Wainscott v. St. Louis-San Francisco Ry. Co.

• Decision Date: 21 July 1976
• Docket Number: LOUIS-SAN,No. 75-863,75-863
• Citation: 351 N.E.2d 466,47 Ohio St.2d 133
• Parties: , 1 O.O.3d 78 WAINSCOTT, Appellee, v. ST.FRANCISCO RY. CO., Appellant.
• Court: Ohio Supreme Court

Page 133

47 Ohio St.2d 133

351 N.E.2d 466, 1 O.O.3d 78

WAINSCOTT, Appellee, v. ST. LOUIS-SAN FRANCISCO RY. CO., Appellant.

No. 75-863.

Supreme Court of Ohio.

July 21, 1976.

Syllabus by the Court

1. The due-process clause of the Fourteenth Amendment to the United States Constitution requires a determination that a foreign corporation has certain minimum contacts with Ohio such that it is fair that a defendant defend a suit brought in Ohio and that substantial justice is done.

2. Compliance with Civ.R. 4.2(6), providing for service of process upon both domestic and foreign corporations and not limiting service of process to causes of action arising within this state, does not eliminate or abolish the due-process requirement that the necessary minimum contacts exist in order for Ohio courts to acquire in personam jurisdiction.

3. A foreign railroad corporation having no tracks in Ohio and maintaining two offices in this state for the purpose of soliciting freight traffic to be carried over the corporation's out-of-state lines does not have the necessary minimum contacts with Ohio such as to make it fair for the corporation to defend a suit in this jurisdiction based on a cause of action arising from the corporation's business in Missouri and to satisfy the requirement of substantial justice under the due-process clause of the Fourteenth Amendment to the United States Constitution.

This cause arose out of a personal-injury action brought in Ohio by Richard Lee Wainscott, an Ohio resident, against the defendant-appellant, St. Louis-San Francisco Railway Company, a Missouri corporation, not qualified to do business in Ohio, for damages sustained by Wainscott in a railroad-crossing accident which occurred in Missouri.

The record indicates that the train involved in this accident did not pass through or into Ohio either before or after the accident, and all the members of its crew were residents of Missouri. The corporation's railway lines extend from St. Louis, Missouri, south and west through the states of Missouri, Kansas, Oklahoma, Texas, Arkansas, Tennessee, Mississippi, Alabama and Florida. No part of such railroad lines and none of the tracks, roadbeds, stations or other equipment or property of the corporation are located within the state of Ohio except the office furniture and fixtures of two offices leased by the railroad and located in Cleveland and Cincinnati.

The record indicates that these two offline district sales offices are staffed by seven employees who are employed solely for the purpose of soliciting freight traffic for the railroad. The record indicates further that appellant's offices have been maintained in Ohio for in excess or ten years. The authority of the appellant's Ohio employees does not extend to the carrying out of corporate functions, sale of tickets, execution of contracts, bills of lading or other shipping documents, payment or receipt of money, or claims settlement. The corporation owns no real property in Ohio, has no Ohio bank accounts, and pays routine personal property taxes and Ohio employees' salaries from the principal offices of the company in St. Louis, Missouri. The company maintains no fiscal or financial agent or transfer agent or registrar of its securities in the state of Ohio, and none of its corporate or managerial officers reside within the state. Further, the company has neither authorized any of its Ohio employees to accept service of process on its behalf nor has it consented to be sued or to be served with process in Ohio.

Personal service, pursuant to Civ.R. 4.2(6), was secured on an agent of the corporation at its Cincinnati office, and was challenged by the appellant in the Court of Common Pleas of Hamilton County by a motion to dismiss for want of personal jurisdiction over the corporation. The Court of Common Pleas granted the appellant's motion and dismissed the complaint.

Upon appeal, the Court of Appeals reversed the judgment of the trial court and remanded the cause for further proceedings. The Court of Appeals based its decision upon Perkins v. Benguet Consolidated Mining Co. (1952), 158 Ohio St. 145, 107 N.E.2d 203.

The cause is now before this court pursuant to the allowance of appellant's motion to certify the record.

Steer, Strauss, White & Tobias and F. Bruce Abel, Cincinnati, for appellee.

Dinsmore, Shohl, Coates & Deupree, Thomas S. Calder and Gerald V. Weigle, Jr., Cincinnati, for appellant.

J. J. P. CORRIGAN, Justice.

I.

The appellant maintains that the question of what corporate activities in this state are sufficient to support a finding, that a foreign corporation has the minimum contacts with Ohio necessary to sustain personal jurisdiction therein, is a substantive constitutional question; and, that the personal service of process provisions of Civ.R. 4.2(6) cannot be interpreted to abridge substantive constitutional rights. Appellant maintains further that, under the facts existing in the present case, the decision of the Court of Appeals, subjecting appellant to the in personam jurisdiction of the Ohio courts, violates the due-process clause of the Fourteenth Amendment to the United States Constitution.

This court, in Perkins v. Benguet Consolidated Mining Co., supra (158 Ohio St. 145, 107 N.E.2d 203), held that federal due process neither prohibited nor compelled the taking of jurisdiction by state courts in an action against a foreign corporation where the cause of action did not arise in that state or relate to the corporation's activities therein. Paragraphs one and two of the syllabus, in Perkins, read:

'1. Federal due process, neigher prohibits nor compels the taking of jurisdiction by the courts of a state in an action against a foreign corporation where the cause did not arise in that state or relate to the corporation's activities therein. (Paragraph one of the syllabus in the case of Perkins v. Benguet Consolidated Mining Co., 155 Ohio St. 116, 98 N.E.2d 33, overruled.)

'2. Where jurisdiction is not limited by statute to causes of action arising within this state, an action on a transitory cause may be maintained in the courts of this state by a nonresident against a foreign corporation doing business here, although the cause did not arise here or relate to the corporation's business transacted here.'

The Court of Appeals, in the present case, determined that, since Civ.R. 4.2(6) did not limit service to causes of action arising within this state, the absence of a relationship between the present cause of action and such business as the corporation transacted in Ohio posed no impediment to constitutional service of process on a foreign corporation. The Court of Appeals, therefore, felt it was unnecessary, under Perkins, to decide whether the appellant was transacting business in Ohio. We disagree.

II A.

Civ.R. 4.2(6) provides for service of process '(u)pon a corporation either domestic or foreign: by serving the agent authorized by appointment or by law to receive service of process; or by serving the corporation by certified mail at any of its usual places of business; or by serving an officer or a managing or general agent of the corporation.'

Civ.R. 4.2(6) does not specify what activities within the state of Ohio constitute minimum contact for the purpose of establishing the personal jurisdiction of Ohio courts over foreign corporations. The opinion of the Court of Appeals in this cause states, in effect, that because Civ.R. 4.2(6) does not limit service to causes of action arising within this state and because the rule was complied with, i. e., service upon the corporation or its officers, managing or general agents at its usual places of business, there is no constitutional impediment to personal jurisdiction over the appellant corporation. The clear import of the opinion is to equate service of process with in personam jurisdiction.

II B(1).

Since the landmark decision of the United States Supreme Court, in Pennoyer v. Neff (1877), 95 U.S. 714, 24 L.Ed. 565, it has been an established principle that a judgment rendered pursuant to the in personam jurisdiction of a state court over a nonresident is entitled to full faith and credit only if it satisfies the requirements of the due-process clause of the Fourteenth Amendment to the United States Constitution, and, if such a judgment over a nonresident does not meet the requirements of the due-process clause, it is not properly enforceable even within the state which rendered it.

The requirements of the due-process clause can be stated simply: There must be sufficient service of process such as to be reasonably likely to communicate the fact of the commencement of an action to a nonresident; and, there must be some nexus between the forum for the action and the nonresident so as to make it fair and reasonable for the nonresident to appear in that forum and defend the action. McDonald v. Mabee (1971), 243 U.S. 90, 37 S.Ct. 343, 61 L.Ed. 608; International Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.

In the present case, the sufficiency of porcess has not been challenged, and it is clear that the serving of notice upon the appellant's agents in Ohio was reasonably likely to, and did, communicate notice to the appellant of the copmmencement of the present suit.

The sole issue is whether it is fair and reasonable for the appellant to appear and defend this action in the courts of Ohio.

The question of the inpersonam jurisdiction of state court over foreign corporations has troubled courts for many years. The principle established in Pennoyer in dealing with the personal jurisdiction of courts over individuals was that, in order to give such proceedings any validity, the defendant '* * * must be brought within its (the court's) jurisdiction by service of process within the state, or by his voluntary appearance.' (95 U.S., at page 733.) This derivation of the rule was explained by Justice Holmes in McDonald v....