Carlisle v. Kelly Pile & Foundation Corp.

175 F.2d 414, 1949 A.M.C. 1737, 1949 U.S. App. LEXIS 2380

• Court: Court of Appeals for the Third Circuit
• Decided: May 18, 1949
• Docket: No. 9732
• Status: Published

Opinions

BIGGS, Chief Judge.

The plaintiff, Carlisle, a citizen of New Jersey, brought suit in the court below against Kelly Pile and Foundation Corporation (“Kelly Pile”), a New York corporation, alleging acts of negligence by Kelly Pile which occurred in Delaware and which resulted in injury to Carlisle. The court dismissed the complaint for want of proper venue.¹ See Section 51 of the Judicial Code of 1911.² The plaintiff has appealed.

The record shows that the Commonwealth of Pennsylvania on May 21, 1941 granted to Kelly Pile a certificate of authority to transact business in Pennsylvania pursuant to the Business Corporation Law of May 5, 1933, P.L. 364, 15 P.S. Pa. § 2852 — 1001³; that the certificate has not been surrendered or revoked; that in its application for the certificate Kelly Pile designated the Secretary of the Commonwealth of Pennsylvania as its attorney to receive service of process and that the registered office in Pennsylvania of Kelly Pile is in Philadelphia. Service in the instant case was made upon the secretary of Kelly Pile at its Philadelphia office.

The defendant moved to dismiss the complaint on the ground, inter alia, that since the plaintiff was a citizen of New Jersey and the defendant was a New York corporation, the court below had “ * * * no jurisdiction or venue of this action”. The court below granted the motion stating in its opinion that “ * * * as the tort which is alleged as the basis for this action did not occur in Pennsylvania * * * ” the complaint should be dismissed.

We must disagree. The decisions of the Supreme Court in Neirbo Co. v. Bethlehem Corporation, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, 128 A.L.R. 1437, and Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 67 S.Ct. 839, 91 L.Ed. 1055, seem persuasive. The New York statute, Section 210 of the General Corporation Law of New York,⁴ providing for an agent for service of process upon foreign corporations upon which the Neirbo and Gulf Oil decisions were based is no broader in its essential scope than is the Pennsylvania statute. The Pennsylvania act is a general statute whereby a foreign corporation in order to do business lawfully in Pennsylvania must deliver to the Department of State a designation of the Secretary of the Commonwealth as attorney of the corporation on whom all lawful process in any action against it may be served.

It is true that that portion of the statute last italicized in note 3, supra, may be construed in limitation of the phrase any action or proceeding but we are of the opinion that the phrase of limitation must be confined as we confined it in Dehne v. Hillman Inv. Co., 3 Cir., 110 F.2d 456, 458. We stated: “Having authorized the Secretary of the Commonwealth to act as ito attorney to receive service of process, [the foreign corporation] cannot withdraw such authorization by dissolution or otherwise. * * * That authorization will end only upon the termination of the liability of the foreign corporation for acts of an intrastate nature done by it in Pennsylvania.” See Kraus v. American Tobacco Co., 283 Pa. 146, 129 A. 60, 61, and Kelly v. International Clay Products Co., 291 Pa. 383, 140 A. 143, 145. Cf. Steinberg v. Aetna Fire Ins. Co., D.C.E.D. Pa., 50 F.Supp. 438. In other words, the phrase of limitation in the statute does not narrow the broad agency designation but merely puts a time limit on it so that the designation cannot be withdrawn while local liability exists. We should point out that no decision has been cited to us, and we have found none, by a Pennsylvania State court construing the Pennsylvania statute.

Neirbo was rested by the Supreme Court on the leading case of Ex parte Schollenberger, 96 U.S. 369, 24 L.Ed. 853. The Supreme Court by Mr. Justice Waite relied on the Laws of Pennsylvania 1873, p. 27, section 13, which provided in pertinent part that if a foreign ' company “ * * * should cease to maintain such an agent in this State, so designated, such process may thereafter be served on' the insurance commissioner; but, so long as liability of the stipulating company to any resident⁵ of this State, continues, such stipulation cannot be revoked or modified, except that a new one may be substituted. * * * ” It was argued in Schollenberger that the Pennsylvania statute confined the right of suit to courts of the State of Pennsylvania. Mr. Chief Justice Waite held that a foreign corporation authorized to do business in Pennsylvania was suable in the federal courts in that State. The Neirbo decision explicitly applied the doctrine of Schollenberger and deemed the designation of an agent for the service of process consent to be sued in the federal courts. The Supreme Court said, “In finding an actual consent by Bethlehem to be sued in the courts of New York, federal as well as state, we are not subjecting federal procedure to the requirements of New York ’ law. We are recognizing that ‘state legislation and consent of parties may bring about a state of facts which will authorize the courts of the United States to take cognizance of a case.’ Ex parte Schol-lenberger, 96 U.S. at page 377, 24 L.Ed. 8531” [308 U.S. 165, 60 S.Ct. 158]

It would seem, therefore, that the Supreme Court by decision put an end to the anomaly of a foreign corporation exercising every business function in a state while remaining inviolate to suits such as that at bar. We think the views of the Supreme Court expressed in its decisions were crystalized in Section 1391(c) of Title 28, U.S.Code Annotated. The section provides that, “A corporation may be sued, in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.” The language of the subsection is new but its essence is of the Schollenberger, Neirbo and Gulf Oil rulings.

We conclude, therefore, that the decision of the District Court must be reversed. An order will be entered accordingly.

1 The court below first refused to dismiss the complaint. See 72 F.Supp. 326. Upon consideration, however, of the decision of this court in Dehne v. Hillman Inv. Co., 3 Cir., 110 F.2d 456, the motion to dismiss was granted. See 77 F.Supp. 51, Civil Action No. 6380.

2 Section 51 of the Judicial Code of 1911 provides in pertinent part: “Civil Suits; Where to'be Brought. — Except as provided * * * no person shall be arrested in one district for trial in another, in any civil action before a district court; and, except as provided * * * no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant; except that suit by a stockholder on behalf of a corporation may be brought in any district in which suit against the defendant or defendants in said stockholders’ action, other than said corporation, might have been brought by such corporation and process in such cases may be served upon süch corporation in any district wherein such corporation resides or may be found.”

3 The Pennsylvania statute in pertinent part, Section 2852 — 1004, provides: “The foreign business corporation, or its representative, shall deliver to the Department of State a copy of its articles * * *, and an application for a certificate of authority, * * * which shall set forth: (1) The name of the corporation. (2) * * * (3) The name of the state or country under the laws of which it is formed. (4) The address * * * of its principal office in the state or country under the laws of which it is formed. (5) The address * * * of its proposed registered office in this Commonwealth. (6) A designation of the Secretary of the Commonwealth and his successor in office as the true and lawful attorney of the corporation upon whom all lawful process in any action or proceeding against it may be served, that the service of process upon the Secretary of the Commonwealth shall be of the same legal force and validity as if served on the corporation, and that the authority for such service of process shall continue in force as long as any liability remains outstanding against the corporation in this Commonwealth. * * * ” (Emphasis added.)

4 The pertinent part of Section 210 of the General Corporation Law of New York, 22 McKinney’s Consolidated Laws of New York, c. 23, § 210, is as follows:

“A foreign corporation, * * * shall not do business in this state without having first obtained from the secretary of state a certificate of authority. To obtain such certificate, the corporation shall comply with the following conditions :

“1. It shall present to the secretary of state a statement and designation in its corporate name, signed and acknowledged by its president, or vice-president, or its secretary, treasurer, managing director or attorney in fact, which shall set forth the state or country of its incorporation, the place where its office within this state is to be located and if such place be in a city, the location thereof by street and number or other particular description; the business which it proposes to do within this state, and a designation of the secretary of state as "its agent upon whom all process in any action or proceedings against it may be served within this state.”

5 We note the qualification of residence but the point seems immaterial in the instant case.