Best v. Seaboard Air Line Ry.

October 20, 1905. The opinion of the Court was delivered by The plaintiff brought this action in a court of magistrate, in Barnwell County, S.C. to recover of defendant a penalty of $50, claimed under the act of 1903, for failure to adjust and pay, within the time required by that act, a claim of $4.40 for loss of a barrel of flour during transportation. The complaint further alleged that the defendant was a corporation under the laws of North Carolina and Virginia, with its line of railroad track through Barnwell County, and that the claim for loss had been paid by the defendant after the time required by the act, but before the commencement of the action for the penalty. Defendant appeared in the magistrate court and demurred: (1) On the ground that the magistrate had no jurisdiction of an action against a foreign corporation; (2) that it appeared on the face of the complaint that the claim for loss or damage had been paid by defendant and received by the plaintiff, and that, therefore, no action for the penalty could be maintained. The magistrate overruled the demurrer and gave judgment in favor of the plaintiff for the penalty, $50. On appeal to the Circuit Court raising the same questions, the Circuit Court set aside the judgment of the magistrate and dismissed the complaint, sustaining both grounds of the demurrer. The present appeal by plaintiff questions both these rulings.

1. By sec. 21, of art. V., of the Constitution, it is provided that "Magistrates shall have jurisdiction in such civil cases as the General Assembly may prescribe: Provided, Such jurisdiction shall not extend to cases where the value of property in controversy, or the amount claimed, exceeds one hundred dollars, or to cases where the title to real estate is in question, or to cases in chancery." The General Assembly, by section 71 of the Code of Civil Procedure, prescribed that magistrates shall have civil jurisdiction in: "3. An action for a penalty, fine or forfeiture, where the amount claimed or property does not exceed one hundred dollars." This would seem to give magistrates jurisdiction in an action for a penalty not exceeding one hundred dollars against all defendants who may be subject to the process of that court, or who may voluntarily appear therein.

With respect to the service of the summons on a foreign corporation, it is provided in section 155 of the Code of Civil Procedure, that "such service can be made in respect to a foreign corporation only when it has property within the State, or the cause of action arose therein, or where such service shall be made in this State personally upon the president, cashier, treasurer, attorney or secretary, or any agent thereof." It appears by the complaint that the defendant has property in this State, a line of railroad track extending through Barnwell County, in this State, and is engaged in the business of transporting freight to Ulmer, in Barnwell County, S.C. and has an agent there. Under our statutes, now appearing as section 1779, et seq., volume 1, Civil Code, foreign corporations doing business in this State are made subject to the courts of this State, in all actions or suits arising out of the business or dealings of such corporation with any citizen or corporation within this State. This legislation is broad enough to subject foreign corporations to the jurisdiction of a magistrate, where the magistrate otherwise has jurisdiction of the cause of action, and the foreign corporation appears or is otherwise served with process according to law. By the act of 1898, 22 Stat., 698, sec. 156, Code of Civil Procedure, providing for service by publication (among other things), "where the defendant is a foreign corporation, has property within the State, or the cause of action arose therein, " was so amended as to empower magistrates within their jurisdiction to order service by publication on absent defendants, in the same manner and to the same extent as authorized by sec. 156, to be done by the Circuit Court, or a Judge thereof, or the clerk of the Court of Common Pleas, the master or the probate judge. In this case, however, no question is involved as to the manner of service of process, as it appears on the record that the action was commenced by service of summons and complaint on the 24th day of November, 1903, and that defendant appeared and demurred not only to the jurisdiction of the magistrate, but to the complaint on its merits. In so far, therefore, as the question of jurisdiction over the person depends upon the service of process or appearance of defendant, it is complete. Garrett v. Herring Co., 69 S.C. 278, citing cases.

It is contended that sec. 423, Code of Civil Procedure, limits jurisdiction over foreign corporations to the Circuit Court, in the cases therein specified. That section provides: "An action against a corporation created by or under the laws of any other State, government or country may be brought in the Circuit Court —

"1. By any resident of this State for any cause of action.

"2. By a plaintiff not a resident of this State, when the cause of action shall have arisen, or the subject of the action shall be situated, within this State." This section must be construed consistently with subsequent legislation of this State, subjecting foreign corporations doing business in this State, to the jurisdiction of the Courts of this State. It will be observed that there are no words in the above section which show the intent that all actions against foreign corporationsmust be brought in the Circuit Court. It is not inconsistent with the legislation of the State, which in terms or by necessary implication gives jurisdiction to magistrates to entertain actions against such corporations doing business in this State, at the suit of citizens or corporations of this State arising out of such business, when the action is otherwise within the jurisdiction of the magistrate; for example, a magistrate has no jurisdiction when the amount exceeds one hundred dollars, when the title to real estate is involved, in equitable actions, and when the cause of action arose out of the State. But under this section the Circuit Court has jurisdiction of a suit by a resident against a foreign corporation in any cause of action, even when it arose out of the State. Chafee v. Postal Telegraph Co., 35 S.C. 372,14 S.E., 764. But under subdivision 2 of this section, the Circuit Court has jurisdiction to entertain a suit by a nonresident against a foreign corporation, when the cause of action arose in this State, or the subject of the action shall be situated within the State. It may be that a magistrate has no jurisdiction to entertain such a suit by a non-resident, against a foreign corporation, but we are not called upon to consider that question, as it is not suggested that plaintiff is not a resident of this State, or that the complaint is defective for not alleging that plaintiff is a resident of this State. The case of Chafee v. Postal Telegraph Co., 35 S.C. 372,14 S.E., 764, has no real bearing upon the particular point involved in this case, as that case was decided in 1891, before the legislation of 1897 referred to, and the Court was not considering whether a magistrate had jurisdiction in a case like the present one; but the question there was whether in a suit against a foreign corporation in the Circuit Court a complaint was demurrable for failure to state that the plaintiff is a resident of this State. We, therefore, think the Circuit Court was in error in holding that the magistrate was without jurisdiction in this case.

We concur, however, in the view of the Circuit Court that under the act of February 23, 1903, 24 Stat., 81, an action cannot be maintained for a penalty alone, after a settlement for loss or damage before suit. The statute being penal should receive such strict construction as would not defeat the obvious intent of the legislature. The act expressly provides: "Failure to adjust and pay such claim within the periods respectively herein prescribed, shall subject each common carrier so failing to a penalty of fifty dollars for each and every such failure, to be recovered by any consignee or consignees aggrieved, in any Court of competent jurisdiction: Provided, That unless such consignee or consignees recover in such action the full amount claimed, no penalty shall be recovered, but only the actual amount of loss or damage, with interest as aforesaid * * *." It seems that the plain meaning of the statute is to make recovery of the amount claimed in a Court of competent jurisdiction a condition precedent to a recovery of the penalty, as the statute expressly says that no penalty shall be recovered unless the consignee recover the full amount claimed in such action. The term "recover," when considered by itself, is not the usual or apt word to indicate a voluntary payment or receipt of money for damages suffered, but ordinarily means the obtaining in a suit of the right to something by a verdict and judgment of a Court, and that this is the meaning in the present statute is manifest by the context — "recover in such action." The object of the statute was not to penalize the carrier for merely refusing to pay a claim within the time required, whether just or unjust, but the design was to bring about a reasonably prompt settlement of all proper claims, the penalty, in case of a recovery in a Court, operating as a deterrent of the carrier in refusing to settle just claims, and as compensation of the claimant for the trouble and expense of the suit which the carrier's unreasonable delay and refusal made necessary.

It is true, that the statute authorizes a suit for the penalty in the same action for the loss or damage, but that is very far from saying that the penalty is not dependent upon the recovery of the claim by action in Court. Doubtless the act provided for such a joinder mainly because the recovery of the penalty is dependent upon recovery at law of the claim.

The judgment of the Circuit Court is affirmed.