State v. W. T. Rawleigh Co

• Citation: 174 S.E. 385
• Decision Date: 13 March 1934
• Docket Number: No. 13805.,13805.
• Court: United States State Supreme Court of South Carolina
• Parties: STATE . v. W. T. RAWLEIGH CO.

174 S.E. 385

STATE .

v.W. T. RAWLEIGH CO.

No. 13805.

Supreme Court of South Carolina.

March 13, 1934.

Appeal from Common Pleas Circuit Court of Edgefield County; G. Dewey Oxner, Judge.

Action by State against the W. T. Rawleigh Company. From an order setting aside service of summons and complaint, plaintiff appeals.

Affirmed.

The order of the Circuit Judge, directed to be reported, is as follows:

The above-entitled action comes before me on motion of the W. T. Rawleigh Company for an order vacating and setting aside the attempted service of the summons and complaint in this action. It appears specially and for the sole purpose of objecting to the jurisdiction of the court. The grounds of the motion are that the said W. T. Rawleigh Company was a foreign corporation, not doing business and owning no property in this state, and B. C. Bryan upon whom the summons and complaint were served was not its agent, and that any statute or statutes of this state, particularly sections 434 and 826 of volume 1 of the Code of 1932 authorizing or purporting to authorize service of process, and conferring or attempting to confer jurisdiction of the person of the said W. T. Rawleigh Company on this or any court of this state, deprives or undertakes to deprive the said company, of its liberty and property without due process of law, and to deny it the equal protection of the laws in violation of the Fourteenth Amendment of the Constitution of the United States and in contravention of section 5, article 1, of the Constitution of South Carolina of 1895.

This is an action by the state of South Caro lina against the said W. T. Rawleigh Company, an Illinois corporation, to recover certain penalties for which it is alleged to be liable for failure to comply with the provisions of the Act of 1922, as amended by the Act of 1923, now sections 7768 and 7769 of Code of 1932.

The action was commenced in the court of common pleas for Edgefield county by the alleged service of the summons and complaint upon the said B. C. Bryan, on February 23, 1932.

This action was made upon the summons, the verified complaint, and numerous affidavits submitted by both plaintiff and defendant, together with letters, contracts, bulletins, and pamphlets issued by the Rawleigh Company, a book of instructions entitled "Rawleigh Methods, " and other papers. The matter was fully argued by counsel and elaborate briefs were filed. It has been given the most careful and thorough consideration. The delay in filing this order has been unavoidable.

Many of the material facts to bo considered in deciding the issues arising on this motion are really undisputed and admitted. They may be fully stated as follows: That the W. T. Rawleigh Company is an Illinois corporation; that it maintains and operates a branch office at Richmond, Va.; that its business is that of manufacturing and selling at wholesale to the customers, a line of medicines, flavoring extracts, toilet preparations, etc.; that its customers who buy for cash, send their orders to the company at its nearest branch, and thereupon the merchandise ordered is delivered f. o. b-. to transportation companies; that customers who buy on time are required to enter into contracts of purchase and sale; that under such contracts the buyer forwards signed orders to the company which are filled by delivery of the merchandise f. o. b. carriers at the place of shipment; that customers of the company in South Carolina are generally known as "dealers"; that under the contracts between the company and its dealers, all goods ordered shipped and delivered to such dealers or customers become their sole property, the company retaining no right or interest therein; that the company furnished to its customers or dealers literature of various kinds consisting of advertising matter, sales and collection helps which the customer may or may not use as he sees fit; that the company has not filed a written stipulation or declaration under the statutes referred to; that B. C. Bryan at thetime the alleged service of summons and complaint was made was a resident and citizen of Edgefield county in this state, and was one of the company's customers or "dealers" under one of its usual contracts, and bought merchandise from the company by written orders forwarded through the United States mails and after acceptance, the merchandise ordered was delivered f. o. b. carriers at Richmond, Va.; that all sales by the company to B. 0. Bryan were made and accepted at the home office in Freeport, 111.; that all communications between the company and the said B. O. Bryan were carried on through the United States mails; that M. B. Ouzts was a customer and dealer of the company; that transactions between the company and said M. B. Ouzts were under a similar contract and in every other way similar to the transactions of the said B. C. Bryan.

The original contract between the company and Bryan accepted on July 23, 1930, was renewed from time to time, the last renewal, in force and effect at the time of the alleged service, was received by the company at its Richmond branch on November 18, 1931, and was accepted January 2, 1932; that before entering into the contract with Bryan he submitted on application on form R--2051, and furnished to the company a statement entitled "Prospective Dealers Property Statement and Report on Contract Sureties"; that it is stated in this paper, "I desire to buy Rawleigh products at wholesale prices, and retail them to customers on my own account"; that the company furnished Bryan, as well as its other customers, advertising matter describing its products, "order blanks" for their use and convenience, "Weekly Reports" to be used in making reports of progress to the company; that the purpose of these reports was to give the.company some definite idea as to how the "dealer" was conducting his business, the progress he was making, and the volume of business it would have a right to expect him to do, and also to enable it to make constructive suggestions for improving the "dealer's" methods of selling, as well as to furnish the company some idea and basis upon which to determine the amount of credit, if any, that the "dealer" might be reasonably entitled to; that it is stated in these "Weekly Reports, " "All Rawleigh Dealers own and manage their own business. They select and secure their customers, determine their business policies. The company gives no orders or directions, because each dealer is expected to be capable of managing his own business, but most dealers follow the general sales and service methods recommended by the company because they find them sound and practical."

It further appears, and I find, that in the contract with Bryan, the W. T. Rawleigh Company is called the "seller, " and the customer, Bryan, the "buyer"; that the "buyer" agrees to pay for such goods as he may order, either in cash, or in installment payments, satisfactory to "seller" at invoice prices; that the contract may be terminated at any time by either party upon written notice and when so terminated all accounts become due and payable immediately, and if not so terminated the contract expires on the 31st of December of the year in which it is made; that in case business relations are terminated, the seller agrees to purchase from the buyer at current wholesale prices, any goods received and any merchantable products buyer may have on hand, except sample cases, wagons, and auto bodies and discontinued products, provided the buyer returns the goods promptly by prepaid freight to the point designated by the seller, the buyer agreeing to pay the seller the actual cost for receiving, inspecting, and handling the same; that the contract stipulates that the buyer is not the agent or representative of the seller, but' is the sole.owner and manager of his business, and has exclusive right to determine prices and the places where he is to sell such merchandise as he buys from the seller; that the seller retains no right, title, or interest or control over said merchandise; that the buyer is in business solely for himself and the seller does not undertake in any way to control him in the conduct of his business; that the seller will furnish the buyer from time to time with its sales promotion or service letters or bulletins, advertising matter, and other literature which the buyer may use or not, as he sees fit; that if the buyer desires credit and buys on time, he is required to furnish a contract of guarantee with two or more sureties acceptable to the seller.

Plaintiff contends that the record establishes certain other facts, which together with the admitted facts, supra, sustain the validity of the service. The defendant contends that the inference and conclusions which plaintiff would draw from both the admitted facts, and the facts and circumstances about which there is no agreement, even if the latter are found to be true, are not sufficient as a matter of law to sustain the validity of the service. It is important, therefore, that I should make specific findings in respect to these facts and the probative value thereof.

This may best be done by following the order in which plaintiff has argued them, both orally and in its elaborate and helpful brief.

The first contention is that the territory granted by the defendant to its dealers in this state, and in particular to B. O. Bryan, was limited by the defendant. There is nothing in the contract with Bryan as to this matter. The affidavits of the officers and employees of the defendant assert that there was never any limits so far as the defendant is concerned as to territory in which a dealer should work. While it is true that the company has not directly prescribed the localities or instructed its dealers in respect thereto, there is no doubt but what it made from time to time recommendations to its dealers, including Bryan, as to available and open territory, or territory in which the dealer's business...