Knapp v. Bullock Tractor Co.

• Decision Date: 19 May 1917
• Docket Number: 570.,545
• Citation: 242 F. 543
• Court: U.S. District Court — Southern District of California
• Parties: KNAPP et al. v. BULLOCK TRACTOR CO. VANCE v. CHICAGO PORTRAIT CO. et al.

242 F. 543

KNAPP et al. v. BULLOCK TRACTOR CO.

VANCE v. CHICAGO PORTRAIT CO. et al.

Nos. 545, 570.

United States District Court, S.D. California, Southern Division.

May 19, 1917

[Copyrighted Material Omitted]

These two cases, though entirely unrelated in other respects present the same general question of law, and for that reason, and for purposes of brevity, have been considered and will be decided together. The question in each case is: When is a foreign corporation 'doing business' within the state of California to an extent sufficient to give the courts of that state jurisdiction to render a judgment in personam, and upon whom may service be made sufficient to bind such foreign corporation? Both of these actions were commenced in the superior court of Los Angeles county, Cal., and both have been removed to this court and are before the court on motions to quash service of summons.

In the Bullock Case it appears, from the affidavits on file in support of and in opposition to the motion, that the defendant corporation is a corporation organized and existing under the laws of Illinois and having its principal place of business in Chicago. It is engaged in the manufacture and sale of certain farming machinery known and described as 'Bullock tractors,' and which it sells in different states of the Union, through the agency and medium of certain 'sales agents,' who are appointed by it, and who act pursuant to contracts, the terms of which are set out in affidavits. It is the claim of defendant, of course, that it is not doing business in California; that it is merely engaged in interstate commerce, selling its tractors in California through the agency of factors or commission merchants. The true facts, however, as proven by the language of the contracts entered into by defendant, negative this contention. The contracts, one of which was held by plaintiffs and the other by the California Hydraulic Engineering & Supply Company, of San Francisco, upon whom service of summons was had in the action, are substantially similar in their terms. They purport to have been entered into by the defendant at Chicago and by the sales agents at their places of business in California, and contain a provision whereby the plaintiffs in the one instance, and the Engineering & Supply Company in the other, were appointed 'sole and exclusive sales agents,' under the terms and conditions of the contract, in certain described territory in California, to wit, the southern half of the state in the first contract, and the northern half in the second. Other material terms of the contracts are appended in the margin. ^[1]

The order blank referred to in paragraph 4 of the contract is also set out in full in the affidavits, and shows an order addressed to the Bullock Tractor Company, to be signed by the purchaser, and not to be valid until accepted by the Tractor Company, and contains upon its back a written warranty over the name of the defendant, wherein defendant company warrants its tractor, and 'agrees to furnish free of charge any part that may prove defective within one year,' and provides for the sending by the company of an expert, who shall put the tractor 'in working order.' The cost of sending the expert is to be borne by the company if the trouble be due to defective material or workmanship; otherwise, to be borne by the purchaser. Said warranty also provides that, if the tractor could not be made to work well, the purchaser should return it to the agent, and the price was thereupon to be refunded. In addition, it appears from the affidavits that within two years last past the president of the Tractor Company had himself been in California 'superintending and directing the management of the affairs in said state,' and giving directions for the remodeling of said tractors, in order to overcome certain defects detected in the operation thereof; that in 1915 and 1916 sundry directors, employes, and agents, including the general manager of the company, came into the state of California, assisted in demonstrating, operating, and repairing tractors, and in one instance the general manager himself conducted the negotiations for the sale, and sold to a purchaser one of the tractors out of the stock on hand in plaintiff's storeroom.

In the Chicago Portrait Company Case it appears that the defendant company, which is not unknown in the federal courts (Caldwell v. North Carolina, 187 U.S. 622, 23 Sup.Ct. 229, 47 L.Ed. 336; Strain v. Chicago Portrait Co. (C.C.) 126 F. 831), and whose business may be fairly and substantially described by a reference to Dozier v. State of Alabama, 218 U.S. 124, 30 Sup.Ct. 649, 54 L.Ed. 965, 28 L.R.A. (N.S.) 264, and Davis v. Commonwealth, 236 U.S. 697, 35 Sup.Ct. 479, 59 L.Ed. 795, is an Illinois corporation, with its headquarters and place of business in Chicago, in that state. It carries on a very extensive selling campaign for enlarged portraits and frames, and has a very complicated and comprehensive system of contracts in vogue providing for the employment throughout the United States of 'district managers,' 'road managers' 'crew managers,' 'solicitors,' 'collectors,' 'deliverymen,' and other persons who may be required or called upon to secure orders for enlarged portraits, and, what apparently is of more importance, secure the acquiescence of purchasers to the purchase and payment of the frame in which the portrait is contained. The annual business of the company, in California, on the sale of frames alone, and exclusive of portrait enlargements, exceeds $10,000. The contract between the defendant and its 'road manager for the state of California' is in the record, and shows that such road manager, one Frank S. Huffman, is to have general supervision in the matter of 'soliciting and securing orders for the enlargement of pictures and of the procuring of orders for frames and the delivering of the same, and of advising, counseling, or directing and encouraging others so engaged, either as salesman, crew foreman, collector, deliveryman, or district manager. ' The contract further provides that said Huffman would 'devote his entire time and attention to first party's business. ' The contract also contained this language, which is very significant, to wit: 'It is further agreed that the business of first party is carried on and conducted in all the states and territories of the United States of America.'

In the Bullock Case the action was brought to recover damages for breach of warranty with respect to tractors handled by plaintiffs for defendant. In the complaint it was alleged, inter alia, that the defendant 'is, and at all times herein mentioned has been, doing business in the state of California; that it has and maintains an office at No. 157 North Los Angeles street, in the city of Los Angeles, in the county of Los Angeles, and state aforesaid, which is its principal place of business in the said state of California. ' Apt allegation was also made to the effect that the company had not complied with the provisions of section 405 et seq. of the Civil Code of the state of California, hereinafter referred to. Service of summons was made and due return thereof had upon the California Hydraulic Engineering & Supply Company, as 'business agent' of defendant, and also upon the secretary of state of California.

In the Chicago Portrait Company Case service was had upon one S. M. Paine, who admittedly is the secretary of defendant corporation, and an officer upon whom, ordinarily, under the laws of the state of California (section 411 C.C.P.), service could be made. It is apparent, however, that the said Paine resides and has his office in the state of Illinois, and that, though he was served in the state of California, it was while he was in the state of California on a short 'pleasure trip' for a vacation with his wife and family, and while he at no time, as seems to be fairly deducible from the proofs, was engaged in transacting business of, or in any wise representing, defendant company. The claim is made by plaintiffs that Paine came to California, not solely on 'pleasure,' but to transact business for the company, including the adjustment of the very transaction sued on herein. This is but the conclusion, apparently, of plaintiff, and is met by positive denial of Paine. There is no statement in the affidavits as to what he actually did while here.

Seymour L. McCrory, of Los Angeles, Cal., for plaintiffs Knapp & black.

Schweitzer & Hutton, of Los Angeles, Cal., for plaintiff Vance.

Bicksler, Smith & Parke, of Los Angeles, Cal., for defendant Bullock Tractor Co.

Geo. H. Woodruff and Clyde C. Shoemaker, both of Los Angeles, Cal., for defendants Chicago Portrait Co. and others.

BLEDSOE, District Judge (after stating the facts as above).

The contentions of defendants in both cases seem to be directed to the point that, because they are engaged in interstate commerce, they are not 'doing business' in the state of California within the terms of the law of said state providing for service of summons. Section 411 of the Code of Civil Procedure of California reads: 'The summons must be served by delivering a copy thereof as follows: * * * 2. If suit is against a foreign corporation, or a nonresident joint stock company or association, doing business and having a managing or business agent, cashier or secretary within this state. To such agent, cashier, or secretary. * * * 6. In all other cases to the defendant personally.'

And much, if not most, of the argument has been expended in the effort to cite a multitude of cases to the effect that defendants are engaged in interstate commerce, and therefore are not amenable to the laws of the state of California.

Without in any wise attempting to refer to...