Dehne v. Hillman Investment Co.
| Decision Date | 07 March 1940 |
| Docket Number | No. 7215.,7215. |
| Parties | DEHNE v. HILLMAN INVESTMENT CO. |
| Court | U.S. Court of Appeals — Third Circuit |
Carl D. Smith and Robert F. Barnett, both of Pittsburgh, Pa., for appellant.
Roy G. Bostwick, Lee W. Eckels, and Thorp, Bostwick, Reed & Armstrong, all of Pittsburgh, Pa., for appellee.
Before BIGGS, MARIS, and CLARK, Circuit Judges.
Hillman Investment Company, the sole appellee, a Delaware corporation, owned all of the stock of Allegheny Bankshares, Inc. The stock of the appellee, in turn, was owned by the four individual defendants. In 1930, one of these, J. H. Hillman, Jr., purchased stock of the Central National Bank of Wilkinsburg. He later exchanged this for stock of the First National Bank of Wilkinsburg. In October, 1931, he transferred this stock to Allegheny Bankshares, Inc. The bill of complaint alleges that Hillman made this transfer at a time when the banks and trust companies of Western Pennsylvania were suffering substantial losses, knowing that Allegheny Bankshares, Inc., was insolvent. The bill of complaint also alleges that upon December 31, 1934 the appellee dissolved in accordance with the law of Delaware; that prior to its dissolution the Comptroller of the Currency had taken possession of the First National Bank of Wilkinsburg and that in March, 1934, the Comptroller levied a 100% assessment on the stock. The appellant, Dehne, is the present receiver of the Bank. He prays discovery as to the transactions between Allegheny Bankshares, Inc., the appellee, and the individual defendants, and also that the individual defendants be required to account to him for their proportionate amounts of the assessment made by the Comptroller. The appellee appeared specially and moved to quash the service and to dismiss as to the appellee for want of jurisdiction over it. The court below granted this motion and the appeal at bar followed.
The appellee contends that the service made upon it was quashed properly because the deputy-sheriff of Dauphin County, Pennsylvania, who served the subpœna was not "specially appointed by the court or judge for that purpose * * *" as required by Equity Rule 15, 28 U.S.C.A. following section 723, which was in effect upon September 7, 1937, the day the service was made. This point is well taken and we must sustain it. Putting other questions to one side, however, under Rule 4(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, this defect of service could be cured now by issuing an additional summons, delivering it to a person specially appointed to serve it upon the Secretary of the Commonwealth of Pennsylvania at Harrisburg pursuant to the provisions of Rule 4(b), and a deputy-sheriff of Dauphin County could be appointed to make such service as provided by Rule 4(c).
The District Court of the United States for the Western District of Pennsylvania had venue jurisdiction of the appellee, despite its dissolution,1 if it was liable because of acts of an intrastate nature committed by it within the Commonwealth of Pennsylvania. Section 1001 of the Pennsylvania Business Corporation Law, 15 P.S. § 2852 — 1001, requires a foreign business corporation before doing any business in the Commonwealth of Pennsylvania to procure a certificate of authority from the Department of State. Section 1004 of the Pennsylvania Business Corporation Law, 15 P.S. § 2852 — 1004, provides the terms and conditions upon which such a certificate of authority may be obtained. These include a designation by the corporation of the Secretary of the Commonwealth as its agent or attorney for service of process upon it. The section provides that "* * * the authority for such service of process shall continue in force as long as any liability remains outstanding against the corporation in this Commonwealth." The appellee procured a certificate of authority upon compliance with the conditions imposed. Section 1011, 15 P.S. § 2852 — 1011, prescribes a method for the service of process upon a foreign corporation and provides that, "Such process may be issued by any court * * * having jurisdiction of the subject matter of the controversy in any county of the Commonwealth in which the corporation shall have its registered office, or in the county in which the right of action arose."
There is no doubt that the District Court of the United States for the Western District of Pennsylvania is a court in a county of the Commonwealth of Pennsylvania within the purview of Section 1011 of the Pennsylvania Business Corporation Law. Ex parte Schollenberger, 96 U.S. 369, 24 L.Ed. 853. That court had jurisdiction of the subject matter. The suit at bar is not one based upon diversity of citizenship, but arises out of the laws of the United States. The court below erred,2 however, in holding that it did not have jurisdiction over the appellee because the appellee was not an inhabitant of the Western District. We are of the opinion that by applying for a certificate of authority and designating the Secretary of the Commonwealth as its attorney for...
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...registration, the Third Circuit in Bane cited Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927) and Dehne v. Hillman Inv. Co., 110 F.2d 456 (3d Cir. 1940). See Bane, 925 F.2d at 641. The exercise of jurisdiction in both of these cases was premised on in-state conduct, which......
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