State Ex Rel. American Laundry MacHinery Co. v. District Court , 98 Mont. 278 ( 1934 )

I think my associates are in error in holding that the American Laundry Machinery Company is not doing business in Montana, within the meaning of section 9111, Revised Codes of 1921. The case of General F.E. Co. v. Northwestern A.S. Co.,65 Mont. 371, 211 P. 308, is not controlling here. It is distinguishable on three grounds. In the first place that case dealt with the question whether the corporation was doing business which would subject it to statutes prescribing conditions to doing business in this state, and not whether it was doing such business as would render it amenable to service of process. That there is a wide difference in the two situations is recognized by the authorities. The difference lies in the fact that in the one case the commerce clause of the Federal Constitution has application, and in the other it has not. (See note in 60 A.L.R. 995, 996, and cases therein cited.) Secondly, in the General Fire Extinguisher Case the corporation had been a party to two isolated transactions only. Here it is shown that the company involved has, over a period of years, sold many thousands of dollars' worth of machinery in Montana. Hilton was formerly the traveling salesman for this state, but that position is now occupied by McCunniff, who frequently comes to Montana in the interests of the company. It thus appears, at least prima facie, that the operations of the company were continuous, having some permanence and continuity, as distinguished from isolated transactions. If this was not so, the company should have submitted proof to that effect in support of its motion. The record is not clear as to the exact method under which the agent operated in this state. That he had a wide discretion in attending to the business of the corporation is apparent, since he was sent to Montana to prosecute the action in its behalf wherein the counterclaim was interposed against the company. He was the alter ego of the corporation.

I think the case is controlled by that of InternationalHarvester Co. v. Kentucky, 234 U.S. 579, 34 Sup. Ct. 944,58 L. Ed. 1479. In that case the foreign corporation maintained agents in Kentucky to solicit orders. At one time it had a certain designated principal place of business in that state, with a designated agent upon whom process could be served, but this agency had been revoked. The authority of the agents was in writing and specifically provided that they should not have any headquarters or place of business in Kentucky. Their authority was limited to taking orders subject to the approval of the general agent without the state. They had authority to receive money on debts due the company, but not to compromise claims. The instructions also stated to the agents that "anything that is done that places the company in the position where it can be held as having done business in Kentucky will not only make the man transacting the business liable to a fine of from $100 to $1,000 for each offense, but it will make the company liable for doing business in the state without complying with the requirements of the laws of the state. We will therefore depend upon you to see that these instructions are strictly carried out." The Supreme Court of the United States held that the corporation was doing business in Kentucky, saying: "Upon this question the case is a close one, but upon the whole we agree with the conclusion reached by the court of appeals, that the Harvester Company was engaged in carrying on business in Kentucky. We place no stress upon the fact that the Harvester Company had previously been engaged in doing business in Kentucky, and had withdrawn from that state for reasons of its own. Its motives cannot affect the legal questions here involved. In order to hold it responsible under the process of the state court, it must appear that it was carrying on business within the state at the time of the attempted service. As we have said, we think it was. Here was a continuous course of business in the solicitation of orders which were sent to another state, and in response to which the machines of the Harvester Company were delivered within the state of Kentucky. This was a course of business, not a single transaction. The agents not only solicited such orders in Kentucky, but might there receive payment in money, checks, or drafts. They might take notes of customers, which notes were made payable, and doubtless were collected, at any bank in Kentucky. This course of conduct of authorized agents within the state in our judgment constituted a doing of business there in such wise that the Harvester Company might be fairly said to have been there doing business, and amenable to the process of the courts of the state."

Thirdly, in the General Fire Extinguisher Case it appeared that the principal business of the corporation was that of fabricating machinery. The record here does not show that the laundry machinery company has any other business than that of selling machinery. Much of that business, according to the record, is done in Montana. That being so, it follows that the company is doing business in Montana and that service upon its agent, McCunniff, in this state was service on the corporation (compare American Asphalt Roof Corp. v. Shankland,205 Iowa, 862, 219 N.W. 28, 60 A.L.R. 986), unless the corporation was immune from service upon its agent, who was in attendance upon a trial as a witness in an action instituted by the company in this state.

I express no opinion on the question whether the corporation was immune from service of process under the circumstances, since that question is not discussed in the majority opinion.

I agree that the individual defendants were immune from service of process affecting them personally, while they were serving as witnesses.

Rehearing denied January 28, 1935.

Cause taken to Supreme Court of the United States by writ of certiorari March 12, 1935. Writ denied April 29, 1935.