Lambert v. Schell , 235 N.C. 21 ( 1952 )

69 S.E.2d 11 (1952) 235 N.C. 21

LAMBERT
v.
SCHELL et al.

No. 317.

Supreme Court of North Carolina.

February 1, 1952.

Mull, Patton & Craven, Morganton, for plaintiff appellee.

Deal, Hutchins & Minor, Winston-Salem, for defendant appellants.

BARNHILL, Justice.

Finding of Fact No. 2 (No. 4 in the judgment) quoted in the above statement of facts, contains the decisive facts in this case. There the judge details the nature and extent of the activities of the corporate defendant within this State. Defendant Walker is the local agent or representative through whom the corporation acts in furtherance of the objectives there outlined.

Is he a local agent within the meaning of G.S. § 1-97, upon whom process may be served, so as to subject the corporate defendant to the jurisdiction of the courts of this State? This is the one question posed for decision on the appeal of the Union Pacific.

Process issued out of a court of this State may be served on a nonresident under the "local agent" provision of G.S. § 1-97 so as to subject it to the jurisdiction of the courts of this State only when it is present and doing business within this State through a duly authorized agent possessing general or limited authority to perform some of the functions authorized by its charter. That is, it cannot be served with process unless it an be "found" within the State, and it may be found within the State only when it is engaged in exercising in this State some of the functions for which the corporation was created, which are not purely incidental to the powers granted. McDonald Service Co. v. People's Nat. Bank, 218 N.C. 533, 11 S.E. 2d 556; Cunningham v. Southern Express Co., 67 N.C. 425; Whitehurst v. Kerr, 153 N.C. 76, 68 S.E. 913; Schoenith, Inc., v. Adrian X-Ray Manufacturing Co., 220 N.C. 390, 17 S.E.2d 350; Plott v. Michael, 214 N.C. 665, 200 S.E. 429; Radio Station WMFR, Inc., v. Eitel-McCullough, 232 N.C. 287, 59 S.E.2d 779; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587.

Briefly stated, where no property is seized or attached, there are two requisites to jurisdiction of a State court over a foreign corporation: (1) the corporation must be doing business in the State, and (2) it must be present in the State in the person of an authorized officer or agent. Gloeser v. Dollar S. S. Lines, 192 Minn. 376, 256 N.W. 666, 95 A.L.R. 1470.

Doing business in this State means doing some of the things or exercising some of the functions in this State for which the corporation was created. Ruark v. Virginia Trust Co., 206 N.C. 564, 174 S.E. 441; Radio Station, WMFR, Inc., v. Eitel-McCullough, supra. Harrison v. Corley, 226 N.C. 184, 37 S.E.2d 489, and cases cited. And the business done by it here must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction and is, by its duly authorized officers and agents, present within the State. People's Tobacco Co. v. American Tobacco Co., supra.

A corporation performs the functions authorized by its charter through the medium of officers and agents, and an agent of a foreign corporation through whom the corporation may be "found" within the State and upon whom service of process may be had so as to subject the corporation to the jurisdiction of the court is one who exercises some control over and discretionary power in respect to the corporate functions of the company. McDonald Service Co. v. People's Nat. Bank, supra [218 N.C. 533, 11 S.E.2d 558.]

"A local agent is one who stands in the shoes of the corporation in relation to the particular matters committed to his care. He must be one who derives authority from his principal to act in a representative capacity. Watson v. [Oregon Moline] Plow Co., 113 Wash. 110, 193 P. 222, and who may be properly termed a representative of the foreign corporation. St. Clair v. Cox, 106 U.S. 350, 1 S.Ct. 354, 27 L.Ed. 222; Annotation 113 A.L.R. 41. He must have the power to represent the foreign corporation in the transaction of some part of the business contemplated by its charter, Booz v. Texas & P. R. Co., 250 Ill. 376, 95 N.E. 460; and he must represent the corporation in its business in either a general or limited capacity. Peterson v. Chicago, R. I. & P. R. Co., 205 U.S. 364, 27 S.Ct. 513, 51 L.Ed. 841. Thus the question is to be determined from the nature of the business and the extent of the authority given and exercised. J. B. Blades Lumber Co. v. Finance Co. [of America at Baltimore], 204 N.C. 285, 168 S.E. 219." McDonald Service Co. v. People's Nat. Bank, supra; Plott v. Michael, supra; Conn. Mutual Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569; City of Chicago Board of Trade v. Hammond Elevator Co., 198 U.S. 424, 25 S.Ct. 740, 49 L.Ed. 1111.

It is well settled that soliciting in a State by a foreign common carrier of the business of transporting persons and property between the states is not the doing or transaction of business within the State so as to bring the corporation within the jurisdiction of the local courts in an action in personam, at least where such foreign railroad corporation has no line in the State and does no business there other than soliciting business for interstate commerce, even though it maintains an office and employs an agent within the State, because this is merely incidental to the main business of the corporation. 18 Fletcher Cyc. Corporations, Perm. ed., 382, sec. 8719; Green v. Chicago B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916; Philadelphia & Reading R. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 281, 61 L.Ed. 710; Annotations 46 A.L.R. 583 and 95 A.L.R. 1480; 34 Mich.Law Rev. 979. (See other cases cited in Fletcher.)

Thus the maintenance of an office and the employment by a foreign corporation of a "district freight and passenger agent * * * to solicit and procure passengers and freight to be transported over the defendant's line", and having under his direction "several clerks and various traveling passenger and freight agents" has been held not to constitute "doing business within the state." Philadelphia & Reading R. Co. v. McKibbin, supra; 18 Fletcher Cyc. Corporations 384.

While the judge found that Walker's duties in part were "generally to conduct the business of said railroad in this state", the business of "said railroad" conducted within this State is spelled out in particularity. It includes the commission of no act, or the performance of no duty, which would constitute "doing business" such as would subject it to the jurisdiction of the courts of this State.

On this record defendant Walker, as agent of the corporate defendant, was not authorized to issue a bill of lading or sell a ticket or route a shipment or do anything else that constitutes a part of the usual and ordinary business of a common carrier, for the Union Pacific has no part of its railroad in this State and is engaged in no business here which requires or necessitates any such activity on the part of any of its agents.

The duty assigned to him was to induce local shippers to request that their shipments to and from the Pacific Northwest be so routed that the Union Pacific would constitute one of the connecting carriers. To accomplish this objective, he was engaged in advertising, soliciting, and creating good will for and on behalf of his principal. These are activities which are purely incidental to the business of a common carrier, as they are to any other large business enterprise.

Likewise, it is alleged in the complaint, and the court found, that it was the duty of Walker "to adjust grievances." However, the nature of the "grievances" is not disclosed, and it is neither alleged nor found that he ever adjusted any type or kind of grievance against the corporate defendant. It is a matter of common knowledge that consignors ordinarily adjust their complaints or grievances with the initial, and the consignees with the delivering, carrier. The Union Pacific maintains neither position within this jurisdiction. Therefore, in view of its limited activities within this State, as found by the court, this allegation and finding must be deemed too general and indefinite to have any substantial meaning. It is the statement of a conclusion rather than the statement of a fact.

It follows that the corporate defendant is not doing business or maintaining a local agent within this State so as to render it amenable to process issued in this cause. The conclusion to the contrary made by the court below is unsupported by the evidence offered or the facts found and must be reversed.

Appeal of Individual Defendants.

Paragraph 5 of the complaint does not contain the allegation of a single ultimate fact necessary to a statement of plaintiff's alleged cause of action. Some of the facts there stated are evidentiary in nature and some are wholly irrelevant. The competency of evidence in respect to still others will perhaps depend upon the developments at the trial. The admissibility of evidence in respect thereto is best left to the trial judge.

But the defendants do not seek to strike the paragraph as a whole. They seek only to strike allegations (1) referring to one Newton, a coemployee of plaintiff's intestate, (2) of the rapid advancement of plaintiff's intestate in his employment, (3) the duty of Walker to solicit plaintiff's intestate and others, and (4) prior entertainments by Walker of plaintiff's intestate.

The references to Newton are clearly impertinent and irrelevant. The other allegations to which objection is entered are evidentiary and repetitious. Evidence in respect thereto may be tendered at the hearing in support thereof under the allegations contained in paragraph 4 of the complaint. The injection of matter relating to Newton is sufficiently prejudicial to warrant a reversal of the judgment on the motion to strike. Hinson v. Britt, 232 N.C. 379, 61 S.E.2d 185.

On both appeals the judgment entered is reversed.