Madden v. Truckaway Corporation

• Citation: 46 F. Supp. 702
• Decision Date: 27 July 1942
• Docket Number: No. 669.,669.
• Parties: MADDEN v. TRUCKAWAY CORPORATION.
• Court: U.S. District Court — District of Minnesota

46 F. Supp. 702

MADDEN v. TRUCKAWAY CORPORATION.

No. 669.

District Court, D. Minnesota, Fourth Division.

July 27, 1942.

John M. Palmer and Stinchfield, Mackall, Crounse & Moore, all of Minneapolis, Minn., for defendant.

John J. McKasy and Thompson, Hessian & Fletcher, all of Minneapolis, Minn., for plaintiff.

NORDBYE, District Judge.

The question presented is whether valid service of process can be made on an agent appointed under Section 321(c), Title 49 U.S.C.A. (the Motor Carrier Act), in an action of this character against a non-resident corporation, which has never qualified to do business in this State; does not conduct any business herein; and has no property or any of its officers in this State. The defendant is engaged in the transportation business with its headquarters and domicile in the State of Michigan. It transports motor cars by truck and is authorized by the Interstate Commerce Commission to engage in interstate business in many states in the Union, including the State of Minnesota, under the Federal Motor Carrier Act. This Act, among other things, requires a carrier to designate an agent for service of process in each State where it operates, and compliance therewith has been made by the defendant in this State. This portion of the Act, 49 U.S.C.A. § 321(c) reads:

"Designation of agent for service of process. Every motor carrier shall also file with the board of each State in which it operates a designation in writing of the name and post-office address of a person in such State upon whom process issued by or under the authority of any court having jurisdiction of the subject matter may be served in any proceeding at law or equity brought against such carrier. Such designation may from time to time be changed by like writing similarly filed. In the event such carrier fails to file such designation, service may be made upon any agent of such motor carrier within such State."

The nature of this action is essentially this: In 1934, the defendant had an authorized capital stock of 10,000 shares at $10 par value, and prior to October 15, 1934, of the 555 outstanding shares of their capital, plaintiff held 115 shares. The outstanding stock apparently was held by plaintiff and four other persons. On October 15, 1934, defendant issued and sold to its existing stockholders other than plaintiff 445 shares of its capital stock at $10 per share without the authorization or knowledge of the plaintiff or affording him an opportunity to purchase his pro-rata share. It is alleged that this was done in violation of the laws of Michigan. On April 2, 1936, defendant declared a stock dividend of 100% on its outstanding stock, but plaintiff was only issued 115 shares of the dividend stock instead of 231 shares, which he would have received had he been afforded his preemptive right to subscribe to the issue of October 15, 1934. He contends that he did not discover that he had been deprived of such preemptive rights until April, 1940, when he made due demand on the officers and directors for an opportunity to exercise his preemptive right to subscribe. In this proceeding, plaintiff offers $1,160 in payment for the stock for which he claims the right to subscribe, and seeks to recover from the defendant the cash dividends payable on such stock from 1935 to 1941, inclusive, in the sum of $25,000. He seeks the aid of this Court in addition to require defendant, upon the payment of $1,160, to issue to him 116 shares of its capital stock as of October 15, 1934, and 116 shares — the stock dividend — as of April 2, 1936.

It will be observed that plaintiff proceeds in equity and seeks to obtain a decree from this Court determining and settling certain alleged rights accruing to him as a stockholder of a Michigan corporation and to exercise certain visitorial powers over this corporation and its internal affairs. This action was commenced in State Court by the service made upon the agent designated under the Motor Carrier Act. Thereafter, on the grounds of diversity of citizenship and the requisite amount in controversy, the matter was removed to this Court. In response to the motion to quash service, plaintiff urges that there are no limitations expressed in the Act as to the character or nature of the proceedings in law and equity in which service may be made upon the designated agent. He points out that the Act broadly provides that the carrier shall designate a person upon whom process "issued by or under the authority of any court having jurisdiction of the subject matter may be served in any proceeding at law or equity brought against such carrier." It is plaintiff's position, therefore, that, in light of this all-inclusive language, without limitation or restriction, Congress intended to provide a process statute which would be available to any person in proceeding against an interstate carrier in any action in the courts of this State, regardless of the nature or character of the proceedings. If one merely considers the language of this subdivision and accepts it literally, ignoring the purposes and objects of the Act, it may well be that plaintiff's position is entirely tenable. But that Congress ever intended to interfere with the internal policies of the States with respect to the acquisition of jurisdiction in their local courts, and to supplant their various process statutes, is indeed most improbable, if not in conflict with the limitations on the power of the Federal government. This does not mean that, in its own proper sphere, Congress cannot legislate and enact process statutes, even though this procedure in certain types of litigation may serve as a cumulative remedy to that afforded by the statutes of the States. But it must be evident that Congress is not concerned with providing means for obtaining jurisdiction in the State of Minnesota over a dispute between a local stockholder and a Michigan corporation involving the stockholder's alleged preemptive right to the issuance to him of certain stock in such corporation. Under the commerce clause of the Constitution, Art. 1, § 8, cl. 3, Congress has exclusive jurisdiction and authority over all matters pertaining or relating to interstate commerce. It had enacted a comprehensive act regulating transportation by interstate motor carriers. Obviously, it was necessary for Congress to pass some statute with reference to the service of process on the carriers who were authorized to conduct an interstate business under the Act. There are numerous provisions in the Act with reference to the regulation and supervision of carriers and their amenability to proceedings directed to the enforcement of the same. Apparently, Congress had in mind that the public should be protected by reason of accidents growing out of the negligent use of motor vehicles engaged in interstate transportation, and also that shippers should be protected in the event of loss of property shipped in such commerce. Section 315 authorizes the Commission to require the filing of a suitable surety bond, conditioned to pay, within the amount of such bond, any final judgment recovered against such motor carrier for bodily injuries to, or the death of any person resulting from, the negligent operations of the motor vehicles operating under the permit. Likewise, the Commission is authorized to prescribe suitable rules and regulations whereby surety bonds are to be furnished by the...