Opinion
14764
November 3, 1938.
Before DENNIS, J., Allendale, September, 1937. Affirmed.
Action by L.B. Zeigler against the Puritan Mills. From orders holding that defendant was not doing business within the State, and setting aside service, plaintiff appeals.
The order of Judge Dennis, requested to be reported, follows:
This action was instituted in the Court of Common Pleas for Allendale County, on the 20th day of July, 1937, by handing copies of the summons and complaint to C.A. Avrett, a commercial traveler for the defendant, Puritan Mills, in Barnwell County. It appears from the record that the only authority of Mr. Avrett was to solicit orders for the said Puritan Mills.
The record further discloses that on August 2, 1937, the defendant filed a special appearance and moved to set aside the process alleged to have been made upon Mr. Avrett, upon two grounds: (1) That C.A. Avrett was not an agent of the defendant upon whom service of process could properly be made; and (2) that Puritan Mills, a Georgia corporation, was not subject to process in the State of South Carolina because it was not doing business in this State.
It further appears that after service of the notice of the motion to set aside the alleged service, the plaintiff, on August 5, 1937, pursuant to Act No. 349 of the Acts of 1933, 38 St. at Large, p. 486, served copies of the summons and complaint upon the Secretary of State.
When the motion was called up before Honorable J. Henry Johnson, resident Judge of the Fourteenth Judicial Circuit, on the 6th day of August, 1937, he passed an order disqualifying himself to hear the motion, for the reasons therein stated, and continued said motion until it could be heard by a Judge of this Court who had jurisdiction to hear same; and the order further provided that the rights of the defendant be preserved and in nowise lost by reason of the disqualification. Upon the filing of said order, notice was duly given to the plaintiff that the motion now under consideration would be heard before me at Hampton, South Carolina, on the 27th day of September, 1937.
In determining the issues before me, it is my opinion that they should be considered in reverse order, for, if Puritan Mills, the defendant herein, is not doing business in the State of South Carolina in a jurisdictional sense, it becomes unnecessary to determine whether Mr. Avrett was a proper agent upon whom service of process could be made.
The record before me shows, and I so find, that Puritan Mills is a Georgia corporation, with its principal place of business in Atlanta, Georgia, and that at the time of service of process in this action it maintained a branch office at Augusta, Georgia. The record further discloses that prior to, at the time of, and since, the institution of this action, the defendant did not maintain an office in South Carolina, and had no property in South Carolina; and that the only person representing the defendant who came into South Carolina was the said C.A. Avrett, who, so far as the record discloses, came into the State only for the purpose of soliciting orders, which were sent to the main office of the defendant in Atlanta, Georgia, or to its branch office in Augusta, Georgia; that he had no authority to make contracts in behalf of the defendant, but all orders taken by him were taken subject to the approval of Puritan Mills at either Augusta, Georgia, or Atlanta, Georgia, and that the said C.A. Avrett did not reside in South Carolina, but resided in the State of Georgia.
It further appears that certain deliveries of goods were made by Puritan Mills on orders solicited and thereafter approved in the State of Georgia, by a truck owned by the defendant. These deliveries amounted to a very small proportion of the entire business solicited in South Carolina. The record discloses that this truck carried a South Carolina license, but that it was maintained and kept in Augusta, Georgia; so I do not think that the mere fact that the truck of the defendant had a South Carolina license has any bearing on the issues before the Court.
The first question presented is whether, under these facts, the defendant is subject to the jurisdiction of this Court.
As stated in the case of Wiggins Sons, Inc., v. Ford Motor Company, 181 S.C. 171, 186 S.E., 272, 273, the Court said:
"* * * in determining whether a foreign corporation is doing business within a state to such an extent as to make it amenable to state jurisdiction, the federal authorities are controlling, because of the question of `due process,' `equal protection,' and `interstate commerce' involved. York Mfg. Co. v. Colley, 247 U.S. 21, 38 S.Ct., 430, 62 L.Ed., 963, 11 A.L.R., 611; McSwain v. Adams Grain Co., 93 S.C. 103, 76 S.E., 117 (2), Ann. Cas., 1914-D, 981; State v. Rawleigh Co., 172 S.C. 415, 174 S.E., 385."
In determining what constitutes doing business, the Courts have laid down no hard and fast rule, but are inclined to judge each case upon its own merits. People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct., 233, 62 L.Ed., 587, 590, Ann. Cas., 1918-C, 537. The Courts, however, have uniformly held that the mere solicitation of business in the State is not sufficient to subject a corporation to legal jurisdiction. People's Tobacco Co. v. American Tobacco Co., supra; Davega, Inc., v. Lincoln Furn. Co., 2 Cir., 29 F., 2d 164.
They have held that if it maintains in the State an advertising agent that is not sufficient to confer jurisdiction. People's Tobacco Co. v. American Tobacco Co., supra; 14A C.J., 1378.
The ownership and protection of property is not sufficient. Territory of New Mexico ex rel. v. Baker, 196 U.S. 432, 25 S.Ct., 375, 49 L.Ed., 540.
The incidental adjustment of a claim is not sufficient. Southeastern Dist. Co. v. Nordyke Marmon Co., 159 Ga. 150, 125 S.E., 171; Davega, Inc., v. Lincoln Furn. Co., supra.
The Courts have held that the combination of several of these matters is not sufficient. Green v. Chicago, Burlington Q.R. Co., 205 U.S. 530, 27 S.Ct., 595, 51 L.Ed., 916, 918; Davega, Inc., v. Lincoln Furn. Co., supra; Hilton v. Northwestern Expanded Metal Co., D.C., 16 F., 2d 821; Alpha Portland Cement Company v. Massachusetts, 268 U.S. 203, 45 S.Ct., 477, 69 L.Ed., 916, 44 A.L.R., 1219.
The United States Supreme Court, in the Green case, supra, held that although the railroad company maintained in Philadelphia a district freight and passenger agent, with numerous working subordinates under him, who solicited and obtained freight and passengers, and who maintained an office and occasionally sold tickets, this was insufficient to constitute doing business in Pennsylvania.
The plaintiff lays great stress on the fact that the deliveries in question to the plaintiff and others were made by a truck belonging to the defendant, which, as hereinbefore set out, was maintained and kept in Augusta, Georgia. The goods were delivered by the defendant from Augusta, Georgia, by said truck to the plaintiff, who resides in Allendale County, South Carolina.
The proof shows that at the time of the taking of the orders in question, the merchandise ordered was not within the State of South Carolina, and that the salesman soliciting the orders had no interest whatsoever in the goods, in the truck which made the deliveries, nor in the sale price of the goods.
As stated in the case of Jewel Tea Co. v. City of Camden, 171 S.C. 353, 172 S.E., 307, 308:
"[If] the goods are not in the state at the time of sale, the manner of delivery is unimportant, the transaction being as much interstate in character when the goods are shipped by the manufacturer either to the selling or delivery agent and by him delivered to the purchaser as where the goods are shipped direct to the purchaser."
The Court further said in the Jewel Tea Company case, supra:
"It seems clear that the mere fact that articles are carried in private conveyance does not prevent the transaction becoming interstate commerce."
In addition to the authorities cited in the Jewel Tea Company case, supra, the United States Supreme Court laid down the same rule in the following cases: Kirmeyer v. Kansas, 236 U.S. 586, 35 S.Ct., 419, 59 L.Ed., 721; United States v. Ohio Oil Company, 234 U.S. 548, 34 S. Ct., 956, 58 L.Ed., 1459; and Pennsylvania Gas Company v. Public Service Commission, 252 U.S. 23, 40 S.Ct., 279, 64 L.Ed., 434.
Furthermore, there are recent and quite pertinent decisions of the Supreme Court of the United States which are controlling upon this question. In Bank of America v. Whitney Cent. Nat. Bank, 261 U.S. 171, 43 S.Ct., 311, 67 L.Ed., 594, the Court held that the fact that the defendant bank, domiciled in New Orleans, maintained the relationship of principal and agent with six New York banks, which regularly performed various acts in New York on behalf of the defendant, including receiving and delivering in New York securities belonging to the defendant, paying various persons in New York for such securities, making other payments on behalf of and at the direction of the defendant, receiving money in New York on behalf of the defendant, and other similar acts, did not constitute doing business in New York by the defendant so as to enable the Court to acquire jurisdiction over the defendant by serving process on its president while temporarily there. The Court held that jurisdiction taken of foreign corporations does not rest upon a fiction of constructive presence, but must flow from the fact that the corporation itself does business in the state in question in such a manner and to such an extent that its actual presence there at the time of service of process is established.
In Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct., 250, 69 L.Ed., 634, the Supreme Court held that the fact that an Alabama corporation, a subsidiary of the defendant, a Maine corporation, was domesticated and engaged in business in North Carolina, that the parent corporation owned all of the stock of the subsidiary and completely controlled and dominated it, both commercially and financially, in substantially the same manner that the parent corporation controlled its various branches in other states, which were not separately incorporated, did not constitute doing business in North Carolina on the part of the parent corporation and that service of process on the subsidiary could not bring the parent into the Courts of that state.
The fact that the cause of action arose in the State of South Carolina is not material to the question of doing business. Rosenberg Bros. Co. v. Curtis Brown Co., 285 F., 879, Id., 260 U.S. 516, 43 S.Ct., 170, 67 L.Ed., 372.
The recent South Carolina cases of State v. Rawleigh Co., 172 S.C. 415, 174 S.E., 385; Dyar v. Georgia Power Co., 173 S.C. 527, 176 S.E., 711, and Douglas v. Frigidaire Sales Corporation, 173 S.C. 66, 174 S.E., 906, apply in general the propositions of law outlined herein.
Taking all the cases decided by the Supreme Court of South Carolina touching on this question, and those of the Supreme Court of the United States and other cases herein cited, and applying them to the facts in this case, I have reached the conclusion that Puritan Mills, the defendant herein, is not doing business in South Carolina in such a manner and to such an extent as to warrant the inference that it is present here, and that this Court has no jurisdiction of said Puritan Mills, the defendant herein. Having reached the conclusion that the defendant is not present in South Carolina and is not doing business in South Carolina, it follows that the service made on the Secretary of State in pursuance of the Act hereinbefore mentioned is not such service as would give this Court jurisdiction of the defendant herein.
The conclusion stated above render unnecessary a decision on the question of whether C.A. Avrett was such an agent of the defendant upon whom service of process could be made.
As stated in the case of Wiggins Sons, Inc., v. Ford Motor Co., supra:
"Our statute as to service on agents is very broad. Under the authorities, however, the decisions of the United States Supreme Court as to the definition of an agent on whom process could be served would seem to be controlling. State v. Rawleigh Co., supra; Dyar v. Georgia Power Co., supra."
In Jenkins v. Bridge Co., 73 S.C. 526, 528, 53 S.E., 991, 992, which is cited with approval by the Circuit Court in the Rawleigh case, it is held that authority of an agent to contract is sufficient to constitute agency under the South Carolina statute, but that a claim of agency based on any authority short of power to contract has been rarely maintained.
It will be seen from the facts in these cases that C.A. Avrett had no authority to contract in behalf of Puritan Mills and was not an agent upon whom service could properly be made.
It is, therefore, ordered and adjudged, That the service of process on C.A. Avrett and on the Secretary of State in the above-entitled cause be, and the same hereby is, set aside, and the special appearance is sustained.
Messrs. Searson Searson, for appellants, cite: Jurisdiction: 217 U.S. 90; 54 L.Ed., 679; 234 U.S. 579; 58 L.Ed., 479; 176 S.C. 59; 179 S.E., 693; 256 U.S. 421; 65 L.Ed., 1029; 279 U.S. 329; 73 L.Ed., 711; 171 S.C. 353; 172 S.E., 307; 101 A.L.R., 127; 172 S.C. 415; 174 S.E., 385. As to service upon agent of foreign corporation: 174 S.C. 24; 176 S.E., 880; 73 S.C. 526; 53 S.E., 991.
Messrs. A.S. Grove, C. Birnie Johnson, Randolph Murdaugh, Sr., and Randolph Murdaugh, Jr., for respondent, cite: Jurisdiction: 186 S.E., 272; 27 U.S. 31; 62 L.Ed., 963; 11 A.L.R., 611; 93 S.C. 103; 76 S.E., 117; Ann. Cas, 1914-D, 981; 172 S.C. 415; 174 S.E., 385; 246 U.S. 78; 62 L.Ed., 587; 243 U.S. 264; 61 L.Ed., 710; 227 U.S. 218; 57 L.Ed., 486; Ann. Cas., 1915-B, 77; 205 U.S. 530; 51 L.Ed., 916; 29 F.2d 164; 196 U.S. 432; 49 L.Ed., 540; 125 S.E., 171; 16 F.2d 821; 261 U.S. 171; 67 L.Ed., 594; 267 U.S. 333; 69 L.Ed., 634; 285 F., 879; 260 U.S. 516; 67 L.Ed., 372; 172 S.C. 415; 173 S.C. 527; 176 S.E., 711; 172 S.C. 307; 236 U.S. 586; 73 S.C. 526; 53 S.E., 991. Relevancy of testimony: 104 S.C. 332; 88 S.E., 896.
November 3, 1938. The opinion of the Court was delivered by
This action, a suit for damages against the Puritan Mills, a foreign corporation, was instituted in the Court of Common Pleas for Allendale County. Two methods of service were followed: (1) By handing the summons and complaint to one C.A. Avrett in Barnwell County, it being alleged by the plaintiff that Avrett was an agent of the defendant; (2) service of the summons and complaint later upon the Secretary of State, the Act of the Legislature providing therefor (38 Stat. at Large, page 486), being fully complied with.
Thereafter, the defendant made special appearance for the purpose of moving to set aside the service. The motion was argued before his Honor, Judge Dennis, the matter being heard by him upon affidavits and other papers filed by the parties and upon testimony taken at the hearing. On September 28, 1937, Judge Dennis issued an order setting the service aside. He held that the defendant at the time of the attempted service of the summons and complaint, was not doing business within this State to such an extent as would warrant the inference that it was present here, and that, in view of this fact, service made on the Secretary of State was not such service as would give the Court jurisdiction of the defendant. He also found and held that Avrett was not an agent upon whom service could be made. Later, upon motion of plaintiff the Circuit Judge granted a rehearing as to the alleged agency of Avrett. He adhered, however, to his former conclusions, holding that it did not appear that the defendant was engaged in doing business in this State. The plaintiff in due time appealed from both orders, alleging that the Court was in error in its several findings and holdings.
We deem it unnecessary to review the evidence, documentary or other, presented at the hearing of the motion before Judge Dennis. We have considered it with care, however, along with the authorities cited and relied upon, and we cannot say that the conclusions reached by him are based upon an erroneous conception or application of the law. Furthermore, as there was some evidence to sustain his findings of fact, even if a different conclusion might have been reached, the judgment of the Circuit Court should be affirmed under the well-established rule referred to and applied in the following cases, where similar questions were considered and decided: Lipe v. Railway Co., 123 S.C. 515, 116 S.E., 101, 30 A.L.R., 248; State ex rel. Kerns v. Insurance Co., 168 S.C. 516, 167 S.E., 833; State v. W.T. Rawleigh Co., 172 S.C. 415, 174 S.E., 385.
With regard to the service made upon the Secretary of State under the Act mentioned, it is clear that the holding of Judge Dennis thereabout was correct, in view of his finding and conclusion that the defendant was not doing business in South Carolina.
The judgment of the Court below is affirmed.
MESSRS. JUSTICES BONHAM, BAKER and FISHBURNE concur.
MR. JUSTICE CARTER did not participate on account of illness.