Portscheller v. Atlas Mut. Ben. Ass'n

Decision Date19 June 1944
Citation38 A.2d 607,42 Del. 486
CourtDelaware Superior Court

Collins J. Seitz, of Wilmington, for plaintiff.

Clair J. Killoran, of Wilmington, for defendant.




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.

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 in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 519, 146 A.L.R. 926.See 23 Va. Law Rev. 307.

Much reliance is placed by the defendant on Green v. Chicago, B. & Q.R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916. There an Iowa corporation maintained an agency in Philadelphia which solicited freight and passenger business, and in some instances collected money and issued pre-paid orders for transportation. The suit was brought to recover damages for a cause of action arising in Colorado. It was held that mere solicitation of business and nothing more did not constitute such a "doing of business" as to form the basis for a service of process. It will be noted that the Green case cited with no evidence of disapproval the case of Denver, etc., R. Co. v. Roller, 9 Cir., 100 F. 738, 49 L.R.A. 77, 79, which on quite similar facts reached a different conclusion from that of the Green case. The Green case only distinguished the cited case, stating that in it the action has been "brought in the state courts and the question was of the interpretation of a state statute and the jurisdiction of the state courts." [205 U.S. 530, 27 S.Ct. 596, 51 L.Ed. 916.] It will be also noted that is precisely the question in the present case, although it is difficult to see the exact basis of the distinction. See also W. J. Armstrong Co. v. New York Cent., etc., R. Co., 129 Minn. 104, 151 N.W. 917, L.R.A. 1916E, 232, Ann.Cas.1916E, 335.

In International Harvester Co. v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, it was held that solicitation of business plus the receipt of certain money, checks or notes for goods sold in Kentucky did constitute such a "doing of business" in that state so as to sustain a service of process. The Court considered the Green case, which it termed "an extreme case."

The present standing and effect of the Green case has been the subject of some comment. Thus in speaking of it in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 518, 146 A.L.R. 926, it is said

"later cases, on the whole, have interpreted 'doing business' more broadly" and "it is impossible to tell how far the decision * * * was due to reluctance to require the defendant and its witnesses to cross the continent and defend in the east a cause of action that arose in the west."

That this question of hardship as affecting railroads engaged in interstate commerce is an important one may be seen in Davis v. Farmers' Co-op. Equity Co., 262 U.S. 312, 43 S.Ct. 556, 67 L.Ed. 996.

In Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 141, Judge Learned Hand says

"possibly the maintenance of a regular agency for the solicitation of business will serve without more. The answer made in Green v. Chicago, Burlington & Quincy R. Co. * * * perhaps becomes somewhat doubtful in the light of International Harvester Co. v. [Commonwealth of] Kentucky * * * and, if it still remains true, it readily yields to slight additions." See also Wood v. Delaware & H.R. Corp., 2 Cir., 63 F.2d 235; Pergl v. United States Axle Co., 320 Ill.App. 115, 50 N.E.2d 115.

The U.S. Circuit Court for the First Circuit in Canadian Pac. R. Co. v. Sullivan, 126 F.2d 433, 437, in distinguishing the Green case says "but this case, if it is still the law * * * is not in point." See also 21 R.C.L. p. 1343.

In Haskell v. Aluminum Co. of America, D.C., 14 F.2d 864, 869, the Court felt that the decisions of the Supreme Court "reveal a tendency to confine the principle of the Green case to the particular facts of that case."

Most of the cases involving "solicitations" as constituting a basis for service of process involve solicitations for orders for goods to be shipped from another state. Many of...

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