Portscheller v. Atlas Mut. Ben. Ass'n.

Citation38 A.2d 607
Decision Date19 June 1944
CourtSuperior Court of Delaware

38 A.2d 607


Superior Court of Delaware, New Castle County.

June 19, 1944.

Action of debt on foreign judgment by Helen Portscheller against the Atlas Mutual Benefit Association.

Judgment for the plaintiff.


Collins J. Seitz, of Wilmington, for plaintiff.

Clair J. Killoran, of Wilmington, for defendant.

Superior Court, New Castle County, No. 55 March Term, 1942.

Heard by Court without a jury, on agreed statement of facts.

This is an action of debt on a foreign judgment. The declaration alleges that the plaintiff on March 5, 1941, recovered a judgment against the defendant for the sum of $542.50, in the Circuit Court of Wayne County, in the State of Michigan, and that such judgment is in full force and effect and not reversed, annulled or satisfied.

The defendant has filed a number of pleas, of which the fifth is the only material one. By this plea the defendant denies the jurdisdiction of the Michigan Court to render the judgment here sued upon. Several reasons are assigned as showing the lack of jurisdiction of the Michigan Court, which in view of the stipulation hereinafter mentioned need not be particularly mentioned or set out.

To the fifth plea the plaintiff filed a replication. In it she states that the Court of Michigan had jurisdiction over the defendant because the defendant was engaged in business in the State of Michigan; that while the defendant had not appointed or maintained an agent or officer in Michigan to accept service, yet it had by the transaction of business in the jurisdiction of the Michigan Court, subjected itself to the service of process under Sec. 14092, Compiled Laws of Michigan of 1929, as amended by Act 195 of Public Acts of 1933.

There was then filed in the case an agreed statement of facts, upon which alone the opinion of the Court is desired. This included

(1) That Atlas United Benefit Association, a Delaware Corporation, is successor

38 A.2d 608

to Capitol Mutual Benefit Association, a Colorado Corporation, which last corporation issued the certificates in Michigan.

(2) That the Capitol *** Association authorized one Fred Koch to solicit applications for it in the State of Michigan, and forwarded to Koch its printed applications for that purpose and printed receipts to be executed by Koch and delivered to the applicants.

(3) That Koch for a period of 30 days solicited applications from a number of persons, but succeeded in getting but two applications-one being the certificate involved in the present matter, and one application made by one Nicholas Barodte; that these were the only two successful solicitations made by Koch and [the agreed facts state] that all solicitations were made within 30 days; that on September 10, 1934, Portscheller signed the application and paid to Koch the sum of $6.00; that Koch sent the application and $2.00 to the company in Denver, Colorado, and retained $4.00 as his commission; that the $2.00 represented $1.00 as application fee and $1.00 contribution for the first month's benefits; that similar proceedings were had with reference to the application of Barodte.

(4) That Koch was acting as agent for Capitol Mutual Benefit Association in the State of Michigan for said period of “approximately thirty days.”

(5) That Portscheller continued his payments and remained in good standing.

(6) It is mutually stipulated that the judgment of the Court of the State of Michigan sued upon in this action is a legally valid and binding judgment upon the Atlas Mutual Benefit Association, the defendant herein, provided this Court shall determine from the facts hereinbefore stipulated that the Capitol Mutual Benefit Association, the predecessor of the said defendant, was doing business in the State of Michigan in such a manner as to subject it to the service of process, on or about the time, namely, September 10, A.D. 1934, that the aforesaid Benefit Certificate was issued by the said Capitol Mutual Benefit Association to the said Peter Portscheller.

(7) That with respect to a foreign corporation the laws of the State of Michigan do not define what constitutes “doing business” in said State.

RODNEY, J., delivering the opinion of the Court:

The present matter comes to the Court in a rather unsatisfactory manner and the opinion of the Court is required upon somewhat insufficient facts. It is a difficult task to attempt to reconcile according to any fixed pattern or standard the diverse rulings on the question as to when a foreign corporation is “doing business” in a forum state so as to clothe the latter state with jurisdiction over it so as to warrant the service of process. As said in Frink Co. v. Erikson, 1 Cir., 20 F.2d 707, 711.

“We have tried, without success, to discover some salient circumstance or point common to all that might be held to be determinative of the instant case.”

All of the cases indicate that a correct ruling can only be had upon the facts of the particular case. As is said in St. Louis S. W. R. Co., v. Alexander, 227 U.S. 218, 227, 33 S.Ct. 245, 247, 57 L.Ed. 486, Ann.Cas.1915B, 77:

“This court has decided each case of this character upon the facts brought before it, and has laid down no all-embracing rule by which it may be determined what constitutes the doing of business by a foreign corporation in such manner as to subject it to a given jurisdiction.”

Attention must be drawn to the insufficiency of facts presented to us. Objection is made by the defendant to the jurisdiction acquired by the Michigan Court by reason of the service of process there. No record of the Michigan Court is before us, but by Item 6 of the agreed statement of facts it is stipulated that the Michigan judgment was valid if it be found that the defendant, upon the stipulated facts, was “doing business” in Michigan on September 10, 1934, when the policy in suit was issued.

The agreed statement of facts does state the activities of Koch, the admitted agent, who took the application upon which the instant policy or certificate was issued. There is nothing in the record nor statement of facts to indicate whether the activities of Koch, the admitted agent of the defendant in the State of Michigan, represented the only activities of the defendant in that State. Whether or not a foreign insurance corporation is “doing business” in a given state may depend not alone on the activities of the particular agent responsible for the issuance of the policy in suit, but upon the sum total of the activities of the company through all its various agencies, if more than one.

38 A.2d 609

In 1839 Chief Justice Taney, in Bank of Augusta v. Earle, 13 Pet. 519, 588, 10 L.Ed. 274, brought to the fore the difficulties of a corporation exercising its franchises in jurisdictions other than that of its origin. Since then the activities of every state have been directed to some measure of control or regulation of “foreign” corporations, some of which must inevitably do business in states other than that of their incorporation. These statutes both preceded and followed the “due process” clause of the 14th Amendment and, indeed, a few antedated the Augusta case.

Some jurisdiction by a state of a foreign corporation doing business in its boundaries has usually been sought because of one or more of three reasons: (1) A desire to have some general control or oversight of the qualifications of such foreign corporation doing business in the given state; (2) a desire to subject such foreign corporation to some measure of taxation for such doing of business, and (3) for the service of process on such foreign corporation, thereby obviating the requirement of suitors seeking relief in the home state of the corporation. Some care must be exercised in the distinction between the classes, for the requirements of each are not the same, and it has been said that the requirement for “service of process” is the least exacting of the three. With it only are we concerned. See 18 Fletcher on Corporations, Permanent Ed., § 8712; 25 Columbia L. Rev. “An analysis of doing business”, 1018, 1045.

The concept of a foreign corporation “doing business” in a state as constituting jurisdiction by such state as to the service of process has been arrived at by the application of varying theories. Such jurisdiction was first thought to have at its source the implied consent of the foreign corporation to be bound by the laws of the state in which it was “doing business.”

Such was the theory of Old Wayne Mut. Life Ass'n v. McDonough, 204 U.S. 8, 27 S.Ct. 236, 51 L.Ed. 345. When in International Harvester Co. v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, it was held that a company solely engaged in interstate commerce was amenable to the laws of the state by reason of doing business in such state, the consent theory of jurisdiction largely gave way to the “corporate presence” theory. It is thus now almost uniformly held that the presence of a corporation within a state necessary to the service of process is shown when it appears that the corporation by its conduct or the acts of its agents is there carrying on business in such sense or to such extent as to manifest its presence within the state.

These theories of jurisdiction, while valuable in their way, are of little aid in determining the difficult question of just what constitutes “doing business”, so as to form the basis of a service of process. There has been a tendency to include as one of the factors to be considered the “reasonableness” of the exercise of jurisdiction under the facts of a case, as indicative of the extent and purpose of the corporate presence. This view was indicated in Smolik v. Philadelphia & Reading Coal & Iron R. Co., D.C., 222 F. 148; Farmers' & Merchants' Bank v. Federal Reserve Bank, D.C., 286 F. 566, at pages 577 and 588, and in Scott, “Jurisdiction over Non Residents doing business within a State” 32 Harvard L.Rev. 883. The suggestion is again made...

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