People of State of Cal. v. Western Tire Auto Stores, Inc.

• Decision Date: 20 May 1965
• Docket Number: No. 38858,38858
• Citation: 207 N.E.2d 474,32 Ill.2d 527
• Parties: The PEOPLE of the STATE OF CALIFORNIA, Appellee, v. WESTERN TIRE AUTO STORES, INC., Appellant.
• Court: Illinois Supreme Court

Page 474

207 N.E.2d 474

32 Ill.2d 527

The PEOPLE of the STATE OF CALIFORNIA, Appellee, v. WESTERN TIRE AUTO STORES, INC., Appellant.

No. 38858.

Supreme Court of Illinois.

May 20, 1965.

Freeman, Freeman & Haas, Chicago, (Adolph L. Haas, Chicago, of counsel), for appellant.

Arthur B. Sachs, Chicago (Leonard Gordon and David F. Browne, Chicago, of counsel), for appellee.

KLINGBIEL, Chief Justice.

The State of California filed a petition in the circuit court of Cook County for registration of a judgment pursuant to the Uniform Enforcement of Foreign Judgments Act (Ill.Rev.Stat.1963, chap. 77, par. 88 et seq.). The judgment sued on had been recovered in California against Western Tire Auto Stores, Inc., an Illinois corporation, for accrued California sales taxes and penalties. The circuit court gave summary judgment for the plaintiff, over defendant's objections that there had been no tax liability and that the California court lacked jurisdiction. Defendant appeals directly to this court, a constitutional question being involved.

The California action was brought in 1962, in the superior court of Sacramento County. It alleged a sales tax liability accruing during the period from January 1 to March 31, 1955. The defendant corporation, a nonresident of that State neither doing business there nor licensed to do so, was summoned on substituted service pursuant to statute. It did not appear, and judgment was entered against it for $17,587.59.

Affidavits in opposition to the motion for summary judgment show that on or about May 1, 1953, defendant had purchased from Gamble-Skogmo, Inc., a Delaware corporation, all the furniture, fixtures and equipment located in the latter's retail stores and warehouses in some 22 States, including California, that defendant thereupon leased the assets to Gamble-Skogmo at a fixed rental until January 31, 1955, at which time it reconveyed them back to that corporation, and that the latter transaction is the subject of the alleged tax liability for which the suit was brought. Defendant contends that under California tax law the transaction was clearly exempt as an 'occasional sale.' It is then argued that since there was no tax liability the California court 'was totally without jurisdiction of the subject matter.' It is also urged that under the language of the procedural statute jurisdiction on substituted service can be acquired only in cases of actual tax liability, and that since none appears here the California judgment was void for lack of personal jurisdiction.

Neither argument has merit. As for the claim that jurisdiction over the subject matter was absent it is a sufficient answer to point out that there is nothing to show the California superior court was not authorized to hear sales tax cases. Jurisdiction of the subject matter does not mean simple jurisdiction of the particular case then occupying the attention of the court, but jurisdiction of the class of cases to which the particular case belongs. Whether a complaint does or does not state a cause of action is of no importance insofar as this question is concerned, nor does jurisdiction depend upon the rightfulness of the decision. (Baker v. Brown, 372 Ill. 336, 23 N.E.2d 710; O'Brien v. People ex. rel. Kellogg Switchboard and Supply Co., 216 Ill. 354, 75 N.E. 108.) The rule is no different in California. Jurisdiction is the power to hear and determine the cause (Pacific States Sav. & Loan Co. v. Superior Court, 217 Cal. 517, 19 P.2d 977), and the test of its presence is to be found in the nature of the case as made by the complaint and the relief sought. Ransome-Crummey Co. v. Martenstein, 167 Cal. 406, 139 P. 1060; Becker v. Superior Court, 151 Cal. 313, 90 P. 689.

The objection that jurisdiction over the person was lacking must also be rejected. Section 1018 of the California Code of Civil Procedure provides that every foreign corporation which 'incurs any liability to the State of California under any tax law of the State' shall file with the Secretary of State a designation of an agent for service of process, and that in the absence of such designation service of process shall be made by delivery to the Secretary of State, who shall thereupon notify the corporation by telegraph and forward a copy of the summons and complaint by registered mail. (18 West's Annotated California Codes, pp. 476-478). No claim is made that the statutory requirements were not satisfied in the California lawsuit, or that timely notice was not in fact received. Although defendant had never appointed an agent for service of process, it is not disputed that process was duly served upon the Secretary of State, and that defendant received telegraphic notice as well as copies of the summons and complaint.

The defendant's contention is evidently based upon a literal reading of the statutory language, which would require liability to be established before nonresidents could be brought in on substituted service. No California authority has been cited construing the provision in this manner, nor do we think we can reasonably consider such to have been the intention of the California legislature. In Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673, this court rejected an argument of a similar nature, urged with regard to the Illinois statute. A Wisconsin defendant was sued here for a tort allegedly committed in Illinois by one of his employees. He was served in Wisconsin under our 'long arm' provision authorizing out-of-state service as to any cause of action arising from 'the commission of a tortious act within the State.' He contended that before such service could be upheld under this statute it was necessary to prove, as a matter of substantive law, that an actual tort liability existed. In disagreeing we pointed out that the statute is concerned not with...