Kelly v. Johnson Nut Co.

• Decision Date: 14 February 1930
• Docket Number: No. 5316.,5316.
• Citation: 38 F.2d 177
• Parties: KELLY et al. v. JOHNSON NUT CO.
• Court: U.S. Court of Appeals — Sixth Circuit

38 F.2d 177 (1930)

KELLY et al. v. JOHNSON NUT CO.

No. 5316.

Circuit Court of Appeals, Sixth Circuit.

February 14, 1930.

Bulkley, Hauxhurst, Jamison & Sharp, of Cleveland, Ohio (H. A. Hauxhurst, Frank X. Cull, and J. Hall Kellogg, all of Cleveland, Ohio, on the brief), for appellants.

Shaw, Safford, Putnam & Shaw, of Minneapolis, Minn. (Tolles, Hogsett & Ginn, of Cleveland, Ohio, on the brief), for appellee.

Before MOORMAN and HICKENLOOPER, Circuit Judges, and TAYLOR, District Judge.

HICKENLOOPER, Circuit Judge.

Sections 178 and 179 of the General Code of Ohio make it a condition precedent to a foreign corporation transacting business in that state, that it file in the office of the secretary of state a statement under its corporate seal setting forth, inter alia, "the name of a person designated as provided by law, upon whom process against the corporation may be served within this state." Section 180 provides for filing fees, and section 181 further provides that if the agent so designated dies or removes from the principal place of business of the corporation within the state, the corporation shall designate another person upon whom process may be served. "On failure so to do, the secretary of state shall revoke the authority of the corporation to do business within this state and process against such corporation in an action upon the liability incurred within this state before such revocation may be served upon the secretary of state after such death or removal and before another designation is made."

These sections of the General Code must be read in pari materia, and when so read it is obvious that their purpose is primarily "to secure local jurisdiction in respect of business transacted within the State." Mitchell Furniture Co. v. Selden Breck Construction Co., 257 U. S. 213, 215, 42 S. Ct. 84, 85, 66 L. Ed. 201. The precise question confronting us is whether, under the liberal construction in furtherance of the general purpose to which we think the statutes are entitled (compare Ohio G. C. § 10214), the right to serve the corporation, by service upon a designated agent, survives the revocation (for nonpayment of taxes) of authority to do business within the state, as to suits founded upon business transacted there before revocation and withdrawal.

It seems manifest that if the statute expressly provides that the power of attorney shall be irrevocable, or validates service upon a state officer, as long as any liability of the company remains outstanding in such state (compare sections 9380 et seq., Ohio General Code), such provisions are valid and withdrawal from the state is ineffective to defeat such service. Hunter v. Mutual Reserve Life Ins. Co., 218 U. S. 573, 591, 31 S. Ct. 127, 54 L. Ed. 1155, 30 L. R. A. (N. S.) 686; Insurance Co. v. Scott, 136 N. C. 157, 48 S. E. 581; Kraus v. American Tobacco Co., 283 Pa. 146, 129 A. 60; Wilson v. Martin-Wilson Automatic Fire Alarm Co., 149 Mass. 24, 20 N. E. 318; Collier v. Mutual Reserve Fund Life Ass'n (C. C.) 119 F. 617. The same principle has been applied where the statute provides for the appointment of an agent to receive service of process "in any action" thereafter instituted. Home Ben. Soc. of New York v. Muehl, 109 Ky. 479, 59 S. W. 520; Commonwealth v. Provident Sav. Life Assur. Soc., 155 Ky. 197, 159 S. W. 698; Chehalis River Lumber Co. v. Empire State Surety Co. (D. C.) 206 F. 559. In such a case the agency is said to be irrevocable as one coupled with an interest on behalf of resident creditors. Frazier v. Steel & Tube Co. of America, 101 W. Va. 327, 132 S. E. 723, 45 A. L. R. 1442; McClamroch v. Southern Surety Co., 193 Iowa, 249, 187 N. W. 41. Or, more properly, we think, the designation of an agent to receive service of process, as a condition precedent to doing business within the state, is regarded as a contract for the benefit of resident creditors, to submit to local jurisdiction, which applies to all liabilities created within the state and which, as to such liabilities, is...