Thompson-Hayward Chemical Co. v. Childress

• Decision Date: 19 November 1964
• Docket Number: 1 Div. 104,THOMPSON-HAYWARD
• Citation: 169 So.2d 305,277 Ala. 285
• Parties: CHEMICAL CO., et al. v. Paul CHILDRESS, Jr., et al.
• Court: Alabama Supreme Court

Page 305

169 So.2d 305

277 Ala. 285

THOMPSON-HAYWARD CHEMICAL CO., et al. v. Paul CHILDRESS, Jr., et al.

1 Div. 104.

Supreme Court of Alabama.

Nov. 19. 1964.

Paul W. Brock, W. C. Boone, Jr., and Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, for Thompson-Hayward Chemical Co.

Wilters & Brantley, Bay Minette, for Bertolla & Sons.

Chason & Stone, Bay Minette, for appellees.

COLEMAN, Justice.

Defendants appeal from judgment for plaintiffs in action for breach of duty to warn plaintiffs of the dangerous character of a substance allegedly manufactured by one defendant and sold to plaintiffs by the other defendant. We discuss this allegation below in detail.

Stated generally, plaintiffs allege that one defendant manufactured and placed on the market a dangerous substance, i. e., a vine killer; that the other defendant sold the substance to plaintiffs; that defendants knew of the dangerous quality of the substance but failed to warn plaintiffs; that plaintiffs used the substance by spraying it on their potato crop to kill the vines; that some of the substance drifted out of the potato field onto grass in plaintiffs' adjacent pasture; and that plaintiffs' cattle ate the grass, were thereby poisoned, and died.

Plaintiffs operate a farm in Baldwin County, Alabama. The manufacturing defendant is Thompson-Hayward Chemical Company, a foreign corporation not qualified to do business in Alabama. The vendor defendants, who sold the vine killer to plaintiffs, are a partnership, A. Bertolla & Sons, and the individual partners. They will sometimes be referred to collectively as Bertolla. Thompson-Hayward and Bertolla have taken separate appeals.

Service was made on Thompson-Hayward as provided by Act No. 282, Acts of Alabama, Regular Session, page 347, approved August 5, 1953. See Code of 1940, Recompiled 1958, Title 7, § 199(1).

Appearing specially, Thompson-Hayward asserted, by motion to quash service and plea in abatement, that it was not doing business in Alabama and, therefore, was not subject to the jurisdiction of the Circuit Court of Baldwin County. After hearing, the court denied the motion to quash and overruled the plea in abatement. Thompson-Hayward assigns these rulings as error.

The only evidence taken on the hearing of motion and plea is the testimony of the district manager of Thompson-Hayward, who testified that: he had been district manager of Thompson-Hayward, New Orleans, since 1936; he had under his control and supervision customers since 1936; he definitely has personal knowledge of the operations of Thompson-Hayward insofar as they relate to sales in Alabama and that is under his jurisdiction; Thompson-Hayward has not, since April of 1960, owned any real property in Alabama, owned nothing in Alabama, has no warehouse under lease and stored property, has had none since April of 1960, has no employee living in Alabama, has had none since 1960; Thompson-Hayward has never had any employees living in Alabama since 1926 and never owned any property of any type in Alabama; Thompson-Hayward is a corporation, was chartered in Missouri until June 1, 1962 or 1961, when it merged with a Delaware corporation; since April, 1960, Thompson-Hayward has not been chartered in Alabama; Thompson-Hayward has had only one salesman at any time that traveled through this area, making his headquarted in New Orleans; the salesman, Ashworth, who traveled here in April of 1960 left the company later in the year and has been replaced with another salesman; both men lived in New Orleans, Louisiana; the salesman travels in Alabama approximately one week out of the month; his schedule is under the control of the witness; Thompson-Hayward had no written contract with the salesman, Ashworth; he was paid so much a month and received a car allowance for using his own automobile; the arrangement is the same with the present salesman; the salesman 'can accept orders but only through final orders by' the witness; the salesman tries to sell merchandise; he uses a written order blank supplied by the company; an order cannot be shipped out of New Orleans to any point until the credit is approved by the sales manager, office manager, or the witness; since April of 1960 the salesman has had no authority to bind the company on orders taken in Alabama; final approval has to come through New Orleans office; Thompson-Hayward has never exercised any control over Alabama customers as to the price for which they sell the products of Thompson-Hayward; under a 'protected stock arrangement,' if the customer has unsold merchandise, Thompson-Hayward agrees to take up what they have left, take it to New Orleans and issue credit, but 'We don't like that; it is strictly to meet competition'; the salesman has no authority, on his own, to settle disputes with customers; the salesman can discuss, obtain pertinent information, and bring it back to the witness or sales manager, who decides what is to be done; after the order is approved, products are shipped into Alabama from New Orleans; Thompson-Hayward sells to four customers in Baldwin County, where action was brought; Thompson-Hayward has been making sales in Alabama since 1931, has over 1500 different items, had between 25 and 30 customers in Alabama in April of 1960; Thompson-Hayward had some pesticides or herbicides registered with the Department of Agriculture and Industries in Alabama in 1960 but witness does not recall how many; the salesman called on Bertolla in 1960; the salesman calling on customers would spend at least one week out of each month in this particular area; on occasion, Thompson-Hayward ships C.O.D.; its customers may resell at any price fixed by the customer; there is a suggested price on most things; Thompson-Hayward would not sell directly to a farmer but would tell him 'that we had people handling our materials, or buying materials from us that would no doubt have some stocked that they would be glad to sell; we would not ship directly'; all products are shipped under labels which give specific instructions for use of the product; a salesman, on inquiry, 'would recommend one product to another to a customer to use on a crop'; the salesman would give the man one of the labels; the witness sent salesmen to Alabama and encouraged them to call on customers and promote the sale of company products; the witness came to Alabama possibly in May, 1960; he was present when pictures were taken of the container; he came to Alabama to investigate the unfortunate occurrence in Baldwin County; he came as representative of Thompson-Hayward; Thompson-Hayward has no agency in Alabama.

This action was commenced April 19, 1961. The occurrences which form the basis of the action took place in May, 1960, and thereafter.

In summary, the evidence taken on hearing of the motion and plea tends to show that: Thompson-Hayward had been making sales in Alabama since 1931; had 25 to 30 customers in Alabama, 4 of whom were in Baldwin County; that defendant employed one salesman who spent approximately one week of each month in Alabama; that he was a soliciting agent without authority to bind the company. We think the evidence warrants the inference that there was a continuous flow of defendant's products into this state. We are called to decide whether such activity is sufficient to constitute doing business in this state so as to give the courts of this state jurisdiction in this case.

Whether a non-resident corporation was doing business in a state, so as to subject the corporation to the jurisdiction of that state and its courts, has been the issue in many decided cases. One of the later cases decided by this court is Boyd v. Warren Paint & Color Company, 254 Ala. 687, 49 So.2d 559, where this court said:

'It is, of course, recognized that a state may not make binding a judgment in personam against an individual or corporate defendant with which the state has no contracts, ties, or relations, that is, where the defendant is not present in the state. But since a corporation must act vicariously and its presence in the state can only be manifested by the acts of its authorized agents, the question is to be determined by the activites of those agents and the character of business done. And each case must depend on its own facts. International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; International Harvester Co. v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479.

'. . .

'But the traditional theory, thought to be crystalized in federal jurisprudence, that personal jurisdiction over a foreign corporation cannot be acquired when the only basis is 'mere solicitation' of business within the borders of the forum's sovereignty, (Citations Omitted.) seems to be no longer controlling. Recent federal decisions have considerably impinged upon that concept. (Citations Omitted.)

'The rule that we deduce from these late decisions, of which International Shoe Co. v. State of Washington is the 'bellwether,' is that the regular and systematic solicitation of orders in the state by appellant's salesmen, resulting in a continuous flow of appellant's products into the state, is sufficient to constitute doing business in the state so as to make the corporate defendant amenable to suits in its courts, provided there be included in the inquiry the factor of estimating the inconvenience which would result to the corporation from a trial away from its home. (Citation Omitted.)' [254 Ala. at pages 689, 690, 49 So.2d at pages 561, 562]

Many authorities are cited in the Boyd case. To repeat the discussions in them would serven no useful purpose and would unduly lengthen this opinion.

The testimony shows that, for more than a year before this action was begun, Thompson-Hayward's salesman traveled in Alabama one week of each month soliciting orders, and that Thompson-Hayward made sales in Alabama as a result of orders obtained by the salesman. W...