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State of South Carolina v. W.T. Rawleigh Co.

Supreme Court of South Carolina
Mar 13, 1934
172 S.C. 415 (S.C. 1934)



March 13, 1934.

Before Oxner, J., Edgefield, February, 1932. Affirmed.

Action by the State of South Carolina against the W.T. Rawleigh Company. From an order setting aside service of summons and complaint, plaintiff appeals.

The order of the Circuit Judge, directed to be reported, is as follows:

The above-entitled action comes before me on motion of the W.T. Rawleigh Company for an order vacating and setting aside the attempted service of the summons and complaint in this action. It appears specially and for the sole purpose of objecting to the jurisdiction of the Court. The grounds of the motion are that the said W.T. Rawleigh Company was a foreign corporation, not doing business and owning no property in this State, and B.C. Bryan upon whom the summons and complaint were served was not its agent, and that any statute or statutes of this State, particularly Sections 434 and 826 of Volume 1 of the Code of 1932 authorizing or purporting to authorize service of process, and conferring or attempting to confer jurisdiction of the person of the said W.T. Rawleigh Company on this or any Court of this State, deprives or undertakes to deprive the said company, of its liberty and property without due process of law, and to deny it the equal protection of the laws in violation of the Fourteenth Amendment of the Constitution of the United States and in contravention of Section 5, Article 1, of the Constitution of South Carolina of 1895.

This is an action by the State of South Carolina against the said W.T. Rawleigh Company, an Illinois corporation, to recover certain penalties for which it is alleged to be liable for failure to comply with the provisions of the Act of 1922, as amended by the Act of 1923, now Sections 7768 and 7769 of Code of 1932.

The action was commenced in the Court of Common Pleas for Edgefield County by the alleged service of the summons and complaint upon the said B.C. Bryan, on February 23, 1932.

This action was made upon the summons, the verified complaint, and numerous affidavits submitted by both plaintiff and defendant, together with letters, contracts, bulletins, and pamphlets issued by the Rawleigh Company, a book of instructions entitled "Rawleigh Methods," and other papers. The matter was fully argued by counsel and elaborate briefs were filed. It has been given the most careful and thorough consideration. The delay in filing this order has been unavoidable.

Many of the material facts to be considered in deciding the issues arising on this motion are really undisputed and admitted. They may be fully stated as follows: That the W.T. Rawleigh Company is an Illinois corporation; that it maintains and operates a branch office at Richmond, Va.; that its business is that of manufacturing and selling at wholesale to the customers, a line of medicines, flavoring extracts, toilet preparations, etc.; that its customers who buy for cash, send their orders to the company at its nearest branch, and thereupon the merchandise ordered is delivered f. o. b. to transportation companies; that customers who buy on time are required to enter into contracts of purchase and sale; that under such contracts the buyer forwards signed orders to the company which are filled by delivery of the merchandise f. o. b. carriers at the place of shipment; that customers of the company in South Carolina are generally known as "dealers"; that under the contracts between the company and its dealers, all goods ordered shipped and delivered to such dealers or customers become their sole property, the company retaining no right or interest therein; that the company furnished to its customers or dealers literature of various kinds consisting of advertising matter, sales and collection helps which the customer may or may not use as he sees fit; that the company has not filed a written stipulation or declaration under the statutes referred to; that B. C. Bryan at the time the alleged service of summons and complaint was made was a resident and citizen of Edgefield County in this State, and was one of the company's customers of "dealers" under one of its usual contracts, and bought merchandise from the company by written orders forwarded through the United States mails and after acceptance, the merchandise ordered was delivered f. o. b. carriers at Richmond, Va.; that all sales by the company to B. C. Bryan were made and accepted at the home office in Freeport, Ill.; that all communications between the company and the said B.C. Bryan were carried on through the United States mails; that M.B. Ouzts was a customer and dealer of the company; that transactions between the company and said M.B. Ouzts were under a similar contract and in every other way similar to the transactions of the said B.C. Bryan.

The original contract between the company and Bryan accepted on July 23, 1930, was renewed from time to time, the last renewal, in force and effect at the time of the alleged service, was received by the company at its Richmond branch on November 18, 1931 and was accepted January 2, 1932; that before entering into the contract with Bryan he submitted an application on form R — 2051, and furnished to the company a statement entitled "Prospective Dealers Property Statement and Report on Contract Sureties"; that it is stated in this paper, "I desire to buy Rawleigh products at wholesale prices, and retail them to customers on my own account"; that the company furnished Bryan, as well as its other customers, advertising matter describing its products, "order blanks" for their use and convenience, "Weekly Reports" to be used in making reports of progress to the company; that the purpose of these reports was to give the company some definite idea as to how the "dealer" was conducting his business, the progress he was making, and the volume of business it would have a right to expect him to do, and also to enable it to make constructive suggestions for improving the "dealer's" methods of selling, as well as to furnish the company some idea and basis upon which to determine the amount of credit, if any, that the "dealer" might be reasonably entitled to; that it is stated in these "Weekly Reports," "All Rawleigh Dealers own and manage their own business. They select and secure their customers, determine their business policies. The company gives no orders or directions, because each dealer is expected to be capable of managing his own business, but most dealers follow the general sales and service methods recommended by the company because they find them sound and practical."

It further appears, and I find, that in the contract with Bryan, the W.T. Rawleigh Company is called the "seller," and the customer, Bryan, the "buyer"; that the "buyer" agrees to pay for such goods as he may order, either in cash, or in installment payments, satisfactory to "seller" at invoice prices; that the contract may be terminated at any time by either party upon written notice and when so terminated all accounts become due and payable immediately, and if not so terminated the contract expires on the 31st of December of the year in which it is made; that in case business relations are terminated, the seller agrees to purchase from the buyer at current wholesale prices, any goods received and any merchantable products buyer may have on hand, except sample cases, wagons, and auto bodies and discontinued products, provided the buyer returns the goods promptly by prepaid freight to the point designated by the seller, the buyer agreeing to pay the seller the actual cost for receiving, inspecting, and handling the same; that the contract stipulates that the buyer is not the agent or representative of the seller, but is the sole owner and manager of his business, and has exclusive right to determine prices and the places where he is to sell such merchandise as he buys from the seller; that the seller retains no right, title, or interest or control over said merchandise; that the buyer is in business solely for himself and the seller does not undertake in any way to control him in the conduct of his business; that the seller will furnish the buyer from time to time with its sales promotion or service letters or bulletins, advertising matter, and other literature which the buyer may use or not, as he sees fit; that if the buyer desires credit and buys on time, he is required to furnish a contract of guarantee with two or more sureties acceptable to the seller.

Plaintiff contends that the record establishes certain other facts, which together with the admitted facts, supra, sustain the validity of the service. The defendant contends that the inference and conclusions which plaintiff would draw from both the admitted facts, and the facts and circumstances about which there is no agreement, even if the latter are found to be true, are not sufficient as a matter of law to sustain the validity of the service. It is important, therefore, that I should make specific findings in respect to these facts and the probative value thereof. This may best be done by following the order in which plaintiff has argued them, both orally and in its elaborate and helpful brief.

The first contention is that the territory granted by the defendant to its dealers in this State, and in particular to B.C. Bryan, was limited by the defendant. There is nothing in the contract with Bryan as to this matter. The affidavits of the officers and employees of the defendant assert that there was never any limits so far as the defendant is concerned as to territory in which a dealer should work. While it is true that the company has not directly prescribed the localities or instructed its dealers in respect thereto, there is no doubt but what it made from time to time recommendations to its dealers, including Bryan, as to available and open territory, or territory in which the dealer's business might be carried on. A paper entitled, "Sales Estimate and Location Recommended" contains suggestions as to such territory. It is true that it is in the nature of a recommendation, yet it is equally true that it is in accordance with the policy of the company not to have its dealers working in one another's territory. There can be little doubt, under the contract between the company and its dealer, and the established course of dealings, and apparent policy of the company, that if there was interference of one dealer by another dealer, the contract with the latter would probably have been terminated by the company. While this is not provided for in the contract, it is very clear that the general policy of the company was to recommend localities for its dealers, and it expected them to confine their operations to such localities. The dealer, B.C. Bryan, in his affidavit states that there was no limitation as to the locality in which he should carry on his business. A.B. Bryan, however, states in his affidavit that B.C. Bryan informed him that he was only working half of Edgefield County and wanted to secure an agent for the other half of the county. W.L. Stevens in his affidavit states that B.C. Bryan repeatedly spoke of different localities that were occupied and others that were open. H.J. DeVore in his affidavit states that a dealer is assigned a certain territory and not allowed to leave that territory. These different statements, of course, are directly denied by the defendant. My conclusion, therefore, is that while there was no direct requirement on the part of the company limiting or restricting the territory of its dealers, and the contracts contained no provision in respect thereto; that it was the policy of the company to recommend localities to its dealers and it expected these recommendations to be observed, and if the recommendations were not observed, I am strongly of the opinion that the company would have terminated the contracts of the offending dealers. Certainly under the contract this could be done.

It is undisputed that dealers are required to make weekly reports to the company showing the amount of cash and credit sales. However, the contracts do not require the making of them. The dealer is under no contractual or legal obligation to furnish these reports. While this is true, I find that it was the policy of the company to require these reports of its dealers. In the forms furnished for making these reports, it appears: "So that you will understand the reasons for requiring reports from our dealers and how to make out your reports." It is evident that these reports were required to be furnished in order to enable the company primarily to determine whether or not the leader was a satisfactory customer or dealer, to determine the amount of credit to be extended, if any, and to furnish it the basis upon which to estimate the volume of business it would be able to do with its customers or dealers. It may be that if the weekly reports were not furnished, the company would have terminated the contracts of the dealers failing to furnish them.

It is next contended by the State that the contract between the company and Bryan, and between the company and its other dealers, provides for a return of unsold products. I find that the contract provides that the seller reserves the option to purchase any of the unsold merchandise on hand upon the termination of the contract upon conditions therein stated. This is one of the undisputed facts in the case.

Another matter strongly relied upon by the State is that dealers of the company are authorized or permitted to procure others to become customers or dealers for it, and for their service in procuring other dealers, if successful, are paid for the same. The contract makes no provision in reference to this matter. The showing made satisfies me that it is true. One of the papers in the record is entitled "Acknowledgment of Prospects' Names." It contains the statement that the company is now paying its old customers about $80,000 a year in cash and giving them other credits for securing new customers. It provides "that money you receive for your recruiting efforts will depend very largely on how closely you follow up the prospects." There is proof to the effect that some of the dealers were paid for securing other persons to become dealers. The proof, however, tends to show only an occasional casual and isolated transaction of this character. The securing of other customers or dealers was not any part of the regular business of an accepted customer or dealer. Such transactions are voluntary on the dealers' part. There is no requirement contractual or legal that a dealer should engage in such activities. A dealer or customer has no authority to accept agents, and all he could do was to persuade some person to apply for a customer's or dealer's contract. All such applications were subject to the acceptance of the company.

It is further submitted in behalf of the State that the dealer is required to execute a bond to secure the faithful performance of the contract on his part. This is admitted by the company, but it only applies where the dealer desires to buy merchandise of the company on credit.

Another matter relied on is that the dealer was furnished advertising matter as to the merits of the company's product and was instructed to distribute the same. I have already found that the company carried on an extensive advertising campaign and that its dealers did distribute its advertising material. This was clearly for the advantage of both dealer and company. I cannot find that they were "instructed" to distribute advertising material, but that it was suggested that they do so, and their activities in that respect were voluntary upon their part.

It is submitted further that the company offers to supply its dealers with auto bodies and other equipment, and to sell the same for cash or on credit. This is a fact.

Again, it is contended that the dealers or customers of the company did not as a general rule take orders for their products and subsequently deliver them, but that they sold and delivered the products of the company as they travelled from place to place in their territories. There is no doubt but what the customers and dealers of the company, who had bought its products, sold them in the conduct of their business for both cash and credit, as they worked their territory.

It is also contended that the company directed its dealers to have a regular line of customers. I find nothing in the record to substantiate this contention. The company did make suggestions to its dealers that they should try and establish regular customers, but there is no requirement of the company as to whom a dealer should sell, either for cash or credit.

Another contention made is that the company advises that its products be sold for cash or credit, and suggested to its dealers that they leave its products with their customers for inspection and trial in order to build up business. The record does show that such suggestions were made, but it is not established that the company assumed authority for saying whether or not the goods should be sold for cash or credit, or in respect to the inspection and trial of its products by prospective customers of the dealers.

The last contention made in behalf of the State is that the company furnished a book of instructions to its dealers advising them how to sell its products and containing numerous suggestions and directions as to how and to whom to sell. This book is entitled "Rawleigh's Methods." It is stated at the very beginning of this book that "all of Rawleigh's Salesmanship Literature is furnished without expense to customers, but owing to the large expense of furnishing this book, $2.50 is charged to the account of each customer to whom it is sent. The company's actual cost is much more." The contents of this book are for the mutual benefit of the parties. The suggestions contained therein may or may not be followed by a dealer. There is nothing in the record either requiring the dealer to buy this book, or to follow its suggestions.

After the most careful consideration of the facts presented and study of the numerous authorities relied upon by both parties and the briefs submitted. I am entirely satisfied that the service of the summons and complaint in this case should be set aside and vacated, and the complaint herein dismissed, for the reasons that the W.T. Rawleigh Company is a foreign corporation and was not doing business in the state at the time of the attempted service, and the said B.C. Bryan was not its agent, and it owned no property, real or personal, in this State. Having reached these conclusions, it is not necessary to consider the constitutional questions raised, but in this connection it should be stated that at the hearing, in oral argument, and by citation of authorities, counsel for defendant also attacked the constitutionality of the Acts of 1922, and the amendatory Act of 1923, which are now Sections 7768 and 7769 of the Code of 1932. The cases cited in support of this position cause me to entertain considerable doubt as to the constitutionality of these sections, but a decision to this effect, in view of my conclusions above stated, is not necessary to a disposition of the case. I, therefore, do not sustain the position of the defendant as to these constitutional questions. I am compelled, however, to grant their motion on the other grounds stated. As to the grounds upon which I base my conclusion, it is perfectly clear that the relation between the Rawleigh Company and B.C. Bryan, upon whom the service of the summons was made, was simply and solely that of vendor and vendee of the products manufactured for sale by the vendor. The Rawleigh Company maintains no office or place of business and has no officer or agent located in this State. It has had in the State no representatives, or traveling salesmen to solicit orders, and not one of its officers or employees ever entered the State to make contracts with customers or dealers, or to solicit or secure orders for its merchandise, or to secure contracts of guarantee.

The Rawleigh Company does not own any real or personal property in the State. B.C. Bryan and R.A. Shell sold its products in this State, and all the goods and products of the defendant which they sold were ordered by them through the mail and were shipped to them by the defendant by common carrier in interstate commerce. The plain interpretation of the contract is that upon the shipment of the goods in interstate commerce by the seller, the buyer becomes the sole owner of the goods purchased, and was at liberty to sell and dispose of the same on such terms, conditions and at such prices as he may see fit. The dealer may or may not use the literature and other advertising matter furnished by the seller, and it is plainly provided that he is under no obligation to follow the seller's advice or suggestions to promote his business, and is not under any legal obligation to furnish the seller weekly reports of the progress of his business, although it may be desirable that he should do so, and in accordance with the general policy of the company. There is, therefore, shown by this record not a single fact or circumstance to indicate the agency of the customer, or dealer, in this case B.C. Bryan, for the defendant.

Section 434 of the Code of 1932 provides that the summons shall be served by delivery of a copy thereof, in the case of a corporation to the president, or other head of the corporation, secretary, cashier, treasurer, director, or agent thereof, and "such service can be made in respect to a foreign corporation only when it has property within the State, or the cause of action arose therein, or where such service shall be made in this State personally upon the president, cashier, treasurer, attorney or secretary, or any agent thereof."

Section 826 of the Code of 1932 authorized suits to be brought against foreign corporations in the Circuit Courts of this State by any resident of the State for any cause of action.

The Acts of 1922 and 1923, now Sections 7765-7769 of the Code of 1932, and particularly Section 7769, provide that the penalties for non-compliance with the provisions of said statutes shall be recovered at the suit of the State in the Courts of Common Pleas for any county of the State.

It may be conceded that the statutes of this State providing for service upon foreign corporations are sufficiently complied with when any foreign corporation is shown to be "doing business" in the State and when "any agent" of such corporation is served with process in this State. I am of the opinion that the W.T. Rawleigh Company was not at the time of the service, or attempted service herein, "doing business" in South Carolina in the sense necessary to afford jurisdiction to its Courts; in fact, that it was not to be "found in the State" at all, and that the said B.C. Bryan was not in any sense its agent.

It is fundamental that in order to obtain jurisdiction of a foreign corporation so as to render a judgment in personam against it, at least two things must concur: First, the corporation must be doing business in the State. Toledo Railways Light Co. v. Hill, 244 U.S. 49, 37 S.Ct., 591, 61 L.Ed., 982; Riverside Cotton Mills v. Menefee, 237 U.S. 189, 35 S.Ct., 579, 59 L.Ed., 910; International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct., 944, 58 L.Ed., 1479; Green v. Ry. Co., 205 U.S. 530, 27 S.Ct., 595, 51 L.Ed., 916.

And, second, it is necessary that there be service of process upon a duly authorized officer or agent of the corporation within the State, under the statutes authorizing and providing for such service. Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct., 250, 69 L.Ed., 634; St. Louis Southwestern Railway Co. v. Alexander, 227 U.S. 218, 33 S.Ct., 245, 57 L.Ed., 486, Ann. Cas., 1915-B, 77; St. Clair v. Cox, 106 U.S. 350, 1 S.Ct., 354, 27 L.Ed., 222; Golden v. Wheel Co. (D.C.), 252 F., 904; Michigan Aluminum foundry Co. v. Aluminum Castings Co. (C.C.), 190 F., 879; Philadelphia R. Railway Co. v. McKibbin, 243 U.S. 264, 37 S.Ct., 280, 61 L.Ed., 710; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct., 233, 62 L.Ed., 587, Ann. Cas., 1918-C, 537; Davega, Inc., v. Lincoln Furniture Co., (C.C.A.), 29 F.2d 164.

The United States Supreme Court is the final arbiter upon both of these questions. Abbeville Electric Co. v. Supply Co., 61 S.C. 371, 39 S.E., 559, 55 L.R.A., 146, 85 Am. St. Rep., 890; McSwain v. Grain Provision Co., 93 S.C. 103, 76 S.E., 117, Ann. Cas., 1914-D, 981; Chipman v. Jeffrey, 251 U.S. 373, 40 S.Ct., 172, 64 L.Ed., 314, and cases cited therein; 14A Corpus Juris, 1372, and cases cited; Thurman v. C., M. St. Paul Ry. Co., 254 Mass. 569, 151 N.E., 63, 46 A.L.R., 566, and numerous cases cited in the note; Conley v. Mathieson Alkali Works, 190 U.S. 406, 23 S.Ct., 728, 47 L.Ed., 1113; Barrow v. Kane, 170 U.S. 100, 18 S.Ct., 526, 42 L.Ed., 964.

The contract between the Rawleigh Company and Bryan, the alleged agent upon whom the summons was served as above stated, must be construed to be simply a contract of purchase and sale of the products manufactured by the Rawleigh Company. This is shown not only by the terms and provisions of the contract but by an examination of the following cases of our Court: W.T. Rawleigh Co. v. Thompson, 122 S.C. 43, 114 S.E., 702; W.T. Rawleigh Co. v. Wilson, 141 S.C. 182, 139 S.E., 395; Furst Thomas v. Moore, 129 S.C. 233, 123 S.E., 825; and Furst Thomas v. Davis et al., 150 S.C. 1, 147 S.E., 654.

In the Rawleigh cases contracts identical with that between the defendant and Bryan were involved. In the Furst Thomas cases the contracts are substantially and practically the same. In all these cases the Court treated the contracts as contracts of vendor and vendee.

The provisions of these contracts guaranteeing the payment of any goods that might be purchased by the vendee on credit were treated as contracts of guarantee.

The contract with Bryan was accepted by the Rawleigh Company at Richmond, Va., and all deliveries of goods ordered by Bryan thereunder were made to common carriers f. o. b. Richmond, or elsewhere outside of the limits of this State. It is clear, therefore, that this contract was to be performed and was actually performed outside of the State. The payments thereunder by Bryan were made through the United States mail. I conclude that the contract is not a South Carolina contract. The same thing is true of the contract made between defendant and R.A. Shell.

An agent is one appointed by a principal as his representative and to whom the principal confides the management of some business to be transacted in the principal name, or on his account, and who brings about or effects legal relationships between the principal and third parties. 21 R.C.L., 817.

In Jenkins v. Bridge Co., 73 S.C. 528, 53 S.E., 991, 992, the Supreme Court said:

"An agent is generally defined as a person who acts on behalf of another person who is his principal. While in practical affairs the relation assumes so many phases, it is often quite difficult to apply the definition, it is certainly necessary to constitute agency that there should be some kind of representation of the principal by virtue of authority conferred by him. Authority to contract is sufficient to constitute agency under this statute. Gross v. Nichols, 72 Iowa, 239, 33 N.W., 653; Norton v. Berlin Bridge Co., 51 N.J. Law, 442, 17 A., 1079; Packet Co., v. Pikey, 142 Ind., 304, 40 N.E., 527. The claim of agency based on any other authority short of power to contract it is said by high authority has rarely been maintained, and certainly it should be allowed with great caution. Moore v. Freeman, 92 N.C. 590." Connecticut M. Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct., 308, 43 L.Ed., 569; Carpenter v. Lumber Co. (C.C.), 158 F., 697.

"The agent must be one having in fact a representative capacity and derivative authority, and not one created by construction or implication, contrary to the intention of the parties." Doe v. Springfield, etc., Mfg. Co., 104 F., 684, 687 (C.C.A., 9th Cir.).

The reason that has led the Federal Courts to hold that the person served must be an agent in fact and not one by implication or estoppel, seems to be that in dealing with service of process upon an agent, the Court is confronted with the question whether due process of law is being accorded the defendant. Inasmuch as service of process goes to the jurisdiction of the Court over the person, the word "agent" as used in the statutes must be so construed as to conform to the principles of natural justice, so that the service will constitute due process of law. 21 R.C.L., 1351.

The question has also occasionally arisen in some of the State Courts. The following cases hold that the agent must be one in fact and not one arising by implication or estoppel. Chicago, etc., R. Co. v. Suta, 123 Ill. App., 125; North Wisconsin Cattle Co. v. Oregon, etc., R. Co., 105 Minn., 198, 117 N.W., 391; Wold v. J.B. Colt Co., 102 Minn., 386, 114 N.W., 243; Mikolas v. Walker, 73 Minn., 305, 76 N.W., 36; Arrow Lumber Co. v. U.P. Ry. Co., 53 Wn., 629, 102 P., 650; Barnard v. Springfield, etc., Traction Co., 274 Ill., 148, 113 N.E., 89, L.R.A., 1916-F, 451; Chicago, B. Q.R.R. Co. v. Weber, 219 Ill., 372, 76 N.E., 489, 4 L.R.A. (N.S.), 272; Tinker v. Rice Motors, 198 N.C. 73, 150 S.E., 701.

This question has come before our Court in a number of cases. I have, however, not been able to find a single case in which under similar facts and circumstances service has been sustained. In every case where the service was sustained, there were ample facts to establish the two fundamental essentials which are necessary to be shown to exist in order to sustain the service. The case of McNeill v. Electric Storage Co., 109 S.C. 326, 96 S.E., 134, is very different from the case at bar. There, the buyer agreed amongst other things, that he would not sell any other products than those of the seller; that he would stock or carry a stock sufficient to enable him to fill all orders; that he would install and provide suitable facilities satisfactory to the seller for the conduct of the business; that he would otherwise promote the interests of the seller; that he would refer all orders or inquiries made from outside his definitely limited territory to the seller; that the seller retained the right to cancel the agreement upon notice if the conditions were not satisfactorily carried out. The Court held that the battery company had absolute control of the Columbia business, conducted by McNeill and others under the name of the Capital City Garage, and specifically that the facts showed that the Capital City Garage was simply the agent of the Electric Battery Company. This case is easily distinguished from the facts of the instant case.

In the case of the Ideal Theater v. Southern Enterprises, 132 S.C. 352, 128 S.E., 166, service of process on the foreign corporation was sustained on evidence showing the actual presence of an agent of the corporation in the State, and on other evidence showing that the corporation was actually doing business in the State. The same thing is true in the case of Hodges v. Lake Summit Co., 155 S.C. 436, 152 S.E., 658.

The most recent case is that of A.P. Richardson v. Frigidaire Corporation et al., 168 S.C. 473, 167 S.E., 681, in which the opinion was filed on February 3, 1933. An examination of this case shows that the facts are quite different from the facts here. The agent J.R. Little was shown to have actually transacted business for the foreign corporation. There, also, the Fridigaire Corporation had at one time been fully domesticated in the State, although in 1929 it announced its desire to withdraw from the State, but it was found by the lower Court that subsequent transactions indicated very clearly that it had not actually withdrawn from the State, but in certain particulars had continued to do business in the State, by and through J.R. Little, as its agent, and accordingly the order to set aside the summons was refused.

The Courts have defined "doing business in the State," and under numerous authorities I am satisfied that there is nothing contained in this record that can logically or reasonably be said to constitute "doing business" in this State by the Rawleigh Company.

It is true that no hard and fast rule as to what constitutes "doing business" can be laid down and that each case must be determined upon its own circumstances. Washington-Virginia Railway Co. v. Trust Co., 238 U.S. 185, 35 S. Ct., 818, 59 L.Ed., 1262; International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct., 944, 58 L.Ed., 1479; Green v. C., B. Q. Ry. Co., 205 U.S. 531, 27 S.Ct., 595, 51 L.Ed., 916.

Cases which throw light on this question and furnish concrete instances of what is "doing business" and what is "not doing business," are as follows: Hunau v. Supply Corporation (D.C.), 262 F., 181; Parsons-Willis Lumber Co. v. Stuart (C.C.A.), 182 F., 779; Rosenberg Bros. Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct., 170, 67 L.Ed., 372; Bank of America v. Whitney Central National Bank, 261 U.S. 171, 43 S.Ct., 311, 67 L.Ed., 594; Hessig-Ellis Drug Co. v. Sly et al., 83 Kan., 60, 109 P., 770, Ann. Cas., 1912-A, 551; Harrell v. Peters Cartridge Co., 36 Okla. 684, 129 P., 872, 44 L.R.A. (N.S.), 1094; Gunn v. White Sewing Mach. Co., 57 Ark. 24, 20 S.W. 591, 18 L.R.A., 207, 38 Am. St. Rep., 223; Three States Buggy Implement Co. v. Commonwealth (Ky.), 105 S.W. 971; Gottschalk v. Distilling Cattle Feeding Co. (C.C.), 50 F., 681; Delaware, etc., Canal Co. v. Mahlenbrook, 63 N.J. Law, 281, 45 L.R.A. (N.S.), 538; John Deere Plow Co. v. Agnew, 48 Can. Sup. Ct., 208, Ann. Cas., 1913-E, 1145 and note; Houston Canning Co. v. Virginia Can Co., 211 Ala., 232, 100 So., 104, 35 A.L.R., 912; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S. Ct., 233, 62 L.Ed., 587, Ann. Cas., 1918-C, 537; Green v. C., B. Q. Ry., 205 U.S. 530, 27 S.Ct., 595, 51 L.Ed., 916; Cooper v. E.L. Welch Co. (D.C.), 218 F., 719; Philadelphia R.R. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct., 280, 61 L.Ed., 710; Note 35 A.L.R., 917, where numerous cases to the same effect are reviewed. Brumer v. Kansas Moline Plow Co., 168 F., 218, 93 C.C.A., 504; Kendall v. American Automatic Loom Co., 198 U.S. 477, 25 S.Ct., 768, 49 L.Ed., 1133; Frawley Bundy Wilcox v. Pennsylvania Casualty Co. (C.C.), 124 F., 259.

The State cannot, by statutory enactment or judicial construction, extend the jurisdiction of its Courts over foreign corporations not "doing business" locally. Rosenberg Bros. Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct., 170, 67 L.Ed., 372; Pope v. Terre Haute Car Mfg. Co., 87 N Y, 137; Bank of America v. Whitney Cent. Nat. Bank, 261 U.S. 171, 43 S.Ct., 311, 67 L.Ed., 594; Mechanical Appliance Co. v. Castleman, 215 U.S. 437, 30 S.Ct., 125, 54 L.Ed., 272; Riverside D. River Cotton Mills v. Menefee, 237 U.S. 189, 35 S.Ct., 579, 59 L.Ed., 910; Vicksburg, S. P. Ry. Co. v. De Bow, 148 Ga. 738, 98 S.E., 381; Robert Dollar Co. v. Canadian Car Foundry Co., 220 N.Y., 270, 115 N.E., 711; Atchison, T. S.F.R.R. Co. v. Weeks, 166 C.C.A., 71, 254 F., 513, certiorari denied in 249 U.S. 602, 39 S.Ct., 259, 63 L.Ed., 797; Weiss v. Director Gen., 250 Mass. 12, 144 N.E., 765; Davis v. L.L. Cohen Co., 268 U.S. 639, 45 S.Ct., 633, 69 L.Ed., 1132.

To assume jurisdiction over a person against his protest where no jurisdiction exists is a denial of due process of law. Thurman v. C., M. St. P. Ry. Co., 254 Mass. 569, 151 N.E., 63, 46 A.L.R., 563; Pawloski v. Hess, 250 Mass. 22, 144 N.E., 760, 35 A.L.R., 945; Baker v. Baker, 242 U.S. 394, 37 S.Ct., 152, 61 L.Ed., 386.

It is, therefore, ordered that the service or attempted service of the summons and complaint herein be and the same is hereby vacated and set aside and the complaint herein dismissed.

Messrs. John M. Daniel, Attorney General, J. Ivey Humphrey and J. Ivey Wilson, Assistant Attorney Generals, Thurmond Thurmond and T.B. Greneker, for appellant, cite: Power of State to exclude foreign corporations: 83 S.C. 418. When corporation doing business in State: 76 S.C. 218; 64 L.Ed., 157; 62 L.Ed., 854; 283 Fed., 473; 216 S.W. 32; 126 N.E., 868; 178 N.W., 665; 231 S.W., 935; 205 S.W. 422; 247 U.S. 26; 62 L.Ed., 966; 11 A.L.R., 611; 38 S.Ct., 430. As to agency: 2 C.J., 420; 21 R.C.L., 817; 124 S.C. 347; 97 S.C. 150; 73 S.C. 48; 112 S.C. 109; 132 S.C. 352; 73 S.C. 532; 109 S.C. 326; 172 U.S. 602; 43 L.Ed., 574.

Messrs. Folk Folk and Grier, Park, McDonald Todd, for respondent, cite: To obtain jurisdiction of foreign corporation: 47 S.C. 498; 123 S.C. 515; 124 S.C. 346; 145 S.C. 539; 164 S.C. 52; 168 S.C. 519; 244 U.S. 49; 237 U.S. 189; 234 U.S. 579; 205 U.S. 530; 267 U.S. 333; 69 L.Ed., 434; 227 U.S. 218; 106 U.S. 350; 252 U.S. 904; 190 U.S. 879; 234 U.S. 587; 29 F.2d 164; 61 S.C. 371; 93 S.C. 103; 251 U.S. 373; 46 A.L.R., 566; 141 S.C. 182; 129 S.C. 223; 150 S.C. 1. Doing business: 182 F., 779; 105 C.C.A., 211; Ann. Cas., 1912-A, 551; 128 N.W., 1014; 102 P., 564; 69 A., 1098; 44 L.R.A. (N.S.), 1094; 38 A.S.R., 223; 12 R.C.L., 73; Ann. Cas., 1913-E, 1145.

March 13, 1934. The opinion of the Court was delivered by

This action was brought in the Court of Common Pleas for Edgefield County by the State of South Carolina against the defendant company, a nonresident corporation, to recover the sum of $7,300.00, alleged to be due as penalties for doing business in this State without complying with the requirements of an Act of the Legislature of March 24, 1922 (32 St. at Large, p. 1023, as amended by Act March 20, 1923 [33 St. at Large, p. 9]), providing for domestication by foreign corporations. Service was made on one B.G. Bryan, a resident of Edgefield County, and an alleged agent of the company.

Upon due notice to the plaintiff, the defendant made special appearance for the purpose of moving to set aside the service of the summons and complaint on the following grounds: (1) That the company was not doing business in South Carolina: and (2) that the person served was not an agent or representative of the defendant. The motion was heard by Hon. G. Dewey Oxner, Circuit Judge, upon the record, affidavits submitted by the parties, certain letters, and other documentary evidence. Upon an analysis of the evidence before him, Judge Oxner concluded, as a matter of fact, that the defendant company was not engaged in business in this State and that the person served was not its agent. He, therefore, sustained the defendant's motion on both grounds, and by an order dated February 20, 1933, vacated and set aside the service. From this order, plaintiff appealed.

The point is made by the respondent that the result of the determination of the issues by the Circuit Judge being a finding of fact, is not subject to review by this Court in a law case, unless wholly unsupported by evidence. The position is sustained by our decisions. In Lipe v. Railway Company, 123 S.C. 515, 116 S.E., 101, 30 A.L.R., 248, the Court held as follows: "A conclusion as to either of the points indicated (similar to the questions presented here), necessarily involves the determination of a question of mixed law and fact, but the result of such determination by the Circuit Judge is essentially a finding of fact which this Court has no power to review, unless wholly unsupported by evidence or manifestly influenced or controlled by error of law." Citing cases. See, also, Bass v. American Products Export Import Corporation, 124 S.C. 346, 117 S.E., 594, 30 A.L.R., 168; Singletary v. Seed Company, 145 S.C. 539, 143 S.E., 269; and State v. Insurance Company, 168 S.C. 516, 167 S.E., 833.

In the case at bar, we have examined the documentary evidence contained in the record, all of which, as we have said, was before Judge Oxner; and, despite the strong and persuasive argument of counsel for plaintiff, we find ourselves unable to agree with the contention that the findings and holdings of the Circuit Judge, that the defendant company was not engaged in business in this State and that the person upon whom service was made was not its agent, are "wholly without evidence to support them or manifestly attributable to an erroneous conception or application of the law." On the contrary, we think his conclusions, under applicable principles of law, have ample support in the evidence. And while we may not agree with everything said in the Court's decree, we approve the result reached.

The order appealed from is affirmed.


Summaries of

State of South Carolina v. W.T. Rawleigh Co.

Supreme Court of South Carolina
Mar 13, 1934
172 S.C. 415 (S.C. 1934)
Case details for

State of South Carolina v. W.T. Rawleigh Co.

Case Details


Court:Supreme Court of South Carolina

Date published: Mar 13, 1934


172 S.C. 415 (S.C. 1934)
174 S.E. 385

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