W. J. Armstrong Co. v. N.Y. Cent. & H. R. R. Co.

• Citation: 129 Minn. 104,151 N.W. 917
• Decision Date: 19 March 1915
• Docket Number: No. 19046[242].,19046[242].
• Court: Supreme Court of Minnesota (US)
• Parties: W. J. ARMSTRONG CO. v. NEW YORK CENT. & H. R. R. CO.

129 Minn. 104

151 N.W. 917

W. J. ARMSTRONG CO.

v.NEW YORK CENT. & H. R. R. CO.

No. 19046[242].

Supreme Court of Minnesota.

March 19, 1915.

Appeal from District Court, Waseca County; Arthur B. Childress, Judge.

Action by the W. J. Armstrong Company, a corporation, against the New York Central & Hudson River Railroad Company, a corporation. Defendant's motion to set aside service of summons was denied, and it appeals. Affirmed.

Syllabus by the Court

Summons was served on a foreign railroad corporation by leaving a copy with a soliciting freight agent employed by defendant and other corporations operating connecting lines and associated under the name of New York Central Fast Freight Lines. Under that name defendant and its connecting lines solicit freight systematically throughout the state of Minnesota for transportation out of the state. They transport freight solicited under a single through tariff. They maintain offices in the state for the purpose of such solicitation. This cause of action arose out of a shipment of freight from a point in Minnesota to New York City which was solicited in this manner. The statutes of the state authorize service of a summons on a foreign corporation by service upon an agent in the state for the solicitation of freight traffic over its lines outside the state.

The statute authorized service of summons upon the agent who was in fact served. The agent of the associated corporations was the agent of each of them.

Three conditions are necessary to give a court jurisdiction in personam over a foreign corporation: First, it must appear that the corporation was carrying on business in the state; second, that the business was transacted by some agent of the corporation in the state; third, the existence of some local law making such corporation amenable to suit.

Where a state by statute designates an agent of a particular character as an agent upon whom process may be served, the corporation by sending such an agent into the state assents to the statute and clothes the agent with authority to receive service in its behalf.

Without invoking this principle, the state may designate the agent upon whom service of summons may be made, but the agent must be one sustaining such relation to the corporation that such service constitutes due process of law.

A foreign corporation keeping and maintaining agents in this state for procuring business for its benefit and profit may be required to answer in this state to a citizen thereof for a breach of contract or duty arising out of business so procured, and an agent engaged in procuring such business may be declared the representative of the corporation for the purpose of bringing it into court. William Furst, of Minneapolis, for appellant.

Moonan & Moonan, of Waseca, for respondent.

HALLAM, J.

The complaint alleges that plaintiff is engaged in business at Waseca, Minnesota; that defendant is a common carrier, with lines of railroad without the state of Minnesota; that plaintiff consigned over defendant's road to Henry Behrmann & Co., New York City, certain goods, of which plaintiff was the owner; that defendant did not safely carry the goods, but negligently caused their damage. The summons was served upon H. R. Ballard. Defendant moved to set aside the service of the summons. The motion was denied, and defendant appealed.

In what state the defendant is incorporated the record does not show, but the briefs concede that it is not a Minnesota corporation. Nothing appears as to the extent or location of its lines of road, except that it is one of the ‘large lines' and that it carries freight between New York and Buffalo. Ballard is commercial agent, or soliciting freight agent, of the New York Central Fast Freight Lines. Under that name defendant and its connecting lines solicit freight business and they receive and transport such freight outside the state under a single through tariff. Ballard solicits freight for transportation over these roads, both east and west bound. He does not collect freight charges, but receives a copy of the billing containing a description of the shipments, the originating point, the name of the shipper and consignee, and the freight charges, and on receipt of the same sends out cards to the customers. These associated roads evidently cover the state of Minnesota with systematic solicitation of business. They have an office in Minneapolis, another in St. Paul, and another ‘agency’ in Duluth. Between these the state is parceled out. Ballard is in charge of the St. Paul office. He covers most of the state of Minnesota outside of the cities mentioned, and also North Dakota and a large part of South Dakota. The amount of freight so solicited is described as ‘a large amount of freight.’ It is alleged the freight out of which this cause of action arose was solicited in this manner. The expense of this work of solicitation is borne by joint contribution of all the roads concerned.

Chapter 218, Laws 1913 (Gen. St. 1913, § 7735), provides as follows:

‘Any foreign corporation having an agent in this state for the solicitation of freight and passenger traffic or either thereof over its lines outside of this state, may be served with summons by delivering a copy thereof to such agent.’

The statute without doubt covers this case. In explicit terms it authorizes service of summons upon the agent who was in fact served. The fact that Ballard is the agent of several other railroad companies, as well as defendant, does not alter the case. He is the agent of each of the associated roads. Archer-Daniels Linseed Co. v. Blue Ridge Despatch, 113 Minn. 367, 129 N. W. 765;St. L. S. W. Ry. Co. v. Alexander, 227 U. S. 218, 228, 33 Sup. Ct. 245, 57 L. Ed. 486.

It is urged that a statute subjecting the defendant to the jurisdiction of the court by service upon such an agent is unconstitutional. This is the question in the case.

Formerly it was held that a foreign corporation could not be sued in an action for the recovery of a personal demand outside of the state by which it was chartered. The principle was that a corporation must dwell in the place of its creation, that it could not migrate to another sovereignty, and that no officer or agent of the corporation could carry his functions with him into another state. The great increase in the number of corporations and in the extent of their business, and the inconvenience and manifest injustice of such a rule, led the Legislatures of the several states to provide for service of process on officers and agents of foreign corporations doing business therein. St. Clair v. Cox, 106 U. S. 350, 354, 1 Sup. Ct. 354, 27 L. Ed. 222. There is a limit beyond which the state cannot go in subjecting foreign corporations to the jurisdiction of its courts. It is an elementary principle of jurisprudence that a court of justice cannot acquire jurisdiction to render a personal judgment except by actual service of notice within the jurisdiction, upon the defendant, or upon some one authorized to accept service in his behalf, or by his waiver of want of due service. The state may designate the agent upon whom service may be made, but, in doing so, it must not encroach upon this principle. St. Clair v. Cox, 106 U. S. 350, 356, 1 Sup. Ct. 354, 27 L. Ed. 222;Goldey v. Morning News, 156 U. S. 518, 15 Sup. Ct. 559, 39 L. Ed. 517.

Formerly the federal courts could take cognizance of an assumption of jurisdiction by a state court only when the judgment of the state court was called into question in another jurisdiction, and the ‘full faith and credit’ clause of the federal Constitution was invoked to sustain it. ‘Since the adoption of the fourteenth amendment to the federal Constitution, the validity of such judgments may be directly questioned, and their enforcement in the state resisted, on the ground that proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law.’ Pennoyer v. Neff, 95 U. S. 714, 733 (24 L. Ed. 565). The Constitution of this state contains a provision similar to that contained in the fourteenth amendment (State Const. art. 1, § 7), so that these fundamental principles are now common to both the federal and the state Constitutions. Since they are part of the former, the Supreme Court of the United States is the final arbiter in cases where the application of these principles comes into question, and such cases are accordingly controlled by the decisions of that court. State v. Weyerhauser, 72 Minn. 519, 75 N. W. 718.

It is well settled by the decisions of the federal Supreme Court that three conditions are necessary to give a court jurisdiction in personam over a foreign corporation: ‘First, it must appear that the corporation was carrying on its business in the state where process was served on its agent; second, that the business was transacted or managed by some agent or officer appointed by or representing the corporation in such state; third, the existence of some local law making such corporation amenable to suit.’ Conn. Mutual Life Ins. Co. v. Spratley, 172 U. S. 602, 618, 19 Sup. Ct. 308, 314 (43 L. Ed. 569), quoting United States v. Bell Telephone Co. (C. C.) 29 Fed. 17.

This decision might be placed on narrow ground. It is well recognized, where a state by statute designates an agent of a particular character as an agent upon whom process may be served, the corporation by sending such an agent into the state assents to the statute, and clothes the agent with authority to receive service in its behalf. (B. & O. R. Co. v. Harris, 12 Wall. 65, 81, 20 L. Ed. 354;Lafayette Ins. Co. v. French, 18 How. 404, 15 L. Ed. 451;N. Y. L. E. & W. R. Co. v. Estill, 147 U. S. 591, 13 Sup. Ct. 444, 37 L. Ed. 292;Commercial Mutual Accident Co. v. Davis, 213 U. S. 245, 254, 29 Sup. Ct. 445, 53 L. Ed. 782), and the same result follows where the corporation continues its agent...