Harry Gill Co. v. Superior Court

This is a petition by The Harry Gill Company, a corporation, for a writ of mandate seeking to compel the Superior Court of Santa Clara County to quash service of summons made upon petitioner. The sole issue presented is whether petitioner, as a foreign corporation, is amenable to service of process and the jurisdiction of the California courts.

In H. Liebes & Co. v. Erica Shoes, Inc., 237 Cal.App.2d 25 , 27-28 [ 46 Cal.Rptr. 470 ], we stated the applicable principles as follows: “Under subdivision 2 of Code of Civil Procedure section 411, which prescribes the means by which service of summons must be made as against a foreign corporation, it is requisite, in order that a court may acquire jurisdiction over such a corporation, that the corporation be ‘doing business in this State. . . .’ The meaning of this term as applied to jurisdiction to maintain litigation is stated in Henry R. John & Son v. Superior Court, 49 Cal.2d 855 , 858 [ 323 P.2d 437 ], as follows: ‘That term is a descriptive one that the courts have equated with such minimum contacts with the state “that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” (International Shoe Co. v. Washington, 326 U.S. 310 , 316 [ 66 S.Ct. 154 , 90 L.Ed. 95 , 161 A.L.R. 1057 ].) Whatever limitation it imposes is equivalent to that of the due process clause. “ ‘ [D]oing business’ within the meaning of section 411 of the Code of Civil Procedure is synonymous with the power of the state to subject foreign corporations to local process.’’ (Eclipse Fuel etc. Co. v. Superior Court, 148 Cal.App.2d 736 , 738 [ 307 P.2d 739 ].)’ (See also Empire Steel Corp. v. Superior Court, 56 Cal.2d 823 , 831 [ 17 Cal.Rptr. 150 , 366 P.2d 502 ].) ‘Whether a foreign corporation is doing business within this state so that jurisdiction may be constitutionally exercised depends upon the circumstances of each individual case. [Citations.] . . . [T]he analysis is concerned with weighing the various relevant “contacts’’ by the foreign corporation within the state attempting to exercise jurisdiction. [Citation.]’ (Empire Steel Corp. v. Superior Court, supra, p. 831.) In determining whether jurisdiction may constitutionally be assumed the following factors have received attention by our courts: ‘The interest of the state in providing a forum for its residents [citation] or in regulat

In the instant ease an action for damages for personal injuries was filed in respondent court against petitioner, the Palo Alto Unified School District and Ronald Skillieorn, an employee of the school district. The amended complaint filed therein alleged that on or about August 6, 1963 one Stephen E. Schneider, a minor, the real party in interest, sustained injuries when a vaulting pole, furnished him by the Palo Alto Unified School District and manufactured, supplied and sold by petitioner, broke while he was using it, causing him to fall. Petitioner was served by service upon the Secretary of State pursuant to Corporations Code sections 6501-6502, whereupon petitioner moved to quash service of summons on the ground that it was a foreign corporation not doing business in California and not subject to the jurisdiction of respondent court. The motion was supported by the declaration of petitioner’s president which stated essentially that petitioner manufactures and distributes track and field equipment throughout the United States ; that it does not now, nor has it ever, done business in California ; that it has no representatives in California, and that its only business office and plant are located in Urbana, Illinois.

No declaration was filed in opposition to that submitted by petitioner. However, when the motion came on for hearing the real party in interest presented the testimony of Marvin Stroh, who testified as follows: That he owns Stroh & Co., a company located in San Francisco that sells athletic equipment ; that Stroh & Co. started in business in 1951 and since that time has placed approximately 15-20 orders per year with petitioner; that Stroh & Co. has petitioner’s catalog and this catalog illustrates petitioner’s products and furnishes prices; that every year when petitioner’s product line changes, it sends its new catalogs to Stroh & Co. and its other California dsitributors; that when Stroh & Co. requires additional copies of the catalog, petitioner furnishes them; that

Alluding to the scope of our review, we note that the evidence adduced is not conflicting. Accordingly, we are not bound by the trial court’s findings based on the evidence because the determination is a matter of law. (Cosper v. Smith & Wesson Arms Co., 53 Cal.2d 77 , 81 [ 346 P.2d 409 ]; Sims v. National Engineering Co., 221 Cal.App.2d 511 , 513 [ 34 Cal.Rptr. 537 ]; Emsco Pavement etc. Corp. v. City of Los Angeles, 176 Cal.App.2d 760 , 766 [ 1 Cal.Rptr. 814 ].) We have concluded, however, that the trial court’s determination was correct and that it acted properly in denying the motion to quash the summons. In reaching this conclusion we have determined, upon an analysis of petitioner’s activities, that they provide the minimum contacts sufficient to sustain service of process upon a foreign corporation.

The facts presented to the trial court show, essentially, that petitioner regularly sent a substantial quantity of its products into this state through four independent distributors to whom petitioner each year furnished catalogs illustrating its products and giving the prices therefor; that the goods ordered were shipped either to the distributors or directly to the consumer in this state; that on occasions, Stroh & Co. would purchase petitioner’s goods from the other California distributors; and that petitioner sent its representatives to conventions held in California at which it would display samples, put on exhibits for the dealers and others, and at which catalogs and price lists were made available.

Analyzing the foregoing activities on the part of petitioner foreign corporation in the light of the decisional law of this state, we find that the crux of the holding in the cases which have found similar activities sufficient to provide the necessary minimum contacts to sustain service of process is that the sale by a foreign corporation of a substantial quantity of its products in this state when combined with activities consisting of regular and continuous solicitation of customers or the promotion of sales in this state constitutes “doing business” in California. (See H. Liebes & Co. v. Erica Shoes, Inc., supra, p. 27; Carl F. W. Borgward, G.M.B.H. v. Superior Court, 51 Cal.2d 72 [ 330 P.2d 789 ]; Kneeland v. Ethicon Suture Laboratories, Inc., 118 Cal.App. 2d 211 [ 257 P.2d 727 ]; Cosper v. Smith & Wesson Arms Co., supra, p. 77; Sims v. National Engineering Co., supra, p.

We note, however, that “doing business” in this state does not necessarily depend upon continuous activity resulting in substantial contact or upon a quantitative consideration of the activities, but in the analysis of the foreign corporation’s activities “in terms of their ‘quality and nature, ’ and their connection with the obligations sued upon,” (Empire Steel Corp. v. Superior Court, 56 Cal.2d 823 , 832 [ 17 Cal.Rptr. 150 , 366 P.2d 502 ].) Thus, in Liebes, we held that the activities of a New York shoe manufacturing corporation consisting in the selling of its products through California retailers, and the sending of representatives two or three times each year to call on the retailers and receive orders for its shoes constituted “doing business” in this state subjecting the foreign corporation to service of process in a personal injury action based on breach of warranty arising out of an allegedly defective shoe manufactured by the corporation in New York and sold in California by a retailer to the person injured. Illustrative of the “doing business” concept delineated in Empire are Twiss and McGee v. International Life Ins. Co., 355 U.S. 220 [ 78 S.Ct. 199 , 2 L.Ed.2d 223 ]. In Twiss, the sole California contacts of the defendant corporation consisted in the entry of one of its vessels into a California port on one occasion and the fact that the corporation enjoyed the port’s facilities for the

Similarly, in Borgward, the petitioner, a German corporation, was held amenable to process in California in an action relating to a contract which it entered into with the plaintiffs, the real parties in interest, whereby the petitioner promised that the plaintiffs’ franchise to market the petitioner’s products in an assigned area would not be terminated. The court noted that not only were the petitioner’s products sold in large quantities in California through an independent importer, but also that the petitioner, on three occasions, sent an agent to California for a stay of several days to negotiate and arrange for the distribution of the petitioner’s products in California, and the alleged cause of action was directly related to the activities of this agent in California.

A case factually similar to the one at bench and one relying strongly on the connection of the activities of the foreign corporation with the obligation sued upon is Waco-Porter Corp. v. Superior Court, 211 Cal.App.2d 559 [ 27 Cal.Rptr. 371 ], wherein the foreign corporation was sued for damages for personal injuries suffered by the plaintiff in an accident resulting from the use of high school gymnasium equipment manufactured by said corporation. The equipment manufactured by the foreign corporation found its way into California through a California corporation which was the exclusive distributor and sales representative in Northern California for such equipment and which the latter corporation purchased outright from the former in Illinois. The only physical presence by any of the foreign corporation’s agents or representatives consisted of a visit by its president after the subject accident for the purpose of investigating and conferring with the president of the California corporation concerning the accident. In denying mandamus to compel the quashing of service of summons upon the foreign corporation, the appellate court, relying strongly upon the factors stressed by our Supreme Court in Fisher Governor Co. v. Superior Court, 53 Cal.2d 222 [ 1 Cal.Rptr. 1 , 347 P.2d 1 ],

Another significant case involving an injury resulting from the purchase and use in this state of a product manufactured by a foreign corporation is Cosper v. Smith & Wesson Arms Co., supra, 53 Cal.2d 77 . There a revolver manufactured by Smith and Wesson, a foreign corporation, was purchased in this state. The purchaser was allegedly injured when the cylinder of the revolver exploded while it was being used in target practice. Smith and Wesson distributed its products F.O.B. Springfield, Massachusetts, through regular wholesale and retail channels. It did, however, have a manufacturer’s representative named Lookabaugh in this state who conducted sales promotion of the manufacturer’s products on a commission basis. Lookabaugh bought his own samples but was furnished advertising material by Smith and Wesson. In reversing an order granting the motion of Smith and Wesson to quash service of summons our Supreme Court made these pointed observations: “Whether Smith and Wesson was operating ‘through an independent contract, agent, employee or in any other manner’ [citations], the essential factor is that Lookabaugh in his selling and advertising activities was performing services for Smith and Wesson and providing it with the opportunity for ‘regular contact with its customers and a channel for a continuous flow of business into the state.’ [Citation.] In short, the arrangement of Smith and Wesson with Lookabaugh appears, in the light of the presi

The cases relied upon by petitioner, excepting Cosper, which as already indicated, does not support its position, are clearly distinguishable. Yeck Mfg. Corp. v. Superior Court, 202 Cal.App.2d 645 [ 21 Cal.Rptr. 51 ], involves an isolated and casual instance of business activity. Martin Bros. Elec. Co. v. Superior Court, 121 Cal.App.2d 790 [ 264 P.2d 183 ], and Estwing Mfg. Co. v. Superior Court, 128 Cal.App.2d 259 [ 275 P.2d 146 ], involve sales of products in this state through an independent distributor without any additional activities. These cases not only deal with a situation in which there was absent a course of continuous business solicitation or sales promotion activity in this state, but, with the exception of Yeck, were all decided prior to McGee, Jahn, Cosper and Fisher which place emphasis not upon the quantity of the activities in this state, but their quality, nature and connection with the obligations sued upon. Yeck took cognizance of these last-mentioned eases but concluded that a mere sale of goods purchased in another state and shipped without title limitation to the purchaser in California did not come within their purview.

Adverting to the case at bench we not only find a course of continuous sales promotion activity resulting in a quantitative substantial contact with California, but we conclude that the quality and nature of the activity was such as to create substantial contacts in this state in relation to the claim asserted by plaintiff in the light of the rule declared in Fisher and the factors alluded to in Waco-Porter and Fisher. The record discloses that the accident took place in the county where the action is pending and that all of the parties to the litigation excepting petitioner are residents of California. As was the case in Waco-Porter, petitioner availed itself of the privilege of selling its products through Cali

The petition for a writ of mandate is denied and the alternative writ is discharged.

Sullivan, P. J., and Sims, J., concurred.