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PERHAM FRUIT CORP. v. CUNARD WHITE STAR

May 14, 1949

PERHAM FRUIT CORPORATION et al.
v.
CUNARD WHITE STAR, Limited, et al.



The opinion of the court was delivered by: DRIVER

The question presented is whether this Court has jurisdiction of defendant, Cunard White Star Limited, a British corporation. The above actions, and two others by different plaintiffs in which the same corporation was named as a defendant, were commenced in State Court and removed for diversity. In each case, summons was served at Seattle, Washington, upon Burchard & Fisken, Inc., a Washington corporation, as agent of the British corporation.

Hereafter, throughout this opinion, plaintiff, Perham Fruit Corporation, will be called 'Perham'; defendant, Cunard White Star Limited, will be called 'Cunard'; and Burchard & Fisken, Inc., will be referred to as 'Burchard'.

 For the purpose of making a factual summary, cause No. 370 may be taken as fairly representative of the others. *fn1" Perham, a Yakima, Washington, concern, undertook to ship seven carloads of fresh pears to Glasgow, Scotland. The carriage was to be by rail to an Eastern Canadian Seaport and thence across the Atlantic by Cunard's Steamship, Delilian. There was a delay of about two weeks in loading the pears aboard the vessel. Some of the fruit was rejected as unfit for ocean transportation, and the remainder arrived in Scotland in a deteriorated condition. In its complaint, Erham charges Cunard and the railroad carriers with negligence and seeks to recover damages from all of them.

 Prior to World War II, Perham and other shippers had sold a large volume of Washington State fresh fruit in United Kingdom markets. The War stopped the movement, but it was resumed in 1946. Cunard, as an ocean carrier, had participated in this trade, but from 1940 on, it had no office in the State and its vessels made no calls therein for freight or passengers. In the summer of 1946, Cunard appointed an individual agent (succeeded in December of that year by Burchard) to solicit freight and passenger business on a commission basis. From then on, the solicitation was continuous and extensive. A substantial portion of the 1946 Washington apple crop was transported across the Atlantic to European markets in Cunard vessels. The same was true of the Washington pear crop. During the 1946-47 season, Perham, alone, shipped 23 carloads of pears to United Kingdom, buyers in vessels owned or operated by Cunard. However, all the fruit was received by Cunard for shipment at Atlantic ports outside of the State of Washington.

 The seven carloads of pears involved in case No. 370 were grown and packed in the State of Washington. Five were shipped by rail from warehouses in the State to Eastern Canada. The remaining two carloads were shipped by rail from Portland, Oregon, where they had been placed in storage. Perham engaged cargo space on the Delilian for three carloads through Inge & Company, a freight forwarder of New York City. Freight thereon was not prepaid. Space was engaged for the other four carloads through a Seattle fruit forwarder, Seaport Shipping Company (an agent of Inge & Company before the War). In accordance with the usual practice followed in many similar transactions, the booking for the four carloads was made by Seaport Shipping Company through Burchard as agent for Cunard. The agent first wired the Montreal office of Cunard for authority to book the cargo, then notified Seaport Shipping Company, which, in turn, notified Perham that 'the space was firm and definitely reserved.' No contract for the transportation of the pears was ever executed other than the exchange of letters and telegrams, requesting and confirming the booking of the cargo space. At the request of Cunard, the railroad bills of lading were delivered to Burchard by Perham, and, after the pears had been placed aboard the Delilian, the ocean bills of lading were delivered to the shipper by Burchard at the direction of Cunard. A check for prepayment of the freight on the four carloads was drawn by Perham, payable to the order of Cunard and delivered to Burchard. After payment and cancellation, the check was returned to the drawer bearing the following stamped endorsement: 'Pay to the order of the National Bank of Commerce of Seattle- Burchard & Fisken, Inc.- Cunard White Star Ltd.' Refund of freight charges on account of fruit rejected for ocean shipment in the amount of $ 459.80 was made to Perham by a bank check drawn by Burchard. *fn2"

 Advertisements of Cunard in trade publications list an office of the Company in the Exchange Building, Seattle. The Seattle telephone directory contains a listing of Cunard 'Exch. Bldg.- Main 7422.' The listing in the same directory for Burchard is 'Exch. Bldg.- Main 7419.' The lettering on the doors of the rooms in the Exchange Building, occupied by Burchard announce that Burchard is the agent or general agent of Cunard. The printed letterhead of Burchard bears the announcement that it is agent for Cunard and other steamship companies.

 It is conceded that Cunard has never been authorized to do business in the State of Washington, has had not statutory agent within the State, has never carried on any intrastate transportation business there, and, since 1940, has not maintained a bank account or kept any assets in the State.

 The motions to dismiss challenge the jurisdiction of this Court on a number of grounds. The contentions are that Cunard was not doing business in the State of Washington so as to be subject to process; that Burchard was not an agent of Cunard upon whom valid service could be made; and that to compel Cunard to submit to the local jurisdiction would constitute a denial of due process and impose an unreasonable burden on foreign commerce.

 In the absence of consent, a foreign corporation is not amenable to process to enforce a personal liability unless it is doing business in the state where the action is brought and process is served upon an authorized agent of the corporation. *fn3" The rule is easy to state, but not easy to apply because it is so difficult in close cases to determine what constitutes doing business. It has often been said that there is no rigid, ready-made formula that can be employed to make such a determination and that the outcome of each case must depend upon its own particular facts. *fn4" Nevertheless, some principles have evolved and one of them, upon which defendant Cunard relies in the present case, is that the mere solicitation of business within a state by a foreign corporation is not sufficient to subject the corporation to state, judicial process.

 The 'mere solicitation' doctrine was first announced by the Supreme Court in Green v. Chicago, Burlington & Quincy Ry. Co., 205 U.S. 530, 27 S. Ct. 595, 51 L. Ed. 916, in 1907. In that case, a foreign railroad corporation had no tracks in Pennsylvania and did no business there except to maintain agents for the solicitation of freight and passengers to be carried wholly outside of the State. It was held that the corporation was not doing business within the State so as to be amenable to process.

 Seven years later, the Supreme Court decided International Harvester v. Kentucky, 234 U.S. 579, 34 S. Ct. 944, 946, 58 L. Ed. 1479. There it was held that a foreign corporation, which maintained in Kentucky agents who took orders that were sent out of the State to be rejected or accepted and filled, was doing business in the State so far as process jurisdiction was concerned. Referring to Green v. Chicago Burlington & Quincy Ry. Co. as 'an extreme case,' the Court distinguished it on the ground that it involved only mere solicitation of business, while in the International Harvester case there was 'something more' than solicitation. The 'something more' in the latter case was that in response to the orders taken there was a continuous flow of goods into the State and the corporation's soliciting agents were authorized to receive payment in money, check, or draft for the goods and to take notes payable at local banks.

 I shall not undertake to discuss or even to cite the numerous cases in which the courts have applied the 'mere solicitation' doctrine of Green v. Chicago, Burlington & Quincy Ry. Co. or the 'solicitation plus' rule of the International Harvester case. *fn5" I shall only briefly comment on the trend of the decisions. The 'mere solicitation' doctrine has been questioned and criticized in the later cases and the marked tendency has been to recognize greater jurisdictional power of the states over foreign corporations. It has taken less and less in the way of additional activities of a foreign corporation's agents to bring solicitation within the doing of business category. *fn6"

 Mr. Justice Rutledge, then an Associate Justice of the Court of Appeals for the District of Columbia, in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926, pointed out that the taking of orders is a very important part of the process of selling merchandise, that the merchant, or manufacturer would regard solicitation as the 'heart of business,' and that the 'mere solicitation' doctrine probably should be abandoned in cases where the solicitation 'is a regular, continuous and sustained course of business.'

 In International Shoe Co. v. State, 22 Wash.2d 146, 154 P.2d 801, the Washington Supreme Court, likewise, concluded that solicitation of orders should be sufficient to make a foreign corporation amenable to state process if the solicitation is regular and systematic and results in bringing a continuous flow of the corporation's products into the State by means of interstate carriers. Actually, it should be noted, there was something more than mere solicitation in both Frene v. Louisville Cement Co. and the International Shoe Company case. In the latter, however, the additional activity of the foreign corporation's salesmen within the State of Washington appears to have consisted only of their ...


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