Hunau v. Northern Region Supply Corp.

262 F. 181, 1920 U.S. Dist. LEXIS 1308

• Court: District Court, S.D. New York
• Decided: January 3, 1920
• Status: Published

Opinion

EEARNED HAND, District Judge

(after stating the facts as above). [1] It appears to be still the federal law (People’s Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 38 Sup. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537), despite International Harvester Co. v. Kentucky, 234 U. S. 579, 34 Sup. Ct. 944, 58 E. Ed. 1479, that the mere solicitation of business, by agents sent into a state without authority to conclude bargains, does not constitute “doing business” within its borders. Such was, of course, the ruling in Green v. C., B. & Q. Ry. Co., 205 U. S. 530, 27 Sup. Ct. 595, 51 E. Ed. 916, and International Harvester v. Kentucky, supra, must be deemed to rest upon the fact that the local agents had authority to receive negotiable paper in payment of orders which they had not the power to close. On the other hand, in New York, the last ruling of the Court of Appeals definitely held that a “continuous” and “permanent” business within the state, which consisted only of soliciting orders, was “doing business.” Tauza v. .Susquehanna Coal Co., 220 N. Y. 259, 115 N. E. 915. A searching analysis of the whole subject would have been necessary if the case at bar raised that question. The theory upon which rests the right to sue a foreign corporation is in flux, and much may depend in the end upon what view becomes dominant.

In this case, however, it appears to me that the master is right under any rule, because Konechko had power to buy from January 4, 1919, on a power which he exercised in one instance, and was in course of executing in others, when Danichewsky intervened. The defendant’s only business was to buy and sell goods between Russia and England and America, and when it sent a duly authorized agent, with power to buy them in New York, and he began what was designed to be a continuous business — at least so it must be assumed — I cannot well see what other business it could have done. The cable of January 26, 1919, did indeed direct Konechko to postpone any purchases till Dan-ichewsky arrived; but I do not read it as curtailing his powers meanwhile, nor did Danichewsky question his intermediate purchase. It was based upon the difficulty of receiving goods at Murmansk, due to' lack of berthing facilities, and was rather a direction of the manner m which he should exercise those powers. It is in this aspect .significant that it was never communicated to the local hank, as the cable of January 4, 1919, had been. I conclude that the defendant had begun a “continuous” and “permanent” business here. Danichewsky certainly had full powers after he arrived in April, nor does it appear that, at least until he left in May, the business of the defendant was intended to cease. At least, the project appears to have remained open on May 20, 1919.

[2] I do not mean to suggest, however, that the service will stand upon the second ground suggested hy the learned master. I know of no authoritative decision that a corporation submits itself to local jurisdiction as to any single transaction performed in a foreign state. If so, it would be suable upon all local causes of action, regardless of any other business. Such, indeed, appears to have been the notion in Premo Specialty Co. v. Jersey Cream Co., 200 Fed. 352, 118 C. C. A. 458, 43 L. R. A. (N. S.) 1015, and was in.33 Harv. R. R. 10, attributed to my decision in Smolik v. Phil. & R. Ry. Co. (D. C.) 222 Fed. 148, though I was, at least consciously, quite innocent of any such purpose. I do not, however, understand this to be the law at all. How far a corporation is immanent in every authorized act of its agents anywhere, and what will be the eventual basis of its subjection to foreign process, it is not necessary to consider; but it is clear that at present some general activities are necessary. The last expression of the Supreme Court (Flexner v. Farson, 248 U. S. 289, 293, 39 Sup. Ct 97, 63 L. Ed. 250) gives little encouragement to the “realists”; but it must be owned that no consistent theory can at present reconcile all the cases, certainly not all the opinions. At any rate, this case ought not to be the excuse for a general essay.

The motion is denied.