Tauza v. Susqehanna Coal Co.

• Decision Date: 06 March 1917
• Citation: 115 N.E. 915,220 N.Y. 259
• Parties: TAUZA v. SUSQEHANNA COAL CO.
• Court: New York Court of Appeals Court of Appeals

220 N.Y. 259

115 N.E. 915

TAUZA

v.SUSQEHANNA COAL CO.

Court of Appeals of New York.

March 6, 1917.

Appeal from Supreme Court, Appellate Division, First Department.

Action by George Tauza against the Susquehanna Coal Company. From an order of the Appellate Division (159 N. Y. Supp. 1145), affirming an order of the Special Term, denying a motion to set aside the service of a summons, defendant by permission appeals, and the Appellate Division certifies five questions. Order affirmed, with costs, and questions 1, 2, and 3 answered in the affirmative, No. 5 in the negative, and No. 4 held not to require an answer.

The Appellate Division certified the following questions:

‘1. Was the defendant, at the time of the service of the summons herein, doing business within the state of New York within the meaning of section 1780, subdivision 4, of the Code of Civil Procedure?

‘2. Has the plaintiff shown such diligence in attempting to serve one of the officers specified in section 432, subdivision 1, of the Code of Civil Procedure, as to permit service to be made upon the managing agent of the defendant corporation?

‘3. Were the duties of and the authority conferred upon Walter Peterson, the defendant's sales agent, such as to constitute him a managing agent of the defendant corporation within the meaning of subdivision 3, section 432, of the Code of Civil Procedure?

‘4. Are sections 1780 and 432 of the Code of Civil Procedure, or either of them, unconstitutional so far as they attempt to confer jurisdiction on the courts of the state of New York over foreign corporations which are not doing business in this state within the meaning of the term ‘doing business' as used in subdivision 4, section 1780, of the Code of Civil Procedure, and have not filed a designation pursuant to section 16 of the General corporation Law in cases where the causes of action did not arise within the state or out of any transaction carried on within this state by such foreign corporation?

‘5. Are sections 1780 and 432 of the Code of Civil Procedure, or either of them, unconstitutional as far as they attempt to confer jurisdiction on the courts of the state of New York over foreign corporations which are doing business in the state within the meaning of the term ‘doing business,’ as used in subdivision 4, section 1780, of the Code of Civil Procedure, and have not filed a designation pursuant to section 16 of the General Corporation Law, in cases where the causes of action did not arise within this state or out of any transaction carried on within this state by such foreign corporation?'Franklin Nevius, of New York City, for appellant.

Frank J. Felbel, of New York City, for respondent.

Edgar T. Brackett, of Saratoga Springs, for interveners.

CARDOZO, J. (after stating the facts as above).

[1] The plaintiff, a resident of this state, has brought suit against the Susquehanna Coal Company, a Pennsylvania corporation. The defendant's principal office is in Philadelphia; but it has a branch office in New York, which is in charge of one Peterson. Peterson's duties are described by the defendant as those of a sales agent. He has eight salesmen under him, who are subject to his orders. A suite of offices is maintained in the Equitable Building in the city of New York, and there the sales agent and his subordinates make their headquarters. The sign on the door is ‘Susquehanna Coal Company, Walter Peterson, Sales Agent.’ The offices contain eleven desks, and other suitable equipment. In addition to the salesmen there are other employés, presumably stenog raphers and clerks. The salesmen meet daily and receive instructions from their superior. All sales in New York are subject, however, to confirmation by the home office in Philadelphia. The duty of Peterson and his subordinates is to procure orders which are not binding until approved. All payments are made by customers to the treasurer in Philadelphia; the salesmen are without authority to receive or indorse checks. A bank account in the name of the company is kept in New York, and is subject to Peterson's control, but the payments made from it are for the salaries of employés, and for petty cash disbursements incidental to the maintenance of the office. The defendant's coalyards are in Pennsylvania, and from there its shipments are made. They are made in response to orders transmitted from customers in New York. They are made, not on isolated occasions, but as part of an established course of business. In brief, the defendant maintains an office in this state under the direction of a sales agent, with eight salesmen, and with clerical assistance, and through these agencies systematically and regularly solicits and obtains orders which result in continuous shipments from Pennsylvania to New York.

To do these things is to do business within this state in such a sense and in such a degree as to subject the corporation doing them to the jurisdiction of our courts. The decision of the Supreme Court in International Harvester Co. v. Kentucky, 234 U. S. 579, 34 Sup. Ct. 944, 58 L. Ed. 1479, is precisely applicable. There sales agents in Kentucky solicited orders subject to approval of a general agent in the home state. They did this, not casually and occasionally, but systematically and regularly. Unlike the defendant's salesmen, they did not have an office to give to their activities a fixed and local habitation. The finding was that travelers negotiating sales were not to have any headquarters or place of business in that state, though they were permitted to reside there. 234 U. S. at page 584, 34 Sup. Ct. 944, 58 L. Ed. 1479. Yet because their activities were systematic and regular, the corporation was held to have been brought within Kentucky, and therefore to be subject to the process of the Kentucky courts. ‘Here,’ said the court (234 U. S. page 585, 34 Sup. Ct. page 946, 58 L. Ed. 1479), ‘was a continuous course of business in the solicitation of orders which were sent to another state and in response to which the machines of the Harvester Company were delivered within the state of Kentucky. This was a course of business, not a single transaction.’ That case goes farther than we need to go to sustain the service here. It distinguishes Green v. Chicago, B. & Q. Ry. Co., 205 U. S. 530, 27 Sup. Ct. 595, 51 L. Ed. 916, where an agent in Pennsylvania solicited orders for railroad tickets which were sold, delivered, and used in Illinois. The orders did not result in a continuous course of shipments from Illinois to Pennsylvania. The activities of the ticket agent in Pennsylvania brought nothing into that state. In the case at bar, as in the International Harvester Case, there has been a steady course of shipments from one state into the other. The business done in New York may be interstate business, but business it surely is.

[2][3] The defendant refers to cases in which corporations, whose situation was not unlike the defendant's, have been held not to be doing business in this state within the meaning of section 15 of the General Corporation Law and kindred statutes. People ex rel. Tower Co. v. Wells, 98 App. Div. 82,90 N. Y. Supp. 313;Id., 182 N. Y. 553, 75 N. E. 1132;Hovey v. De Long H. & E. Co., 211 N. Y. 420, 105 N. E. 667;Cummer Lumber Co. v. Assoc. Mfrs. M. F. Ins. Corp., 67 App. Div. 151,73 N. Y. Supp. 668;Id., 173 N. Y. 633, 66 N. E. 1106;Penn Collieries Co. v. McKeever, 183 N. Y. 98, 75 N. E. 935,2 L. R. A. (N. S.) 127. But activities insufficient to make out the transaction of business, within the meaning of those statutes, may yet be sufficient to bring the corporation within the state so as to render it amenable to process. Int. Text-Book Co. v. Tone, 115 N. E. 914, decided herewith. In construing statutes which license foreign corporations to do business within our borders we are to avoid unlawful interference by the state with interstate commerce. The question in such cases is not merely whether the corporation is here, but whether its activities are so related to interstate commerce that it may, by a denial of a license, be prevented from being here. International Text-Book Co. v. Pigg, 217 U. S. 91, 30 Sup. Ct. 481, 54 L. Ed. 678,27 L. R. A. (N. S.) 493,18 Ann. Cas. 1103. ‘A statute must be construed, if fairly possible, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score.’ U. S. v. Jin Fuey Moy, 241 U. S. 394, 401, 36 Sup. Ct. 658, 659 (60 L. Ed. 1061);Hovey v. De Long H. & E. Co., supra, at page 429 of 211 N. Y., 105 N. E. 667. But the problem which now faces us is a different one. It is not a problem of statutory construction. It is one of jurisdiction, of private international law. Dicey, Conflict of Laws, pp. 38, 155. We are to say, not whether the business is such that the corporation may be prevented from being here, but whether its business is such that it is here. If in fact it is here, if it is here, not occasionally or casually, but with a fair measure of permanence and continuity, then, whether its business is interstate or local, it is within the jurisdiction of our courts. International Harvester Co. v. Kentucky, supra, at page 587 of 234 U. S., 34 Sup. Ct. 944, 58 L. Ed. 1479. To hold that a state cannot burden interstate commerce, or pass laws which regulate it, ‘is a long way from holding that the ordinary process of the courts may not reach corporations carrying on business within the state which is wholly of an interstate commerce character.’ 234 U. S. at page 588, 34 Sup. Ct. at page 947, 58 L. Ed. 1479. The nature and the extent of business contemplated by licensing statutes is one thing. The nature and extent of business requisite to satisfy the rules of private international law may be quite another thing. In saying this we concede the...