Brouillette, Harold J.

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Louisiana Law ReviewVolume 14 | Number 3April 1954Conflict of Laws - Jurisdiction Over Nonresidents -Constructive Service in Tort Action ArisingOutside the StateHarold J. BrouilletteThis Note is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusionin Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact kreed25@lsu.edu.Repository CitationHarold J. Brouillette, Conflict of Laws - Jurisdiction Over Nonresidents - Constructive Service in Tort Action Arising Outside the State, 14 La.L. Rev. (1954)Available at: https://digitalcommons.law.lsu.edu/lalrev/vol14/iss3/16LOUISIANA LAW REVIEWfurnish the rule most likely to prevent, in his words, the reduc-tion of "the law of custody to a rule of seize-and-run.'1 2Helen M. WimmerCONFLICT OF LAWS-JURISDICTION OVER NONRESIDENTS-CONSTRUCTIVE SERVICE IN TORT ACTION ARISINGOUTSIDE THE STATESuit in New York arose out of a death resulting from thecrash of an airliner operated by defendant corporation. A NewYork statute provided that service of process could be made uponthe Secretary of State as agent for nonresident owners of air-craft for the purposes of litigation arising out of accidents ofany aircraft "which has landed at or departed from any airfieldin this state."' The airliner was on a scheduled flight fromNew York to California and crashed in California. Defendantwas served with process in New York in accordance with thestatute. The application of the statute under these facts waschallenged as a violation of due process. The lower court ruledthat all the requirements were met.2 On appeal, held, the statutewas unconstitutional insofar as it was applied to accidents orcollisions which occurred out of state, as the police power of thestate may not be projected -beyond its territorial boundaries.Peters v. Robin Airlines, 281 App. Div. 903, 120 N.Y.S.2d 1 (2dDep't 1953).The United States Supreme Court in 1878 in the landmarkcase of Pennoyer v. Neff' held that constructive service upon anonresident defendant is ineffective to support a personal judg-ment. The court limited the decision by expressly excluding anyopinion as to the right of states to require the appointment ofagents for service of process by nonresidents "entering into apartnership or association within its limits" for actions arisingout of such business.4 Nevertheless, that case represents the highwater mark in protecting nonresident defendants. The principlesof Pennoyer v. Neff have by necessity undergone modifications.It has long been well settled that nonresident corporationsdoing business within a state are subject to the jurisdiction of its12. 345 U.S. 528, 542 (1953).1. N.Y. GENERAL BUSINESS LAW § 250 (Cum. Supp. 1952).2. Peters v. Robin Airlines, 118 N.Y.S.2d 238 (Sup. Ct. 1952).3. 95 U.S. 714 (1878).4. Id. at 735.VOL. XIVNOTEScourts.5 The reasoning employed was that since a state couldexclude corporations from entering the state, it could imposeconditions on their doing business." But this reasoning could notbe applied to individuals because of the "privileges and immuni-ties" clause of the Federal Constitution. Hence, in 1918 in thecase of Flexner v. Farson,7 the United States Supreme Court heldthat the mere doing of business in the state by a nonresident indi-vidual could not be held to imply consent to service of process.In reply to the constitutional obstacle of "privileges and immuni-ties," the states have retaliated with the equally powerful toolof "police power." In Doherty & Co. v. Goodman8 the SupremeCourt found a reasonable exercise of police power in a statestatute making the conduct of the business of selling securitiesthe basis of jurisdiction. However, since all sales of securities inthe state were subjected to special regulations, the case is notauthority for saying that the carrying on of an ordinary businessby an individual may be the basis of jurisdiction. While the ruleof the Flexner case has not been squarely presented to theSupreme Court for reconsideration, state courts have upheldstatutes which provide that a nonresident individual doing busi-ness within the state need not be served personally, but couldbe served through his agent even if the latter was not specificallyappointed to receive process.9In Supreme Court cases prior to Doherty & Co. v. Goodman'0the proposition that the police power of the state to regulatedangerous acts includes the power to require submission by theactor to its jurisdiction had included only acts which werephysically dangerous to citizens of the state. In Hess v. Pawloski"the Supreme Court upheld a statute which permitted service ofprocess on a nonresident by service on the Secretary of State forany cause of action arising out of an automobile accident within5. People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79 (1918);Pennsylvania Fire Ins. Co. v. Gold Issue Mining and Milling Co., 243 U.S. 93(1917); St. Louis S.W.R.R. v. Alexander, 227 U.S. 218 (1913); Lafayette Ins.Co. v. French, Strong and Fine, 18 How. 404 (U.S. 1856).6. See cases cited note 5 supra.7. 248 U.S. 289 (1919).8. 294 U.S. 623 (1935).9. See, e.g., Wein v. Crockett, 195 P.2d 222 (Utah 1948).10. 294 U.S. 623 (1935).11. 274 U.S. 352 (1927). In Louisiana, LA. R.S. § 13:3474 et 8eq. (1950)permits suit against a nonresident by service on the Secretary of State forcauses arising out of automobile accidents within the state in which the non-resident is involved. The constitutionality of the statute was upheld inMoore v.,Payne, 35 F.2d 232 (W.D. La. 1929). See also Roper v. Brooks, 201La. 135, 9 So.2d 485 (1942); Galloway v. Wyatt Metal & Boiler Works, 189 La.837, 181 So. 187 (1938); Note, 1 LOUISANA LAW REviEw 451 (1939).19541LOUISIANA LAW REVIEWthe state. The Doherty case extended such rules to include activi-ties endangering economic interests of the public.12 A valid argu-ment could be made that every business subjects the public toeconomic dangers. The constitutional limits on police power ofthe state in this area seem indefinite, to say the least.As stated earlier, where nonresident corporations are con-cerned, the authority of the state to impose conditions on the"doing of business" is well established. 13 It is thus understand-able that the meaning of "doing business" as that phrase is usedin nonresident corporation statutes has troubled the courts formany years.' 4 However, the speculation about its meaning wasreduced by the Supreme Court's decision in International ShoeCo. v. Washington. In that case, the court introduced new cri-teria for determining what activity by a corporation within astate subjects it to the jurisdiction of the courts of that statethrough the medium of substituted service. Instead of a showingthat a corporation was "doing business" within a state, under theholding of the International Shoe Co. case, the demands of dueprocess "may be met by such contacts of the corporation with thestate of the forum as make it reasonable" for a state court to takejurisdiction.In the cases discussed above, the causes of action arose inthe state of the forum. For actions arising without the state,new complications arise. In 1907 in the case of Old Wayne MutualLife Association v. McDonough" the Supreme Court held that astate statute providing for substituted service on foreign corpora-tions was not applicable in causes of action arising outside thestate. This apparently sweeping rule was later restricted to casesin which service is made on a public official; suit was permittedon out of state causes where service was made on an appointedagent.' 7The recent case of Perkins v. Benquet Consol. Mining Co.' 8involved a suit on a cause of action arising outside the state ofOhio, where suit was brought. The defendant corporation was a"sociedad anonima" incorporated under the laws of the Philip-12. Of., e.g., Recent Cases, 48 HARV. L. Rsv. 1433 (1935).13. See cases cited note 5 supra.14. Isaacs, An Analysis of Doing Business, 25 COL. L. REv. 1018 (1925).15. 326 U.S. 310 (1945).16. 204 U.S. 8 (1907).17. Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243U.S. 93 (1917); Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915(1917).18. 342 U.S. 437 (1952).VOL. XIVNOTESpine Islands, owning gold and silver mines there. During theJapanese occupation of the Philippines the president of the cor-poration returned to his home in Ohio, where "he maintained anoffice in which he conducted his own affairs and did many thingson behalf of the company," which are enumerated in the opinion. 19The United States Supreme Court found that the Ohio courtscould in this case, without violating federal due process, exerciseor decline jurisdiction over the foreign corporation since personalservice had been made on its president. There being personalservice upon an officer of the corporation, the Court specificallydistinguished the holding of the Old Wayne case, where servicehad been made upon a public official without actual notice havingbeen received by a responsible representative of the foreigncorporation.20It is interesting to note that the Supreme Court has not hadoccasion to rule on a case involving an out-of-state cause of actionwhere substituted service is made under a so-called "dangerousactivity" type of statute. The cases discussed above involvedstatutes which depend upon the "doing business" theory or themodification of that theory under the International Shoe Co. doc-trine. The lower court in the instant case applied the Inter-national Shoe Co. rule, holding that the requirements set forthin that case were met by the statute requiring sufficient contactsby the defendant within the state, to-wit, landing or taking offof its airplanes. 21 The Appellate Division reversed this decision,reasoning that the statute was a police power measure and nota "doing business" statute (requiring sufficient contacts withinthe state) and hence the court did not even refer to the Inter-national Shoe Co. doctrine. It is submitted, however, that hadthe service of process been made under a nonresident "doingbusiness" or "sufficient contact" type of statute, the upholdingof the lower court's decision would be inconsistent with the ruleof the Old Wayne case because service had been made upon apublic official and not upon an appointed agent or officer of thecorporation.In examining the problem of judicial jurisdiction historicallysince Pennoyer v. Neff,22 it is clear that the trends have beenaway from the extreme position taken in that case and toward19. Id. at 448.20. Id. at 443-4.21. 118 N.Y.S.2d 238 (1952).22. See note 3 supra.1954]LOUISIANA LAW REVIEWabolition of technical rules which give an undue advantage tononresident defendants. 28 The plaintiff is being relieved of someof the inconveniences entailed by rules designed when businessmethods and transportation facilities were very different fromwhat they are today. The decision in the International Shoe Co.case emphasizes the reasonableness test in determining whethera defendant is in fact being dealt with fairly. While it is sub-mitted that the instant case was decided properly under presentconcepts of jurisdictional requirements, if we pursue the reason-ableness notion, the case seems to indicate that these conceptsare still in need of modification. Assuming proper notice andsufficient time to defend, could a valid argument be made thatit would be unreasonable or unfair to require the defendant air-line corporation to submit to suit in New York where it con-ducted business, where the plaintiff boarded the plane, and wherehe was domiciled? Is it realistic to place so much significance onthe actual place of the injury? The problem when viewed in itsentirety presents two sets of competing interests: first, those ofthe nonresident defendant who, because he had dealings outsidehis home state, may be put to great inconveniences in defendinga suit there since even if the plaintiff has no cause for institut-ing action, still a defense must be made; second, those of theplaintiff who may be deprived of a real opportunity to enforcehis rights if he is forced to bring his suit in a distant jurisdic-tion.24 What difference should it make that the injury occurred inanother state? Whether the problem be approached by definingthe limits of police power or by determining what constitutes thedoing of business, it would seem that principles of reasonablenessand fairness should be paramount to technical niceties, many ofwhich may be obsolete. Where the line should be drawn inbalancing the inconveniences between plaintiffs and nonresidentdefendants is a question of great importance which should bedealt with by legislation or jurisprudence in the light of modernbusiness and commercial trends.Harold J. Brouillette23. Note, Conflict of Laws-Apparent Trends in Jurisdiction, 34 Ky. L.J.139 (1945).24. For an excellent discussion of the dual trend in jurisdictional deci-sions, see Note, The Growth of the International Shoe Doctrine, 16 U. OF CHLL. R v. 523, 536 (1949).VOL. XIV

Conflict of Laws - Jurisdiction Over Nonresidents - Constructive Service in Tort Action Arising Outside the State

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Conflict of Laws - Jurisdiction Over Nonresidents - Constructive Service in Tort Action Arising Outside the State

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