Gursky v. . Blair

This is a motion on behalf of the defendants to set aside the service on them of the summons and complaint in the action.

On April 5, 1912, the defendants, or their predecessors in office, by an order of the United States District Court for the Eastern District of Michigan, were appointed the receivers of the Pere Marquette Railroad Company, a corporation organized and existing under the laws of the state of Michigan, and operating a railroad in that state.

On April 12 of the same year, the plaintiff, while a passenger upon such railroad, was injured through the negligence of the receivers or their employees and servants at Grand Rapids in the state of Michigan.

The plaintiff brought this action against the receivers in the Supreme Court of this state to recover damages for his injuries. The summons in the action was served at the city of New York on one E.B. Johns, the general eastern agent of the receivers, with offices in that city, and also on William L. Marcy at Buffalo, N Y, who was the agent of the Pere Marquette Railroad Company designated under section 16 of the General Corporation Law for the service of process on it in this state.

It is claimed that such service was sufficient to reach the receivers under the provisions of section 66 of the Judicial Code of the United States. That section is as follows: "Section 66. Every receiver or manager of any property appointed by any court of the United States may be sued in respect of any act or transaction of his in carrying on the business connected with such property, without the previous leave of the court in which such receiver or manager was appointed; but such suit shall be subject to the general equity jurisdiction of the court in which such manager or receiver was appointed so far as the same may be necessary to the ends of justice."

In Eddy v. Lafayette (163 U.S. 456, 464) the court said of this statute and its application to receivers of railroad companies, that it "was intended to place receivers upon the same plane with railroad companies, both as respects their liability to be sued for acts done while operating a railroad and as respects the mode of service." Eddy v. Lafayette was an action brought in the courts of the Indian Territory against the receivers of the Missouri, Kansas and Texas Railway, a foreign corporation, and under the statutes in force in the territory the railroad company could be reached with the process of the territorial court by service of the same within the territory upon a station agent of the receivers. The holding of the United States Supreme Court was that the service on a station agent employed by the receivers was sufficient to bring them into court.

The plaintiff in the case at bar urges that inasmuch as the defendants were appointed under the Federal law they are subject to the liability mentioned in section 66 of the Judicial Code, and that section as construed by the Supreme Court authorizes such service of process upon the receivers as was made in this case. I think that view of the law cannot be sustained. Eddy v. Lafayette adopts the same practice in serving process on railroad receivers as that which controls in serving foreign corporations. Section 432 of the Code of Civil Procedure regulates the service of process on foreign corporations in this state, and it provides: "Section 432. Personal service of the summons upon a defendant, being a foreign corporation, must be made by delivering a copy thereof, within the State, as follows:

"1. To the president, vice-president, treasurer, assistant treasurer, secretary or assistant secretary; or, if the corporation lacks either of those officers, to the officer performing corresponding functions, under another name.

"2. To a person designated for the purpose as provided in section 16 of the General Corporation Law.

"3. If such a designation is not in force, or if neither the person designated, nor an officer specified in subdivision first of this section, can be found with due diligence, and the corporation has property within the State, or the cause of action arose therein; to the cashier, a director, or a managing agent of the corporation, within the State."

4. In certain contingencies, not important here, upon the secretary of state.

Under this section of the Code of Civil Procedure the service of the summons on William L. Marcy, the designated agent for the service of process on the Pere Marquette Railroad Company, was not sufficient service upon the receivers. The receivers were not required to designate a person on whom process might be served (United States v. Nixon, 235 U.S. 231), and Mr. Marcy was not their agent. The case is not within the reasoning of Eddy v.Lafayette because the station agent served in that case was the agent of the receivers as distinguished from an agent of the railroad company.

Neither was the service of the summons on E.B. Johns, the general eastern agent of the receivers in the city of New York, sufficient service upon the receivers under the Code of Civil Procedure, even if Johns is regarded as the managing agent of the defendants. The Code contemplates that before service is made on the managing agent of a foreign corporation diligent efforts should be made to serve the officers of the corporation or its agent designated under the General Corporation Law. Service upon the managing agent can be resorted to only after efforts to reach the corporation more directly have failed. So far as the papers in this case show the receivers could have been served personally within the state, but no efforts to find them were made. For all that appears the receivers might have been in the New York city office when Johns was served. The papers should show that the plaintiff could not in the exercise of due diligence make service on the receivers within this state.

The orders appealed from should be reversed, with costs, and the question certified answered in the negative.

HISCOCK, COLLIN and HOGAN, JJ., concur; SEABURY and POUND, JJ., dissent; WILLARD BARTLETT, Ch. J., not voting.

Orders reversed.