Rosenthal v. Frankfort Distillers Corp.

• Decision Date: 14 December 1951
• Docket Number: 13348.,No. 13347,13347
• Citation: 193 F.2d 137
• Parties: ROSENTHAL v. FRANKFORT DISTILLERS CORP. ROSENTHAL v. GLAZER'S WHOLESALE DRUG CO., Inc.
• Court: U.S. Court of Appeals — Fifth Circuit

193 F.2d 137 (1951)

ROSENTHAL v. FRANKFORT DISTILLERS CORP.

ROSENTHAL v. GLAZER'S WHOLESALE DRUG CO., Inc.

Nos. 13347, 13348.

United States Court of Appeals Fifth Circuit.

December 14, 1951.

Neth L. Leachman, John L. Hauer, Dallas, Tex., for appellant.

J. Manuel Hoppenstein, Dallas, Tex., for Glazer's Wholesale Drug Co.

Robert E. Keeton, Houston, Tex., for Frankfort Distillers Corp.

Before JOSEPH C. HUTCHESON, Chief Judge, and HOLMES, and STRUM, Circuit Judges.

JOSEPH C. HUTCHESON, Chief Judge.

These appeals are from orders dismissing, not on the merits but for want of jurisdiction of the person of defendants: (1) a suit for breach of contract; and (2) a garnishment sued out as ancillary thereto.

The questions presented for decision come up in this way. Alleging that defendants, appellee Frankfort Distillers Corporation and another, were foreign corporations with a permit to do business in Texas, appellant, plaintiff below, sued them in the state court for breach of a contract. Citation issued on the complaint to Dallas County, and on February 13th, a return¹ thereon was filed.

On March 3rd, defendants removed the case to the District Court of the United States for the Northern District of Texas, and, on the same date, filed therein a motion with supporting affidavits to quash the citation and service and to dismiss the suit for want of jurisdiction of the person of the defendants.

Plaintiff filing an affidavit in opposition to the motion, evidence was taken, and the court, of the opinion on the pleadings, the affidavits, and the evidence² that the motion should be sustained, quashed and set aside the citation and service. No citation was sued out of the federal court and no attempt made to serve any process issued thereout, but, as set out below, plaintiff, as a substitute for personal service, attempted to secure a quasi in rem jurisdiction³ by suing out a distringas and a garnishment.

On June 8th, the defendants moved⁴ to dismiss the cause for want of jurisdiction. At or about the same time Glazer filed its motion to quash the garnishment for want of jurisdiction. Subject to said motion, it acknowledged an indebtedness to Frankfort Distillers, and prayed that it be dismissed with an attorneys' fee of $750.00. At the same time, the defendants in cause No. 3910 filed their motion to quash for lack of jurisdiction.

These motions coming on to be heard on June 12th, the writ of garnishment was quashed, the garnishee was dismissed with its costs, including $150.00 attorneys' fees, and cause No. 3910 was also dismissed.

Appealing, as to Frankfort Distillers, from the orders entered in cause No. 3910, and, as to Glazer's Drug Co., from the orders entered in the garnishment suit, plaintiff is here insisting: (1) that Frankfort was doing business in Texas at the time of the service of citation out of the state court on its district manager, Lacy; (2) that the service on Lacy was effective service under the Texas statutes; (3) that the garnishment writ properly issued out of the Federal court, under Erie v. Tompkins, because to deny its rightful issuance was to deprive plaintiff of a substantive right, the right to obtain jurisdiction quasi in rem since, if the suit had remained in the state court, such a writ could have issued; (4) that the writ of distringas was properly sued out; (5) that the garnishee, having become an advocate and made a defense in the garnishment proceeding, it was error to award it attorneys' fees.

The appellee, Frankfort, is here maintaining with vigor and earnestness that none of the points are well taken, while appellee, Glazer, as earnestly insists that the order in the garnishment suit was rightly entered.

Upon the primary question, whether Frankfort was doing business in Texas within the meaning of its statutes, as construed by its courts, so as to be present there for service, and the secondary one, whether if it was so in the state, service upon Lacy was sufficient, we think it clear that the evidence supports the findings of the district judge, and the applicable authorities⁵ support his conclusion, that the state court did not acquire jurisdiction of the person of defendant so as to support a judgment against it.

Appellant's insistence, that the later decisions⁶ of the Supreme Court of the United States have made inapplicable the decisions cited and relied on by appellee and the district judge, misconceives the primary question at issue. This is not, as appellant seems to think, what permissible reach, within the federal constitution, that court would, under the facts, give to a construction by the state court of the Texas Statutes governing the doing of business in the state by, and the service of process upon, foreign corporations. It is what construction the Courts of Texas have actually given to the statutes.

As was well said in Pulson v. American Rolling Mill Co., 1 Cir., 170 F. 2d 193 at page 194: "There are two parts to the question whether a foreign corporation can be held subject to suit within a state. The first is a question of state law: has the state provided for bringing the foreign corporation into its courts under the circumstances of the case presented? There is nothing to compel a state to exercise jurisdiction over a foreign corporation unless it chooses to do so, and the extent to which it so chooses is a matter for the law of the state as made by its legislature. If the state has purported to exercise jurisdiction over the foreign corporation, then the question may arise whether such attempt violates the due process clause or the interstate commerce clause of the federal constitution. Const. art. 1, § 8, cl. 3; Amend. 14. This is a federal question and, of course, the state authorities are not controlling. But it is a question which is not reached for decision until it is found that the State statute is broad enough to assert jurisdiction over the defendant in a particular situation." Cf. Employers' Liability v. Lejeune, 5 Cir., 189 F.2d 521.

When it comes to appellant's attempts to obtain in rem jurisdiction by suing out (1) a writ of distringas, and (2) a writ of garnishment, it is quite clear that appellant stands no better.

As to the distringas, the trial court, in his opinion, holding that the writ had improvidently issued, pointed out with brevity, clarity and correctness, the nature of the writ and why its attempted use in this case, to supply a jurisdiction which was lacking, was wholly unwarranted.

Appellee, in its brief, in further support, cites Commonwealth v. Lehigh Valley R. R., 165 Pa. 162, 30 A. 836, 27 L.R.A. 231; State v. Western N. C. Railroad, 89 N.C. 584; and Bouvier's Law Dictionary, 3rd Rev. Vol. 1, p. 897.

As to the garnishment, appellant concedes that under the rule of Big Vein Coal Co. v. Read, 229 U.S. 31,⁷ 33 S.Ct. 694, 57 L.Ed. 1053 no in rem jurisdiction having been acquired in the state court, prior to removal to the federal court, that court could not acquire jurisdiction by the issuance of a garnishment. He contends, however, that generally, under Erie Ry. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and specifically under Rorick v. Devon Syndicate, 307 U.S. 299, 59 S.Ct. 877, 83 L.Ed. 1303, that rule is no longer of force and a federal court on removal has the same right the state court would have had, had the case remained there.

As appellee points out, the Court of Appeals for the Eighth Circuit, in a thoroughly considered and supported opinion, discussing Rorick v. Devon Syndicate, supra, correctly holds, as indeed that case had declared, that it was limited to the precise situation it deals with and does not extend, as appellant claims it does, to facts like those in the case at bar.

We are in no doubt, therefore, that the writ was properly quashed.

Of appellant's final point, the allowance of attorneys' fees, little need be said, except that the allowance was authorized by the express terms of the applicable statute Art. 4100 Revised Civil Statutes of Texas, Rule 677, Vernon's Texas Rules of Civil Procedure, and the authorities⁸ construing same.

No error being made to appear, the orders appealed from are

Affirmed.

1 "Came to hand on the 9th day of February, 1950, at _____ o'clock P. M. Executed at Dallas, within the County of Dallas at 9:4 — o'clock — M., on the 13th day of February, 1950, by delivering to the within named Frankfort Distillers, Inc., a corporation, a private corporation by delivering to M. V. Lacy its district manager and returned unexecuted on this the 13th day of February A. D. 1950, as unable to locate the within named Distillers Distributing Corporation after diligent search and inquiring in Dallas County, Texas, each, in person...