Henry Doherty Co v. Goodman

Decision Date01 April 1935
Docket NumberNo. 469,469
PartiesHENRY L. DOHERTY & CO. v. GOODMAN
CourtU.S. Supreme Court

Mr. Frederick W. Lehmann, Jr., of Des Moines, Iowa, for appellant.

Mr. Joseph I. Brody, of Des Moines, Iowa, for appellee.

[Argument of Counsel from page 624 intentionally omitted] Mr. Justice McREYNOLDS delivered the opinion of the Court.

In 1926, Henry L. Doherty, citizen of New York, trading as Henry L. Doherty & Co., established an office at Des Moines, Polk county, Iowa, and there through agents carried on the business of selling corporate securities throughout the state. E. A. King, designated as district manager, took charge of this office in January, 1929, and continued to direct its affairs during the time here important. Under him were clerks and stock salesmen, paid directly from New York.

A salesman operating from the Des Moines office, September 1, 1929, negotiated in that city a sale of stock to appellee Goodman, and out of this the present controversy arose. The only power or authority expressly conferred upon King by Doherty was to sell securities and supervise other employees; he never in terms consented that service of process upon this agent should constitute service upon himself.

Section 11079, Iowa Code 1927, also 1931, in effect since 1851, provides: 'When a corporation, company, or individual has, for the transaction of any business, an office or agency in any county other than that in which the principal resides, service may be made on any agent or clerk employed in such office or agency, in all actions growing out of or connected with the business of that office or agency.'

July 31, 1931, appellee Goodman commenced an action against Doherty in the District Court, Polk county, wherein he sought only a personal judgment for damages arising out of the sale contract of September 1, 1929. The usual summons or notice commanding the defendant to appear was served upon district manager King.

Doherty appeared specially. He challenged the jurisdiction of the court; claimed he had not been within the state; King had no authority to accept service of process in his behalf; the alleged service was ineffective; and that to hold otherwise would deprive him of rights guaranteed by the Federal Constitution. The District Court, relying upon Code, § 11079, overruled the special plea and held the service adequate. Doherty made no further appearance. Judgment against him was affirmed by the Supreme Court (255 N.W. 667).

The cause is here by appeal. Appellant insists that, if construed as applicable to him, a citizen of another state never in Iowa, in the circumstances disclosed by the record, section 11079 offends the Federal Constitution, section 2, art. 4, and section 1, Fourteenth Amendment.

The Supreme Court affirmed the action of the trial court upon authority of Davidson v. Henry L. Doherty & Co. (1932) 214 Iowa, 739, 241 N.W. 700, 701, 91 A.L.R. 1308. The opinion in that cause construed section 11079, and, among other things, said:

'By its terms, and under our holding, the statute is applicable to residents of 'any other county' than that in which the principal resides, whether such county be situated in Iowa or in some other state. In other words, the statute does apply to nonresidents of Iowa who come within its terms and provisions, as well as to residents. Our construction of the statute has stood since 1887. * * * We adhere to our former holdings that the statute is applicable to individual nonresidents who come within its express terms and provisions. * * *

'The statute in question does not in any manner abridge the privileges or immunities of citizens of the several states. It treats residents of Iowa exactly as it treats residents of all other states. The citizens of each state of the United States are, under this statute, entitled to all the privileges and immunities accorded citizens of this state.

'The justice of such a statute is obviojs. It places no greater or different burden upon the nonresident than upon the resident of this state. * * * A nonresident who gets all the benefit of the protection of the laws of this state with regard to the office or agency and the business so transacted ought to be amenable to the laws of the state as to transactions growing out of such business upon the same basis and conditions as govern residents of this state. * * * 'It makes no hostile discrimination against nonresidents, but tends to put them on the same footing as residents.' * * *

'Four things are under this statute essential to the validity of such service. The...

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