Ex parte Volkswagenwerk Aktiengesellschaft

• Decision Date: 16 September 1983
• Citation: 443 So.2d 880
• Parties: Ex parte: VOLKSWAGENWERK AKTIENGESELLSCHAFT, a Corporation. (In re David Kenneth BROWN, Father of Richard Paul Brown and Administrator of the Estate of Richard Paul Brown v. VOLKSWAGEN OF AMERICA, INC., a corporation; Volkswagenwerk Aktiengesellschaft, a corporation; David Frank Burns, et al.) 82-202.
• Court: Alabama Supreme Court

Page 880

443 So.2d 880

Ex parte: VOLKSWAGENWERK AKTIENGESELLSCHAFT, a Corporation (In re David Kenneth BROWN, Father of Richard Paul Brown and Administrator of the Estate of Richard Paul Brown v. VOLKSWAGEN OF AMERICA, INC., a corporation; Volkswagenwerk Aktiengesellschaft, a corporation; David Frank Burns, et al.)

82-202.

Supreme Court of Alabama.

Sept. 16, 1983.

Rehearing Denied Dec. 22, 1983.

Bibb Allen of London, Yancey, Clark & Allen, Birmingham, for petitioner.

Steven D. Tipler, Birmingham, for respondents.

ADAMS, Justice.

This is an original petition to this Court for a writ of mandamus directed to Honorable Fred W. Nicol, Circuit Judge of the Sixth Judicial Circuit, to review a ruling made by him that overruled a prior motion to quash service of process and to order him to re-enter his original order granting the motion of petitioner, Volkswagenwerk Aktiengesellschaft (VWAG), to quash service.

VWAG, a German corporation, contends that the purported service of process is invalid for two reasons: (1) service of the summons and complaint by certified mail on VWAG pursuant to Rule 4.4(b) of the Alabama Rules of Civil Procedure is illegal, since the provisions of the "Service Abroad of Judicial and Extrajudicial Documents" (the Hague Convention), opened for signature November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638, 658 U.N.T.S. 163, govern the service of process on corporations located in countries which are signatories of the convention, and (2) service of process on Volkswagen of America (VWoA) as the agent of VWAG is improper because VWoA is merely a subsidiary of VWAG and has no authority to accept service of process on behalf of VWAG.

We need not address the first issue. The respondents, Judge Fred Nicol and David K. Brown, have admitted, in their brief in support of their answer to the petition for writ of mandamus, that the provisions of the Hague Convention must be complied with if service of process is attempted directly on VWAG in West Germany. These provisions were not complied with here. Nevertheless, they contend that the Hague Convention's provisions are inapplicable in this case, since VWoA is the alter ego, and therefore the agent, of VWAG in the United States for the purpose of service of process.

Our inquiry, then, is limited to the issue of whether VWoA can be considered the agent of VWAG for the purpose of service of process; if so, then the summons and complaint served on VWoA on the behalf of VWAG is good and sufficient service on VWAG. After careful consideration of the salient facts involved, we conclude that the trial court was correct in overruling its prior grant of the motion to quash and we, therefore, deny the writ of mandamus.

Prior to a review of the facts and arguments in this case, it is necessary to address the issue of whether it is proper for this court to review the record below on a writ of mandamus.

In Ex parte Helveston, 267 Ala. 94, 100 So.2d 7 (1957), this court stated that the writ of mandamus is not the proper vehicle for the review of a denial of a motion to quash service, since the dispute over proper service can be settled on appeal. Again, in Orkin Exterminating Co. of North Ala. v. Krawcheck, 271 Ala. 305, 312, 123 So.2d 149, 156 (1960), it was stated on rehearing that "[w]e do not review the action of the trial court in refusing to quash the summons in such a case by extraordinary writs. The error, if any, must be raised on appeal from the final judgment." However, we have allowed review by extraordinary writ, even in the face of a clear prohibition of its usage, where the issue or issues presented also raised matters of substantial importance. In Ex parte Taylor Coal Co., Inc., 401 So.2d 1 (Ala.1981), this court was presented with a petition for a writ of mandamus to direct a trial judge to disqualify attorneys representing the defendants. Even though we noted several cases stating that mandamus does not lie to review a judge's acts of discretion, this court proceeded to review the facts of the case, since serious charges of ethical violations were leveled at the attorneys involved. Id. at 3.

Although the matter before the trial court in the instant case was solely within the discretion of the trial judge, we find this case to present a matter of importance beyond the basic issues in dispute. As stated by both parties, if service of process on VWoA as the alter ego of VWAG is not good and sufficient service on VWAG, then requiring VWAG to submit to the trial court's jurisdiction would be in disregard of the provisions of the Hague Convention ¹ and, therefore, in violation of the Supremacy Clause of the United States Constitution, Article VI, clause 2. ² This is so because a convention, such as the Hague Convention, "has the status of a treaty and consequently is the supreme law of the land...." American Trust Company v. Smyth, 247 F.2d 149, 153 (9th Cir.1957).

If the writ of mandamus is denied, the only other method of attack open to the petitioner is to defend itself at trial, obtain a final judgment, and then appeal. To deny the writ, then, without consideration of VWoA's agency, would be to force VWAG to defend itself in a court that possibly lacks jurisdiction over it; this would be a denial of the German corporation's right to due process in American courts. As the writ of mandamus lies when no other adequate remedy is available, Martin v. Loeb & Co., Inc., 349 So.2d 9 (Ala.1977), and believing that to require VWAG to continue to final judgment could be in derogation of a treaty of the United States, we proceed to a review of the facts and arguments of the case.

Respondent, David K. Brown, the father of the deceased Richard Paul Brown and the administrator of his estate, filed an action for personal injuries against VWoA, VWAG, Haun Motors, Inc., Frank D. Burns, and numerous fictitious defendants on May 5, 1981. The event which gave rise to the complaint was an automobile accident which occurred on or about May 6, 1979. Richard Brown, a passenger in a Volkswagen van, was fatally injured when the van was hit from the rear by a motor vehicle operated by Frank Burns.

Respondent's first service of process on VWAG, sent by registered mail to the corporation's headquarters in Wolfsburg, West Germany, was refused. Service was then attempted on VWAG by ordinary mail on or about July 10, 1981. On September 8, 1981, service was attempted by certified mail, return receipt requested, on VWoA as the agent for VWAG in the United States, pursuant to the Alabama long-arm statute, ARCP 4.2.

After three hearings regarding VWAG's motion to quash service, the trial court found that service on VWoA constituted good and sufficient service on VWAG.

Petitioner VWAG alleges that the trial court has not acquired personal jurisdiction over it by its service of VWoA as agent for VWAG since VWoA is a separate entity and has no authority to accept service on behalf of VWAG. Respondent claims that VWoA is completely controlled by VWAG and is therefore its alter ego. If the latter assertion is found to be true, then service on VWoA is good and sufficient service on VWAG.

The facts as reflected in the record below, and as set out in this opinion, amply justify the conclusion reached by the trial court. We hold that service upon VWoA as agent of VWAG was good and sufficient service on VWAG.

VWAG is a corporation organized and existing under the laws of the Federal Republic of Germany. It manufactures Volkswagen automobiles, as well as individual VW parts and accessories, which it sells to importers from over 100 countries. The transactions take place in West Germany; that is, payment for the products and the subsequent title transfers occur in VWAG's country of incorporation. VWoA, a New Jersey corporation, is a wholly-owned subsidiary of VWAG; in other words, VWAG owns all of the issued and outstanding shares of VWoA.

As support for their respective positions, both parties utilize the written "Importer Agreement," which governs the relationship between VWAG and VWoA. The language relied on by petitioner provides:

Importer (VWoA) will transact all business pursuant to this agreement on its own behalf and for its own account; it has no power or authority whatsoever to act as agent or otherwise for or on account or on behalf of Volkswagenwerk A.G. (VWAG).

Although this language is persuasive, the agreement considered in its entirety clearly indicates VWAG's control over the operations of VWoA. The agreement further provides:

[VWoA] will appoint at locations to be approved by VW[AG] such number of dealers as may correspond to the request of VW[AG]....

[VWoA] shall furnish to VW[AG] its orders ... for the periods and at the time or times determined by VW[AG] and shall use therefor the forms prescribed by VW[AG]. All such orders may be accepted or rejected by VW[AG] in writing.

VW[AG] shall not be under any liability whatsoever toward [VWoA] for failure to deliver under, or for delay in making delivery pursuant to, orders of [VWoA] accepted by VW[AG]....

At and around its premises [VWoA] shall conspicuously display a sufficient number of Volkswagen Signs in accordance with the directives of VW[AG].

... [VWoA] shall use for its Volkswagen business only stationery and business forms printed in accordance with the requests of VW[AG].

VW[AG] will employ a number of competent office employees and business fieldmen sufficient in the opinion of VW[AG] to secure supervision of solicitation by dealers appointed by it of all potential customers for VW[AG] Products....

[VWoA] will employ such number of competent office employees and technical fieldmen as, in the opinion of VW[AG], may be required to assure prompt and satisfactory customer's service....

VW[AG] shall sell VW[AG] Products to [VWoA] at such prices and upon such terms as may from time to time be established by VW[AG].... In the event of any increase of the prices established by VW[AG], [VWoA] agrees to...