Knott Corporation v. Furman

• Decision Date: 27 October 1947
• Docket Number: No. 5589.,5589.
• Citation: 163 F.2d 199
• Parties: KNOTT CORPORATION v. FURMAN.
• Court: U.S. Court of Appeals — Fourth Circuit

163 F.2d 199 (1947)

KNOTT CORPORATION v. FURMAN.

No. 5589.

Circuit Court of Appeals, Fourth Circuit.

June 16, 1947.

Writ of Certiorari Denied October 27, 1947.

John W. Oast, Jr., and E. L. Ryan, Jr., both of Norfolk, Va. (White & Ryan, of Norfolk, Va., F. M. Schlater, of New York City, and Edwin C. Kellam, of Norfolk, Va., on the brief), for appellant.

Edward R. Baird, of Norfolk, Va. (Baird, White & Lanning and Vernon D. Hitchings, Jr., all of Norfolk, Va., on the brief), for appellee.

Before PARKER, Circuit Judge, GRONER, Chief Justice of the United States Court of Appeals for the District of Columbia (sitting by special assignment), and DOBIE, Circuit Judge.

Writ of Certiorari Denied October 27, 1947. See 68 S.Ct. 111.

PARKER, Circuit Judge.

This is an appeal from a judgment for damages in a negligence case. The plaintiff is Mrs. Mary Hale Furman, a citizen of the State of Massachusetts, who was injured in March 1945 in the course of a fire which damaged the Chamberlin Hotel on the Fort Monroe Military Reservation at Old Point Comfort, Virginia. Defendant is a Delaware corporation, having its principal place of business in New York, and was engaged at the time of the fire in operating the hotel. The plaintiff was injured while attempting to lower herself from a fifth story window of the hotel to a roof below by means of a rope of bed sheets, which broke while she was engaged in making the descent. She alleges negligence on the part of the defendant in connection with the origin of the fire, with delay in fighting it and with giving notice therof to the guests in the hotel. Defendant denies negligence, charges contributory negligence and denies that the venue is proper. There was verdict and judgment for plaintiff, and defendant has appealed. While numerous matters have been argued before us, the case as presented by the appeal resolves itself into three principal questions: (1) Was the venue proper? (2) Was there evidence to take the case to the jury? and (3) Was the case properly submitted under the judge's charge? We think that all of these questions should be answered in the affirmative.

The most important question before us is that relating to venue. Defendant challenges the jurisdiction of the court on the ground that, since plaintiff is a citzen of Massachusetts and defendant a Delaware corporation, suit in the Eastern District of Virginia was not in the district of residence of either plaintiff or defendant, as provided by the applicable venue statute, 28 U.S.C.A. § 112. Plaintiff contends that the venue is proper because defendant, by doing business within the State of Virginia, has consented to suit and service of process there under the applicable Virginia statute and has waived venue as to cases instituted against it in the federal courts of that state. Defendant denies that it has been doing business in Virginia and says also that, if what it was doing in the operation of the hotel constituted doing business within the meaning of the statute, this was done on federal territory to which the statute has no application.

The first contention of defendant, which is basic not only on this question of venue, but also on the question of negligence, later to be considered, is that it was not operating the hotel at all, and hence was not doing business in such way as to subject it to service of process under the Virginia statute or render it liable for negligence in connection with the fire that occurred. Its contention is that it was merely giving advice to the government in the operation of the hotel and making audit of the hotel's accounts from time to time. There is nothing in this contention. The evidence shows conclusively that defendant was operating the hotel and was furnishing all labor and services, as well as materials, articles and supplies required for its operation. The manager in charge of the operation was employed and paid by defendant as were the 293 other persons employed on the premises. The fact that the moneys used were derived from the operation, that a United States officer was on hand to protect the interests of the government and issue directives and that the defendant was paid a fixed sum for its services while the net profits of operation went to the government, — all of these taken together do not negative either the doing of business by defendant or defendant's responsibility in the operation of the hotel. The contract between defendant and the United States is before us and shows clearly that, while the defendant was restricted in many ways in the operation of the hotel, it was the defendant and not the government that was running the business. There is nothing in the parol evidence which would justify a contrary conclusion; and the judge properly instructed the jury to that effect.

We shall point out later that, for the purposes of venue, the doing of business on the Fort Monroe Military Reservation does not differ from doing business elsewhere in the Eastern District of Virginia; and we think it clear that such doing of business amounts to consent to the service of process upon the Secretary of the Commonwealth of Virginia and consent to be sued in the federal court of the district as well as in the state courts with respect to a cause of action which has arisen there. The Code of Virginia, Supp.1946, section 3846a contains the following provisions:

"1. Any foreign corporation doing business in this State shall by written power of attorney appoint the Secretary of the Commonwealth and his successor in office its true and lawful attorney for the purposes hereinafter stated.

"2. Any foreign insurance company, and any guaranty, indemnity, fidelity or security company as defined in section forty-two hundred of the Code of Virginia, before doing business in this State shall by written power of attorney appoint the Secretary of the Commonwealth and his successor in office its true and lawful attorney for the purposes hereinafter stated.

"3. If any such company shall do business in this State without having appointed the Secretary of the Commonwealth its true and lawful attorney as required herein, it shall by doing such business in the State of Virginia be deemed to have thereby appointed the Secretary of the Commonwealth its true and lawful attorney for the purposes hereinafter set forth.

"4. The requirements of the preceding subsections of this section shall be in addition to and not in derogation of any other provisions of law, except that any foreign corporation which has in effect a power of attorney appointing the Secretary of the Commonwealth its attorney for the purposes hereinafter stated shall be deemed to have complied with the requirements of such subsections."

It will be noted that under section three of the statute the doing of business is deemed to be an appointment of the Secretary of the Commonwealth as process agent whether appointment has been formally made or not. Question has been raised as to whether this should not be limited to the companies mentioned in section 2, but we think it clear that it was intended to apply to foreign corporations generally. The statute is of a highly remedial nature and, under familiar principles, is to be liberally construed. Both the foreign corporations mentioned in section 1, and foreign insurance companies, guaranty companies etc. mentioned in section 2 were required to appoint the Secretary of the Commonwealth agent for the service of process, the separate section being devoted to insurance companies, guaranty companies, etc. so as to bring them under the statute whether incorporated or not. The word "company" includes "corporation" but is a word of broader meaning; and it is reasonable to construe the words "such company" in section 3 as intended to embrace any of the entities referred to in the preceding paragraphs which were required to appoint the Secretary of the Commonwealth as process agent. Section 4 shows that the whole purpose of the code provision was to liberalize the law with respect to bringing foreign corporations into court; and there would be no sense in giving such a narrow interpretation to section 3 as would confine its provisions to the insurance companies, guaranty companies, etc., described in section 2. So far as the application of the statute to the case at bar is concerned, it should be observed that, since the cause of action sued on arises out of business done within the state, section 3 is merely declaratory of the rule which the courts would apply in such a case if the statute had contained only section 1; the rule being that by doing business in the state a foreign corporation, as to causes of action arising out of such business, consents to service on a process agent which by the statute of the state it is required to appoint. Simon v. Southern R. Co., 236 U.S. 115, 130, 35 S.Ct. 255, 59 L.Ed. 492; Old Wayne Life Ass'n v. McDonough, 204 U.S. 8, 22, 27 S.Ct. 236, 51 L.Ed. 345; St. Clair v. Cox, 106 U.S. 350, 1 S.Ct. 354, 27 L.Ed. 222.

Since the staute must be construed as providing that, by doing business in the State of Virginia, a foreign corporation shall be deemed to have thereby appointed the Secretary of the Commonwealth as process agent, and since the defendant unquestionably did business in the state within the meaning of the statute (assuming at this stage that doing business within the Fort Monroe Reservation was the same as doing business elsewhere within the state), there would seem to be no question as to its having appointed a process agent. The defendant must be presumed to have knowledge of the law of the state; and, when it did business in the state with knowledge of the provision of the law to which we have referred, it necessarily consented to the appointment of the process agent therein provided. As said by the Supreme Court in R. R. Co. v. Harris, 12 Wall. 65, 81, 20 L. Ed. 354: "The chief point of difference between the natural and the artificial...