Krueger v. Rheem Mfg. Co., 52349

• Citation: 149 N.W.2d 142,260 Iowa 678
• Decision Date: 07 March 1967
• Docket Number: No. 52349,52349
• Parties: Otto KRUEGER, Hildegarde Krueger, and Jean Anfinson, Appellants, v. RHEEM MANUFACTURING COMPANY and Robertshaw Fulton Controls Company, Appellees.
• Court: United States State Supreme Court of Iowa

Page 142

149 N.W.2d 142

260 Iowa 678

Otto KRUEGER, Hildegarde Krueger, and Jean Anfinson, Appellants, v. RHEEM MANUFACTURING COMPANY and Robertshaw Fulton Controls Company, Appellees.

No. 52349.

Supreme Court of Iowa.

March 7, 1967.

Rehearing Denied May 1, 1967.

Kenline, Reynolds, Roedell & Breitbach, Dubuque, for appellants.

O'Connor, Thomas, Wright, Hammer & Bertach, Dubuque, for appellees.

STUART, Justice.

The sole question presented here is whether our present 'long arm' statute, section 617.3 Code 1966, can be applied retroactively to obtain jurisdiction over nonresident defendant corporations whose alleged tortious conduct occurred prior to the effective date of the act.

Plaintiffs' petition alleges property damages resulting from an explosion of a liquid gas hot water heater in Dubuque on August 23, 1962. The petition charges specific acts of negligence and res ipsa loquitur against the nonresident defendants who manufactured the heater and its control unit. Our present 'long arm' statute became effective July 4, 1963. Defendants appeared specially challenging the jurisdiction of the Iowa courts. Plaintiffs concede that defendants' business activities were not such that service could be obtained under section 496A.120 and further concede that the preceding 'long arm' statute was unconstitutional for lack of proper requirement for notification to defendants. The whole case is centered on the question of the retrospective application of 617.3 as amended by the Sixtieth General Assembly. The trial court ruled the statute applied prospectively only and sustained the special appearances. Plaintiffs appealed.

I. Whether a statute operates retrospectively or prospectively is a matter of legislative intent. Within constitutional limits, the legislature may by clear and express language state its intention. Manilla Community School District v. Halverson, 251 Iowa 496, 101 N.W.2d 705, 708.

Defendants argue in support of the trial court's ruling that the language of the statute evidences a clear intention on the part of the legislature for the statute to operate prospectively only, since its language expressly refers only to 'happenings in the future'. As this proposition, if upheld, would dispose of the case without entering into much more difficult questions, we will consider it first.

The pertinent parts of section 617.3 are: '* * * if such foreign corporation Commits a tort in whole or in part in Iowa against a resident of Iowa, such acts Shall be deemed to be doing business in Iowa by such foreign corporation for the purposes of service of process or original notice on such corporation under this section, and, if the corporation does not have a registered agent * * * in the state of Iowa, Shall be deemed to constitute the appointment of the secretary of state of the state of Iowa * * * to be its true and lawful attorney upon whom may be served all lawful process or original notice in actions or proceedings arising from or growing out of such * * * tort. * * * The committing of the tort Shall be deemed to be the agreement of such corporation * * * that any process or original notice so served shall be of the same legal force and effect as if served personally upon such defendant within the state of Iowa.'

Defendants rely on the italicized words and phrases. They argue 'commits a tort' applies only to future acts and cannot be read to apply to torts already committed. They argue the legislature would have added 'or has committed', if such was the intention. We cannot say the use of the present tense clearly shows an intent for prospective application only. It can be argued just as effectively that if the legislature intended prospective application only, they would have said 'shall hereafter commit' a tort.

Defendants also argue that the use of 'shall' and 'shall be' evidences a clear intention the statute shall operate prospectively only. Supporting authorities are cited. State ex rel. Clay Equipment Corp. v. Jensen, Mo., 363 S.W.2d 666; Summers v. Skibs A/S Myken, 191 F.Supp. 929, affirmed 3rd Cir., 296 F.2d 548; Cassan v. Fern, 33 N.J.Super. 96, 109 A.2d 482. 'Shall' may be used to indicate future application. The suggested phrase 'shall hereafter commit' is an example of such usage. It may also be used to denote compulsion. We believe the phrases are used here in the mandatory sense. At least, the language of the statute is not so clearly limited to future application that we may say it is prospective only without looking at further rules of statutory construction.

II. 'As a rule all statutes are to be construed as prospective in operation unless the contrary is expressed or clearly implied. The rule is subject to an exception where the statute relates solely to remedies or procedure.' Hill v. Electronics Corp. of America, 253 Iowa 581, 113 N.W.2d 313, 318; Bascom v. District Court of Cerro Gordo County, 231 Iowa 360, 1 N.W.2d 220; Davis v. Jones, 247 Iowa 1031, 78 N.W.2d 6, 8; Schultz v. Gosselink, Iowa, 148 N.W.2d 434, 1967.

Plaintiffs claim section 617.3 is solely procedural. Defendants argue it affects substantive rights. Both parties cite many authorities in support of their respective positions. In most instances, however, the apparent conflict is resolved when the type of service called for in the statutes is taken into consideration. Cases involving 'long arm' statutes which provide for service of notice on the defendant by personal service outside the state or by registered or certified mail have generally been held to be remedial only. McGee v. International Life Ins. Co., 355 U.S. 220, 224, 78 S.Ct. 199, 2 L.Ed. 223, 226--227, ('registered mail at its principal place of business in Texas'); Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673, 676, and Sunday v. Donovan, 16 Ill.App.2d 116, 147 N.E.2d 401, 403, (personal service outside the state); Harrison v. Matthews, 235 Ark. 915, 362 S.W.2d 704, 705, and Safeway Stores Inc. v. Shwayder Brothers, Inc., 238 Ark. 768, 384 S.W.2d 473, 475--476, (registered or certified mail); O'Mara v. Alberto Culver Co., 6 Ohio Misc. 132, 215 N.E.2d 735, (service by registered mail); Hiersche v. Seamless Rubber Co. (Or.) 225 F.Supp. 682 (personal service outside the state); Coreil v. Pearson (La.) D.C., 242 F.Supp. 802, (registered or certified mail or personal service outside the state, LSA-RS 13:3201); Teague v. Damascus (Wash.) 183 F.Supp. 446, (personal service outside the state); Chovan v. E. I. DuPont De Nemours & Co., 217 F.Supp. 808 (Mich.) (not substituted service).

The decisions are based on the theory expressed in McGee v. International Life Ins. Co., supra, 355 U.S. loc. cit. 226--227, 78 S.Ct. loc. cit. 201, in which the court said such statute was: 'remedial, in the purest sense of that term, and neither enlarged nor impaired respondent's substantive rights or obligations * * *. It did nothing more than to provide petitioner with a California forum to enforce whatever substantive rights she might have against respondent. At the same time respondent was given a reasonable time to appear and defend on the merits after being notified of the suit. Under such circumstances it had no vested right not to be sued in California.'

In the same case the U.S. Supreme Court, p. 225, 78 S.Ct. p. 200, pointed out that: 'In a continuing process of evolution this Court accepted and then abandoned 'consent,' 'doing business,' and 'presence' as the standard for measuring the extent of state judicial power over' nonresident corporations before arriving at the 'minimum contacts' concept of due process annunciated in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.

However, some state legislatures have not abandoned the 'consent' concept in their 'long arm' statutes, but have provided that by doing certain acts in the state, the nonresident consents to a state official serving as his process agent and the statutes provide for substituted service on the designated official to obtain jurisdiction of nonresident defendants. Cases involving 'long arm' statutes which provide for substituted service have almost invariably held such statutes to affect substantive rights and to operate prospectively only. State ex rel. Clay Equipment Corp. v. Jensen, Mo., 363 S.W.2d 666, (Secretary of State); Gillioz v. Kincannon, 213 Ark. 1010, 214 S.W.2d 212, 214, (Secretary of State); Nevins v. Revlon Inc., 23 Conn.Sup. 314, 182 A.2d 634, (Secretary of State); Summers v. Skibs A/S Myken, 184 F.Supp. 745, 746, 191 F.Supp. 929, aff'd 3rd Cir., 296 F.2d 548, (Secretary of Commonwealth); Cassan v. Fern, 33 N.J.Super. 96, 109 A.2d 482, (Director, Division of Motor Vehicles, Department of Public Safety); Johnson v. Baldwin, 214 S.C. 545, 53 S.E.2d 785, (Secretary of State). But see: Lone Star Motor Import, Inc. v. Citroen Cars Corp., (Tex.) 185 F.Supp. 48; Pugh v. Oklahoma Farm Bureau Ins. Co., (La.) 159 F.Supp. 155.

We have avoided citing the many cases under nonresident motorist statutes of other states. They are uniformly based upon the consent concept and uniformly have been held to apply prospectively only.

In Summers v. Skibs A/S Myken, 184 F.Supp. 745, 746 (E.D.Pa.) the court in discussing a 'long arm' statute which provided for substituted service on the secretary of the commonwealth to obtain jurisdiction over nonresident ship owners or operators said: 'The decisions that substituted service statutes partake of substantive law and are not retrospective seem uniform in result regardless of variation in statutes. * * * And no case has been found which represens a clear cut departure from the foregoing proposition.'

'The crux of the decisions which are pertinent, however, is that substituted service statutes affect substantive rights. They are thus found to be more than merely procedural or remedial. Paraboschi v. Shaw, 1927, 258 Mass. 531, 155 N.E. 445; Restatement of Conflict of Laws, § 84.' p. 747.

The distinction...