S. Howes Co. v. W. P. Milling Co.

• Decision Date: 07 July 1954
• Docket Number: No. 35275,35275
• Citation: 277 P.2d 655
• Parties: S. HOWES CO., Inc. v. W. P. MILLING CO.
• Court: Oklahoma Supreme Court

Page 655

277 P.2d 655

1954 OK 217

S. HOWES CO., Inc. v. W. P. MILLING CO.

No. 35275.

Supreme Court of Oklahoma.

July 7, 1954.

Rehearing Denied Sept. 28, 1954.

Syllabus by the Court.

1. Where an Oklahoma commission machinery broker suggests to a customer the purchase of a certain machine, which was guaranteed by the manufacturer to perform the services for which it was purchased, and the customer sends to the broker an order therefor, which is forwarded to the manufacturer, a foreign corporation, for acceptance or rejection, and said order is accepted and the machine is shipped freight collect directly to the customer, over a route designated by the broker, and the machine is installed in the manner and upon structures, recommended by the broker and the manufacturer, and, upon request by the broker the customer delivers to him a check for the purchase price made payable to the manufacturer and subsequently forwarded to and endorsed by the manufacturer and where the machine proved unsatisfactory and the manufacturer, after a long distance telephone conversation with its Oklahoma broker (or agent) disclosing the unsatisfactory operation of the machine, sent its agent from Kansas City to Muskogee, Oklahoma, to investigate the operation of the machine and such agent suggested changes, including substitution of different parts which the manufacturer furnished for exchange but which did not eliminate the unsatisfactory performance of the machine, there has been such a doing of business in this state as to make the manufacturer amenable to legal process under the provisions of 18 O.S.A. §§ 1.17 and § 472 in an action for damages resulting from alleged breach of warranty of fitness of the machine so purchased.

Banker, Bonds & Wilcoxen, Muskogee, for plaintiff in error.

T. L. Gibson, Norman & Wheeler, Muskogee, for defendant in error.

JOHNSON, Vice Chief Justice.

This is an action brought by W. P. Milling Company, a corporation, as plaintiff, against the defendants, Ward R. McGavren and S. Howes Company, Inc., a foreign corporation, for damages resulting from alleged breach of warranty of fitness of certain milling machinery purchased from defendants. The parties will be referred to as they appeared in the trial court.

The case was tried to a jury and resulted in a verdict and judgment in favor of plaintiff and against the one defendant only, S. Howes Company, who has perfected this appeal. Verdict and judgment having been in favor of the other defendant, McGavren, he need not be further considered as a party to the litigation. The defendant, S. Howes Company, was a foreign corporation not domesticated in this state and service of summons was had upon it by service on the Secretary of State. At every stage of the proceeding, the defendant objected to the jurisdiction of the court over it because it was a foreign corporation. That is the only proposition presented here. Therefore, the only question necessary for determination is whether or not said defendant was doing business, or had done business, in this state, making it amenable to legal process herein.

The plaintiff was organized for the purpose of constructing and operating a grain mill in Muskogee, Oklahoma. For all purposes of the case before us, all of the acts occurred in the year 1948. At that time, Ward R. McGavren was an independent broker, dealing in mill machinery on commission, with his place of business in Oklahome City. He had not had previous dealings with the defendant. The plaintiff desired purchasing a corn with cob and husk separator. It had purchased other mill machinery through McGavren and had ordered a separator, but was unable to get delivery on it. On January 12, McGavren mailed to the plaintiff information and circulars on a machine manufactured by defendant and recommended the purchase of a certain type and size. Inclosed in the letter were order blanks which McGavren recommended be filled out and mailed to the defendant in care of him, McGavren. The machine was ordered in the manner suggested, for delivery not later than June. McGavren acknowledged receipt of the order and forwarded it to the defendant. It was necessary that the order be accepted by the defendant at its home office, the machine to be shipped direct to the plaintiff. Previous to the order, McGavren explained the situation to the defendant and asked that the machine be guaranteed. In reply, the defendant wrote McGavren that it would guarantee the machine to perform as represented.

During the ensuing months, McGavren, after collaborating with defendant, gave detailed instructions to the plaintiff for all construction of the elevator and shuck house. Plaintiff built these structures in conformity with the instructions. There was considerable delay in the delivery of the machine and, before its shipment, the defendant had McGavren make an investigation of the different routes for the purpose of determining the best and fastest way to ship. It was shipped directly from the defendant's plant f. o. b. to the plaintiff, arriving the early part of October. Shortly thereafter, McGavren was in Muskogee, while the machine was being installed. He asked one of the officers of the plaintiff if the invoice had been received. When informed that it had, he remarked that there was a discount if the purchase price was paid immediately. A check therefor was written by plaintiff to defendant and delivered to McGavren who forwarded it to said defendant. He was to receive his sales commission from the purchase price.

After the installation was complete, the machine was put into operation, and, within a few hours, the shucks were set on fire by the friction and carried into the shuck house while still burning. The resulting fire destroyed the shuck house. McGavren was notified and he went to Muskogee. When he was there, the machine was again started and another fire resulted. McGavren immediately called the defendant by telephone to report the condition. The defendant then notified a salesman in Kansas City to investigate, which he did. The defendant then wrote plaintiff that, based upon the report, other fans were being sent to be substituted in the mill. The trouble was not eliminated and defendant offered to take the machine back. The plaintiff refused the offer because of its losses, troubles, and the expenses necessary for removal and return of the machine. This action was filed for recovery of the damages on April 26, 1950.

Plaintiff in Error cites, quotes from, and principally relies upon the case of Wills v. National Mineral Company, 176 Okl. 193, 55 P.2d 449. There the question was whether the undomesticated foreign corporation was doing business within the state so as to be sued in this state and service of process obtained upon it. Therein we held that the quality, character and quantity of business conducted within the state may be sufficient to subject a foreign corporation to local process and yet be insufficient to require it to take out a license.

As will be readily seen from a reading of some of the recent cases discussed in leading Law Review articles (see Vol. 1 Okl.Law Review, 294-5 (1948); Vol. 45 Mich.Law Review, 218-21 (1946); 25 Col.Law Review, 1018 (1925); Vol. 16 Univ. of Chicago Law Review 523-24 (1949); Vol. 26 Univ. of So.Cal.Law Review, 215-16), dealing with the subject of the meaning of 'doing business' for the purpose of making a foreign corporation amenable to local process, there is no rule of thumb by which determination may be made as to what constitutes the required amount of transacting business. Each case must depend upon the character of its particular facts. This, in substance, was the holding in the Wills case, supra. While this principle is approved by a majority of the courts, it is of little help in determining whether specific activities constitute such 'doing of business' as to make the foreign corporation liable to local process.

In Oklahoma the question is raised chiefly by two statutes, Title 18 Okl.Stat.Ann. § 1.17 and § 472, which provide in effect that any foreign corporation 'engaging in or transacting business' within the state can be sued and served by local process. Whenever the question has been raised of whether a corporation's activities within the meaning of these statutes constitutes 'doing business' (a term not defined by statute) this Court has held almost without exception that the corporation was liable to local process. For cases see 4 Oklahoma Digest Corporations, k642 and 662. Recent cases, Wills case, supra; International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; Jeter v. Austin Trailer Equipment Co., 122 Cal.App.2d 376, 265 P.2d 130 and Kneeland v. Ethicon Suture Laboratories, Inc., 118 Cal.App.2d 211, 257 P.2d 727, indicate a definite disposition to broaden the application of the term 'doing business'. In Isaacs 'An Analysis of Doing Business' 25 Col.Law Review 1018, supra, the author distinguished 'doing business' under three legal purposes, namely, service of process, taxation, and qualification, the degree of activity required rising in the order named. The multiple standard for 'doing business' is categorically stated to be the law in 20 C.J.S., Corporations, § 1828, and was recognized in the Wills case, supra.

It is argued that the factual situation in the instant case indicates only an isolated transaction, or a single transaction was not continuous in nature, and therefore, did not constitute 'doing business' within the State, subjecting defendant to local process. Such argument is not based upon reason and justice. Courts of a particular state should have jurisdiction over all disputes arising out of contracts made (or to be performed) within the state, regardless of the number of contracts of the defendant which were made (or to be performed) there. Moreover, the test as to what activities will subject the foreign corporation to suit is 'qualitativ...