Joseph G. Moretti, Inc. v. Caterpillar Tractor Co.

• Decision Date: 01 February 1965
• Docket Number: Civ. No. 5827.
• Parties: JOSEPH G. MORETTI, INC., Plaintiff, v. CATERPILLAR TRACTOR CO., Caterpillar Americas Co., and Cardoze & Lindo S.A., Defendants.
• Court: U.S. District Court — Panama Canal Zone

237 F. Supp. 481

JOSEPH G. MORETTI, INC., Plaintiff, v. CATERPILLAR TRACTOR CO., Caterpillar Americas Co., and Cardoze & Lindo S.A., Defendants.

Civ. No. 5827.

United States District Court D. Canal Zone, Balboa Division.

February 1, 1965.

Roy Phillipps, Henry L. Newell, Balboa, Canal Zone, for plaintiff.

Guillermo Jurado, Carlos Icaza A., Panama City, R. of P., for defendants Caterpillar Tractor Co., Caterpillar Americas Co. (Special Appearance).

De Castro & Robles, Balboa, Canal Zone, for Cardoze and Lindo S. A.

CROWE, District Judge.

On or about December 1, 1962, a meeting was held in the offices of Joseph G. Moretti, Inc. at 2401 N. W. 7th Street, Miami, Florida, with a representative of the plaintiff and representatives of the three defendants present. The meeting was held subsequent to certain negotiations that had taken place relative to the use of machinery and equipment and a lease was thereafter entered into between the parties and dated December 21, 1962. The lease provided that certain machinery and equipment would be furnished by the defendants for use in the performance of Panama Canal Company Contract Number PC-2-862, and was to continue for a period of thirteen months on an agreed rental basis. The equipment was used for earth moving in the Canal Zone during the period of construction and plaintiff alleges that due to frequent breakdowns and repeated failures on parts of the equipment, the completion of the aforesaid contract was delayed, much to plaintiff's damage, all of which is set out in detail in the complaint filed herein on September 18, 1964.

The defendant, Cardoze & Lindo S. A. is a corporation which has duly qualified in the Canal Zone by conforming with the provision of Title 2, Canal Zone Code, 872, naming the executive secretary of the Panama Canal Company as its agent for service of process, but neither the Caterpillar Tractor Company nor Caterpillar Americas Company have so qualified although it is alleged in the petition, which is further substantiated by the affidavit of William H. Bourne, Vice President of the plaintiff corporation, that both the Caterpillar Tractor Company and the Caterpillar Americas Company were doing business in the Canal Zone during the performance of the contract.

The affidavit of Mr. Bourne sets out in considerable detail the fact that representatives of the two non-qualifying defendants came into the Canal Zone during the time of the actual work on the contract and made suggestions as to the use and operation of the equipment and performed work upon it. It states further that they inspected, supervised, and performed welding repairs upon the equipment and tried to remedy the "failure of the equipment" to perform the work that it had been furnished to do under the contract.

After filing the complaint, the attorneys for the plaintiff found that Caterpillar Tractor Company and Caterpillar Americas Company are foreign corporations having neither offices nor agents for service of process within the Canal Zone and they moved for service of process upon the executive secretary of the Canal Zone Government in accordance with the provision of Title 2, Canal Zone Code, 872. The marshal made the service upon Mr. Robert S. Jeffery, Deputy Executive Secretary, Canal Zone Government, and both Caterpillar Tractor Company and Caterpillar Americas Company have appeared specially and made motions to vacate the order of the Court of October 7, 1964 directing the service of the summons and to quash and make void the service of the summons made in pursuance of the order on the 14th day of October, 1964.

The motions to quash state that the service of process can be made on the executive secretary or his successor "only when a foreign corporation is licensed to do business in the Canal Zone and has designated a person residing within the Canal Zone and the place of business of such person upon whom process may be served, or in the event that such person cannot be found in the Canal Zone, or in the event that no such person is designated by the corporation." The motions further state that the defendants are foreign corporations not licensed to do business in the Canal Zone and that they neither do business in the Canal Zone nor maintained offices or any other facilities therein, or procured licenses to do business therein, and that they have not applied for such licenses, nor have such licenses ever been revoked or surrendered, nor have they ever employed any person upon whom service of summons could be made.

For the purpose of testing the validity of the service, it will be assumed that the allegations in the complaint and affidavit that the defendants in question were doing business in the Canal Zone are true. Therefore it becomes a matter of law as to whether service on the executive secretary of the Canal Zone Government is good when a corporation has failed to qualify under the statutes to do business but then actually does business in the Canal Zone.

Plaintiff has announced its reliance upon paragraph (b) of Title 2, Section 872 of the Canal Zone Code, which reads as follows:

"Process served on the person designated by the corporation or, if he can not be found at the place designated, or if a person is not designated, on the executive secretary of the Canal Zone Government, is a valid service on the corporation. When the executive secretary is served with process he shall without delay communicate the same to the corporation concerned at its last known address. A default judgment may not be entered against the corporation in an action in which process is served on the executive secretary until at least 60 days after the date of the service."

It is recognized by the parties that there is no specific statute in the Canal Zone providing that service may be perfected upon a corporation "doing business" in the Canal Zone by serving process upon the executive secretary of the Canal Zone Government or any other officer, when that corporation has not qualified to do business in the Canal Zone. However plaintiff asserts that the language in the first sentence of the paragraph of the statute quoted, which is "or if a person is not designated, on the executive secretary of the Canal Zone Government", is sufficient. His attorneys argue that in the absence of the specific statute the court in the interest of justice should "read into" the above paragraph the intent of Congress to make such service good.

Service of process in the Canal Zone generally is governed by Rule 4 of the Federal Rules of Civil Procedure, Title 28 U.S.Code and in the absence of a specific statute contrary to its provisions, we must abide by it. The paragraphs of that rule governing service on parties out of the "state" are as follows:

"(d) Summons: Personal Service. The summons and complaint shall be served together. The plaintiff shall furnish the person making service with such copies as are necessary. Service shall be made as follows: * * *

"(3) Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant. * * *

"(e) Same: Service Upon Party Not Inhabitant of or Found Within State. Whenever a statute of the United States or an order of court thereunder provides for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the circumstances and in the manner prescribed by the statute or order, or, if there is no provision therein prescribing the manner of service, in a manner stated in this rule. Whenever a statute or rule of court of the state in which the district court is held provides (1) for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state, or (2) for service upon or

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