Enco, Inc. v. F.C. Russell Co.

• Decision Date: 15 May 1957
• Citation: 210 Or. 324,311 P.2d 737
• Parties: ENCO, Incorporated, a corporation, Respondent, v. F. C. RUSSELL COMPANY, a corporation, Appellant.
• Court: Oregon Supreme Court

Page 737

311 P.2d 737

210 Or. 324

ENCO, Incorporated, a corporation, Respondent, v. F. C. RUSSELL COMPANY, a corporation, Appellant.

Supreme Court of Oregon, Department 1.

Argued and Submitted Oct. 17, 1956.

Decided May 15, 1957.

Howard I. Bobbitt, Portland, for appellant. On the briefs were Morris & Bobbitt, and Thomas J. Moore, Portland.

Arno Denecke, Portland, for respondent. With him on the brief was John E. Walker, Portland.

Before WARNER ^*, C. J., and ROSSMAN, PERRY ^**, and McALLISTER, JJ.

PERRY, Chief Justice.

The plaintiff Enco, Incorporated, an Oregon corporation, brought an action for damages against the defendant F. C. Russell Company by reason of defendant's breach of an oral contract. Defendant is an Ohio corporation with its principal place of business in the city of Cleveland, and it is not licensed to do business in this state. Defendant moved to quash the service of summons, served upon its vice-president in the state of Oregon, upon the grounds that the defendant was not doing business in this state and, therefore, was not subject to the jurisdiction of our courts. The trial court denied defendant's motion to quash and a trial of the issues resulted in a judgment for the plaintiff. From assigned error in failing to sustain the defendant's motion to quash, and alleged errors occurring in the trial of the cause, the defendant appeals.

We shall first consider whether or not the trial court was in error in refusing to sustain the motion to quash. We are concerned here only with jurisdiction of the trial court for the service of process and not with jurisdiction for taxation, license, or other purposes.

It is, of course essential to the maintenance of this action for a judgment in personam that the defendant be subject to the jurisdiction of our state courts. A foreign corporation is subject to the jurisdiction of the courts of this state, whether it has complied with our statutory requirements for doing business herein or not, if it is, in fact, doing business in this state in such a sense as to confer jurisdiction upon the courts of the state (Winslow Lbr. Co. v. Edward Hines Lbr. Co., 125 Or. 63, 266 P. 248), and is then amenable to the judgments of the courts, providing the statutory requirements for service of summons had been had upon it.

The trail court could find the following facts from the affidavits and depositions offered upon the motion to quash the service of summons:

(1) The defendant F. C. Russell Company is a corporation organized and existing under and by virtue of the laws of the state of Ohio with its principal place of business and general offices in Cleveland, Ohio, and is engaged in the manufacture and sale of its trade name windows.

(2) This company does business as a supplier with two companies located in Oregon, one company purchasing a product known as its 'Thermoseal Combination Window,' and the other company purchasing its 'Rusco Prime Window.' It has no financial interest in these companies, is not licensed to do business in the state of Oregon, and does not now maintain an office or paid employees therein.

In the early part of the year 1951, through the negotiations of its agent Northern Enterprises, Inc., with offices in Seattle, Washington, and Anchorage, Alaska, the defendant F. C. Russell Company entered into contracts to furnish building contractors in Alaska with its steel windows. Before the steel-sash windows were satisfactory to the contractors for use in Alaska, the defendant was required to incase them in a wooden frame known to the trade as a 'surround.'

In March, 1951, the defendant employed the plaintiff company to manufacture these surrounds to fulfill two Alaska contracts. The plaintiff prior to this time had not engaged in the manufacture of wood surrounds, and, because of the plaintiff's inexperience, the defendant sent its field engineer, Ren DeBoer, to Portland, 'to help in the manufacture, assembly and shipment of Rusco window units to Alaska'; that his instructions were 'to check on the handling, the assembly, and delivery of the units, in that they be correct in all details as per the contracts involved'; and that the 'prime contract between Anderson-Montin-Benson and the F. C. Russell Company called for the delivery of a certain number of Rusco units complete with wood surrounds, crated for overseas shipment as per their contract with army engineers of Alaska.' These windows were to be delivered to the Alaskan contractors by the defendant at the Portland docks. All 'Rusco' windows to be incased by the plaintiff under these agreements were shipped by the defendant to itself at Portland. Mr. DeBoer inspected them and filed all claims with the carrier for losses on behalf of defendant. After the windows were installed in the surrounds they were crated, 'marked or labeled, stenciled to their destination, and taken to the dock here in Portland.' All this was done 'under the supervision of the Russell Company.' Mr. DeBoer used his hotel room and space in the plaintiff's quarters for his office work.

Prior to the completion of the above-mentioned contracts, the defendant entered into a contract with Peter Kiewit Son's Co., a corporation (hereinafter referred to as 'Kiewit'), an Alaskan builder, to furnish it with defendant's Rusco windows. Before the defendant entered into the Kiewit contract, it obtained from the plaintiff a firm bid for the manufacture of the surrounds. Defendant then prevailed upon plaintiff to contract directly with Kiewit for manufacturing the surrounds, crating and delivering the incased Rusco windows to Kiewit at the docks in Portland.

At the time the Kiewit contract was negotiated, Ren DeBoer was still in Portland, and was to remain through the Kiewit contract. However, shortly thereafter, because of illness, he left, suggesting to plaintiff that its Mr. Woodward was capable of carrying on his duties. Mr. Woodward then assumed the duties formerly performed by Mr. DeBoer, but received his pay from the plaintiff and none from the defendant.

In prevailing upon the plaintiff to enter into the agreement directly with the Kiewit Company to furnish the necessary surrounds, the defendant agreed with plaintiff to furnish the Rusco windows to be incased in the surrounds at regular intervals of time so that the plaintiff could fulfill its agreement with the Kiewit Company, and, relying upon this agreement, plaintiff entered into the contract with Kiewit.

It is the failure of the defendant to deliver the windows to the plaintiff as agreed that gives rise to this litigation.

All Rusco windows to be furnished by the defendant under the Kiewit contract were consigned by the defendant to the Kiewit Company at Portland in care of the plaintiff.

After the plaintiff claimed a breach of the agreement by the defendant, the plaintiff discussed the matter with a Mr. Taft of Northern Enterprises and a Mr. Connally, West Coast sales representative of the defendant. In May, 1952, Mr. Raquet, a vicepresident of the defendant company, came to Portland, and while there attempted to get in touch with Mr. Hollenbeck, the president of the plaintiff company to 'try to arrive at some settlement' of the difficulty between the parties. Before Mr. Raquet was able to contract Mr. Hollenbeck, he was served with summons in this cause by the sheriff of Multnomah county, Oregon.

Since the defendant did not comply with our statutes for permission to transact business within our state, the two vital questions that must be decided are: (1) Did the defendant transact business in the state that will subject it to the processes of our courts? (2) Since defendant had no designated agent upon whom service could be made, was the service of summons upon its vice-president in the state of Oregon sufficient?

Whether a corporation is 'doing business' in a state foreign to its birth involves in the final analysis, a question of due process under the Constitution of the United States. Wells Fargo & Co. of Mexico, S. A. v. McArthur Bros. Mercantile Co., 42 Ariz. 405, 26 P.2d 1021; Walter M. Toole Co. v. Distributors' Group, 217 Iowa 414, 415, 251 N.W. 689; 23 Am.Jur. 341, Foreign Corporations § 363.

A foreign corporation may be doing business in a state so that it will be subject to the processes of the courts, but the business conducted may not be such as will require its domestication. Mergenthaler Linotype Co. v. Spokesman Pub. Co., 127 Or. 196, 270 P. 519; Rashford Lumber Co. v. Dolan, 122 Or. 572, 260 P. 224; Annotations, 60 A.L.R. 995; 101 A.L.R. 127; 8 Thompson, Corporations (3rd ed.) 845, § 6625. These cases are to be distinguished from the problem presented here.

This court in compliance with the earlier decisions of the federal courts adopted the implied consent theory for sustaining the jurisdiction of its state courts over suits brought therein against foreign corporations. This theory was based upon the fiction that a foreign corporation doing business in a state foreign to its birth consented to be found in that state. The purpose of the court in adopting the 'implied consent' theory is well expressed in Aldrich v. Anchor Coal & Development Co., 24 Or. 32, 35, 32 P. 756, 757, as follows:

'* * * The inconvenience and often manifest injustice of exempting a corporation from being sued in a state other than that in which it was created has caused the rule in modern times to be very much relaxed, and it is now generally held that where a corporation created in one jurisdiction is permitted, either by express enactment or by acquiescence, to do business in another, it is to be deemed a resident, and subject to the jurisdiction of the courts of the latter in all matters founded upon contracts made or causes of action arising there, and service may be made upon it in the same manner as a domestic corporation where the law does not provide otherwise. 2 Mor.Corp. 980; Miller v. [Eastern Oregon Gold] Mining Co. [C.C.], 45 F. 345; St. Clair...