Merchants Heat Light Company v. James Clow Sons

• Decision Date: 28 January 1907
• Docket Number: No. 118,118
• Citation: 204 U.S. 286,27 S.Ct. 285,51 L.Ed. 488
• Parties: MERCHANTS HEAT & LIGHT COMPANY, Plff. in Err., v. JAMES B. CLOW & SONS
• Court: U.S. Supreme Court

204 U.S. 286

27 S.Ct. 285

51 L.Ed. 488

MERCHANTS HEAT & LIGHT COMPANY, Plff. in Err.,

v JAMES B. CLOW & SONS.

No. 118.

Argued January 15, 1907.

Decided January 28, 1907.

Messrs. W. H. H. Miller, James W. Fesler, C. C. Shirley, and Samuel D. Miller for plaintiff in error.

[Argument of Counsel from pages 286-288 intentionally omitted]Messrs. Newton Wyeth, Warren B. Wilson, and Walter L. Fisher for defendant in error.

Mr. Justice Holmesdelivered the opinion of the court:

This case comes up on the single question of the jurisdiction of the circuit court, which was saved by bill of exceptions and stipulation, and which is certified to this court.The defendant in error, the original plaintiff, and hereafter called plaintiff, is an Illinois corporation; the plaintiff in error is a purely local Indiana corporation, organized for the furnishing of heat, light, and power in Indianapolis.The questions are whether the service of the writ was good (Board of Trade v. Hammond Elevator Co.198 U. S. 424, 435, 49 L. ed. 1111, 1116, 25 Sup. Ct. Rep. 740), or, if not, whether the defendant submitted to the jurisdiction.The material facts are these: The service was upon one Schott in Chicago.By the laws of Illinois a foreign corporation may be served with process by leaving a copy with its general agent, or with any agent of the company.Schott had an entire contract with the defendant by which he was to build and equip the plant, assume general management of it, and operate it for the company until fully completed, 'approve contracts therefor,' certify bills, and have the heating plant ready for service on December 1, 1902, and finally finished by July 1, 1903.Schott was acting as general manager under this contract at the date of service, March 23, 1903, and did any purchasing required for the company in Illinois.In the same capacity he made the contract sued upon, which was for materials to be used for equipping the plant.He made it in the city of Chicago.After the suit was begun, a motion to quash the return of service was made and overruled, and thereupon the defendants, after excepting, appeared, so ordered, and pleaded the general issue and also a recoupment or set-off of damages under the same contract, and overcharges, in excess of the amount ultimately found due to the plaintiff.There was a finding for the plaintiff of $9,082.21.

It is tacitly conceded that the provision as to service does not apply unless the foreign corporation was doing business in the state.If it was, then, under the decisions of this court, it would be taken to have assented to the condition upon which alone it lawfully could transact such business there.Old Wayne Mut. Life Asso. v. McDonough, 204 U. S. 8, 51 L. ed. 345, 27 Sup. Ct. Rep. 236.

Whether the purchase of materials for the construction or equipment of its plant, as a preliminary to doing its regular and proper business, which necessarily would be transacted elsewhere, in the state of its incorporation, is doing business, within the meaning of the Illinois statute, was argued at length and presents a question upon which the decisions of the lower courts seem not to have agreed.We shall intimate no opinion either way, because it is not necessary for the decision of the case, in view of the submission to the jurisdiction which the facts disclose.

We assume that the defendant lost no rights by pleading to the merits, as required, after saving its rights.Harkness v. Hyde, 98 U. S. 476, 25 L. ed. 237;Southern P. Co. v. Denton, 146 U. S. 202, 36 L. ed. 943, 13 Sup. Ct. Rep. 44.But by setting up its counterclaim the defendant became a plaintiff in its turn, invoked the jurisdiction of the court in the same action, and, by invoking, submitted to it.It is true that the counterclaim seems to have arisen wholly out of the same transaction that the plaintiff sued upon, and so to have been in recoupment rather than in set-off proper.But, even at common law, since the doctrine has been developed a demand in recoupment is recognized as a cross demand, as distinguished from a defense.Therefore, although there has been a difference of opinion as to whether a defendant, by pleading it, is concluded by the judgment from...