State ex rel. Verd v. Superior Court for King County

• Decision Date: 15 October 1948
• Docket Number: 30509.
• Citation: 31 Wn.2d 625,198 P.2d 663
• Parties: STATE ex rel. VERD v. SUPERIOR COURT FOR KING COUNTY et al.
• Court: Washington Supreme Court

198 P.2d 663

31 Wn.2d 625

STATE ex rel. VERD v. SUPERIOR COURT FOR KING COUNTY et al.

No. 30509.

Supreme Court of Washington, En Banc.

October 15, 1948

This is an original proceeding in this Court, for a writ of prohibition treated as a writ of certiorari.

Proceeding by the State, on the relation of Wes E. Verd, for a writ of prohibition to prevent the Superior Court for King County and James T. Lawler, a judge thereof, from granting the Standard Lumber and Manufacturing Company a change of venue of relator's action against it.

Proceeding remanded to the Superior Court, with instructions to deny the company's motion for change of venue.

SCHWELLENBACH MILLARD and SIMPSON, JJ., dissenting.

Kellogg Reaugh & Smith, of Seattle, for relator.

Church & Chamberlin, of Port Angeles, for respondent.

HILL Justice.

The Standard Lumber & Manufacturing Company is a Washington corporation with its registered office and sawmill at Carlsborg, Clallam county, Washington. George W. Pankratz is president and manager of the corporation. He owned the mill at Carlsborg prior to incorporation, and both Before and since the incorporation has made it a practice to go to Seattle to sell lumber, the product of the mill, to Wes E. Verd, the relator, and perhaps to others. On April 5 1947, he called at Verd's office in Seattle and, on behalf of the corporation, agreed to sell and Verd agreed to buy certain lumber (nine carloads), with Verd's written order to follow. The written order was mailed on the next business day to Carlsborg, and there it was accepted by Pankratz, on behalf of the corporation, and returned to Verd.

Verd brought suit against the Standard Lumber & Manufacturing Company in King county, alleging that, because of the defective quality of the lumber furnished, he was compelled to make adjustments with his customers totalling $1,868.57.

The corporation requested a change of venue as a matter of right, relying on Rem.Rev.Stat. § 205-1, which provides: 'An action may be brought in any county in which the defendant resides, or, if there be more than one defendant, where some one of the defendants resides at the time of the commencement of the action. For the purpose of this act, the residence of a corporation defendant shall be deemed to be in any county where the corporation transacts business or has an office for the transaction of business or transacted business at the time the cause of action arose or where any person resides upon whom process may be served upon the corporation, unless hereinafter otherwise provided.' (Italics ours.)

The judge of the superior court having indicated his intention of granting the change of venue, Verd has applied for a writ of prohibition.

Verd contends that when Pankratz, the president and general manager of the corporation, sells lumber to him in his office in Seattle, the corporation is transacting business in King county and a written order and acceptance are mere formalities. The position of the corporation and of the respondent here is that what happened in Verd's office on April 5th was only incidental to the business of the corporation and constituted no more than negotiations, and that the sale was not consummated until the written order was accepted at Carlsborg. The single issue to be determined is whether the defendant corporation was transacting business in King county within the purview of Rem.Rev.Stat. § 205-1; or, more concretely, whether the solicitation and acceptance of business by the president and manager of the corporation constituted transacting business within the purview of that statute.

Both sides cite and rely upon State ex rel. Anacortes Veneer v. O'Phelan, 23 Wash.2d 142, 160 P.2d 515, 521. We there quoted approvingly what we had said in State ex rel. Guernsey-Newton Co. v. Superior Court, 136 Wash. 653, 241 P. 303, adopting the rule as stated in 12 R.C.L. 71, § 49:

'* * * Is the corporation engaged in the transaction of that kind of business, or any part thereof, for which it was created and organized? If so, it 'does business,' within the meaning of the constitutions and statutes. * * *'

That case was properly decided on the basis of that test. However, when the solicitation of sales is the activity in which the corporation is engaged, that rule represents an over-simplification of the problem of determining what constitutes doing or transacting business in a given locality. Our research has convinced us that the only general statement that will fit all the cases bearing on that question is that they are numerous, varied, and inharmonious. 23 Am.Jur. 336, § 361. The decision as to what constitutes transacting business necessarily depends upon the issues involved.

'The decisions on the question as to what constitutes doing business disclose a tendency on the part of some courts to treat the question as an indivisible one, overlooking the fact that the phrase 'doing business' does not and cannot have a uniform and unvarying meaning, but is governed largely by the connection and in view of the object of the statutes under construction or the particular issues involved. This tendency has been productive of much confusion. If the question relates to the right to subject a foreign corporation to the jurisdiction of the courts in the state through service of process, the point presented is different from the one presented where it relates to the power of the state to impose conditions, restrictions, or regulations upon the corporation's activities in the state. If it relates to the right to impose a tax on the corporation, still different considerations may be pertinent, and a broader meaning may sometimes be attributed to the words 'doing business' as used in a tax statute, the fact that interests or activities of the corporation receive the protection of the local laws being of weight where this issue is involved.' 23 Am.Jur. 339, § 362.

One of the purposes of the Standard Lumber & Manufacturing Company is

'* * * to buy and sell, at wholesale and retail, logs, timber, lumber, shingles and other saw mill and shingle mill products and other products manufactured from timber and forest products of every kind.' No one can deny the truth of the statement by Mr. Justice Rutledge in the case of Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134, 134 F.2d 511, 516, 146 A.L.R. 926:

'* * * Solicitation is the foundation of sales. Completing the contract often is a mere formality when the stage of 'selling' the customer has been passed. No business man would regard 'selling,' the 'taking of orders,' 'solicitation' as not 'doing business.' The merchant or manufacturer considers these things the heart of business. * * *' (Italics ours.)

It would appear that the defendant corporation was carrying out its corporate purpose and was transacting business--at least from the standpoint of the businessman--on April 5, 1947, when the president and manager solicited and secured an order totaling nine carloads of lumber. As previously stated, the corporation and the respondent take the position that there was no contract of sale until the written order was received accepted at Carlsborg.

International Shoe Co. v. State, 22 Wash.2d 146, 154 P.2d 801, will be of material assistance in the determination of the present case. The principal question there was whether or not the shoe company was doing business in the state of Washington so as to make it amenable to process of the courts of this state. In that case, between the majority opinion and the dissent, we get a thorough discussion of the principles and holdings applying to the solicitation of sales as constituting the transaction of business. Both the majority and the minority seemed to be in accord that the 'mere solicitation' of orders, if those orders have to be approved, accepted, and filled out of the state, is not sufficient to constitute doing business in the state so as to make a foreign corporation amenable to process herein. The majority, however, was of the opinion that the 'mere solicitation' rule does not apply (1) if the solicitation by the corporation's agents was regular and systematic and had resulted in a continuous flow of its products into this state, or (2) if there were additional activities by the corporation's agents sufficient to bring the case within what is known as the 'solicitation plus' rule. The 'solicitation plus' rule is well stated in Dahl v. Collette, 202 Minn. 544, 551, 279 N.W. 561, 566, which we cited approvingly in the International Shoe Company case:

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