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a glance at the statutes it seems obvious that this is a most artificial construction adopted solely for the purpose of reconciling the cases with the consent theory, although it is generally recognized that the statutes must be strictly construed.42 But even if such a construction were to be adopted, the doing of business by the corporation within the state would give rise to no presumption of consent. In the other cases, consent might be inferred because it would be unreasonable to assume that the corporation was acting illegally when its conduct was equally capable of a legal interpretation. But in this case the corporation is acting illegally, from any viewpoint, by failing to designate an agent to receive process.
Under the second and third types of statutes, which do not require an express consent, it is not so difficult to work out an implied consent. But even here it can only be done by totally disregarding the actual language of the statutes. The statutes do not say: "We forbid you to do business within the state unless you consent to the jurisdiction of our courts.” The statutes assume for the most part that the corporation is present, and that it is only necessary to provide for the method of service. This seems also to be the attitude of the states which have made no provision for jurisdiction over foreign corporations. They are served whenever an agent can be found within the state on corporate business. However, since only the legislature has the power to offer terms to foreign corporations, no ground at all is afforded for presuming the consent of the corporation to the jurisdiction of the courts in these states.
Moreover, the courts, except in the very earliest cases, see no necessity for consent. The course of decision of the United States Supreme Court is typical. It is particularly instructive as it controls to a great extent the decision of state tribunals since the question of jurisdiction is usually raised on the Fourteenth Amendment. In Insurance Co. v. French, decided in 1855,44 the opinion of Mr. Justice Curtis is based wholly on the consent theory. But in St. Clair v. Cox,45 Mr. Justice Field makes the consent theory only one of his
« BEALE, FOREIGN CORPORATIONS, $ 269.
u Railroad v. Harris, 12 Wall. (U. S.) 65 (1870). In Hayden o. Androscoggin Mills, i Fed. 93 (1879), service on a foreign corporation doing business in Massachusetts, where there was no statute, was sustained. See also Fire Insurance Co. o. Carrugi, 41 Ga. 660, 670 (1871). 4 18 How. 404.
* 106 U. S. 350 (1882).
ratio decidendi; the other he makes the presence of the corporation. In re Hohorst 6 makes no mention of the consent theory, while Steamship Co. v. Kane, 47 going altogether on the theory of the corporation's presence, is irreconcilable with the consent theory.48 The real character of the consent theory is shown in Insurance Co. v. McDonough, which purports to be decided on that theory. The Insurance Company made a contract in Indiana, while it was doing business within Pennsylvania, without complying with the Pennsylvania statute requiring foreign insurance companies to designate the Commissioner of Insurance as agent to receive service of process. The plaintiff subsequently attempted to bring suit in Pennsylvania on this Indiana contract by serving the Commissioner of Insurance. On the argument counsel made the point that there was no evidence that the Company was doing business in Pennsylvania when the suit was brought, and hence under the authorities the Pennsylvania court was without jurisdiction. The court so decided, but Mr. Justice Harlan, one of the older judges, who wrote the opinion, rested the decision on less tenable reasoning. He said that, while service on the commissioner could bind the corporation as to business transacted within the state, it could not as to transactions entered into without its borders, as the corporation could not be presumed to consent to service in such cases. But it must be perfectly clear that, if the insurance company is to accept the condition of the state, it must accept it as a whole, as the state has not split its offer. In this case, however, we have the additional difficulty that the corporation did not accept the offer of the state at all, because it made no attempt to comply with its terms, and hence there was no ground to presume a real consent to the condition.
This was pointed out in Bagdon v. Reading Co.,50 where the New York Court of Appeals sustained a judgment in an action on a foreign tort, service having been made upon the agent designated by the foreign corporation to receive it. The court adopted the distinction previously taken in Smolik v. Reading Co.,51 between actual consent and consent implied in law. Of course the latter form of consent is purely fictional and will not support jurisdiction. Jurisdiction under such a statute must exist apart from the implied con
sent and in the case of a foreign corporation can rest only upon its presence. In Simon v. Southern Ry.,52 although the judgment was clearly invalid and the statute in question unconstitutional for other reasons, the court treated the case as identical with Insurance Co. v. McDonough, and took occasion to lay down the flat rule that a statute authorizing service upon a state officer where the cause of action accrues out of business transacted outside the state is pro tanto unconstitutional. The decision leaves the question open where there is actual consent. As it does not purport to overrule Steamship Co. v. Kane, 53 a foreign corporation not having consented to the jurisdiction of the courts is still subject to service upon its agents in actions accruing out of transactions outside the state. The most that can be said, then, is that at present the court is of opinion that service upon a state officer in actions accruing from extra-state transactions is not a reasonable method of service and hence unconstitutional.
The last blow to the theory of the necessity of consent seems to have been administered by International Harvester Co. v. Kentucky,54 decided in 1913. In that case the corporation had been engaged in intrastate business within the state of Kentucky, and had designated an agent to receive service of process. The corporation discontinued its intrastate business and revoked the agency. It continued, however, to do an interstate business, and while so engaged was served in a criminal proceeding through one of its agents in the state, not the one originally designated. The court upheld the service on the sole and necessary ground that the corporation was present in the state. The corporation had never agreed to accept service on any but the designated agent, hence it was impossible to work out consent. Since this article went to press International Harvester Co. v. Kentucky has been followed by the New York Court of Appeals in Tauza v. Susquehanna Coal C0.55 The opinion of the court, written by Judge Cardoza, furnishes an impressive buttress to the theory of jurisdiction by corporate presence.
The courts appear to adopt the view of Morawetz, who says: 56
“There is not the slightest reason why service of process upon a foreign corporation, at common law, should not be governed by the same principles and rules as service of process on domestic corporations, at common law.” 57
170 U. S. 100 (1897).
W 234 U. S. 579.
62 236 U. S. 115 (1914).
220 N. Y. 259 (1917).
They seek first to assure themselves of jurisdiction by deciding the question of the corporation's presence. The most mooted difficulty is what constitutes “doing business within the state.” This is merely a question of statutory construction, and is not necessarily as broad as the question of the corporation's presence.68 Jurisdiction being found, the court then turns to the statute to settle the method of service.59 A particularly striking illustration of this attitude is found in the decision and reasoning of the New York Court of Appeals in the case of Dollar v. Canadian C. & F.Co.60
A corporation may be said to be present in a state when any member of the corporate group is within the state's territorial limits on authorized business. The mere presence of any member of the group will not suffice to give jurisdiction of the corporation. It is necessary to sharply distinguish the personality of the individual from that of the group. The member's personality only merges in the group's when he is engaged in group activity. The group
67 Mining Co. o. Johnson, 173 U. S. 221 (1898); Packing Co. v. Hunter, 8 Biss. 429 (1879) (Federal Court, Illinois); Groel v. United Electric Co., 69 N. J. Eq. 397, 60 Atl. 822 (1905); Colorado Iron Works o. Mining Co., 15 Colo. 499, 25 Pac. 325 (1890); Western Union Tel. Co. v. Pleasants, 46 Ala. 641 (1871); Equity Life Ass'n v. Gammon, 118 Ga. 236, 46 S. E. 100 (1903); Reeves o. Ry. Co., 121 Ga. 561, 49 S. E. 674 (1905); Railroad Co. v. Akers, 4 Kan. 453 (1868); Council Bluffs Canning Co. v. Omaha Míg. Co., 49 Neb. 537 (1896); Railroad Co. o. Keep, 22 Ill. 9 (1859); Boyd v. Coates, 24 Ky. L. 730, 69 S. W. 1090 (1902); American Casualty Co. v. Lea, 56 Ark. 539, 20 S. W. 416 (1892).
68 Colorado Iron Works o. Mining Co., 15 Colo. 499, 25 Pac. 325 (1890); International Text Book Co. o. Tane, 220 N. Y. 313 (1917).
69 It is important to delimit the scope of jurisdiction obtained by consent, and that obtained by presence, in order to avoid decisions like Moulin v. Insurance Co., 24 N. J. L. 222 (1853), 25 N. J. L. 57, where the statute merely provided for a method of service. In that case, the court enforced a judgment obtained in New York upon service on an officer of a foreign corporation which had ceased to do business there. As soon as a corporation has withdrawn its representatives from the state, it is no longer present there, and jurisdiction must be obtained by consent. The statute may properly require consent to the jurisdiction of the courts as to disputes arising out of previous business to continue after the withdrawal of the corporation from the state. Mutual Reserve, etc. Ass'n v. Phelps, 190 U. S. 147 (1902). And that does not appear to be an unreasonable construction of any statute actually requiring the corporation's consent, or the designation of an agent to accept service. Groel v. United Electric Co., 69 N. J. Eq. 397, 60 Atl. 822 (1905). But the statute should actually require consent, and would be without effect unless consent was given.
60 220 N. Y. 270 (1917).
activity of a stockholder is generally limited to signing one proxy a year, and receiving an occasional dividend cheque. The foreign corporation would be present in the jurisdiction only during those processes which take an infinitesimal time, too fleeting to be caught. The corporate activity of the ordinary director consists solely of attending the meetings of the Board of Directors. The corporation will surely be wherever the board may meet, usually at the head office of the company. But when the director leaves the meeting his active connection with the corporation ceases for another month, and his presence or residence will not give a state jurisdiction of the corporation.61 Of course, the corporation is present at any time isolated pieces of business are done within a jurisdiction by its agents properly authorized, but it is not present in the interim unless it maintains some representative or place of business there. But if the president of a foreign corporation lives in a state, or spends most of his time there, and is accustomed to supervise the corporate activities therefrom so far as is necessary, it would seem that that state had jurisdiction of the corporation although it had no office within the state and transacted no other business there. 62
The court may get jurisdiction of individuals not domiciled in the territory, through allegiance, consent or presence. To dispose of the first, which is not of primary importance (an individual is a citizen of the state of his domicile) to American students, we may say that a sovereign or its court has jurisdiction to impose an obligation or judgment in personam upon a subject even though he is domiciled abroad.63
It is clear that a sovereign state can exclude citizens of other states from doing business within its territorial limits, and it is equally clear that it can admit them on the condition that they consent to the
61 Riverside Mills v. Menefee, 237 U. S. 189 (1914).
62 Grant v. Cananea Copper Co., 189 N. Y. 241, 82 N. E. 191 (1907). The presence of an officer or other employee of a foreign corporation, unless engaged on corporate business, will not give jurisdiction of the corporation. It is solely the corporate activity of the individual which links him with the group. Nor will the residence of an officer or employee be sufficient unless the state is the scene of a large part of his corporate activity, as in Grant v. Cananea Copper Co., supra. The employee or officer is then a continuously active and permanent part of the group whose presence gives jurisdiction.
& Douglas v. Forrest, 4 Bing. 686 (1828); Russell v. Cambefort, 23 Q.B. D. 526 (1889).