Ladd Metals Co. v. American Min. Co., Ltd.

• Decision Date: 22 April 1907
• Docket Number: 3,064.
• Citation: 152 F. 1008
• Parties: LADD METALS CO. v. AMERICAN MINING CO., Limited.
• Court: U.S. District Court — District of Oregon

152 F. 1008

LADD METALS CO. v. AMERICAN MINING CO., Limited.

No. 3,064.

United States Circuit Court, D. Oregon.

April 22, 1907

The complaint herein exhibits an action based upon a contract entered into in the state of Idaho, between W. C. Jones of the one part, and the defendant company of the other, whereby the latter sold and agreed to deliver to the former certain copper ore then at the Seven Devils Mines in the state of Idaho. Among other things, an advance payment of $3,000 was agreed upon. Jones subsequently assigned the contract to the plaintiff corporation, and the present action is for a breach thereof. Plaintiff is an Oregon, and defendant a Montana corporation. Action was instituted in this district, and service of summons, as shown by the return of the marshal was had within the district 'by delivering to R. H Kleinschmidt, who is the secretary and treasurer of said company, personally, a true copy of said summons,' etc. In due time a motion was interposed, as follows: 'Comes now the defendant above named by John H. Hall, its attorney appearing specially and for the purposes of this motion only, and without submitting itself to the jurisdiction of this court, and for no other purpose, moves the court that the alleged service of summons upon this defendant in the above-entitled action be quashed, annulled, set aside, and held for naught, for the reason that this defendant is organized under and by virtue of the laws of the state of Montana. That it has no property within the state of Oregon of any description. That it never has and does not now transact any corporate or other business within the state of Oregon, and does not maintain any agent, officer, or other person in this state upon whom service of summons can be made. That said alleged service in this action was attempted to be made by serving a copy of the original thereof upon R. H.

Kleinschmidt, the secretary and treasurer of this defendant, while he was temporarily within the city of Portland. ' From affidavits filed in support of and against the motion, it appears that Jones entered into the contract in question with the defendant corporation with a view to assigning the same to the plaintiff; but it was understood between the parties thereto that, if arrangements could not be made with the plaintiff to take the assignment, then Jones might assign to any other person or corporation satisfactory to the defendant company; it being further understood that Jones was not to be held personally to a performance of the contract or fulfillment of its conditions. Subsequently Jones came to Portland at the request, as he avers, of Kleinschmidt, who was the secretary and treasurer of the defendant company, and there negotiated for an assignment of the contract to plaintiff, which assignment was then and there made. In anticipation of such assignment, Kleinschmidt drew upon Jones for the $3,000 advance payment to be made, and when the assignment was closed the plaintiff honored and paid the draft.

It further appears that an action is pending between these parties in Idaho; that certain depositions were required to be taken in Portland; that Kleinschmidt came to Portland to represent and protect the interests of the defendant while such depositions were being taken; that while here he presented two claims against the plaintiff to the president of that company for settlement and collection; and that it was during his stay that he was served with summons in manner as previously indicated.

Snow & McCamant, for plaintiff.

John H. Hall and G. A. Brown, for defendant.

WOLVERTON District Judge.

The action is by an Oregon corporation against a Montana corporation, and, there being no other ground upon which to base federal jurisdiction than diversity of citizenship, it was properly instituted in the district of the residence of the plaintiff; the statute in such cases granting the authority to sue in the district of the residence of either party. Act Cong. March 3, 1875, c. 137, Sec. 1, 18 Stat. 470, amended by Act March 3, 1887, c. 373, Sec. 1, 24 Stat. 552, and corrected by Act Aug. 13, 1888, c. 866, Sec. 1, 25 Stat. 433 (U.S. Comp. St. 1901, p. 508); 4 Fed.Stat.Ann.p. 265; In re Keasbey & Mattison Co., 160 U.S. 221, 228, 229, 16 Sup.Ct. 273, 40 L.Ed. 402.

Two questions are therefore presented for determination, namely: First, whether proper service has been had upon the defendant; and, second, whether defendant has, by the form of motion adopted to quash, waived its right to object to the insufficiency of such service. Of these in their order.

A corporation is regarded as a citizen and resident only of a state in which it is incorporated, and has its principal place of business. Shaw v. Quincy Mining Co., 145 U.S. 444, 452, 453, 12 Sup.Ct. 935. 36 L.Ed. 768. By a comity existing between the states, however corporations in one state are allowed and permitted to do business in states other than those of their citizenship and residence. Usually there exist statutory provisions prescribing the conditions upon which corporations foreign to the state may come into it, and carry on and transact business therein. But it frequently occurs that corporations intrude themselves upon the territory of other states, and transact business therein, regardless of the local rules and regulations, and in evasion of the laws intended for their observance. It is but compensatory justice that, wherever and whenever a corporation of foreign persuasion enters into another state, and therein engages in and carries on its business, whether as its principal pursuit or auxiliary thereto, and depends upon, looks to, and expects the protection of the local government in maintaining its contractual and legal relations, it should at the same time be subjected to the local tribunals of judicatory for the determination and enforcement of all reciprocal relations, whether arising out of the same or other transactions. License and protection in governmental affairs means subjection and obedience on the part of those reaping the benefits, whether they be individuals or corporations. That a corporation may be severable in a state other than that in which it is organized and incorporated, it must have engaged in business to the extent that it may be said in legal parlance to be doing business therein, and the agent served therein must be its authorized representative for the transaction of such business, or such as will be deemed generally to represent the company in its corporate capacity. St. Clair v. Cox, 106 U.S. 350, 1 Sup.Ct. 354, 27 L.Ed. 222; Goldey v. Morning News, 156 U.S. 518, 15 Sup.Ct. 559, 39 L.Ed. 517. Says the court, in Fitzgerald Construction Co. v. Fitzgerald, 137 U.S. 98, 106, 11 Sup.Ct. 36, 39, 34 L.Ed. 608:

'Where a foreign corporation is not doing business in a state, and the president or any officer is not there transacting business for the corporation and representing it in the state, it cannot be said that the corporation is within the state, so that service can be made upon it.'

The palpable meaning of the court being, as will find...