Milbank v. Standard Motor Construction Co.

This is an appeal by defendant, a New Jersey corporation, from a personal judgment rendered against it after default and subsequent to the denial of its motion made by special appearance to quash service of summons. The affidavit of service attached thereto recited that personal service had been made upon the defendant corporation “by serving Henry W. Runyon, Jr., its California business agent ...” The motion of the defendant challenged the sufficiency of the service of the summons under section 411 of the Code of Civil Procedure, which then read: “The summons must be served by delivering a copy thereof as follows: ... If suit is against a foreign corporation . . . doing business and having a man

The defendant first contends that the judgment is void because it is not so far engaged in doing business in this state as to be subject to the jurisdiction of its courts. The authorities, both state and federal, have found difficulty in laying down an all-embracing rule as to what constitutes “doing business”, and many instances of irreconcilable conflict have arisen. It has been held by numerous eases, however, that in order for a foreign corporation to be doing business within the state it must transact here some substantial part of its ordinary business by its agents and officers selected for that purpose. (Davenport v. Superior Court, 183 Cal. 506 [ 191 Pac. 911 ]; Walton N. Moore Dry Goods Co. v. Commercial Industrial Co., 276 Fed. 590 , 594; Knapp v. Bullock Tractor Co., 242 Fed. 543 .) The phrase “doing of business” is equivalent to the words “transacting business” and has reference to a continuation in some form of business, but ordinarily does not apply where a corporation does only a single act of business within the state. (General Conference of Free Baptists v. Berkey, 156 Cal. 466 [ 105 Pac. 411 ].) There must be the carrying on of business to such an extent by the corporation as to manifest its presence in the state even though the transactions are entirely interstate in character. (International Harvester Co. v. Kentucky, 234 U. S. 579 [ 34 Sup. Ct. 944 , 58 L. Ed. 1479 , 1483].)

Directing our attention to the activities of defendant in this state, we are of the opinion that they were sufficient in character to constitute “doing business” for the purpose of the service of summons. The continuous endeavor to service the engines of customers in order to correct their mechanical defects and increase their efficiency was a substantial and important branch of its ordinary business. It is apparent that the maintenance of such a service does not logically fall within the category of a merely casual or incidental activity of defendant. (Cone v. New Britain Machine Co., 20 Fed. (2d) 593, 595; Beach v. Kerr Turbine Co., 243 Fed. 706 .)

The defendant further maintains that the service of process was not made on a “managing” or “business agent”. In the construction of this phrase there has also

It is finally urged that Runyon lacked the specific authorization from the defendant corporation required by section 411 of the Code of Civil Procedure as construed in Jameson v. Simonds Saw Co., 2 Cal. App. 582 [ 84 Pac. 289 , 292], where it was said that the status of “managing” or “business agent” could not be created “by construction or implication, contrary to the intention of the parties”.

But we are of the opinion that this language could never have been intended to extend to a situation similar to the one presented by the instant case. Such a rule would permit a foreign corporation to avoid the jurisdiction of the courts of this state by the mere denial of its agent’s authority. The true rule is found in the case of Connecticut Mutual Life Ins. Co. v. Spratley, 172 U. S. 602 [ 19 Sup. Ct. 308 , 313, 43 L. Ed. 569 , 573], which reads as follows: “In such case it is not material that the officers of the company deny that the agent was expressly given such power, or assert that it was withheld from him. The question turns upon the character of the agent, whether he is such that the law will imply the power and impute the authority to him, and if he be that kind of an agent, the implication

It follows that the judgment should be, and it hereby is, affirmed.

Conrey, P. J., and Houser, J., concurred.

A petition by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on July 17, 1933.