Junk v. RJ Reynolds Tobacco Co.

• Decision Date: 30 September 1938
• Parties: JUNK v. R. J. REYNOLDS TOBACCO CO.
• Court: U.S. District Court — Western District of Virginia

24 F. Supp. 716

JUNK v. R. J. REYNOLDS TOBACCO CO.

District Court, W. D. Virginia, at Danville.

September 30, 1938.

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Carter & Williams, of Danville, Va., for plaintiff.

Harris, Harvey & Brown, of Danville, Va., for defendant.

PAUL, District Judge.

This is an action in personam for an alleged breach of contract to pay money under a contract stated to have been entered into between the parties in the State of North Carolina. The plaintiff is a citizen and resident of this district and the defendant is a New Jersey corporation which has been admitted to do business in Virginia and has, in accordance with the Virginia statute (Code, Sect. 3845), designated the Secretary of the Commonwealth as its agent for the service of legal process upon it.

On March 21, 1938, the plaintiff caused process to issue from the Clerk's Office at Danville for service upon the statutory agent in the City of Richmond, the official residence of the Secretary of the Commonwealth. At the same time he caused process to be issued for service upon the manager of defendant's business in the City of Danville, evidently upon the theory that such manager was an actual agent of the defendant.

Both summons were served and the defendant, appearing specially for that purpose, has submitted motions to quash the service in each instance and has also filed pleas in abatement covering the same matter.

Service upon the Statutory Agent.

The City of Richmond is in the Eastern District of Virginia and service upon the Secretary of the Commonwealth was made there as, under the Virginia statute, it must be. Va.Code, Sect. 3845. Objection is made that the process of this Court in civil cases does not run outside the district and that service upon defendant's agent in the Eastern District is ineffectual even though that agent be the statutory agent for the state.

It is well settled that, except where specifically authorized by Federal statute, the civil process of a Federal District Court does not run outside the district. Toland v. Sprague, 12 Pet. 300, 9 L.Ed. 1093; Herndon v. Ridgway, 17 How. 424, 15 L.Ed. 100; New York L. Insurance Co. v. Bangs, 103 U.S. 435, 26 L.Ed. 580; Caledonian Coal Co. v. Baker, 196 U.S. 432, 25 S.Ct. 375, 49 L.Ed. 540; McCall Co. v. Bladworth, 2 Cir., 290 F. 365; Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916; Munter v. Weil Corset Co., 261 U.S. 276, 43 S.Ct. 347, 67 L. Ed. 652; Robertson v. Railroad Labor Board, 268 U.S. 619, 45 S.Ct. 621, 69 L.Ed. 1119.

In Employers Reinsurance Corp. v. Bryant, 299 U.S. 374, 57 S.Ct. 273, 81 L.Ed. 289, an action in personam was originally brought in the state court and removed to the federal court for the Eastern District of Texas. Process was issued out of the latter court and served on an agent of defendant in the Western District of Texas. In holding that this service was not effectual to obtain jurisdiction of defendant, the court says page 274:

"The suit was in personam and not within any exceptional provision empowering the federal court to send its process outside its district. Therefore that court's process could be effectively served only within the district."

The opinion in the above quoted case does not disclose whether the agent in the Western District of Texas was a statutory agent, but I am informed that the record in the case shows that he was not. However, in view of the broad statement made in this and other cases, I am unable to draw a distinction as to the validity of service upon a statutory agent and an actual agent where the service is attempted outside the district of suit. The decisions indicate no such distinction. While it may be argued that a public official designated as statutory agent is constructively present in every county in the state, the fact remains that service of process is an actual thing and the objection lies in the fact that civil process of federal courts can be effectually served only within the territorial limits of the district in which it issues. This very question was raised in Petty & Co. v. Dock Contractor Co., 283 F. 338, affirmed in 283 F. 341, where process issuing in the Eastern District of Pennsylvania was served upon the Secretary of the Commonwealth, the designated statutory agent, in Harrisburg, the state capital, in the Middle District of that State, and the service was held invalid.

The exact question has likewise been ruled on in this district. In Nickels v. Pullman Co. (opinion not published) the late Judge McDowell held that process issuing from this court and served upon the statutory agent of the defendant in the Eastern District could not give this Court jurisdiction of the defendant. To the same effect is Adair v. Employers' Reinsurance Corp., D. C., Tex., 10 F.Supp. 725, where it is said page 726:

"A United States District Court cannot issue process beyond the limits of its own district. A defendant cannot be subjected to its jurisdiction in personam by pretended service outside of the district. Robertson v. Railroad Labor Board, 268 U.S. 619, 45 S.Ct. 621, 69 L.Ed. 1119.

"It seems that the appointment of a state agent for service purposes is without effect upon these fundamental provisions," citing Petty v. Dock Contractor Co. supra and other cases.

Likewise in Boykin v. Hope Production Co., D.C.La., 58 F.2d 1041, it was held that process issuing in one district and served upon a designated agent in another district of the same state was ineffectual. See also Keller v. American Sales Book Co., D.C., 16 F.Supp. 189; Herriage v. Texas & P. R. Co., D.C.La., 11 F.2d 671.

I do not take it that the case of Massachusetts Bonding, etc., Co. v. Concrete Steel Bridge Co., 4 Cir., 37 F.2d 695, denies the holding of the cases hereinbefore cited. That case may be distinguished on several grounds, including the fact that the West Virginia statute making the state auditor the agent of foreign corporations differs in its provisions and effect from the Virginia statute (Va.Code 3845) and the defendant in that case was held to have accepted service and also was held to have made a general appearance. The opinion by Judge Northcott clearly intimates that different considerations may govern as between a jurisdiction obtained by acceptance of service and a jurisdiction attempted in invitum.

It would appear from the authorities cited that the service made upon the Secretary of the Commonwealth did not bring the defendant under the jurisdiction of this Court and the motion to quash such service must be granted.

Service upon A. T. Gunn

As previously stated, the plaintiff, in addition to having process served on the statutory agent, caused process to issue and be served on one A. T. Gunn, an alleged agent of the defendant, located at Danville within this district. As to this service, the defendant has likewise filed a motion to quash and a plea in abatement. Objection to this process alleges: (1) That the memorandum or praecipe made by the plaintiff directing the issuance of process requested that it be "directed to the United States Marshal for the Western District of Virginia, to be served on the manager of said defendant's Danville plant at Danville, Virginia," and that when issued by the Clerk and delivered to the Marshal, the process recited that "we command you to summon Manager — R. J. Reynolds Tobacco Company, Danville, Va.," but that Gunn, upon whom the process was served, was not the manager of defendant. (2) That in any event, the defendant having designated a statutory agent as required by the Virginia statute, service of process can be made only upon such agent and cannot be legally served upon any other agent of defendant.

The second named of the objections urged by defendant is, in my opinion, the more serious and necessitates prolonged discussion and will be considered first. The statutes cited in connection therewith are Sect. 3845 and Sect. 6064 of the Code of Virginia. The first of these provides that a foreign corporation doing business in this state shall designate the Secretary of the Commonwealth as statutory agent upon whom shall be served all lawful process against said corporation. Sect. 6064 provides that process against a foreign corporation shall be served upon the statutory agent, if any has been appointed; but if no statutory agent has been appointed, then service may be had upon any other agent at his place of residence or in which his place of business is. It is the contention of defendant that, since it has complied with the statute and designated a statutory agent, service upon it can be made only on such agent and upon no other.

It is obvious that if this contention is upheld, no suit can be brought in this district against a foreign corporation which has designated the Secretary of the Commonwealth as its statutory agent, even if the plaintiff is a citizen and resident of this district and even if the business done by the foreign corporation is confined to this district and the cause of action arose here.

In considering the question here raised, it is well to bear in mind the origin and nature of the jurisdiction of the Federal courts and also certain now well settled principles involved in suits against foreign corporations.

The jurisdiction of Federal courts is not determined by state statutes; Barrow Steamship Co. v. Kane, 170 U.S. 100, 18 S.Ct. 526, 42 L.Ed. 964; nor is the right to sue a foreign corporation in the Federal Court of a district wherein it is doing business dependent upon permission given by the state. The Federal courts have jurisdiction of suits between citizens of different states (subject to limitations as to the amount in controversy). That diversity of citizenship exists here and the amount in controversy exceeds $3,000.00. The matter is, therefore, one of which the Federal Court has general jurisdiction.

It is provided (28 U.S.C.A. § 112) that where (as here) the jurisdiction is founded only upon diversity of...