Elkhart Engineering Corporation v. Dornier Werke

• Decision Date: 13 April 1965
• Docket Number: No. 21411.,21411.
• Citation: 343 F.2d 861
• Parties: ELKHART ENGINEERING CORPORATION, Appellant, v. DORNIER WERKE, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

343 F.2d 861 (1965)

ELKHART ENGINEERING CORPORATION, Appellant, v. DORNIER WERKE, Appellee.

No. 21411.

United States Court of Appeals Fifth Circuit.

April 13, 1965.

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Albert W. Copeland, Montgomery, Ala., Vincent P. McCauley, Columbus, Ga., John C. Godbold, Montgomery, Ala., Godbold, Hobbs & Copeland, Montgomery, Ala., McBreen & Tobin, Chicago, Ill., of counsel, for appellant.

James Garrett, Montgomery, Ala., Rushton, Stakely & Johnston, Montgomery, Ala., of counsel, for appellee.

Before RIVES, WISDOM, and BELL, Circuit Judges.

GRIFFIN B. BELL, Circuit Judge.

Elkhart, a Wisconsin corporation, brought a diversity suit under 28 U.S. C.A. § 1332 against Dornier Werke, a corporation organized under the laws of the Federal Republic of Germany. Elkhart does no business in Alabama. Dornier Werke does no business in the United States except for the activity which gave rise to this suit. Service was had upon Dornier by serving the Secretary of State of the State of Alabama under the provisions of Title 7, § 199(1) of the Code of Alabama, the adopted federal law for service of process.¹ This provision of the Alabama Code permits service of process on the Secretary of State in actions against a non-qualifying, non-resident corporation accruing from any business or character of work done in the state. The District Court granted the motion of Dornier to quash the return of service of process and this appeal is from that order. See Rosenberg Bros. & Co. v. Curtis Brown Co., 1923, 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372, and 6 Moore's Federal Practice, § 54.12(1), p. 114, demonstrating appealability of the order.

The twofold question presented is whether service may be perfected (1) under the terms of the Alabama statute, and (2) in view of the due process requirements of the Fourteenth Amendment on Dornier, a foreign corporation not qualified to do business in Alabama, in a suit arising from the commission of a tort by Dornier during the conduct of a single business transaction within the state.

The relevant facts are not disputed. Elkhart purchased an aircraft from Dornier in Germany and agreed, it being the only aircraft of its type in the United States, that it would be available to Dornier for sales demonstration purposes. In September 1962 Dornier wrote Elkhart as follows:

"Since we are contemplating a demonstration of the DO 28 aircraft to American authorities, we should be very much obliged if you would assist our efforts by placing your aircraft at our disposal for this purpose. Demonstrations are planned to commence in the course of the next month, whereby the aircraft will be flown by one of our pilots."

Elkhart agreed to the request, and Dornier sent one of its master mechanics from Germany to Wisconsin, where the aircraft was located, to inspect it. He was joined there by one of Dornier's test pilots, and shortly thereafter its sales manager also arrived. The three spent about a week in Wisconsin, departing in October 1962, to carry out a series of demonstrations throughout the United States. In December 1962 the aircraft was flown by the test pilot to Ft. Rucker, Alabama where it was to be used for demonstration purposes. Dornier stated that the sole purpose of taking the aircraft to Ft. Rucker was to ascertain if sufficient interest existed in civil or governmental organizations for the purchase of similar aircraft. The plane crashed there while being demonstrated by the test pilot. The master mechanic was also present at the time, and the sales manager who had left earlier in the day returned to the scene immediately after the crash. The suit by Elkhart was for damage to the aircraft.

At the time of the crash Dornier had possession of Elkhart's aircraft, and it was being demonstrated for Dornier's own business purposes. However, on the motion to quash, Dornier contended that its presence in Alabama for this purpose was not sufficient to subject it to the jurisdiction of Alabama courts to answer for a tort arising out of the demonstration. This contention rested on the argument that Dornier was not doing business in Alabama at the time suit was filed within the minimum contracts or substantial connection with the state doctrine of International Shoe Company v. State of Washington, 1945, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; and McGee v. International Life Insurance Company, 1957, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223. The District Court was persuaded to this view. No procedural due process fault is alleged.

I.

We must first dispose of the argument, which we deem to be implicit in Dornier's position, that § 199(1), supra, by its terms, is not a statutory base for service absent a series of business activities in the state amounting to continuity. Principal reliance to support this argument is placed on Mississippi Wood Preserving Co. v. Rothschild, 5 Cir., 1953, 201 F.2d 233, where we construed a Mississippi statute similar in terms to exclude service in a tort suit where the activities of the defendant within Mississippi, although the tort resulted from them, were few and sporadic. See also Davis-Wood Lumber Co. v. Ladner, 1951, 210 Miss. 863, 50 So.2d 615.² We will examine the Alabama statute in the light of this argument.

The Alabama law provides a statutory basis for service on non-resident corporations in three situations. First, jurisdiction may be acquired over a non-resident corporation which is transacting business in the state by serving the agent of the corporation appointed for that purpose, or if no agent is appointed, by serving the Secretary of State. Title 7, §§ 192, 193, Alabama Code. Second, the Alabama Non-Resident Motorist Statute provides that jurisdiction may be acquired over non-resident motorists in suits for torts committed on the highways by serving the Secretary of State. Title 7, § 199, Code of Alabama. And in Dealer's Transport Co. v. Reese, 5 Cir., 1943, 138 F.2d 638, we held that this statute applied to a non-qualifying non-resident corporation even where there was an express finding that the corporation was not doing business in Alabama. The third situation arises under the statute with which we are concerned, § 199(1). It is separate and distinct from §§ 192 and 193. It provides that non-resident, non-qualifying corporations which "do any business or perform any character of work or service" in Alabama may be served through the secretary of state in suits accruing or resulting from such business, work, or service. The statute does not speak in terms of transacting or carrying on business as is the case with §§ 192 and 193. On the other hand, service under §§ 192 and 193 is not limited to actions accrued or resulting from the particular business or work done in the state. In short, these statutes appear to serve separate functions and to apply in different situations.

Section 199(1) in pertinent part provides:

"Any non-resident * * * corporation not qualified * * * as to doing business herein, who shall do any business or perform any character of work or service in this state shall, by the doing of such business or the performing of such work, or services, be deemed to have appointed the secretary of state, or his successor or successors in office, to be the true and lawful attorney or agent of such non-resident, upon whom process may be served in any action accrued, accruing, or resulting from the doing of such business, or the performing of such work or service, or relating to or as an incident thereof, by any such non-resident, or * * * its * * * agent, servant, or employee."

The Supreme Court of Alabama has equated § 199(1) with the Alabama Non-Resident Motorist Statute which of course, contains no requirement of "doing business" as a prerequisite to jurisdiction. Armi v. Huckabee, 1957, 266 Ala. 91, 94 So.2d 380. There service under § 199(1) was sustained over California residents whose connection with Alabama was through ownership of three apartment houses which were rented to the public by an Alabama real estate agent. The suit was for property damage resulting from a fire. But in Ex parte Emerson, 1960, 270 Ala. 697, 121 So.2d 914, service under the section on a Texas resident was quashed. He was sued for injuries sustained from the use of a medicine. The sales of the medicine in Alabama had been made by either independent contractors or purchasers from the defendant, and the court held that therefore the defendant had done no business nor performed any work or service in the state.

The construction of this section was once again before the Supreme Court of Alabama in New York Times Co. v. Sullivan, 1962, 273 Ala. 656, 144 So.2d 25; reversed on other grounds, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686, and we think the question was there settled adversely to Dornier. Unlike the narrow construction placed on the Mississippi statute, supra, here the Supreme Court of Alabama stated that the scope of substituted service under this statute was as broad as the permissible limits of due process. And see also Calagaz v. Calhoun, 5 Cir., 1962, 309 F.2d 248, where the New York Times case on this point was followed. We thus construe the provisions of § 199(1) to mean that service of process may be perfected on a nonresident corporation in a suit claiming damages on account of a tort which arose out of a single business transaction in Alabama. Being of this view, we proceed to the federal constitutional question involved. This was the ground of the decision of the District Court.

II.

Since the question presented involves federal due process, federal authorities are controlling. Pennoyer v. Neff, 1878, 95 U.S. 714, 741, 24 L.Ed. 565, established the proposition that the due process clause of the Fourteenth Amendment is violated when a court renders a personal judgment against a nonresident without having jurisdiction over him, and that jurisdiction may not be acquired by service of process upon a defendant...