Southeastern Distributing Co. v. Nordyke & Marmon Co.

125 S.E. 171, 159 Ga. 150, 1924 Ga. LEXIS 398

• Court: Supreme Court of Georgia
• Decided: October 17, 1924
• Docket: No. 4380
• Status: Published

Opinion

Hines, J.

(After stating the foregoing facts.)

A corporation is not always present where its officers or agents may transact business in its .behalf under authority conferred by it. Reeves v. Southern Ry. Co., 121 Ga. 561 (49 S. E. 674, 70 L. R. A. 513, 2 Ann. Cas. 207). It is now well settled that it is essential to the legal rendition of a personal judgment against a foreign corporation, otherwise than by its voluntary appearance, that the corporation be doing business within the State. Vicksburg &c. Ry. v. DeBow, 148 Ga. 738 (98 S. E. 381); St. Louis S. W. Ry. v. Alexander, 227 U. S. 218 (33 Sup. Ct. 245, 57 L. ed. 486, Ann Cas. 1915B, 77); International Harvester Co. v. Kentucky, 234 U. S. 579 (34 Sup. Ct. 944, 58 L. ed. 1479). In order to give the courts of this State jurisdiction of a suit against a foreign corporation and to authorize proper service of process upon it, the business which the corporation is conducting in the State must'be a part of the business for which it was organized. 14A C. J. 1373,; Vicksburg &c. Ry. v. DeBow, supra; Booz v. Texas &c. R. Co., 250 Ill. 376 (95 N. E. 460); Home Lumber Co. v. Hopkins, 107 Kan. 153 (190 Pac. 601, 10 A. L. R. 879). If what is done in this State is a mere incident to such business of the corporation, it will not give the courts of this State jurisdiction of the foreign corporation. Vicksburg &c. Ry. v. DeBow, supra. Whether a foreign corporation is doing business in this State in such á sense as to make it amenable to the jurisdiction of the courts thereof is, in its last analysis, a question of due process of law under the constitution of the United States. 14A C. J. 1372; Vicksburg &c. Ry. v. DeBow, supra. Before a foreign corporation is amenable to process to enforce a personal liability, in the absence of consent, it must be doing business within this State in such a manner and to such an extent as to warrant the inference that it is present in this State. Philadelphia &c. R. Co. v. McKibbin, 243 U. S. 264 (37 Sup. Ct. 280, 61 L. ed. 710); St. Louis &c. R. Co. v. Alexander, supra; Smithson v. Roneo, 231 Fed. 349. The presence of a foreign corporation within this State, such as is necessary to the service of process upon it, is shown, when it appears that the corporation is here carrying on business in such a sense as to manifest its presence within this State, although the business transacted may ])e entirely interstate in its character. International Harvester Co. v. Kentucky, supra. This principle was distinctly announced by this court in the DeBow case. In that case this court said: “The question as to whether a foreign corporation is ‘doing business’ in the State, so as to be subject to the jurisdiction of the courts of the State, is entirely distinct from the question as to whether such a corporation is ‘doing business’ in the State within the purview of the act prescribing the conditions upon which such corporations may be allowed to do business within the State; and that it does not follow that business which, by reason of the interstate-commerce law, does not bring the corporation within the latter statute, may not nevertheless bring it within the statute providing for the service of process.”

It was said by the Supreme Court of the "United States in International Harvester Co. v. Kentucky, supra: “Each case must depend upon its own facts, and their consideration must show that this essential requirement of jurisdiction has been complied with, and that the corporation is actually doing business within the State.” So in this case, if the defendant corporation was not doing business within this State, to the above extent and in the above sense, when service of process was attempted to be made upon its agent in this State, then the trial court had no jurisdiction, and valid service could not be perfected upon it by service of process upon its agent who was then in this State.

Was the defendant doing business in this State to the extent and in the sense above defined ? In order to answer this question, it will be profitable to examine the cases in which it has been held that-foreign corporations were so doing business. By the weight of judicial authority, both State and Federal, the taking of orders by an agent, subject to the approval of a corporation at its office or place of business outside the State, constitutes doing business within the State so as to render the corporation liable to suit. International Harvester Co. v. Kentucky, supra, s. c. 147 Ky. 655 (145 S. W. 393); Ryerson v. Wayne, 114 Mich. 352, (72 N. W. 131); Toledo &c. Scale Co. v. Miller, 38 App. D. C. 237; McSwain v. Adams Grain &c. Co., 93 S. C. 103 (76 S. E. 117, Ann. Cas. 1914D, 981); Vicksburg &c. Ry. v. DeBow, supra. In such a situation “such corporation may be required to answer in this State to such person for a cause of action arising out of business or transactions so initiated.” Vicksburg &c. Ry. v. DeBow, supra; Armstrong Co. v. New York &c. R. Co., 129 Minn. 104 (151 N. W. 917, L. R. A. 1916E, 232, Ann. Cas. 1916E, 335). While this is true, this court said in the DeBow case that “the mere solicitation of business within the State, ‘unaccompanied by a local performance of contract obligations/ is not ‘doing business’ within the State so as to bring the corporation within the jurisdiction of the courts of the State.” In People’s Tobacco Co. v. American Tobacco Co., 246 U. S. 79 (38 Sup. Ct. 233, 62 L. ed. 587, Ann. Cas. 1918C, 537), the Supreme Court of the United States said: “As to the continued practice of advertising its wares in Louisiana, and sending its soliciting agents into that State, . . the agents having no authority beyond solicitation, we think the previous decisions of this court have settled the law to be that such practices did not amount to that doing of business which subjects the corporation to the local jurisdiction for the purpose of service of process upon it.” In that case, the defendant company “was selling goods in Louisiana to jobbers, and sending its drummers into that State to solicit orders of the retail trade, to be turned over to the jobbers, the charges being made by the jobbers to the retailers.” "These agents were not domiciled in the State, and did not have the right or authority to make sales on account of the American Tobacco Company, collect money, or extend credit for it. Under these facts the Supreme Court of the United States held that the American Tobacco Company was not doing business in the State of Louisiana so as to be subject to the processes of the courts of that State.

Where a domestic corporation entered into a contract with a foreign manufacturing corporation, whereby the former agreed to handle the manufactured products of the latter, and where it was provided in such contract that the domestic corporation should purchase such products in its own name upon orders to be filled in another State by such foreign corporation, and that, when so purchased, the goods should become the property of the domestic corporation, and such domestic corporation sold such goods throughout the State by its traveling agents, it was held that such transactions did not constitute doing business within the State by the non-resident corporation, and that service of summons upon the domestic corporation was not service upon the foreign corporation. It was likewise held, that where a foreign manufacturing corporation having such a contract sent its traveling agents into the domestic State for the purpose of advertising the goods and pushing the sales by giving exhibitions and demonstrations of the merits of such goods, and by assisting the agents of the domestic corporation in getting customers and orders for such goods, such orders to be filled by the domestic corporation out of its stock, such acts or transactions on the part of such agents did not constitute doing business within the State by the foreign corporation so as to subject the foreign corporation to the processes of the courts of the domestic State. Harrell v. Peters Cartridge Co., 36 Okla. 684 (129 Pac. 872, 44 L. R. A. (N. S.) 1094).

In Advance Lumber Co. v. Moore, 126 Tenn. 313 (148 S. W. 212), it was held that a foreign corporation engaged in the business of buying and selling lumber, which maintained an office in the State in charge of a resident agent, who made no sales, but looked’ after the purchasing business in adjacent States, was not engaged in business within the State within the meaning of an act prohibiting a foreign corporation from doing business within the State without complying with the acts as to registration of its charter, though it was a party to two or three isolated transactions had in the State.

In Holzer v. Dodge, 233 N. Y. 216 (135 N. E. 268), it was held that a corporation manufacturing automobiles outside the State and selling them in the State through dealers who purchased the cars from the manufacturer and who were not merely sales agents, which corporation .was represented in the State only by export agents and by district representatives, whose duties were merely to look after the interests of the defendant, but whp were not authorized to enter into any contracts in its behalf and whose business was maintained in their own name and not by the corporation, was not engaged in business within the State so as to bo liable to service of process therein. The relation between the defendant and the Marmon-Atlanta Company was not that of principal and agent, but that of seller and purchaser. Burkhalter v. Ford Motor Co., 29 Ga. App. 592 (116 S. E. 333).

Applying the above principles, we do not think that the defendant was so doing business in Georgia as to subject it to the processes of the courts of this State. It was a foreign corporation chartered under the laws of the State of Indiana, with its principal office and place of business in the City of Indianapolis. Under its charter it was authorized, among other things, to manufacture and sell automobiles. Under the contract between the defendant and the Marmon-Atlanta Company, the latter being a Georgia'corporation, the former sold to the latter its automobiles to be by it in turn resold to retail purchasers. These automobiles were shipped on closed bills of lading, with drafts attached, with “order notify” directions to the Marmon-Atlanta Company. The drafts and bills of lading were sent to an Atlanta bank, when the drafts were taken up and the bills of lading surrendered to the Marmon-Atlanta Company, to which the title to the cars passed at that time. The defendant does not sell any of its cars in Georgia, except to distributors and dealers, who buy them under the plan above set forth. The duties and powers of Haskell, the agent of the defendant upon whom service was sought to be perfected in this case, are fully set out in the statement of facts. It will be seen that the defendant has a district representative in territory embracing this State. He • does not sell any cars for the defendant. He visits distributors and dealers from time to time within this territory. He assists them in every way possible in selling their ears purchased from the defendant. He demonstrates to prospective buyers, from such distributors or dealers, their Marmon cars. He instructs such distributors and dealers in the art of salesmanship of Marmon cars. He will sell such cars belonging to distributors or dealers, but turns over the orders therefor to such distributors or dealers. He keeps up with the business done by distributors and-dealers, and makes reports thereof to the defendant at its home office. He sees that dealers and distributors render proper service to the users of Marmon cars purchased from them, in order that such users may be satisfied with their cars. He selects the dealers and the distributors, and executes, for the defendant, tentative contracts with them, subject to be countersigned by its executive officer, and approved by the company at its home office. It will be seen that the business done by the defendant through its agent does not consist in selling their cars, but is incident merely to the sale of their cars to the distributors or dealers. The effect of the services of the agent may be, and doubtless is, to expand and swell the business of these distributors and agents, and thus indirectly the business of the defendant. He boosts the sales of dealers and distributors, so that the company can sell to them more of its cars. While this is so, it is a mere incident to the business the defendant is doing. Being such, it does not constitute doing business in this State so as to subject the defendant corporation to process served on such agent in this State; and we are of the opinion that the trial judge did right in sustaining the plea of the defendant to the jurisdiction of the court. If there is anything in Eastman Kodak Co. v. Southern Photo Material Co., 295 Fed. 98, to the contrary of what-■is held above, we think that the authorities on which we base our ruling express the sounder law. See Taylor v. Friedman Co., 152 Ga. 529 (110 S. E. 679).

Judgment affirmed.

All the Justices concur, except Russell, 0. J., and Atkinson, J., dissenting.