally required to defend in an action in personam in a county of this state where such non-resident maintains an office or agency as to matters growing out of such office or agency where proper service is had on the agent? A non-resident who gets all the benefit of the protection of the laws of this state with regard to the office or agency and the business so transacted ought to be amenable to the laws of the state as to transactions growing out of such business upon the same basis and conditions as govern residents of this State.

As is said by the Supreme Court of the United States in Hess v. Pawloski, 274 U.S. 352, 71 L.Ed. 1091, 47 S.Ct. 632, referring to the state statute there under consideration:

"It makes no hostile discrimination against non-residents, but tends to put them on the same footing as residents."

The opinion in Kane v. New Jersey, 242 U.S. 160, 61 L.Ed. 222, 37 S.Ct. 30, is pertinent to the question involved here. Kane was convicted of violating the statute of New Jersey which required all persons operating automobiles on the public...