Straub v. Lyman Land & Investment Co.

138 N.W. 957, 30 S.D. 310, 1912 S.D. LEXIS 236

Opinion

SMITH-, J.

Appeal from an order of 'the circuit court of Lyman county denying defendant’s motion to vacate a-judgment against appellant. The complaint in the allegation alleges the breach of an agreement by- defendant to sell and convey to plaintiff certain farm lands situated in Lyman coünty,- and demands damages in the sum of $300, with interest. The defendant is a domestic corporation organized and existing under the laws of this state. The summons 'and complaint were served by one Phillips,- a deputy sheriff of Lyon county, Iowa,- b}r delivering to and leaving the same with one Charles Shade; the treasurer of' said corporation, á resident of Lyon county,- Iowa, on the 7th day of February, 1908, in Lyon county,-Iowa. N'o appearance or answer was made in the' action, and the- summons, complaint, and return of service,,,.as 'stated,, were filed in the office..of the clerk, of the circuit, court of Lyman county, February 26, 1910,. .^nd on March 15, 1910, judgment was entered . against the defendant-cor-p.ora-r tion in .the sum of $403.95, damages and costs. Thereafter, on the 21st day of August, 1911, defendant appearing specially moved the court, upon .affidavit and the files and records of the court, to set aside and vacate the alleged pretended judgment, upon the ground that the court was without,jurisdiction to enter.the same. The affidavit accompanying the motion discloses the mode of service as indicated; that there was no affidavit or order for publication of summons;, ancl that no other- service was made or attempted .than as above stated, ■ and no appearance made in the acrtion by defendant, or by any one in its behalf. In resistance of the motion, -plaintiff’s counsel, filed an affidavit of M. A. Brown, stating that summons was issued. in said cause on January 8, 1908, and an attempt made to serve the same upon officers of. said corporation, residents of this state; whereupon it was disclosed that all the resident officers of said corporation had resigned, and that Charles Shade, the treasurer, was a resident of and in Lyon county, Iowa; whereupon service was made upon him, as stated. Upon the hearing an order was entered, denying defendant’s motion to vacate the judgment, to which ruling defendant excepted, and has brought the action to his court for review, alleging error in the denial of the motion to vacate the judgment.

[1] It is appellant’s contention that service of the summons upon an officer designated by statute as one of the officers upon whom service of process may be had,. but who resides and is served outside of the state, does not constitute due process of law in an action against a domestic corporation, so as to authorize a judgment for damages against such corporation.

It is respondent’s contention, on the other hand, that section no of the Code of 'Civil Procedure authorizes such service in an action against a domestic corporation, and that such service constitutes due process of law. Section, no provides: “The summons shall be served by delivering a copy thereof as follows: 1. If the action be against a private corporation, to the president or other head of the corporation, secretary, cashier, treasurer, a director or managing agent thereof; but such service can be made in respect to a foreign corporation only when it has property in this state, or the cause of action arose therein, or when such service shall be made within this state personally upon the president, treasurer, secretary, or duly authorized agent thereof. ^ * * Service made in any of the modes provided in this section shall be taken and held to be personal service. * * * ”

None of the other provisions of the section affect the question involved in this appeal. It seems plain to us that the clauses of file section above quoted are intended to distinguish broadly between domestic and foreign corporations as to the mode of service of summons. It will be observed that as to domestic corporations service may be made upon “the president or other head of the corporation, the secretary, cashier, treasurer, a director or managing agent thereof”; while as to foreign- corporations 'such service can -only be made upon “the president, treasurer, secretary or duly authorized agent thereof.” The section also- expressly provides that as to foreign corporations such service shall be made within this state, personally, upon the officers named; while as to domestic corporations the statute does not say that service shall be made within, the state. It is almost universally held that service of -process within the state upon officers of a foreign corporation, pursuant to statutory enactments, is sufficient to bring the foreign corporation within the jurisdiction of the state court, and to authorize the entry of judgment against such corporation in any case; and such statutes are upheld ‘by an overwhelming weight of authority.

If service upon an officer of a foreign corporation within this state may be deemed due process of law, we see no1 reason why service of proceess upon an officer of a domestic corporation residing in a foreign state may not likewise be deemed due* process as well. A domestic corporation is necessarily resident within the state, and cannot remove itself therefrom, either permanently or temporarily. Such corporation is at all times to be deemed an inhabitant of the state, and never beyond the territorial jurisdiction of its courts. A natural person may voluntarily remove from the state, either temporarily or permanently. Where the removal is temporary, the statute prescribes a mode in which process may be served and jurisdiction of the absent defendant obtained by leaving a copy of the summons at the usual dwelling place, with a member of the family over 14 years of age — a mode of substi tuted service. Such service is upheld by the courts, upon the theory that it is reasonably desigried to give the defendant notice of the proceeding in court, and an opportunity to be heard in defense of the action. A corporation is an artificial person, and can be served with process only through its agents. The statute does not say that service of the' summons upon a domestic corporation shall be made within the state; and upon principle we see no reason for adding such limitation 'by construction. Such a corporation is at all times within the territorial jurisdiction of the state courts,- and service upon its agents or officers designated by the statute, without the state, is as reasonably certain, to convey notice of the pendency of the action as would like service upon the same officer within the state. The theory of such statutes is that any of the officers designated, when so served, will take proper and necessary steps to protect the interests of the corporation in the pending proceeding. It appears to have been held at common law that jurisdiction of a corporation could not be acquired by service of process on its officers outside of the state which gave it existence. McQueen v. Middleton Mfg. Co., 16 Johns. (N. Y.) 6; Barnett v. Chicago & Lakage R. R. Co., 4 Hun (N. Y.) 114; Peckham v. North. Parish, 16 Pick. (Mass.) 286. In almost all if not in every state of the Union, statutes have 'been enacted which provide 'that if a foreign 'Corporation engages in business in the state it will be suable there in regard to such business; and service within the state on its officers designated by statute is sufficient to bring the corporation) within the jurisdiction of the state courts. Moulin v. Insurance Co., 24 N. J. Law, 234; Bawknight v. Liverpool, London & Globe Ins. Co., 55 Ga. 195; National Bank of Commerce v. Huntington, 129 Mass. 444; Ex parte Schollenberger, 96 U. S. 369, 24 L. Ed. 853; Hagerman v. Empire State Co., 97 Pa. St. 534; McNichol v. U. S. Merc. Rep. Ag., 74 Mo. 457. The latter case also holds that' such service may become the basis of a judgment in personam. Town of Hinckley v. Kettle River R. Co., 70 Minn. 105, 72 N. W. 835; Clearwater Merc. Co. v. R. J. & R. Shoe Co., 51 Fla. 176, 40 South. 436, 4 L. R. A. (N. S.) 117, 120 Am. St. Rep. 153. In the latter cases it is held that if the mode of service provided in the statute is, under the circumstances, reasonable and appropriate to the case, it is “due process of law,” and, as to a .resident,of the'state, Mill1-give-jurisdiction-Of the person and support; a-personal judgment. It is. also: held, .that .due -process of law , does., not require -that.. there,.. 'be ..actqal . personal, notice to, the party whose.,property,:is in question. It-,is 'sufficient if a kind of notice Is provided .by which, it .is..reasonably,probable that the-party proceeded-against, will be apprised of -what is going on against him, and an, opportunity is offered him, to defend 3 Words and.Phrases, 2251, citing, Happy v. Mosher, 48 N. Y. 313; In re Union Elevated R. Co., 112 N. Y. 61, 19, N. E. 664, 2 L. R. A. 359; City of Indianapolis v. Holt, 155 Ind. 222, 57, N. E. 966, 988, 110; Gilchrist v. Schmidling, 12 Kan. 263; Kansas City v. Duncan, 135 Mo. 571, 37 S. W. 513.

- . -The .purpose of such a statute is-not to bring -the nonresident officer of the corporation, within -the -jurisdiction- of the court,- but to bring the domestic-corporation within its jurisdiction. It does not seek to have the process ' of. the court affect the personal or property rights of- a person or corporation -resident- in another ■state; and therefore is not an attempt to ■ extend the process of the court beyond the territorial limits of the state within which it i-s established. It' follows, that the only. question really involved is whether or not .such service constitutes - due process of -law within -the state. The fundamental lorinciple involved-in “due process of lawl’ is that it shall give sufficient notice of. the pendency of the action or proceeding, and a reasonable- opportunity to1 a defendant to appear and assert his rights before, a tribunal legally constituted to adjudicate such rights. And whenever a statutory mode of service is reasonably designed to accomplish that end service in -accordance therewith constitutes due process of law, and confers jurisdiction on the state court.

[2] Counsel for appellant note the fact that chapter 226, Laws of 1911, being- an amendment to. section 110, C. C. P., provides that service on a domestic corporation, may -be made by delivering a copy to a designated officer -of the corporation, “either within or without the state,” and urge that this enactment is- a legislative recognition of the insufficiency of the existing statute to authorize such service. A legislative declaration as to the construction to be given a previous statute is not conclusive or binding on the courts. The amendment, however, may be regarded as an express legislative adoption of the principle announced in this decision as to what constitutes due process of law. No question of discretion is involved in the ruling of the trial court. It is not alleged that the defendant corporation did not receive notice of the pendency of the action, nor that it has a good defense thereto. We are clearly of opinion respondent is right in his contention, and that the principle underlying the decisions in Clearwater Merc. Co. v. R. J. & R. Shoe Co., 51 Fla. 176, 40 South. 436, 4 L. R. A. (N. S.) 117, 120 Am. St. Rep. 153, Hinckley v. Kettle River R. Co., 70 Minn. 105, 72 N. W. 835, and the cases there cited, is controlling in this case.

The order and judgment of the trial court are therefore affirmed.