Eclipse Fuel Engineering Co. v. Superior Court In and For City and County of San Francisco

Citation148 Cal.App.2d 736,307 P.2d 739
CourtCalifornia Court of Appeals Court of Appeals
Decision Date27 February 1957
PartiesECLIPSE FUEL ENGINEERING COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent, Thomas H. Beatty, Real Party in Interest. ECLIPSE FUEL ENGINEERING COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent, Francis P. Wakefield, Real Party in Interest. ECLIPSE FUEL ENGINEERING COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent, Larry Joe Reece and Charles Kohn, Real Parties in Interest. ECLIPSE FUEL ENGINEERING COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent, Dennis A. Green, Real Party in Interest. ECLIPSE FUEL ENGINEERING COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent, Ole R. Yecny, Real Party in Interest. Civ. 16676-16680.

Lamb, Hoge & Killion, San Francisco, for petitioners.

Boccardo, Blum & Lull, San Jose, for real parties in interest.

FRED B. WOOD, Justice.

In each of five suits brought by different individuals for personal injuries allegedly suffered as the result of a boiler explosion at an industrial plant is Santa Clara County, Eclipse Fuel Engineering Company, a corporation, was joined as one of the defendants, allegedly a distributor that sold the boiler to the owner of this industrial plant.

Eclipse, an Illinois corporation, specially appeared in each of the five cases and moved to quash service of summons upon it. In support of its appeal from the court acquired no jurisdiction over it because, it says, it never did business in California and, even if it did, process was not properly served. 1

At the first hearing of this proceeding, it appeared that there was an inadequate record. The parties stipulated that a referee be appointed to take evidence and make findings on certain issues. Honorable Albert C. Wollenberg, Judge of the Superior Court in and for the City and County of San Francisco, appointed as such referee, conducted hearings and has made and filed his findings of fact.

1. Was Eclipse 'Doing Business' In California?

'Doing business' in this state is both a constitutional and a statutory requirement for the effective service of process upon a foreign corporation, such as Eclipse, which has not 'qualified' to do business in this state. In California the statutory requirement is the same as that of the due process clause of the federal Constitution, Const. Amend. 14; i.e., 'doing business' within the meaning of section 411 of the Code of Civil Procedure is synonymous with the power of the state to subject foreign corporations to local process. Kneeland v. Ethicon Suture Laboratories, 118 Cal.App.2d 211, 218-223, 257 P.2d 727.

The test to be used when ascertaining whether a foreign corporation is doing business in this state, in the sense of rendering it amenable to the process of our courts, we find well expressed by Justice W. Turney Fox in Jeter v. Austin Trailer Equipment Co., 122 Cal.App.2d 376, 382, 265 P.2d 130, 134: 'In the landmark International Shoe case [International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95], the climate of judicial thinking on this problem, formerly encased in rigid legal formalisms, was profoundly revised. The approach taken was based on a realistic appraisal of the considerations involved. The Supreme Court of the United States, speaking through Justice Stone, substituted a qualitative criterion in place of the 'mechanical or quantitative' concepts formerly accepted as determinative. The court there stated that the 'test is not merely * * * whether the activity * * * is a little more or a little less.' International Shoe Co. v. Washington, supra, 326 U.S. at page 319, 66 S.Ct. at page 159. All that is required is that the foreign corporation have 'certain minimum contacts with it (the forum) such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'' 326 U.S. at page 316, 66 S.Ct. at page 158. The requirements of due process 'may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there. An 'Estimate of the inconveniences' which would result to the corporation from a trial away from its 'home' or principal place of business is relevant in this connection.' 326 U.S. at page 317, 66 S.Ct. at page 158.'

Our examination of the record convinces us that the contacts which Eclipse had with this state met those requirements and rendered it amenable to process.

It appears that Eclipse is an Illinois corporation, has its home office in that state, and maintains neither a place of business nor a bank account in California. But it also appears that Eclipse maintains contacts in California through Chester C. Smith. He is engaged in business under the fictitious firm name of 'Thermal Engineering and Equipment Company.' The firm's sales engineer is Sam A. Lombardo.

Whether those contacts amount to the doing of business in California by Eclipse calls, first, for an examination of the sales agreement between Eclipse and Smith.

This agreement was executed in April, 1949. It was still in effect and the parties were still operating under it when Lombardo's deposition was taken in January, 1955. (The plaintiffs' injuries allegedly occurred in October, 1953.)

The agreement describes Smith as 'Chester C. Smith of the Thermal Engineering and Equipment Company, hereinafter referred to as the Representative.' states that 'the Representative is appointed exclusive Sales Representative for the Company [Eclipse]' in the indicated southern portion of this state. It provides for the sale of the products manufactured by the Boiler Division of Eclipse and destined for shipment to and use in that part of California which lies south of the northern county lines of San Luis Obispo, Kings, Tulare and Inyo Counties. It provides a description of products and states that the 'compensation to the Representative shall be only in the form of commissions on goods sold, except in cases where the Representative buys and sells for his own account' and specifies the rates of commissions and the terms upon which the same shall be paid by Eclipse. It also states that the representative 'may buy and sell the products covered by this Agreement' and sets forth a 'discount schedule which will apply' in such case. The sales prices are fixed by Eclipse.

The representative will give his best endeavors to the business of Eclipse at all times and will not manufacture, handle or sell any machinery, material or equipment 'which in any way competes' with the products listed in the sales agreement. He may take on two or three noncompetitive lines, but no more, 'subject to the advance approval and authorization, in writing' of Eclipse.

Each party will supply the other with copies of all correspondence pertaining to Eclipse business. Upon termination of the agreement, the representative will 'give the Company [Eclipse] all correspondence, records, literature, lists of customers and prospects and such other file records pertaining to the Company's musiness, as the Representative may have in his possession * * * .'

Whether this agreement constitutes the representative an agent or an independent contractor is not pivotally important. As said in Fielding v. Superior Court, 111 Cal.App.2d 490, 494, 244 P.2d 968, 970, the 'essence of doing business is that the corporation is present within the state sufficiently to constitute it just and equitable that it be amenable to process within the state. Milbank v. Standard Motor Const. Co., 132 Cal.App. 67, 22 P.2d 271; Boote's Hatcheries & Packing Co. v. Superior Court, 91 Cal.App.2d 526, 528, 205 P.2d 31. The technical distinction between an independent contractor and an agent is, for this purpose at least, immaterial, except as it may be evidence one way or the other. Thew Shovel Co. v. Superior Court, 35 Cal.App.2d 183, 95 P.2d 149; Moore Machinery Co. v. Stewart-Warner Corp., D.C., 27 F.Supp. 526.' 'Every factual situation where the question arises calls for a comparison of the business advantages derived from the methods employed by the corporation, with those it would enjoy if it conducted its business through its own offices or paid agents in the state. If the representation which petitioner maintained in the state gave it in a practical sense, and to a substantial degree, the benefits and advantages it would have enjoyed by operating through its own office or paid sales force, it was clearly doing business in the state so as to be amenable to civil process.' Sales Affiliates, Inc., v. Superior Ct., 96 Cal.App.2d 134, 136, 214 P.2d 541, 542.

The agreement in the instant case gives promise of such benefits and advantages to Eclipse, and other evidence indicates that those benefits and advantages have been and are enjoyed by Eclipse. This appears, principally, from the deposition of Sam A. Lombardo.

He testified (in January of 1955) that he has worked for Thermal Engineering and Equipment Company since August, 1952. He is sales engineer. His duty is to sell engineering products. They contact their customers personally. When calling on prospective purchasers they take with them brochures, a sort of catalog, furnished by Eclipse, descriptive of Eclipse products. Many times a customer knows what equipment he wants. At other times he knows only the end result to be accomplished and 'we have to help provide him with the means to...

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