Sun-X Glass Tinting of Mid-Wisconsin v. Sun-X Internat'l
| Decision Date | 16 March 1964 |
| Docket Number | Civ. A. No. 3561. |
| Citation | 227 F. Supp. 365 |
| Parties | SUN-X GLASS TINTING OF MID-WISCONSIN, INC., a Wisconsin Corporation, et al., Plaintiffs, v. SUN-X INTERNATIONAL, INC., formerly American Glass Tinting Corp., a Texas Corporation, and E. I. Du Pont De Nemours and Company, Inc., a Delaware Corporation, Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
John J. Walsh, Madison, Wis., for plaintiffs.
Quarles, Herriott & Clemons, Milwaukee, Wis., and Stroud, Stebbins & Stroud, Madison, Wis., for defendants.
Defendant Sun-X International, Inc., formerly American Glass Tinting Corp., a Texas corporation (hereinafter referred to as "AGT") moved to dismiss the complaint or in lieu thereof to quash the return of service made on it on the ground that AGT is not doing business in Wisconsin. AGT and Du Pont further alleged improper joinder of parties plaintiff.
This is a diversity action originally commenced in the Circuit Court of Dane County, Wisconsin, and removed by defendants.
There are eight plaintiffs to this action. Four are residents of Wisconsin; and the remaining four reside respectively in Iowa, Kentucky, Minnesota and Kansas.
Defendant AGT was served by a deputy sheriff at its home office in Houston, Texas.
The parties have filed detailed interrogatories and facts from which the statement of facts is taken. AGT spent $500 in 1960, $900 in 1961, and $450 in 1962 in Wisconsin by way of advertising to procure distributor-dealers for the glass tinting product which it distributes nationally. Between the years 1959 and 1962, AGT spent a total sum of $62,000 for national magazine advertising, some of which it assumed was read in Wisconsin. In fact, from the answers to defendant's interrogatories, two of the Wisconsin plaintiffs first came to know of AGT through its advertising. A friend referred another plaintiff to the AGT representative then in Wisconsin.
AGT spent the following man days in Wisconsin, by its agents, for the purpose of procuring dealers: 1960—55; 1961— 71; 1962—22. Its expenses during those periods were: 1960—$1,100; 1961—$1,400; and 1962—$450.
With respect to the four Wisconsin plaintiffs, AGT spent up to 5 days in Wisconsin for each plaintiff, and up to $100 in costs (exclusive of transportation) all for the purpose of procuring contracts with each of the Wisconsin plaintiffs.
Defendant AGT advised and counseled its distributor-dealers by mail and by telephone. It sent manuals and bulletins to them. Between August 1960, and March or April 1961, it occasionally sent field representatives into Wisconsin to personally call on dealers and consult with them. AGT estimates that about 12 such calls were made.
AGT devoted 31 days in 1960 to training its Wisconsin dealers; in 1962 it devoted 10 days in Wisconsin to such training.
The total initial purchase monies received was $51,300.00.
The number of gallons of plastic Sun-X shipped to Wisconsin was:
Initial order Subsequent order Total
1958 0 0 0
1959 0 0 0
1960 151 253 404
1961 0 119 119
1962 54 20 74
Total sales were as follows
1958 0 0 0
1959 0 0 0
1960 $41,320.17 $13,335.27 $54,655.44
1961 $ 4,993.63 $ 6,679.80 $11,673.43
1962 $ 4,993.63 $ 932.43 $ 5,926.06
During the periods of negotiations with the various plaintiffs, officers of AGT came to Wisconsin for the purpose of securing distributor-dealer contracts. Among others was the sales manager, vice-president, his secretary, and a field representative. All of this was in addition to correspondence, telephone calls and literature mailed or given to the plaintiffs. The agreements provided that they were not to become effective until signed by the president or vice-president of defendant. It is not explicit where the contracts were signed by the various defendants. It would, however, be a fair inference that the plaintiffs executed their contracts in their own states.
It should be noted that a similar practice of having officers of AGT personally negotiate with the plaintiffs was followed in Kansas, Minnesota and Kentucky. In the last two states the president of AGT participated in the negotiations.
Defendant AGT raises three principal issues. The first is whether or not AGT is subject to the jurisdiction of the Wisconsin process statutes on the ground that it was doing business in Wisconsin. The second issue is, that if AGT is found to have been doing business in Wisconsin, is it subject to process by the nonresident plaintiffs? The third issue is whether there has been a proper joinder of parties plaintiff.
The Federal Rules of Civil Procedure, Rule 4(e) provides, so far as material:
"Whenever a statute or rule of court of the state in which the district court is held provides (1) for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state, * * * service may in either case be made under the circumstances and in the manner prescribed in the statute or rule."
Jurisdiction over AGT was obtained by plaintiffs under section 262.09(4), Wisconsin Statutes (1957). It is suggested by defendant AGT that as to plaintiff, Sun-X Glass Tinting of Milwaukee, Section 262.05, Wisconsin Statutes (1959), would apply, since the latter statute is applicable to actions arising after July 1, 1960. The contract with the above named plaintiff was executed May 5, 1961. At the outset, the court finds that no material distinction exists in respect to the question presented here. Both statutes provide for service outside of the state. Both statutes appear to follow the same "doing business test," although the respective statutes frame the test differently.
Upon removal the defendant is not precluded from raising defenses available to it had the cause not been removed. A non-resident defendant corporation has a legal right to the opinion of the federal court as to the validity of the service of process. Springs Cotton Mills v. Machinecraft, Inc., 156 F. Supp. 372 (W.D.S.C.1957).
In a diversity action the district court applies the law of the state in which it holds court. The question of doing business in a state is one of state law. Green v. Robertshaw-Fulton Controls Company, 204 F.Supp. 117 (S. D.Ind.1962).
In State ex rel. Consolidated Textile Corp. v. Gregory, 209 Wis. 476, 245 N.W. 194 (1932), the court held that "A foreign corporation is present in this state when an officer thereof, vested with authority, is here transacting business for it." In that case, the corporate president was served in Wisconsin while he was here in respect to the business affairs of the corporation. He was discussing and negotiating for the delay of entry of default judgment on the firm's bonds in a New York action. This was his sole purpose in coming to Wisconsin. The corporation did no business in this state and had no officer or property here. The decision was reversed by the United States Supreme Court, 289 U.S. 85, 53 S.Ct. 529, 77 L.Ed. 1047 (1932), wherein the court held:
Under the facts in the case at bar, and from a consideration of the cases which follow, it can be seen that a finding that AGT was doing business in Wisconsin as respects the Wisconsin plaintiffs is not inconsistent with the Gregory case.
In Huck v. Chicago, St. P., M. & O. R. Co., 4 Wis.2d 132, 90 N.W.2d 154 (1958), the court held that solicitation of business was doing business in this state under section 262.09(4) (old). The interpleaded defendant, Rock Island Railroad, had no tracks in Wisconsin. It had maintained an office with telephone service in Milwaukee for 30 years. It had three agents soliciting freight and passenger service. The court said that Rock Island's extensive activities in Wisconsin constituted the carrying on of business in the state.
In Huck the court undertook a discussion of the policy underlying section 262.09(4) (old) and the scope of the statute consistent with due process.
The court held that "This court is disposed to give statutes regulating procedure a liberal interpretation. * * *" Further, the court held that:
"We have no hesitancy in holding that the objective of the statute was to give citizens of Wisconsin the right to make use of the courts of this state in instituting causes of action against any foreign corporation, which actually is carrying on business activities within the state, subject only to such limitations as are imposed by the United States constitution."
The court cited International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), setting further the following from that case:
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