Opinion — International Harvester Co. of America v. Kentucky

INTERNATIONAL HARVESTER v. KENTUCKY. 579

234 U.S. Argument for Plaintiff in Error.

INTERNATIONAL HARVESTER COMPANY OF

AMERICA v. COMMONWEALTH OF KENTUCKY.

ERROR TO THE COURT OF APPEALS OF THE STATE OF

KENTUCKY.

No. 297. Argued April 24, 1914.—Decided June 22, 1914.

It is essential to the rendition of a personal judgment against a cor-

poration that it be doing business within the State; but each case

must depend upon its own facts to show that this essential require-

ment of jurisdiction exists.

The presence of a corporation within a State necessary to the service of

process is shown when it appears that the corporation is there carry-

ing on business in such sense as to manifest its presence within the

State, although the business may be entirely interstate in its char-

acter.

The fact that the business carried on by a corporation is entirely inter-

state in its character does not render the corporation immune from

the ordinary process of the courts of the State.

147 Kentucky, 655, affirmed.

Tue facts, which involve the validity and sufficiency of

service of process upon a foreign corporation and the de-

termination of whether such corporation was doing busi-

ness within the State, are stated in the opinion.

Mr. Alexander Pope Humphrey and Mr. Edgar /. Ban-

croft, with whom Mr. Victor A. Remy was on the brief,

for plaintiff in error in this case and in No. 298."

For cases involving questions of service of process upon

foreign corporations as controlled by the Constitution of

the United States, see Ky. Stats., § 571 (1909); Com-

monwealth v. Hogan & Co., 25 Ky. L. R. 41; Commonwealth

v. Eclipse Hay Press Co., 31 Ky. L. R. 824; Three States

' See p. 590, post.

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580 OCTOBER TERM, 1913.

Argument for Plaintiff in Error. 234 U.S.

Buggy Co. v. Commonwealth, 32 Ky. L. R. 385; Goldey v.

Morning News, 156 U. 8. 518; Conley v. Mathieson, 190

U.S. 406; Caledonian Co. v. Baker, 196 U.S. 482; Reming-

ton v. Cent. Pac. R. Co., 198 U. S. 95; Kendall v. Am.

Loom Co., 198 U. S. 477; Peterson v. C., R. I. & P. Ry.

Co., 205 U. S. 364; Green v. C., B. & Q. R. R. Co., 205

U. S. 530; Mechanical Appliance Co. v. Castleman, 215

U. S. 437; Saxony Mills v. Wagner, 94 Mississippi, 233;

Fawkes v. Am. Motor Co., 176 Fed. Rep. 1010.

At the time of the attempted service the defendant

was doing nothing but an interstate commerce business

with the people of Kentucky. Commonwealth v. Chat-

tanooga Co., 126 Kentucky, 636; Brennan v. Titusville,

153 U. S. 289; Caldwell v. North Carolina, 187 U.S. 621.

The carrying on of interstate commerce by the defend-

ant with persons residing in this State does not constitute

a doing of business in Kentucky. Cases supra, and Havens

v. Diamond, 93 Ill. App. 557.

Merely soliciting orders is not doing business in a State.

Cases supra, and Green v. C., B. & Q. Ry. Co., 205 U.S.

530; North Wisconsin Cattle Co. v. Oregon Short Line, 105

Minnesota, 198; Earle v. Ches. & Ohio Ry. Co., 127 Fed.

Rep. 235, 240; Fairbank v. Cincinnati &c. Ry. Co., 54

Fed. Rep. 420, 423; Grace v. Martin Brick Co., 174 Fed.

Rep. 131, 132; Kentucky Civil Code of Practice, § 51,

subd. 3 and 6.

To hold that defendant can be prosecuted in these cases

would violate the commerce clause of the Constitution.

Waters-Pierce Oil Co. v. Texas, 177 U. 8. 27; Hadley-Dean

Co. v. Highland Glass Co., 143 Fed. Rep. 242, 244; Albertype

Co. v. Gust-Feist Co., 102 Texas, 219; Eclipse Paint Co. v.

New Process Roofing Co., 55 Tex. Civ. App. 553; Moroney

Co. v. Goodwin Pottery Co. (Tex. Civ. App.), 120 8. W.

Rep. 1088, 1091.

The fact that the Harvester Company formerly carried

on business in Kentucky does not alter the situation.

INTERNATIONAL HARVESTER v. KENTUCKY. 381

234 U.S. Argument for Defendant in Error.

Conley v. Mathieson Alkali Works, 190 U. S. 406; Inter-

national Textbook Co. v. Pigg, 217 U. 8. 91; St. Louis

S. W. Ry. v. Alexander, 227 U.S. 226.

Under the construction given the Kentucky Process

Statute by the Court of Appeals a person or corporation

doing exclusively an interstate commerce business must

submit to the jurisdiction of Kentucky courts.

The submission to the state courts, which is requisite to

render foreign corporations subject to suit, cannot be

compelled or implied where such corporation does only

an interstate commerce business.

The cases relied upon by the Commonwealth do not

support its contentions.

Mr. Charles Carroll, with whom Mr. James Garnett,

Attorney General of the State of Kentucky, Mr. Frank E.

Daugherty, Mr. J. R. Mallory, Mr. J. C. Dedman, Mr. C.

R. Hill and Mr. C. D. Florence were on the brief, for de-

fendant in error in this case and in No. 298:'

Plaintiff in error cannot raise the question in this court

that the proceedings against it in these cases were a denial

to it of due process of law. Section 157, Crim. Code, Ken-

tucky; Commonwealth v. Cheek, 1 Duval, 26; Common-

wealth v. Neat, 89 Kentucky, 242; Payne v. Common-

wealth, 16 Ky. L. R. 839; Sharp v. Commonwealth, 16 Ky.

L. R. 840; York v. Texas, 137 U. S. 15-20; Cosmopolitan

Mining Co. v. Walsh, 193 U.S. 469.

The process in this case was served upon the proper per-

son and the judgment rendered thereon was valid and bind-

ing. St. Louis S. W. R. R. Co. v. Alexander, 227 U.S. 227.

As to effect of the instructions to agents from the plain-

tiff in error, see Good Roads Co. v. Commonwealth, 146

Kentucky, 690; Boyd Commission Co. v. Coates, 24 Ky. L. R.

730; Nelson Morris v. Rehkopf, 25 Ky. L. R. 352; Green v.

‘See p. 590, post.

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582 OCTOBER TERM, 1913.

Opinion of the Court. 234 U.S.

Chicago &c. R. R. Co., 205 U. S. 530; Denver &c. R. R.

Co. v. Roller, 100 Fed. Rep. 938; International Texibook

Co. v. Pigg, 217 U. S. 91; Delamater v. South Dakota, 125

U.S. 93; 19 Cye. 1347-1348.

To hold that plaintiff in error was properly served with

process and the judgment rendered against it valid will

not violate the commerce clause of the Constitution.

International Harvester Co. v. Commonwealth, 147 Ken-

tucky, 657.

Mr. Justice Day delivered the opinion of the court.

This case presents the question of the sufficiency of the

service of process on an alleged agent of the International

Harvester Company in a criminal proceeding in Brecken-

ridge County, Kentucky, in the court of which county an

indictment had been returned against the Harvester Com-

pany for alleged violation of the anti-trust laws of the

State of Kentucky. The Harvester Company appeared

and moved to quash the return, substantially upon the

ground that service had not been made upon an author-

ized agent of the company and that the company was not

doing business within the State of Kentucky, and it set

up that any action under the attempted service would

violate the due process and commerce clauses of the

Federal Constitution. The only question involved, says

the Court of Appeals, and we find none other in the record,

is whether there was such service of process as would

sustain the judgment. The court overruled the motion,

and, the case being called for trial and the Harvester

Company failing to appear or plead, judgment by default

for $500 penalty was entered against it, which was affirmed

by the Court of Appeals of Kentucky (147 Kentucky,

655).

It appeared that prior to October 28, 1911, before this

indictment was returned, the Harvester Company had

INTERNATIONAL HARVESTER v. KENTUCKY. 583

234 U.S. Opinion of the Court.

been doing business in Kentucky and had designated

Louisville, Kentucky, as its principal place of business,

in compliance with the statutes of Kentucky in that re-

spect. It further appeared that the Company had re-

voked the agency of one who had been appointed under

the Kentucky statute and had not appointed anyone else

upon whom process might be served.

It is conceded in the brief of the learned counsel for the

plaintiff in error that whether the person upon whom

process was served was one designated by the law of Ken-

tucky as an agent to receive summons on behalf of the

Harvester Company was a question within the province

of the Court of Appeals of Kentucky to finally determine,

and no review of that decision is asked here. We come

then to the first question in this case, which is, Whether

under the circumstances shown in this case the Harvester

Company was carrying on business in the State of Ken-

tucky in such manner as to justify the courts of that

State in taking jurisdiction of complaints against it.

For some purposes a corporation is deemed to be a

resident of the State of its creation, but when a corpora-

tion of one State goes into another in order to be regarded

as within the latter it must be there by its agents author-

ized to transact its business in that State. The mere

presence of an agent upon personal affairs does not carry

the corporation into the Foreign state. It has been fre-

quently held by this court, and it can no longer be doubted

that it is essential to the rendition of a personal judgment

that the corporation be “doing business” within the

State. St. Louis S. W. Ry. v. Alexander, 227 U. 8. 218,

226, and cases there cited. As was said in that case, each

case must depend upon its own facts, and their considera-

tion must show that this essential requirement of juris-

diction has been complied with and that the corporation

is actually doing business within the State.

In the case now under consideration the Court of Ap-

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584 OCTOBER TERM, 1913.

Opinion of the Court. 234 U.S.

peals of Kentucky found, with warrant for the conclusion,

that the Harvester Company’s method of conducting

business might be shown to the best advantage from the

general instruction of the company to its agents of date

November 7, 1911, as follows:

“The Company’s transactions hereafter with the people

of Kentucky must be on a strictly interstate commerce

basis. Travelers negotiating sales must not hereafter

have any headquarters or place of business in that State,

but may reside there.

“Their authority must be limited to taking orders, and

all orders must be taken subject to the approval of the

general agent outside of the State, and all goods must be

shipped from outside of the State after the orders have

been approved. Travelers do not have authority to make

a contract of any kind in the State of Kentucky. They

merely take orders to be submitted to the general agent.

If any one in Kentucky owes the Company a debt, they

may receive the money, or a check, or a draft for the same

but they do not have any authority to make any allow-

ance or compromise any disputed claims. When a matter

cannot be settled by payment of the amount due, the

matter must be submitted to the general or collection

agent, as the case may be, for adjustment, and he can

give the order as to what allowance or what compromise

may be accepted. All contracts of sale must be made

f. o. b. from some point outside of Kentucky and the

goods become the property of the purchaser when they

are delivered to the carrier outside of the State. Notes

for the purchase price may be taken and they may be

made payable at any bank in Kentucky. All contracts of

any and every kind made with the people of Kentucky

must be made outside of that State, and they will be con-

tracts governed by the laws of the various States in which

we have general agencies handling interstate business

with the people of Kentucky. For example, contracts

INTERNATIONAL HARVESTER v. KENTUCKY. 585

234 U.S. Opinion of the Court.

made by the general agent at Parkersburg, W. Va., will

be West Virginia contracts.

“Tf any one of the Company’s general agents deviates

from what is stated in this letter, the result will be just

the same as if all of them had done so. Anything that is

done that places the Company in the position where it

can be held as having done business in Kentucky, will

not only make the man transacting the business liable

to a fine of from one hundred to one thousand dollars for

each offense, but it will make the Company liable for

doing business in the State without complying with the

requirements of the laws of the State. We will, therefore,

depend upon you to see that these instructions are strictly

carried out.”

Taking this as the method of carrying on the affairs

of the Harvester Company in Kentucky, does it show a

doing of business within that State to the extent which

will authorize the service of process upon its agents thus

engaged?

Upon this question the case is a close one, but upon the

whole we agree with the conclusion reached by the Court

of Appeals, that the Harvester Company was engaged in

carrying on business in Kentucky. We place no stress

upon the fact that the Harvester Company had previously

been engaged in doing business in Kentucky and had with-

drawn from that State for reasons of its own. Its motives

cannot affect the legal questions here involved. In order

to hold it responsible under the process of the state court

it must appear that it was carrying on business within the

State at the time of the attempted service. As we have

said, we think it was. Here was a continuous course of

business in the solicitation of orders which were sent to

another State and in response to which the machines of the

Harvester Company were delivered within the State of

Kentucky. This was a course of business, not a single

transaction. The agents not only solicited such orders

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586 OCTOBER TERM, 1913.

_ Opinion of the Court. 234 U. 8.

in Kentucky, but might there receive payment in money,

checks or drafts. They might take notes of customers,

which notes were made payable, and doubtless were col-

lected, at any bank in Kentucky. This course of conduct

of authorized agents within the State in our judgment

constituted a doing of business there in such wise that the

Harvester Company might be fairly said to have been

there, doing business, and amenable to the process of the

courts of the State.

It is argued that this conclusion is in direct conflict

with the case of Green v. Chicago, Burlington & Quincy

Ry., 205 U.S. 530. We have no desire to depart from that

decision, which, however, was an extreme case. There

the Railway Company, carrying on no business in Penn-

sylvania, other than that hereinafter mentioned, and

having its organization and tracks in another State, was

sought to be held liable in the Circuit Court of the United

States for the Eastern District of Pennsylvania by service

upon one Heller, who was described as an agent of the

corporation. .s incidental and collateral to its business

proper the Company solicited freight and passenger

traffic in other parts of the country than those through

which its tracks ran. For that purpose it employed Heller,

who had an office in Philadelphia, where he was known as

district freight and passenger agent, to procure passengers

and freight to be transported over the Company’s line.

He had clerks and travelling passenger and freight agents

who reported to him. He sold no tickets and received no

payment for the transportation of freight, but took the

money of those desiring to purchase tickets and procured

from one of the railroads running west from Philadelphia

a ticket for Chicago and a prepaid order which gave the

holder the right to receive from the Company in Chicago

a ticket over its road. Occasionally he sold to railroad

employés, who already had tickets over intermediate

lines, orders for reduced rates over the Company’s line.

INTERNATIONAL HARVESTER v. KENTUCKY. 587

234 U. 8. Opinion of the Court.

In some cases for the convenience of shippers who had

received bills of lading from the initial line for goods

routed over the Company’s line, he exchanged bills of

lading over its line, which were not in force until the

freight had been actually received by the Company. Sum-

marizing these facts, Mr. Justice Moody, speaking for

the court, said (p. 533): ‘The business shown in this case

was in substance nothing more than that of solicitation.

Without undertaking to formulate any general rule de-

fining what transactions will constitute ‘doing business’

in the sense that liability to service is incurred, we

think that this is not enough to bring the defendant

within the district so that process can be served

upon it.”

In the case now under consideration there was some-

thing more than mere solicitation. In response to the

orders received, there was a continuous course of ship-

ment of machines into Kentucky. There was authority

to receive payment in money, check or draft, and to take

notes payable at banks in Kentucky.

It is further contended that as enforced by the decision

of the Kentucky court the law, in its relation to interstate

commerce, operates to burden that commerce. It isargued

that a corporation engaged in purely interstate commerce

within a State cannot be required to submit to regulations

such as designating an agent upon whom process may be

served as a condition of doing such business, and that as

such requirement cannot be made the ordinary agents of

the corporation, although doing interstate business within

the State, cannot by its laws be made amenable to judicial

process within the State. The contention comes to this,

so long as a foreign corporation engages in interstate com-

merce only it is immune from the service of process under

the laws of the State in which it is carrying on such busi-

ness. This is indeed, as was said by the Court of Appeals

of Kentucky, a novel proposition, and we are unable to

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588 OCTOBER TERM, 1913.

Opinion of the Court. 234 U.S.

find a decision to support it, nor has one been called to

our attention.

True, it has been held time and again that a State can-

not burden interstate commerce or pass laws which amount

to the regulation of such commerce; but this is a long way

from holding that the ordinary process of the courts may

not reach corporations carrying on business within the

State which is wholly of an interstate commerce character.

Such corporations are within the State, receiving the pro-

tection of its laws, and may, and often do, have large

properties located within the State. In Davis v. Cleveland,

C., C. & St. L. Ry., 217 U.S. 157, this court held that cars

engaged in interstate commerce and credits due for inter-

state transportation are not immune from seizure under

the laws of the State regulating garnishment and attach-

ment because of their connection with interstate com-

merce, and it was recognized that the States may pass

laws enforcing the rights of citizens which affect interstate

commerce but fall short of regulating such commerce in

the sense in which the Constitution gives sole jurisdiction

to Congress, citing Sherlock v. Alling, 93 U. S. 99, 103;

Johnson v. Chicago & Pacific Elevator Co., 119 U. 8. 388;

Kidd v. Pearson, 128 U. 8. 1, 23; Pennsylvania R. R. Co.

v. Hughes, 191 U. S. 477; and The Winnebago, 205 U. 8.

354, 362, in which this court sustained a lien under the

laws of Michigan on a vessel designed to be used in both

foreign and domestic trade.

In International Textbook Co. v. Pigg, 217 U. 8. 91, it

was held that a law of Kansas which required the filing

by a foreign corporation engaged in interstate commerce

of a statement of its financial condition as a prerequisite

of the right to do such business and which required a

certificate from the Secretary of State showing that such

statements had been filed as a condition precedent to the

right of the corporation to maintain a suit in that State,

was void. But that case did not hold, as we should be

INTERNATIONAL HARVESTER v. KENTUCKY. 589

234 U. S. Syllabus.

required to do to sustain the contention of the plaintiff in

error in this case, that the fact that the corporation was

carrying on interstate commerce business through duly

authorized agents made it exempt from suit within the

State by service upon such agents.

We are satisfied that the presence of a corporation

within a State necessary to the service of process is shown

when it appears that the corporation is there carrying on

business in such sense as to manifest its presence within

the State, although the business transacted may be en-

tirely interstate in its character. In other words, this fact

alone does not render the corporation immune from the

ordinary process of the courts of the State.

It follows that the judgment of the Court of Appeals of

Kentucky must be

Affirmed.

INTERNATIONAL HARVESTER COMPANY OF

AMERICA v. COMMONWEALTH OF KENTUCKY.

ERROR TO THE COURT OF APPEALS OF THE STATE OF

KENTUCKY.

No. 298. Argued April 24, 1914.—Devided June 22, 1914.

Where the state court has denied a motion to quash the service of

process on a foreign corporation, and has also held that the statute

on which the action is based is not unconstitutional, both the ques-

tion of validity of the service and that of the constitutionality of the

act are before this court for review.

International Harvester Company v. Kentucky, ante, p. 579, followed to

effect that the plaintiff in error was doing business in the State in

which process was served.

International Harvester Company v. Kentucky, ante, p. 216, followed to

the effect that the provision of the anti-trust statute of Kentucky

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590 OCTOBER TERM, 1913.

Opinion of the Court. 234 U.S.

under which this suit was brought is unconstitutional under the due

process provision of the Fourteenth Amendment.

149 Kentucky, 41, reversed.

Tue facts, which involve the sufficiency of service of

process upon a foreign corporation doing business in the

State of Kentucky and also the constitutionality of the

anti-trust act of Kentucky, are stated in the opinion.

Mr. Alexander Pope Humphrey and Mr. Edgar A. Ban-

croft, with whom Mr. Victor A. Remy was on the brief,

for plaintiff in error in this case and in No. 297.'

Mr. Charles Carroll, with whom Mr. James Garnett,

Attorney General of the State of Kentucky, Mr. Frank E.

Daugherty, Mr. J. R.|allory, Mr. J. C. Dedman, Mr. C.

R. Hill and Mr. C. D. Florence, were on the brief, for de-

fendant in error in this case and in No, 297.'

Mr. Justice Day delivered the opinion of the court.

A penal action was instituted by the defendant in error

against the plaintiff in error in the Boyle Circuit Court

of Kentucky under the anti-trust laws of that State.

Summons having been served upon an alleged agent of

the plaintiff in error, it filed a motion to quash the return

for the reason, as alleged, that the person upon whom

service had been made was not the authorized agent of the

plaintiff in error and that it was not doing business in

Kentucky. The facts in this case which are identical

with those set out in the previous case, International Har-

vester Company of America v. The Commonwealth of Ken-

tuchy, just decided, ante, p. 579, show that the plaintiff in

error had prior to the commencement of this action re-

voked the authority of an agent designated by it in com-

1 For abstracts of arguments see ante, p. 579.

INTERNATIONAL HARVESTER v. KENTUCKY. 591

234 U. S. Opinion of the Court.

pliance with the laws of Kentucky and had removed its

office from the State, but that it had continued through

its agents, the party served in this case being one of them,

to solicit orders to be accepted outside of the State for the

sale of machines which were to be delivered in Kentucky,

and that its agents were authorized to receive money,

checks and drafts in payment therefor, or take the notes

of purchasers payable at any bank in Kentucky.

There are two questions in this case. The Court of

Appeals, deciding that this case was governed by the

previous case from Breckenridge County (147 Kentucky,

655), held that the service was good and that the anti-

trust act was not unconstitutional and violative of the

Fourteenth Amendment to the United States Constitu-

tion. 149 Kentucky, 41. Since the Federal question

involving the validity of the anti-trust act was considerod

and decided adversely in the Court of Appeals, it, as well

as the question of due service, is properly before us.

Miedreich v. Lauenstein, 232 U. S. 236, 243, and cases

there cited.

As we have just dealt with the sufficiency of service in

the previous case, involving the same question, it may be

disposed of here by merely referring to that decision.

And as the constitutional validity of the anti-trust act

was specifically determined in cases Nos. 276, 291 and

292, entitled International Harvester Company of America

v. The Commonwealth of Kentucky, decided June 8, 1914,

ante, p. 216, that question is also concluded.

We therefore reach the conclusion that the plaintiff in

error was doing business in Kentucky and that the service

was sufficient, but that the law under which the action

was brought is unconstitutional and that the judgment

of the Court of Appeals must be reversed, and accordingly

remand the case to that court for further proceedings not

inconsistent with this opinion.

Reversed.