Florence Nightingale School of Nursing, Inc. v. Superior Court for Los Angeles County

• Decision Date: 17 February 1959
• Citation: 168 Cal.App.2d 74,335 P.2d 240
• Court: California Court of Appeals Court of Appeals
• Parties: FLORENCE NIGHTINGALE SCHOOL OF NURSING, INC., an Illinois corporation, Petitioner, v. SUPERIOR COURT of California FOR THE COUNTY OF LOS ANGELES and Leon Wolff, doing business as The Lincoln Institute of Practical Nursing, Respondents. Civ. 23589.

Page 240

335 P.2d 240

168 Cal.App.2d 74

FLORENCE NIGHTINGALE SCHOOL OF NURSING, INC., an Illinois corporation, Petitioner, v. SUPERIOR COURT of California FOR THE COUNTY OF LOS ANGELES and Leon Wolff, doing business as The Lincoln Institute of Practical Nursing, Respondents.

Civ. 23589.

District Court of Appeal, Second District, Division 3, California.

Feb. 17, 1959.

Hearing Denied April 15, 1959.

Isaac E. Ferguson, Beverly Hills, for petitioner.

Harold W. Kennedy, County Counsel and Edward A. Nugent, Deputy County

Counsel, Los Angeles, for respondent Superior Court.

Ralph B. Herzog and Marvin G. Burns, Beverly Hills, for real party in interest.

VALLEE, Justice.

Petitioner, Florence Nightingale School of Nursing, Inc., an Illinois corporation, seeks a writ of mandate to compel the superior court of the County of Los Angeles to enter its order quashing service of summons in an action brought by Leon Wolff, doing business as The Lincoln Institute of Practical Nursing, the real party in interest in this proceeding, for an injunction and damages for alleged unfair competition. Petitioner was served by personal delivery to the Secretary of State and by mail to its secretary in Chicago, Illinois, pursuant to order of the superior court. It appeared specially and moved to quash service of summons. The motion was denied.

Petitioner contends it was not, and is not, doing business in this state within the meaning of section 411, subd. 2 of the Code of Civil Procedure and is therefore not subject to service of process pursuant to section 6501 of the Corporations Code.

Petitioner's principal place of business is in Chicago, Illinois. It gives instructed in nursing by correspondence conducted from its office in Chicago to persons in Illinois and other states. It has advertised and currently advertises in more than 25 magazines with circulation in California. ¹ The relationship between petitioner and students is initiated through an inquiry made in response to an advertisement by the prospective California student by mail directed to petitioner's Chicago office. In response to the inquiry, petitioner mails to the California prospect a form letter, a brochure containing material descriptive of the courses offered, an application, and a self-addressed envelope. A California resident who enrolls for a course of instruction signs and mails an application to petitioner together with payment in whole or in part, receives lessons by mail, submits his work by mail, and receives criticism and comment from petitioner by mail. In substantially all cases when a California resident enrolls, each lesson thereafter is sent in the mail by petitioner from Chicago to the California resident, accompanied by an examination. The student writes out the answers to the examination and returns them by mail to petitioner in Chicago. Petitioner corrects the examination and returns it with comments through the mail to the California student together with the next lesson.

A course consists of about 40 lessons. The lessons and examinations are sent to the California students in groups of four. This is repeated until completion of the entire course. There are about ten mutual exchanges of correspondence between petitioner and each California student. The average time for completion of a course is six months. The cost of a course is $27.50, $39.50, or $47.50, depending on the plan of instruction chosen and the method of payment. On completion of the course the student is notified by mail of success or failure.

All contact between petitioner and its students is by mail only. Petitioner has never had any office, postal address, telephone listing, bank account, property, agents, solicitors, or other representatives in California. The number of petitioner's students in California is less than one per cent of its entire enrollment.

'The amount and kind of activities which must be carried on by the foreign corporation in the state of the forum so as to make it reasonable and just to subject the corporation to the jurisdiction of that state are to be determined in each case.' Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 72 S.Ct. 413, 418, 96 L.Ed. 485, 492; Boote's Hatcheries & Packing Co. v. Superior Court, 91 Cal.App.2d 526, 205 P.2d 31; Jeter v. Austin Trailer Equipment Co., 122 Cal.App.2d 376, 265 P.2d 130.

The later decisions in California construe the phrase 'doing business in this State' as synonymous with those business activities required by the due process clause as the basis for jurisdiction. Sales Affiliates, Inc., v. Superior Court, 96 Cal.App.2d 134, 137, 214 P.2d 541; Kneeland v. Ethicon Suture Laboratories, 118 Cal.App.2d 211, 220-221, 257 P.2d 727. The Supreme Court in Borgward v. Superior Court, 51 Cal.2d 72, 330 P.2d 789, 791, stated:

'In Henry R. Jahn & Son v. Superior Court, 49 Cal.2d 855, 858-859, 323 P.2d 437, 439, we stated: 'The statute authorizes service of process on foreign corporations that are 'doing business in this State.' That term is a descriptive one that the courts have equated with such minimum contacts with the state 'that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'' International Shoe Co. v. State of Washington [etc.], 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95, (161 A.L.R. 1057). Whatever limitation it imposes is equivalent to that of the due process clause. "(D)oing 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.' Eclipse Fuel Engineering Co. v. Superior Court, 148 Cal.App.2d 736, 738, 307 P.2d 739, 741, * * *." Also see Traveler's Health Ass'n v. Com. of Virginia ex rel. State Corp. Commission, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154; Perkins v. Benquet Consol. Min. Co., 342 U.S 437, 72 S.Ct. 413, 96 L.Ed. 485; McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Parmelee v. Iowa State Traveling Men's Ass'n, 5 Cir., 206 F.2d 518, 44 A.L.R.2d 410; 5 U.C.L.A.Law Rev. 198, 214.

Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298, states:

'[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'

International Text-Book Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678, held that a Pennsylvania corporation conducting a correspondence school whose business involved the solicitation of students in Kansas by local agents, who also collected and forwarded to the home office in Pennsylvania the tuition fees, and the systematic intercourse by correspondence between the company and agents, and the transportation of the needful books, apparatus, and papers, was doing business in Kansas. There is no essential difference in the activity or in the results between solicitation by agents in the state and solicitation by advertising in magazines circulated in the state. Solicitation by advertising may be more productive of business than by agents. These days it would seem that there is much more solicitation by advertising in newspapers, magazines, and over radio and television then by any other method.

International Text-Book Co. v. Mueller, 149 Ill.App. 509, held that a Pennsylvania corporation which conducted a school by correspondence was doing business in Illinois. The court stated (at page 511):

'In the performance of its corporate functions it [the Pennsylvania corporation] examined and corrected, from time to time by correspondence the papers submitted to it by its students in the several courses of study pursued by them and in like manner informed the students as to the character of the work done by them. The insistence by appellant that in so conducting a school it was not transacting business in Illinois, because its buildings, instructors and executive officers were all located in Scranton, Pennsylvania, is not tenable in view of the fact that a school cannot exist without pupils, and necessarily where the pupils and instructors are located in different states, the school cannot properly be said to have an exclusive situs in one state.'

To the same effect, Air Conditioning Training Corp. v. Majer, 324 Ill.App. 387, 58 N.E.2d 294; International Text-Book Co. v. Gillespie, 229 Mo. 397, 129 S.W. 922; annotation, 38 A.L.R.2d 760.

Petitioner asserts that since it has no place of business, no agents, employees, or representatives, and no records of its business, in California; and since its activity is confined to solicitation by advertisements in nationally circulated magazines with almost negligible contacts with persons in California, it is not doing business in the state. Early cases holding that personal jurisdiction could not be obtained when the sole basis thereof consisted in mere solicitation within the state seem to be no longer authoritative. 'Under the minimum contacts test of the International Shoe case regular sales solicitation alone can constitute doing business rendering the foreign corporation amenable to process in actions engendered by such activities.' Henry R. Jahn & Son, Inc. v. Superior Court, 49 Cal.2d 855, 859, 323 P.2d 437, 440. Emphasis ours. 'In the more recent decisions, solicitation, without more, constitutes doing business within a state when the solicitation is a regular, continuous and substantial course of business.' Koninklijke Luchtvaart Maatschappij v. Superior Court, 107 Cal.App.2d 495, 500, 237 P.2d 297, 300. 'The principles announced int he International Shoe case have had a most telling and devastating effect on the venerable rule laid down in Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. , 916, that personal jurisdiction cannot be obtained over a foreign corporation when the sole basis thereof consists of 'mere solicitation'...