Summary
In LaBonte v. Company, 98 N.H. 163 (1953) a foreign publishing corporation was held amenable to service under this statute in a libel action where the printing and distribution of its magazine by a domestic corporation was done on its behalf in this state.
Summary of this case from Roy v. North American Newspaper AllianceOpinion
No. 4180.
Decided April 9, 1953.
In an action of libel against a foreign corporation for the publication of an alleged defamatory magazine article, the systematic printing, distribution and other related activities in this state of a domestic corporation on behalf of such foreign corporation were sufficient to constitute doing business here under the fair play and substantial justice rule so as to subject it to service of process here. The issue of whether the activities in this state of a foreign corporation are such as to subject it to service of process here is one of state law.
ACTION OF CASE for libel, for an alleged defamatory article published in the American Mercury magazine by the named defendant, hereinafter referred to as Mercury, which was the proprietor and publisher of the magazine. The second defendant is Rumford Printing Company which was the printer of the magazine. Defendant's motion to dismiss the action was granted on the ground that service should have been made on the Secretary of State of New Hampshire although the Court found that Mercury was doing business in New Hampshire. The plaintiff excepted to the dismissal of the action and moved for leave to serve a copy of the process on the Secretary of State as an agent to receive process for Mercury. Subject to the defendant's exception the motion was granted and the prior ruling of the Court dismissing the action was vacated. The plaintiff then served a copy of the process on the Secretary of State. Whereupon Mercury moved to dismiss the action which was denied. The exceptions of the parties were reserved and transferred by Wheeler, C. J.
The Court found that Mercury was a New York corporation with editorial and general offices in New York City, that it had not registered with the Secretary of State of New Hampshire and that it had not designated an agent in New Hampshire as provided in Laws 1949 c. 206. The Court made findings in part as follows:
"The relationship between the Mercury and Rumford Printing Company on August 13, 1951, was as follows: Since October 20, 1950, Rumford had been printing the American Mercury Magazine under an oral contract with American Mercury Magazine, Inc. Under this arrangement Rumford printed approximately 150,000 copies of this magazine per month for a price of approximately $9,000. Each month the Mercury sends the manuscript to Rumford, who sets it in type and makes a galley proof. Thereafter, the proof is sent to Mercury in New York for any necessary corrections. This proof may pass back and forth between Rumford and Mercury several times for adjustments and corrections. The final proof or page proof, when approved by Mercury, is then printed. On occasions, a representative of Mercury is sent to Rumford with the final copy in order to check the final proof. The magazine, including cover and contents, is then printed and bound on machines at the Rumford plant in Concord, New Hampshire.
"Each month Mercury supplies Rumford with a roll of addresses on a spindle to use in addressing the magazine to the subscribers. Rumford applies adhesive to this roll, and a machine in its plant clips off the names and pastes them on the wrapped magazines. After the magazines are addressed, they are placed in a U.S. government post office contained in the building of the Rumford Printing Company. This post office is a branch of the Concord, New Hampshire, post office and is supervised by full time employees of the government. This same post office is used in mailing the different magazines which are printed by Rumford. Rumford pays the postage in advance and later bills the Mercury for the amount of the postage. The magazines which are mailed to subscribers in Concord and in New York City are stamped with postage stamps by employees of Rumford before they are placed in the post office. All magazines sent to foreign subscribers are similarly stamped.
"Mercury also furnishes Rumford with a distribution sheet showing the distribution to be made to news-dealers and distribution centers of a portion of the Mercury Magazines which are printed each month. These distribution sheets remain the property of Mercury. The magazines are wrapped at Rumford in bundles containing approximately 50 magazines. The bundles are stamped with the addresses of news-dealers or distribution centers by employees of Rumford. The bundles are shipped by mail, freight or express. The number of magazines sent to each news-dealer and distribution center is determined by Mercury. The freight, express and truck shipments are paid by Rumford, and copies of the paid bills are sent to Mercury, who reimburses Rumford. Rumford is authorized to use its own judgment in determining the best, most economical and most feasible mode of transportation for shipping these magazines.
"Each month Rumford bills the Mercury for its charges for printing, assembling and binding. A supplemental bill is also sent for postage used and for express, freight and trucking of the magazines. Another separate bill is sent for second-class postage advanced. Postage and transportation costs advanced amount each month from $400 to $1,000. On instructions from Mercury, a certain number of magazines each month are stored by Rumford in its buildings and shipped out at the order of Mercury. Rumford receives mail at its plant in Concord which is addressed to American Mercury Magazine, Inc. This mail is then forwarded to Mercury in New York.
"A more detailed statement of the relationship between Mercury and Rumford is set forth in two affidavits filed with the court by J. Richard Jackman, President of Rumford, and William B. Huie, Editor of Mercury. The statements contained therein are not disputed by counsel with the exception of the following sentence in the Jackman affidavit: `Rumford Printing Company in effect by this procedure is acting as a collection agency for American Mercury Magazine, Inc., of these accounts receivable.' The Court, in arriving at its decision herein, has not considered this sentence.
"Each issue of the magazine contains the following statement in order to comply with the provisions of its U.S.C.A. Title 39, section 226.
"`Published monthly by American Mercury Magazine, Inc., . . . Publication office, Concord, N.H. Editorial and General Offices, 32 East 57th Street, New York 22, N. Y. Printed in the U.S.A. Entered as second-class matter at the post office at Concord, N.H., September 29, 1936, under the Act of March 3, 1879.'
"The Court finds that the activities of Mercury, their extent and continuity, were such as to constitute transacting business in this state. See Consolidated Cosmetics vs. D-A Publishing Company, Inc., 186 Federal 2nd, 906."
Other facts as they appear in the record and exhibits are stated in the opinion.
Hughes Burns, Donald R. Bryant and Rich Burns (Mr. Bryant orally), for the plaintiff.
Wyman, Starr, Booth, Wadleigh Langdell (Mr. Booth orally), for the defendant Mercury.
Sulloway, Jones, Hollis Godfrey for the Rumford Printing Company, filed no brief.
The principal issue in this case is whether a foreign corporate publisher of a magazine printed in this state was doing business in New Hampshire so that it was validly served with process for an alleged libel. Our inquiry is limited to jurisdiction for service of process and is not concerned with jurisdiction for taxation, license or other purposes. While many of the persuasive authorities cited are federal cases, the issue to be decided is one of state law. See Perkins v. Benguet Mining Co., 342 U.S. 437.
The defendant relies in part on the reasoning in Campbell v. Corporation, 86 N.H. 310, and Bank of America v. Whitney Bank, 261 U.S. 171, for the proposition that Mercury was not doing business in this state. These cases may have been authority for that proposition twenty or thirty years ago but later decisions make the issue more debatable. Today in determining whether a foreign corporation shall be subject to local process, the theories of implied consent and corporate presence have been discarded in favor of the "fair play and substantial justice" rule formulated in International Shoe Co. v. Washington, 326 U.S. 310, 320, and followed with approval in subsequent cases. Travelers Health Ass'n v. Virginia, 339 U.S. 643. That rule is considered more convincing in this jurisdiction than the cases cited by the defendant. Grace v. Company, 95 N.H. 74, 76. Federal decisions extending and applying the rule were followed in the recent case of Taylor v. Company, 97 N.H. 517, 521. While it is true that the rule of International Shoe lacks definite preciseness in its application, it is quite clear that state jurisdiction is now exercised over foreign corporations in instances where it was formerly considered impossible. Almost all cases of libel actions against foreign publishing corporations were dismissed on jurisdictional grounds before the decision in International Shoe. See Street Smith Publications v. Spikes, 120 F.2d 895; Whitaker v. Macfadden Publications, 105 F.2d 44; Cannon v. Time, 115 F.2d 423. At the present time libel actions against foreign corporations may be dismissed but the approach thereto is not as strict as formerly existed. See Note, 16 U. Chi. L. Rev. 523; annotations 96 L. ed. 495 and 94 L. ed. 1167, 1178.
Several factual considerations are urged to show that Mercury is not doing business in this state. It has no telephone, office or designated agent in this state and none of its officers or employees permanently reside or work here. Less than one per cent of its national circulation is in New Hampshire. The activities in this state that are done on behalf of Mercury are carried on by the employees of the defendant, Rumford Printing Company, a New Hampshire corporation pursuant to the oral contract with Mercury. It is therefore argued that Mercury is not subject to process in New Hampshire and reliance is also placed on Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333; Polizzi v. Cowles Magazine, Inc., 197 F.2d 74; Bank of America v. Lima, 103 F. Supp. 916.
The plaintiff emphasizes other facts to demonstrate that Mercury is doing business in this state. The assembling, printing and binding of the magazine by Rumford for Mercury is a systematic and continuous activity which is done under orders, instructions and inspections by Mercury. The mailing, shipping, addressing and storage of the magazine by Rumford has been authorized by Mercury. Rumford as agent for Mercury receives and forwards mail received here. Rumford advances transportation, shipping and postage costs and is reimbursed by Mercury. While the editorial work is performed in New York, some checking of final page proof is done by a representative of Mercury in New Hampshire. Plaintiff maintains that the printing and related activities by Rumford for Mercury constitutes doing business in New Hampshire and cites Consolidated Cosmetics v. D-A Publishing Co., 186 F.2d 906, as supporting authority.
While the concept of doing business is a legal one, it should bear some relation to the concept of doing business in a commercial sense. Certainly the printing and distribution of a magazine is an essential part of the publication of magazines in both a legal and commercial sense. If the plaintiff has a cause of action for libel, the state where the libelous magazine is systematically printed and distributed may assume jurisdiction without offending ". . . our traditional conception of fair play and substantial justice." International Shoe Co. v. Washington, supra, 320. Any libel that may have been committed by Mercury is sufficiently connected with its printing and distribution in this state "to satisfy the primary requirements of the" cited case. Taylor v. Company, 97 N.H. 517, 521. We conclude that Mercury was doing business in this state to the extent that service of process can be made on it here. Since service on the Secretary of State was a permitted method of service, although not exclusive (R. L., c. 280, as amended by Laws 1949, c. 206, ss. 4, 8), it is immaterial whether the prior service of process under R. L., c. 387, s. 13, was valid. The Trial Court's findings and rulings are affirmed and the order is
Exceptions overruled.
All concurred.