Goldberg v. Southern Builders

• Decision Date: 10 July 1950
• Docket Number: No. 10486.,10486.
• Citation: 87 US App. DC 191,184 F.2d 345
• Parties: GOLDBERG et al. v. SOUTHERN BUILDERS, Inc.
• Court: U.S. Court of Appeals — District of Columbia Circuit

87 US App. DC 191, 184 F.2d 345 (1950)

GOLDBERG et al. v. SOUTHERN BUILDERS, Inc.

No. 10486.

United States Court of Appeals District of Columbia Circuit.

Argued May 12, 1950.

Decided July 10, 1950.

Mr. Herman Tocker, Washington, D. C., for appellants.

Mr. Thomas S. Jackson, Washington, D. C., with whom Messrs. Louis M. Denit, A. Leckie Cox, and Pleasant Baxter Davis, all of Washington, D. C., were on the brief for appellee.

Before PRETTYMAN, FAHY and WASHINGTON, Circuit Judges.

WASHINGTON, Circuit Judge.

The question here presented is whether Magnolia Gardens, Inc., a foreign corporation, which conducts certain activities in the District of Columbia, is doing or transacting business in this District within the meaning of Section 13 — 103 of the District of Columbia Code, so that it may be served with process and made amenable to the jurisdiction of our courts.

Plaintiff Goldberg, appellant here, brought suit in the United States District Court for the District of Columbia against Southern Builders, Inc., a foreign corporation. A writ of attachment and garnishment was issued and served on Magnolia Gardens, Inc., a corporation of Delaware. Magnolia admitted indebtedness to defendant Southern Builders. Southern Builders appeared specially in the action¹ and moved for an order quashing service of the writ on Magnolia Gardens on the ground that Magnolia was a non-resident foreign corporation not doing business in the District of Columbia. This motion was granted by the trial court, and it is from the order quashing the service that we have this appeal.

The statute provides:

"In actions against foreign corporations doing business in the District all process may be served on the agent of such corporation or person conducting its business, or, in case he is absent and can not be found, by leaving a copy at the principal place of business in the District, or, if there be no such place of business, by leaving the same at the place of business or residence of such agent in said District, and such service shall be effectual to bring the corporation before the court.

"When a foreign corporation shall transact business in the District without having any place of business or resident agent therein, service upon any officer or agent or employee of such corporation in the District shall be effectual as to suits growing out of contracts entered into or to be performed, in whole or in part, in the District of Columbia or growing out of any tort committed in the said District." (Act of March 3, 1901, 31 Stat. 1419, c. 854, § 1537, as amended, D.C.Code, § 13 — 103.)

This statute, like analogous laws in many states, is remedial in purpose. Its object is quite clear — it is to enable the District of Columbia courts to exercise jurisdiction over foreign corporations which engage in business activities in the District. The law as to when foreign corporations are subject to suit outside of their state of incorporation was for a long time possessed of a mystic quality which had evolved from the piling of additional fictions upon the base of the original corporate fiction. As a result corporations were able to engage in activity in many states and yet all too often escape liability for such activity because they could not be sued in local forums. Such statutes as the one here involved were enacted in consequence. They rest upon the concept that when a foreign corporation does certain acts within a state (or, here, the District of Columbia), there are sufficient contacts with that state to give its courts, upon proper service of process, personal jurisdiction over that corporation. International Shoe Co. v. State of Washington, 326 U.S. 310, 316-319, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.

The statute here involved is concerned with two types of activities by a foreign corporation, activities which are quite distinct quantitatively and qualitatively. The first paragraph relates to the situation where the foreign corporation carries on a consistent pattern of regular business activity within the jurisdiction. The statute provides that in such a situation the foreign corporation, upon proper service, shall be subject to the jurisdiction of the District of Columbia courts generally and not merely for suits arising out of its activity in the District of Columbia. The second paragraph, on the other hand, was intended to cope with those situations where the foreign corporation is not "doing business" within the District of Columbia — that is, where the contacts with the District are only casual and irregular, and thus not sufficient to bring it within the ambit of the first paragraph of the statute. In such a situation the statute provides that when the foreign corporation enters into or performs a contract in the District of Columbia, or commits a tort in the District of Columbia, it shall be subject to the jurisdiction of the District of Columbia courts with regard to suits growing out of that contract or tort.

The problem in this case under the statute is, first, whether the corporation is "doing business" in the District of Columbia, for, if so, there is no question but that the service here is adequate. If the answer is in the negative, then the question arises whether the garnishment of funds owing under a contract executed in the District of Columbia, and to be performed in part in the District of Columbia but primarily in Virginia, is a suit growing out of a contract within the meaning of the second paragraph of the statute.

The term "doing business" is not one possessed of but a single meaning in law. It is used in connection with many different situations and must be characterized and defined according to the context. Thus, what constitutes doing business for purposes of taxation by a state, may be a very different regulation by a state, or for purposes of thing from what constitutes doing business for purposes of process and the subjection of a foreign corporation to the jurisdiction of local cour...