Koninklijke Luchtvaart Maatschappij v. Superior Court in and for Los Angeles County

• Decision Date: 14 November 1951
• Citation: 237 P.2d 297,107 Cal.App.2d 495
• Parties: . Civ. 18671. District Court of Appeal, Second District, Division 2, California
• Court: California Court of Appeals Court of Appeals

Page 297

237 P.2d 297

107 Cal.App.2d 495

KONINKLIJKE LUCHTVAART MAATSCHAPPIJ v. SUPERIOR COURT IN AND FOR LOS ANGELES COUNTY.

Civ. 18671.

District Court of Appeal, Second District, Division 2, California.

Nov. 14, 1951.

Hearing Denied Jan. 10, 1952.

Guthrie, Darling & Shattuck and Milo V. Olson, all of Los Angeles, for petitioner.

Harold W. Kennedy, County Counsel, John B. Anson, Deputy County Counsel, Los Angeles, for respondent.

Benjamin D. Mathon, Raoul D. Magana and Kaplan, Livingston, Goodwin & Berkowitz, Warren M. Goodwin, all of Los Angeles, for Real Parties in Interest.

WILSON, Justice.

This proceeding arises on the petition of Koninklijke Luchtvaart Maatschappij, hereinafter referred to as KLM, a foreign corporation, for a writ of prohibition to restrain the superior court from taking further proceedings in five actions for damages for wrongful death brought against petitioner, following the denial of its motion by special appearance to quash service of summons.

The decedent in each of the actions was either a passenger or a member of the crew of a private airplane owned by the Superior Oil Company which crashed in taking off from an airfield in London, England, causing the death of the person of whom the plaintiffs claim to be the surviving heirs. It is alleged in each complaint that KLM negligently performed its contract with the Superior Oil Company to maintain, repair and inspect the aircraft at London, England, the proximate result of which was that the airplane crashed.

The only question to be determined is whether jurisdiction may be maintained over a foreign corporation engaged solely in interstate or foreign commerce in the State of California when the subject matter of the action is wholly unrelated to any of the business conducted by such corporation in this State.

KLM is a corporation organized under the laws of the Kingdom of The Netherlands and it has never qualified to do business in California. It operates an intercontinental commercial airline with routes between the continent of Europe and New York and between the Netherlands West Indies and Miami, Florida. It purchases from California manufacturers airplanes in excess of $1,000,000 a year, the contracts for which are executed in The Netherlands. It has maintained a technical office in Los Angeles since 1938, where approximately 24 persons are employed for the purpose of administering its contracts for the purchase of airplanes and airplane parts. It maintains a checking account at a local bank from which it pays its employees. It owns four automobiles which are maintained for the use of technical workers in connection with their duties of visiting various aircraft plants. When flight personnel arrive from Amsterdam for the purpose of accepting delivery of an airplane manufactured by a local airplane factory the office makes arrangements for the accommodations of such personnel. The office is listed in the directory of the building and the rent is paid locally on a month-to-month basis. In addition to the technical office KLM maintains a ticket office in Los Angeles where it employs three or four employees whose duties are to sell tickets on the various intercontinental airlines of KLM. No intrastate tickets are sold and no intrastate passengers are carried. Service of process was made upon the corporation's technical representative for administration and finance, who is in charge of the technical office, and upon his assistant who is in charge of personnel in the same office.

In support of its contention that the subject matter of the action must have some connection with the business conducted by the foreign corporation in the state in order to confer jurisdiction of the defendant, petitioner cites Miner v. United Air Lines Transport Corp., D.C., 16 F.Supp. 930; Dunn v. Cedar Rapids Engineering Co., 9 Cir., 152 F.2d 733; Winfield v. United Fruit Co., 135 Cal.App.Supp. 791, 24 P.2d 247; and Fry v. Denver & R. G. R. Co., D.C., 226 F. 893.

In each of the first two cited cases service was made upon the foreign corporation's statutory agent appointed pursuant to section 405 of the Civil Code. ¹ In the Miner case the court cited Missouri Pacific Railroad Co. v. Clarendon Co., 257 U.S. 533, 535, 42 S.Ct. 210, 66 L.Ed. 354; Morris & Co. v. Skandinavia Insurance Co., 279 U.S. 405, 49 S.Ct. 360, 73 L.Ed. 762; and Mitchell Furniture Co. v. Selden Breck Co., 257 U.S. 213, 42 S.Ct. 84, 85, 66 L.Ed. 201. In the latter case the court stated 'The purpose in requiring the appointment of such an agent is primarily to secure local jurisdiction in respect of business transacted within the State. Of course when a foreign corporation appoints one as required by statute it takes the risk of the construction that will be put upon the statute and the scope of the agency by the State Court. * * * Unless the state law either expressly or by local construction gives to the appointment a larger scope, we should not construe it to extend to suits in respect of business transacted by the foreign corporation elsewhere, at least if begun, as this was, when the long previous appointment of the agent is the only ground for imputing to the defendant an even technical presence.' Since the highest court in California had not construed the statute as authorizing service upon the statutory agent of a foreign corporation defendant where the suit is founded upon a cause of action in no way connected with business transacted within the state, the court held that the decisions rendered by the United States Supreme Court 'require in this instance that the California law authorizing service of process upon a foreign corporation doing business within the state be construed so as to exclude from the operation thereof suits founded upon causes of action not arising in the business done by such foreign corporation in this state.' In the Dunn case the court cites and follows the holding in the Miner case. In the instant matter it is admitted that petitioner has never qualified to do business in California and service was not upon a statutory agent. Petitioner does not urge that service of process was not made upon a proper officer of the corporation.

In the Winfield case [135 Cal.App.Supp. 791, 24 P.2d 250] the plaintiff was a merchant seaman who was injured on defendant's ship while on the high seas. Defendant maintained freight terminals, a ticket office, paid members of the crew from a commercial bank account maintained in this state and performed various other acts in connection with its business in the State of California. Plaintiff's contract of employment was made here and the voyage would terminate in California. The court found that the tort arose in connection with defendant's domestic activities and that 'as far as any state jurisdiction was concerned, California was the only state with respect to which both parties dealt.'

Fry v. Denver & R. G. R. Co., decided in 1915, followed the holdings in Old Wayne Mutual Life Association v. McDonough, 204 U.S. 8, 27 S.Ct. 236, 51 L.Ed. 345, and Simon v. Southern Railway Co., 236 U.S. 115, 35 S.Ct. 255, 59 L.Ed. 492. The court regarded those cases as establishing the broad rule that 'it is not enough * * * that the foreign corporation be doing business in the state where sued, but it must appear that the cause of action arose from the business there done', 226 F. at page 895, and that the rule was applicable whether service was on an actual agent or on a designated state official. The courts have repeatedly cited and distinguished the Simon and Old Wayne cases, frequently upon the ground that jurisdiction in each was obtained by service of process upon an agent designated by state statute and not upon an officer or bona fide agent of the defendant company. The decision in the Fry case was criticized in Gold Issue Min. & Mill. Co. v. Pennsylvania...