Opinion
14043
April 12, 1935.
Before FOSTER, J., and THOMPSON, J., County Court, Spartanburg, December, 1933, and February, 1934. Affirmed.
Action by the Garrett Engineering Company against the Auburn Foundry, Inc. From a judgment for plaintiff, defendant appeals.
Order of Judge Foster, directed to be reported, follows:
Plaintiff is a domestic corporation having its principal place of business at Spartanburg, S.C. and defendant is a corporation of the State of Indiana.
In October, 1933, plaintiff commenced this action against defendant in this Court, undertaking to accomplish service of process as provided for by Section 7765, Code of Laws of South Carolina for 1932, as amended by Act approved May 16, 1933 (see 1933 Acts, p. 486). Plaintiff's affidavit of service filed in the Clerk's office shows compliance with the statutory provisions. It is undisputed that the defendant had not attempted to comply with the provisions of this statute by filing the required declaration with the Secretary of State.
The process to be served on defendant having been filed in accordance with the statute on October 28, 1933, defendant appeared specially on November 8, 1933, by its attorney of Columbia, S.C. and served notice of a motion for an order dismissing the action on the several grounds appearing in the notice. In substance, the notice states among its grounds that, at the commencement of this action, defendant was not transacting or doing business in South Carolina, and that it has not done so since the commencement of this action. At the hearing before me, defendant presented the affidavit of its president categorically to the same purport.
From defendant's showing, therefore, it does not appear that it was not transacting its business in this State prior to the commencement of this action. This would seem sufficient to overrule the defendant's motions without further inquiry into the facts and the law, since under the provisions of the Act approved May 16, 1933, service of process could be made on defendant as therein provided if defendant was transacting its business in this State on or after that date. On a full consideration of the entire record, defendant's plight is not improved.
It appears from the affidavit of J.B. Creighton, filed with plaintiff, that the defendant was transacting its business in this State during the year 1932 and thereafter. On March 11, 1933, defendant wrote plaintiff a letter showing that its general sales manager, its chief engineer, and others of its employees, had recently been in South Carolina in connection with that business. This letter states:
"With reference to Mr. Gaines W. Harrison, I now wish to advise you that Mr. Harrison has been appointed State representative for the Auburn stoker and he will doubtless call on you in the near future with a view to working out some arrangement that will be satisfactory both to you and himself as to future Auburn stoker representation in and around Spartanburg.
"I will appreciate it if you will kindly extend to Mr. Harrison every courtesy, as to date he has done a fine piece of work getting properly organized not only to do business on a nice scale but also to be in a position to help his dealers whenever they call for assistance."
There is no showing before me that defendant thereafter ceased to have this representative in South Carolina, organized not only to do business, but also to help his dealers, who would be the dealers selling defendant's products.
Mr. Creighton's affidavit also shows that in August, 1933, several months after the Act under consideration had become law, defendant's president was in South Carolina upon its business endeavoring to adjust and settle defendant's differences with plaintiff, and this is corroborated by the president's letter to plaintiff of August 9, 1933, referring to his recent visit. This letter expressed the hope that plaintiff would secure new business, which was to be reported direct to defendant. The letter stated that plaintiff would no longer have to split commissions and referred to the stoker orders plaintiff would send in. Commissions being a consideration paid to an agent and an order being that which an agent secures and transmits to his principal, this letter is open to the inference that defendant considered on its date that it was transacting its business on a commission basis through its agent in South Carolina.
This letter of August 9, 1933, and other letters written by defendant, show that it was endeavoring to build up its business in South Carolina. On September 6, 1933, defendant made plaintiff a proposal: "In case we sell a fourth stoker to Newberry Cotton Mills * * * there is every possibility that we will receive an order for a fourth stoker from them in the near future." Further, the letter says: "We have set you apart a definite territory in which to work * * * and sincerely trust that you get busy and send us in some orders so that we can all make some money."
To the affidavit of W.H. Willenar, presented by defendant, is attached a copy of a "Contract of Conditional Sale" between defendant and Ideal Laundry of Greenville, S.C. dated June 26, 1933, for the sale of a stoker by defendant to the laundry to be installed by defendant at Greenville. The contract is witnessed by Gaines W. Harrison. In the absence of a showing as to when, if at all, the appointment of Mr. Harrison was revoked, the inference is strong that through him, as its state representative, defendant was about its business in this transaction in South Carolina several weeks after the statute under consideration had become law.
Whether defendant thereafter ceased to transact its business in this State, so that it was not doing business here at the commencement of this action, is immaterial even if escape is possible from the inferences raised by the letters it wrote revealing a design and purpose to build up a continuous business in South Carolina.
But defendant contends earnestly that its general policy and plan contemplated a business solely interstate in character, rendering defendant immune from process in this State. In support, the affidavit of defendant's president explains at length what are defendant's general policy and plan of business. It does not state, however, whether defendant aided by this general policy and plan in its South Carolina activities, or, in fact, whether it ever engaged in any activities in this State, or any of the details thereof from which the nature of such activities could be determined. It does not undertake to explain how discussion of commissions could have arisen under its so-called "Dealers Agreement," or what connection with its general policy and plan a "state representative" could have had.
Defendant's contention, therefore, that it was engaged in this State in transactions purely interstate in character, is a conclusion, and the ultimate facts by which such a conclusion must stand or fall have not been set out in the affidavits filed. It is true that if defendant had followed out its general policy and plan of selling and shipping to dealers solely, the business resulting would have been purely interstate in character, and unless defendant was actually present in South Carolina in connection with that business service of process in this State could not have been effected.
In Lipe v. Carolina, C. O. Railway, 123 S.C. 515, 116 S.E., 101, 104, 30 A.L.R., 248, our Supreme Court said that, in cases of this kind, "The test * * * lies * * * in whether it [the foreign corporation] is actually present within the jurisdiction * * * doing business therein through agents. * * *"
In Louisville N.R. Co. v. Chatters, 279 U.S. 320, 49 S.Ct., 329, 330, 73 L.Ed., 711, the Supreme Court said that: "A foreign corporation is amendable to suit to enforce a personal liability if it is doing business within the jurisdiction in such manner and to such extent as to warrant the inference that it is present there."
In Bethlehem Motors Corp. v. Flynt, 256 U.S. 421, 41 S.Ct., 571, 572, 65 L.Ed., 1029, it was said: "This Court has decided too often to need citation of the cases that corporations doing business in a state and having an agent there are within the jurisdiction of the state for the purpose of suit against them."
It matters not whether the business in question is purely interstate in character. It is said in Fletcher's Corporations, § 2063, that: "The presence of a corporation within a state necessary to the service of process is shown when it appears that the corporation is there carrying on business in such sense as to manifest its presence within the state, although the business transacted may be entirely interstate in its character."
This text is based upon International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct., 944, 945, 58 L.Ed., 1479. In that case the Harvester Company had frankly shaped its policies so that "The company's transactions hereafter with the people of Kentucky must be on a strictly interstate commerce basis." Referring to the company's contention, the Supreme Court said:
"It is further contended that, as enforced by the decision of the Kentucky court, the law, in its relation to interstate commerce, operates to burden that commerce. It is argued that a corporation engaged in purely interstate commerce within a state cannot be required to submit to regulations such as designating an agent upon whom process may be served as a condition of doing such business, and that as such requirement cannot be made, the ordinary agents of the corporation, although doing interstate business within the state, cannot by its laws be made amendable to judicial process within the state. The contention comes to this: so long as a foreign corporation engages in interstate commerce only, it is immune from the service of process under the laws of the state in which it is carrying on such business. This is indeed * * * a novel proposition, and we are unable to find a decision to support it, nor has one been called to our attention.
"True, it has been held time and again that a state cannot burden interstate commerce or pass laws which amount to the regulation of such commerce; but this 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. * * *
"We are satisfied that the presence of a corporation within a state necessary to the service of process is shown when it appears that the corporation is there carrying on business in such sense as to manifest its presence within the state, although the business transacted may be entirely interstate in its character."
But even if defendant would be immune from service if it had shown that it had carried on in South Carolina a business wholly interstate in character, the showing made here indicates that its activities were not so limited. Its plans and purposes were to organize and build up a selling force in this State through its state representative present here for that purpose. It sent its representatives into this State to negotiate adjustments and make contracts of settlement here. After its machinery had arrived in this State, it performed the work of installing the same, which in the Newberry job required several weeks of costly labor. Using the language of the Supreme Court in Kansas City Structural Steel Co. v. Arkansas, 269 U.S. 148, 46 S.Ct., 59, 70 L.Ed., 204, changed slightly to fit these facts, "the installation of the stoker necessarily involved some work and business in South Carolina which were separate and distinct from any interstate commerce that might be involved."
I am constrained to find and hold that defendant was present in South Carolina transacting its business on and after May 16, 1933, when the Act under which it was served with process became law.
Defendant's motion is therefore overruled, and it is so ordered.
Ordered further that defendant have twenty-one days from the day of filing of this order within which to answer the complaint, and that plaintiff, if so advised, may proceed to docket its case forthwith on Calendar 1 of this Court.
Messrs. Edward L. Craig and Lyles Daniel, for appellant, cite: Jurisdiction: 10 L.Ed., 724; 55 L.Ed., 451; 39 S.C. 485; 95 U.S. 714; 243 U.S. 264; 61 L.Ed., 710; 172 S.C. 426; 289 U.S. 88; 77 L.Ed., 1050; 224 U.S. 270; 56 L.Ed., 760; 211 U.S. 110; 53 L.Ed., 110; 39 S.C. 484; 273 U.S. 119; 71 L.Ed., 569.
Messrs. Carlisle, Brown Carlisle and Donald P. Sanders, for respondent, cite: Jurisdiction: 169 S.C. 231; 168 S.E., 693; 153 S.C. 78; 150 S.E., 473; 130 S.C. 307; 126 S.E., 39. Acceptance of service: 171 S.C. 511; 172 S.E., 857; 276 U.S. 13; 72 L.Ed., 446; 48 S.Ct., 259; 274 U.S. 352; 71 L.Ed., 1091. Charge to jury: 80 S.C. 341; 61 S.E., 555; 119 S.C. 259; 155 S.C. 488; 152 S.E., 644.
April 12, 1935. The opinion of the Court was delivered by
The well-considered order of Judge Foster of the County Court, properly disposes of the question of jurisdiction made by the preliminary motion, which challenges the validity of the service of the summons and complaint, and also by the answer of the defendant, which denies the jurisdiction of the Court. There is evidence to sustain the findings and conclusions of the Court that the defendant was doing business in this State in the meaning of the language of the Act of the General Assembly approved May 16, 1933 (38 St. at Large, p. 486). The order is affirmed. Let it be reported.
The only other question demanding attention is made by the exceptions which allege error, for that his Honor charged as follows: "The broker will be assumed to be the efficient and procuring cause if his intervention is the foundation upon which the negotiation in the sale is begun."
It is the established rule that an excerpt from a charge which is made the ground of an allegation of error must be considered in connection with the related parts of the charge. The trial Judge used the above-quoted extract in connection with the following language: "A broker or an agent employed to sell an article earns and is entitled to his commission, if during the continuance of his agency he procures a purchaser ready, able and willing to buy on the terms designated by the owner."
Then follows the language to which exception is made.
The rule in this jurisdiction upon questions of this nature was laid down in the case of Goldsmith v. Coxe, 80 S.C. 341, 61 S.E., 555, 557, and is thus stated by Mr. Justice Woods: "There are no cases in this state bearing on the question here presented. But the rule of reason which seems to be supported by practically all the authorities on the subject is that the broker is entitled to his commissions, if, during the continuance of his agency, he is the efficient or procuring cause of the sale, though the actual agreement for the sale is made by the owner without the aid of the broker; and the broker will be regarded the procuring cause if his intervention is the foundation upon which the negotiation resulting in the sale is begun." (Italics added.) (Citing authorities.)
This rule has been ever since this case followed in this jurisdiction, and was specifically affirmed in the case of Charles v. West, 155 S.C. 488, 152 S.E., 644. However, the charge complained of could have wrought no harm to the defendant, even if erroneous. The gravamen of the plaintiff's complaint is that even after it had interested the Newberry Cotton Mills in the purchase of the apparatus, for the sale of which it was defendant's agent in certain territory in the State, and had secured Newberry Cotton Mills as a prospective purchaser, and was negotiating with it, "defendant thereupon, unknown to plaintiff, conceived and put into execution by means of its fraudulent acts and doings hereinafter set out the secret scheme and design to cheat and defraud plaintiff out of its rightful benefits resulting from its time and labor aforesaid, and out of the benefits and remuneration accruing to plaintiff from selling said stokers and installing same for said Newberry Cotton Mills."
There is in the complaint detailed allegations of alleged fraudulent acts, including the representation of defendant to plaintiff that it would send out its agent to assist in making the sale and installation of the machinery and would pay plaintiff 30 per cent. of the sales price, in lieu of its 35 per cent. under its written contract. The evidence is not set out in the record, but there are quoted extracts from it which show that the case was properly sent to the jury on the issues made. The jury was charged that plaintiff must prove its case by the preponderance of the evidence. The action was for breach of contract accompanied by fraudulent acts; the relief sought was damages, actual and punitive. In the light of the issues thus made, the charge complained of was harmless. See, also, Lipe v. Ry. Co., 123 S.C. 515, 116 S.E., 101, 30 A.L.R., 248.
The judgment of the Court below is affirmed.
MR. CHIEF JUSTICE STABLER, MR. JUSTICE CARTER and MESSRS. ACTING ASSOCIATE JUSTICES WM. H. GRIMBALL and G.B. GREENE concur.