Frazier v. The Steel

• Decision Date: 06 April 1926
• Docket Number: (No. 5445.)
• Citation: 101 W.Va. 327
• Court: West Virginia Supreme Court
• Parties: R. L. Frazier v. The Steel & Tube Company OF America.

101 W.Va. 327

R. L. Frazier

v.The Steel & Tube Company OF America.

(No. 5445.)

Supreme Court of Appeals of West Virginia.

Submitted March 23, 1926.

Decided April 6, 1926.

Corporations Consent of Foreign Corporation, Engaging in Business in State, to Statute Making State Auditor Attorney in Fact to Accept Service of Process for it, Extends to All Actions on Contracts Made by it With Citizens of State, Though it Ceases to Transact Business or Has Withdrawn From State Prior to Bringing Action (Code, C. 5.4, §§ 240, SO; and chapter 32, §132).

A foreign corporation on coming into this state and engaging in business under authority granted it pursuant to statutes providing therefor, thereby consents to the provision of the statute making the state auditor its attorney in fact to accept service of process for it, and such consent extends to all actions on contracts made by it with citizens of the state while doing business under such authority, though it may have ceased to do business or have withdrawn from the state prior to the bringing of the action.

Litz, Woods, Judges, absent.

(Corporations, 14a C. J. §§ 4083, 4129.)

(Note: Parenthetical references by Editors, C. J. Cyc. Not part of syllabi.)

Error to Circuit Court, Logan County.

Assumpsit by R, L. Frazier against the Steel & Tube Company of America for breach of a contract. To review a judgment sustaining defendant's plea in abatement and dismissing plaintiff's action, plaintiff brings error.

Reversed and remanded.

Minter & McNemar and Mark T. Valentine, for plaintiff in error.

Chafin & Estep, for defendant in error.

Miller, Judge:

The trial court sustained defendant's plea in abatement and dismissed plaintiff's action, for want of jurisdiction. The action was in assumpsit for breach of contract.

By its plea the defendant alleged that it is a foreign corporation, created and existing under the laws of the State of Delaware; that at the time of the institution of the action it was not engaged in business in this state, but had, under authority of the secretary of state, withdrawn from the state; and that at the time process was served on the state auditor, he was no longer authorized to accept service, and that such attempted service was void.

Section 24-a, chapter 54 of the Code provides: "The auditor of this state shall be, and he is hereby constituted the attorney in fact for and on behalf of every foreign corporation doing business in this state, and of every non-resident domestic corporation, with authority to accept service of process on behalf of and upon whom service of process may be made in this state for and against such corporation. No act of such corporation appointing the auditor such attorney in fact shall be necessary." Previous to the amendment of this section in 1915, the statute required such corporations to file in the auditor's office their power of attorney to accept service of process upon them, and by the same instrument to consent that such service should constitute clue and legal service.

Defendant's contention is that the agency, or authority of the auditor to accept service of process exists only so long as the foreign corporation is authorized to do business within the state. It seems to be admitted that where the foreign corporation actually appoints some person as its attorney in fact to accept service of process in a state where it is authorized to do business, and where the agency creates a power coupled with an interest, such power of attorney is irrevocable as long as an interest in the subject of the power continues, and that by withdrawing from the state, such corporation does not, and can not, revoke the authority of its agent. But here it is said that the service of process created by the statute is constructive service only, and the authority of the state officer ceases when the corporation formally withdraws its business from the state. For this proposition counsel cite and rely on Cady v. Associated Colonies, 119 Fed. 420. The opinion in that case, after discussing the question of constructive service, simply holds that, under the California statute, service of process on the secretary of state is valid only when the foreign corporation is actually doing business within the state, and cites for the proposition so laid down, St. Clair v. Cox, 106 17. S. 350; Swan v. Association, 100 Fed. 922; and Friedman v. Insurance Co., 101 Fed. 535. In the St. Clair case, where the Michigan statute made service of a copy of a writ of attachment on "any officer, member, clerk, or agent" of a foreign corporation, to have the force and effect of personal service of summons, it was held that the officers return, that he had served a copy of the writ on the defendant "by delivering the same to Henry J. Colwell, Esq., agent of the said Winthrop Mining Company, personally, in said county," was insufficient where neither the record nor the return showed that the company was at the time doing business in the state, and that it did not, therefore, appear even prima facie that Colwell stood in any such representative capacity to the company as would justify the service of a copy of the writ on him.

Whatever may be the effect of these decisions, a number of the later decisions of the Supreme Court of the United States and other federal courts do not seem to support defendant's theory. In Hunter v. Mutual Reserve Life Insurance Co., 218 U. S. 572, the Supreme Court, approvingly quoted from Moore v. Mut. Res. Life Ins. Co., 129 N. C. 31, as follows: "It is conceded that, as a general rule, a principal has the right to revoke a power of attorney at any time, whether it is in terms irrevocable or not. But to this general rule there are well-established exceptions, as to where it is coupled with an interest, or where it is contractual in its nature, given for a consideration and for the protection of some one or some interest. In our opinion this power falls under this exception to the general rule. It was contractual in its nature, was given upon consideration defendant should have the right to carry on its business in this state, and for the protection of those who should deal with the defendant." In. the same opinion, commenting on Woodward v. Mut. Res. Life Ins. Co., 178 N. Y. 490, the Supreme Court said: "It was said in that case that the stipulation of the company in regard to service of process became an obligation of the company precisely as though it 'had been incorporated in the policies; and thereafter, whether the company continued to do business in the state or not, policy holders could commence action by service on the secretary of state, ' subsequently changed to the insurance commissioner. Woodward v. Mutual Reserve L. Ins. Co. was cited by this court in its opinion sustaining the judgment in the Birch case." Mut. Res. Ins. Co. v. Birch, 200 U. S. 612. And in Hill v. Mining & Development Co., 156 Fed. 797, it is said in respect to the St. Clair case, that: "This does not limit the power of the state to prescribe a mode of service confined to the time when the corporation is actually engaged in business or to the agents of the corporation; but it does confine the service 'to litigation arising out of its transactions in the state, ' and to its agents, 'or persons specially designated.' " In Conn Mut. Life Ins. Co. v. Spratley, 172 U. S. 602, the court, in the opinion by Mr. Justice Peckham, said: "A vast mass of business is now done throughout the country by corporations which are chartered by states other than those in which they are transacting part of their business, and justice requires that some fair and reasonable means should exist for bringing such corporations within the jurisdiction of the courts of the state where the business was done, out of which the dispute arose."

In Germania Insurance Company v. Ashby, 112 Ky. 303, 99 Am. St. Rep. 295, where the statute is similar to our own before the amendment of 1915, the Kentucky court said: '' There is no provision in the law limiting this consent to such time as the insurance company shall do business in this state. The object and purpose of the statute * * * was to provide a mode of service to citizens who should desire to sue upon contracts of the insurance company, rather than compel them to go to the state of the corporation for redress. If this consent is to be withdrawn as soon as the company withdraws, the provision, so far as the insurance commissioner is concerned, would be a useless provision. As long as the company is engaged in business here, service can...