Radio Station WMFR, Inc. v. Eitel-McCullough, Inc.

59 S.E.2d 779 (1950) 232 N.C. 287

RADIO STATION WMFR, Inc.
v.
EITEL-McCULLOUGH, Inc.

No. 669.

Supreme Court of North Carolina.

June 9, 1950.

Harriss H. Jarrell, High Point, for plaintiff, appellee.

B. L. Herman, E. F. Upchurch, Jr., High Point, for defendant, appellant.

SEAWELL, Justice.

If the findings of fact are supported by the evidence they are as conclusive as the verdict of a jury and are not subject to review. Matthews v. Fry, 143 N.C. 384, 55 S.E. 787; Cox v. Boyden, 175 N.C. 368, 95 S.E. 548; Tyer v. J. B. Blades Lumber Co., 188 N.C. 268, 124 S.E. 305; Tinker v. Rice Motors, Inc., 198 N.C. 73, 150 S.E. 701; J. B. Blades Lumber Co. v. Finance Co. of America, 204 N.C. 285, 168 S.E. 219; Brown v. Tennessee Coal, Iron & R. Co., 208 N.C. 50, 178 S.E. 858. But this principle does not preclude the review of inferences or conclusions of law. Western Carolina Power Co. v. Moses, 191 N.C. 744, 747, 133 S.E. 5.

In the case at bar the objection made was not that the facts found are not supported by the evidence but that the facts found and incorporated in the judgment do not support the judgment itself. In this case the court was passing on the single question as to whether service of summons upon the Secretary of State wa valid and the objection was pointed to the single question of law and fact, to be inferred from the more specific findings of fact, as to whether the defendant was doing business in this state. The finding of fact number one is obviously an inference drawn from the more specific facts found in the other numbered paragraphs and the validity of its finding and conclusion of law rests within their compass. It remains only to be seen if the findings of fact are sufficient to sustain the ruling of the court below.

Justice Connor, in Commercial Inv. Trust v. Gaines, 193 N.C. 233, 136 S.E. 609, 610, stated: "It has been generally held that a foreign corporation cannot be held to be doing business in a state and therefore subject to its laws, unless it shall be found as a fact that such corporation has entered the state in which it is alleged to be doing business, and there transacted, by its officers, agents, or other persons authorized to act for it, the business in which it is authorized to engage by the state under whose laws it was created and organized. The presence, within the state, of such officers, agents, or other persons, engaged in the transaction of the corporation's business, with citizens of the state, is generally held as determinative of the question as to whether the corporation is doing business in the state."

In Ruark v. Virginia Trust Co., 206 N.C. 564, 174 S.E. 441, 442, Stacy, C. J., states the rule in this way: "The expression ``doing business in this State,' as used in C.S. § 1137 (now G.S. § 55-38), means engaging in, carrying on, or exercising, in this state, some of the things, or some of the functions, for which the corporation was created."

What, then, has the defendant done to bring itself within the rule expressed in Commercial Inv. Trust Co. v. Gaines, supra, and Ruark v. Virginia Trust Co., supra?

A careful perusal of the findings of fact reveals that the defendant, a foreign corporation domesticated under the laws of the State of California, is engaged in the manufacture, for sale in wholesale lots, of filament tubes and that it has chosen to sell its products in North Carolina to six exclusive retail outlets designated "dealer representatives." These retail outlets in turn sell the product to consumers. That such is true is borne out by the finding that the defendant employs a sales representative to aid in promotion of sales to the so-called "dealer representatives" and an agent to facilitate the collection of delinquent or slow accounts owed by the dealer representatives. That the dealer representatives are not agents of the defendant and that the defendant is not doing business in this state because of any acts of such dealer representatives is most apparent. We believe the rule laid down by Stacy, C. J., in Cape Fear Rep. v. Cobb, 190 N.C. 375, 129 S.E. 828, 829, to be most apt: "He who acts as distributor for another, and not merely as distributor of goods manufactured by the other, acts as his agent." And the finding that there is a continuous solicitation of orders carried on by the defendant through such dealer representative is repugnant to the other findings.

The defendant employs a sales representative who travels in North Carolina to aid in promotion of sales to dealer representatives and to facilitate sales directly with customers in company with such dealer representatives. Ordinarily the tubes are shipped from the defendant in California directly to local dealer representatives, but sometimes are shipped directly to customers.

This Court held in Plott v. Michael, 214 N.C. 665, 200 S.E. 429, that the presence in this State of a travelling salesman of a foreign corporation who merely took orders subject to approval at the home office of the corporation for goods to be subsequently shipped into the state did not constitute doing business in the state on the part of the corporation. Such ruling has universal acceptance. Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S. Ct. 595, 51 L. Ed. 916; International Shoe Co. v. Lovejoy, 219 Iowa 204, 257 N.W. 576, 101 A.L.R. 122; Roark v. American Distilling Co., 8 Cir., 97 F.2d 297; 18 Fletcher's Cyclopedia Corporations, sec. 8718; 20 C.J.S., Corporations, § 1920 (8); 23 Am.Jur., sec. 38.1. But here the scope of activity of the employee of the defendant appears to be even more restricted.

The defendant employs the services of an agent to investigate complaints by customers in North Carolina regarding inferior tubes manufactured by defendant. It does not appear that he is vested with any authority to compromise or adjust any matter or to deal with the customer in any way except to acquire information upon which the defendant may or may not act. Indeed, the defendant encloses in each carton of its product a written guarantee, such guarantee containing an outline of procedure to be followed by a customer in returning defective tubes to defendant. Such procedure requires return of the tubes directly to the defendant by railway express and subsequent reshipping directly to the customer by the defendant.

Lastly, the defendant employs an agent or agents who facilitate the collection of delinquent or slow accounts, owed by the dealer representatives in North Carolina, through personal contact. We must assume that the word "facilitate," defined by Webster to mean "to make easy or less difficult; to free from difficulty or impediment," was used advisedly by the court below and that in fact such employee had no authority to act for the defendant beyond the scope of facility, and did not collect or receive money, on behalf of the defendant, from the debtor.

"To give the courts of a state jurisdiction in personam over a foreign corporation, otherwise than by voluntary appearance, it is essential that it not only be doing business, either intrastate or interstate, within the state, but that such business which the corporation is conducting in the state be a part of that for which it was organized and not a mere incident thereto." 18 Fletcher Cyclopedia Corporations, sec. 8714, n. 20, and cases cited thereunder.

In Oyler v. J. P. Seebury Corporation, D.C., 29 F. Supp. 927, 928, a case markedly similar to this, the court, in sustaining the motion of defendant to quash service and dismiss the suit, said: "An ineffectual is not changed to an effectual by being joined with another ineffectual. A non-resident corporation does not hazard its isolation by doing permitted things in an outside state, even though there are several of them."

We think that this succinctly states the proposition at hand. Mere incidental services not substantially of the character of the business carried on by the defendant is not of the nature to subject it to the control and regulation of the state law or to invoke state law for its protection or to bring it within the pale of the statute which makes "doing business" in this state essential to its application.

It follows that the service of summons cannot be sustained as valid, and the judgment is, therefore, reversed.

Reversed.