Star Elkhorn Coal Co. v. Red Ash Pocahontas Coal Co.

• Decision Date: 13 July 1951
• Docket Number: No. 288.,288.
• Citation: 102 F. Supp. 258
• Parties: STAR ELKHORN COAL CO. v. RED ASH POCAHONTAS COAL CO.
• Court: U.S. District Court — Eastern District of Kentucky

102 F. Supp. 258

STAR ELKHORN COAL CO. v. RED ASH POCAHONTAS COAL CO.

No. 288.

United States District Court E. D. Kentucky, at Pikeville.

July 13, 1951.

John Y. Brown, Harry B. Miller, Jr., Lexington, Ky., for plaintiff.

Baird & Hays, Pikeville, Ky., Leslie Meek, Cincinnati, Ohio, for defendant.

SWINFORD, District Judge.

This case is before the Court on the defendant's "motion to quash the issuance of summons and purported service of summons".

The motion presents two questions for determination:

1. Was the defendant doing business in the State of Kentucky so as to make it amenable to service of process on the Secretary of State of Kentucky under Section 271.610, subsection (2), Kentucky Revised Statutes?

2. Is it necessary that the defendant be doing business in the state at the time of service of process?

The term "doing business" has been so frequently discussed by courts and so variously applied in different cases that authority can be found for any position a court takes in a given state of fact. The facts in the case at bar, as disclosed by the present record, show that the defendant, a coal sales agency, had from one to four employees in Eastern Kentucky during the years 1947-48 for the purpose of purchasing, inspecting, accepting and rejecting coal at various tipples and mine offices. The first purchase of coal from the plaintiff was at its office in Kentucky in the amount of 20,000 tons. Other discussions were had, purchases made and necessary business matters attended to by agents of the defendant in the coal fields of Eastern Kentucky, in connection with the acquisition of many thousands of tons of coal by the defendant, continuously over a period of several months.

I am of the opinion the defendant corporation was doing business in the State of Kentucky to such an extent that it was "present" here and subject to the process of our courts.

In my judgment any corporation that makes it its business to systematically and continuously, over a reasonable period of time, solicit business in either selling or buying in a state is doing business within the state. I realize that many of the courts do not go this far, but undoubtedly the courts are steadily moving to the more reasonable and equitable rule that systematic solicitation alone is sufficient for jurisdiction over foreign corporations.

Why should it not be so? Their agents while here on their business for their profit have the protection and security of our police regulations and state institution. Such agents use our highways. They have access as individuals to all privileges of citizens in so far as comfort and convenience go.

Judge Learned Hand expressed what I believe should be the accepted rule in all courts in the case of Kilpatrick v. Texas & Pacific Railway Co., 2 Cir., 166 F.2d 788, 791. This district court had applied the "mere solicitation" rule and dismissed the case. In reversing the lower court the appellate court said: "The necessity that the corporation shall be `present' at all arises from the territorial limitations of the power of a state — legislative, executive or judicial — in dealing with the legal relations of a person not in allegiance. In the case of individuals it has of course been long recognized that the defendant must, ordinarily, be subject to a capias when the action is begun, if a judgment against him in personam is to be valid. The same doctrine applies to corporations; but, since a corporation — whether it be regarded as a fabricated jural person, or an aggregate — is not identical with its members, spatial attributes can be ascribed to it only where its communal purposes are realized. It cannot be present in a place where none of its activities take place, and, literally at any rate, it is present wherever any of them do take place. It would therefore seem that, so far as it must be `present' in order to satisfy the territorial limitation upon the powers of a court when acting in personam, it should be enough constitutionally that it shall have extended its activities into the territory where that court's process runs."

See also, Lesky v. Norfolk & Western Railway Co., 6 Cir., 1946, 157 F.2d 674.

The Supreme Court on February 25, 1946, handed down a decision in the case of Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 589, 90 L.Ed. 760, in which it used this language: "* * * that `mere solicitation' when it is regular, continuous and persistent, rather than merely casual, constitutes `doing business,' contrary to formerly prevailing notions."

I have examined and read with interest the cases on this point cited by counsel for the defendant in his argument and in his brief. These cases have well recognized distinguishing factual features from those in the case at bar and no purpose would be served in discussing them in this opinion. Nearly all of them precede in point of time the case of International Shoe Company v. State of Washington, Office of Unemployment Compensation, 326 U.S. 310, 66 S.Ct. 154, 159, 90 L.Ed. 95, decided in December 1945, which must now be accepted as the leading case on the subject and which greatly liberalizes the rule in holding process valid where the "presence" of a foreign corporation within the state is at issue. This case practically overrules all other pronouncements of federal courts on the question.

The following quotations give both the history of the rule and the present proper constructions of what is meant by a foreign corporation "doing business" within a state:

"`Presence' in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given. St. Clair v. Cox, 106 U.S. 350, 355, 1 S.Ct. 354, 359,...