Houston Fearless Corporation v. Teter, 7266.

• Decision Date: 13 June 1963
• Docket Number: No. 7266.,7266.
• Citation: 318 F.2d 822
• Parties: HOUSTON FEARLESS CORPORATION, Appellant, v. Guy TETER, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

318 F.2d 822 (1963)

HOUSTON FEARLESS CORPORATION, Appellant, v. Guy TETER, Appellee.

No. 7266.

United States Court of Appeals Tenth Circuit.

June 13, 1963.

George Louis Creamer of Creamer & Creamer, Denver, Colo., for appellant.

William P. Johnson, Denver, Colo. (Rothgerber, Appel & Powers, Denver, Colo., were with him on the brief), for appellee.

Before BREITENSTEIN, HILL and SETH, Circuit Judges.

HILL, Circuit Judge.

The appeal, under the provisions of 28 U.S.C. § 1292(b), is from an interlocutory order of the lower court denying defendant-appellant's motions to quash the service of process and to dismiss the complaint for want of jurisdiction and upon the basis of improper venue or, in the alternative, for a change of venue pursuant to 28 U.S.C. § 1404(a). The questions presented are whether, under the facts of the case, defendant-appellant was doing business within the State and District of Colorado within the meaning of the venue provisions of 28 U.S.C. § 1391(c) and, if so, whether as a matter of convenience, venue should be changed to another district under § 1404(a).

The facts as found by the lower court and established by the oral testimony, affidavits, counter-affidavits and the answers to requests for admissions and interrogatories are not in dispute. These facts disclose that appellee, Teter, is a resident of the State of Colorado and the appellant, Houston Fearless Corporation (Houston), is a California corporation with its principal offices and place of business located in Los Angeles, California. Houston does not maintain any corporate office in Colorado and has never done so; it has never applied for authority, or been qualified, to do business in Colorado; it has never authorized or appointed an agent for service of process in Colorado, and it does not have, and has never had, any officer, agent or employee, except as herein disclosed, a resident of Colorado. Houston is engaged in the manufacturing business and no part of such manufacturing activity is conducted in that state.

Houston, in 1960, was desirous of obtaining sales representation in the Denver, Colorado, and Salt Lake City, Utah, areas. It was especially interested in making sales of its products and services to the Martin Company in the Denver area. To that end, Houston entered into negotiations with Teter, who was then employed as a buyer by Martin, to become its sales representative in the States of Colorado and Utah. As a result of these negotiations, Teter terminated his employment with Martin and entered into a written agreement with Houston¹ which became effective on November 7, 1960. This agreement, which could be terminated by either party upon 60 days written notice, referred to Teter as the "Representative" and covered "sales and engineering liaison services" to be performed by him in Colorado and Utah. Under the terms of the agreement, Houston agreed to pay Teter a commission at a specified rate based upon the dollar volume of sales made by him. Houston also agreed to pay him the sum of $400 per month as a retainer, plus expenses not to exceed $250 per month, or a total not to exceed $650 per month. However, the monthly retainer payment was to be deducted from the amount of commissions payable to him and, therefore, Teter's compensation for his services in securing purchase orders and developing markets and sales for Houston's products was on a commission basis even though he did receive a monthly retainer payment.

Teter's duties as Houston's representative were spelled out in considerable detail in the agreement. It provided that his duties should include but were not limited to: (1) Assisting Houston in obtaining sales leads and contracts; (2) assisting Houston in negotiating purchase orders and contracts; (3) providing adequate technical liaison both prior to and after receipt of an order and continuing such liaison until the items ordered were delivered and accepted; (4) providing liaison with customers as might be required after delivery of any items so as to insure customer satisfaction and good-will; and (5) assisting Houston in resolving any problems as to payment or settlement by the customer for goods delivered or services performed.

This agreement was terminated by Houston as of June 30, 1961, and Teter thereafter commenced this diversity action to recover commissions allegedly due and owing to him under such agreement. Service of process was made upon an officer of appellant corporation by the United States Marshal, within the District of Colorado, pursuant to the provisions of F.R.Civ.P. 4(d) (3), 28 U.S. C.A. The lower court in denying appellant's motions attacking the sufficiency of such service specifically found and held that Houston was doing business in Colorado within the meaning of 28 U.S.C. § 1391(c), and that the service of process was proper and valid. The court concluded that the District of Colorado was the proper venue for the action and that it had jurisdiction. We allowed this interlocutory appeal. Houston Fearless Corporation v. Teter, 10 Cir., 313 F.2d 91.

Appellant in its brief first argues that it was not doing business in the State of Colorado and therefore the lower court was without jurisdiction to entertain the action because venue was improper in the Colorado district. For the answer to this contention, we look to the federal venue statute, 28 U.S.C. § 1391(c), which, insofar as pertinent here, provides as follows:

"A corporation may be sued in any judicial district in which it * * * is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

The historical background of venue in the federal courts is interesting, but we will not unnecessarily extend the length of this opinion on it as there are several excellent discussions to be found elsewhere.² From an examination of these discussions, it is apparent that the questions of venue under § 1391(c) and service of process under the various state statutes are so intertwined that it is difficult to separate the principles of law involved. Concededly, as to both questions, the courts must determine what constitutes "doing business".

Professor Moore, in recognizing the difficulties which are encountered in reaching an answer to our problem, states:

"There is a good deal of confusion among the decisions as to the meaning of `doing business,\' as used in § 1391(c), because of the following factors: the courts\' use of the term `doing business\' in connection with venue and also with the amenability of the defendant corporation to service of process; whether this latter matter, at least in diversity cases, is governed by state law, subject to federal constitutional limitations; if it is governed by state law, does state law determine whether a corporation is `doing business\' for federal venue purposes; and because the Supreme Court has greatly broadened the rule as to when a corporation is amenable to service and in so doing has used other language than `doing business.\' We believe that the construction of § 1391(c) involves a federal matter; that state law is not controlling; and uniformity in applying § 1391(c) is desirable. And, although the matter is not free from doubt, and there is very respectable contra authority, we believe that if a corporation is amenable to service of process it should be held to be `doing business\' for venue purposes. * * *"³

We agree that federal law must be applied to determine whether Houston was "doing business" in Colorado for venue purposes,⁴ and that the test of "doing business" is the same for that purpose as it is for determining whether a corporation is amenable to service of process. We may therefore look to the meaning and content generally accorded to the term "doing business" in cases involving the question of whether the service under a state statute comports with due process. The landmark case on this subject is, of course, International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. In that case the Supreme Court said at page 316 of 326 U.S., at page 158 of 66 S.Ct.:

"Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant\'s person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. * * * But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.\' * *"

And, further, at page 317 of 326 U.S., at page 159 of 66 S.Ct.:

"`Presence\' in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given. * * * Conversely it has been generally recognized that the casual presence of the corporate agent or even his conduct of single or isolated items of activities in a state in the corporation\'s behalf are not enough to subject it to suit on causes of action unconnected with the activities there. * * * To require the corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more

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