Kendall v. American Automatic Loom Co.
198 U.S. 477 (1905)

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U.S. Supreme Court

Kendall v. American Automatic Loom Co., 198 U.S. 477 (1905)

Kendall v. American Automatic Loom Company

No. 541

Submitted April 24, 1905

Decided May 2, 1905

198 U.S. 477

APPEAL FROM THE CIRCUIT COURT OF THE UNITED

STATES FOR THE SOUTHERN DISTRICT OF NEW YORK

Syllabus

This Court can review by appeal under § 5 of the Act of March 3, 1891, the judgment of the circuit court dismissing the bill on the sole ground that it never acquired jurisdiction over the defendant, a foreign corporation, for lack of proper service of process. Board of Trade v. Hammond Elevator Co., ante, p. 198 U. S. 424.

Page 198 U. S. 478

Where the foreign corporation was doing no business and had no assets in the state, service upon a former officer residing therein held insufficient under the circumstances of this case.

This suit was brought against the defendant, appellee, for the purpose of obtaining a discovery of all the matters referred to in the bill of complaint, and to have a receiver appointed of the assets of the company within the State of New York, and for an accounting by the directors of the defendant, and for other relief.

The bill alleged that the plaintiff, at the time of filing his bill, was a citizen of the United States and of the State, County, and City of New York; that the defendant was a stock corporation, organized in March, 1898, and existing under the laws of the State of West Virginia, and was incorporated to engage in the business of manufacturing and selling looms and weaving machinery, and that, by its charter, its principal office and place of business was in the City, County, and State of New York. The bill of complaint, together with a writ of subpoena requiring the defendant to answer the bill, were served in the City of New York upon a person who had been the treasurer of the defendant corporation. Within the proper time, the defendant appeared specially for the sole purpose of questioning the jurisdiction of the court and of moving to set aside the attempted service.

The motion was founded upon the affidavit of Joseph H. Emery, in which he averred, among other matters, that the service of the subpoena had been made upon him in the City of New York because (as he believed) he had been the treasurer of the defendant corporation; that the domicil and residence of the defendant were in the State of West Virginia; the purpose of its incorporation was the development of a self-feeding loom attachment which gives to the ordinary loom a continuous supply of filling thread. It was further stated in the affidavit that the corporation was the owner of divers patents, but it had never manufactured merchandise. It had never made a sale, and it had never engaged in the transaction

Page 198 U. S. 479

of the business for which it was incorporated. It had no business or assets in the State of New York, and had no office or place of business there, and those of its officers who resided in that state were not there officially, or as representing any business or interest of the corporation. After the formation of the corporation, and between the years 1898 and 1901, the meetings of the directors of the company were held at different places in the City of New York where accommodations could be secured -- sometimes at the office of the counsel of the company in New York and sometimes at a hotel; but, since August 10, 1901, there had been no meeting either of the stockholders or of the directors, and on the last-mentioned date, the stockholders were notified that the company had no funds with which to pay the franchise taxes which were due to the State of West Virginia, and affiant averred that no funds had since been provided for that purpose; that, since that date, the company had transacted no business, had maintained no office in the State of New York, and that an action had been commenced by the State of West Virginia against it to terminate and forfeit its corporate franchise. The sole assets of the company consisted of two automatic looms and tools and machinery employed in the making thereof and its patents. The looms, with machinery and tools, were in Attleboro, Massachusetts. The letters patent were also in the possession of a Mr. Mossberg, in Attleboro, Massachusetts, who had made divers attempts to improve the looms. The company had no bank account, no office force, and no employees. It had never reached the stage of the active transaction of business, and such assets as it possessed were beyond the jurisdiction of the court. No one had been elected treasurer in place of Mr. Emery, so far as the record shows, and he was the treasurer of the company when service was made upon him.

An affidavit in opposition was filed by the complainant, but the facts above set forth were substantially undenied. The circuit court, upon the hearing, granted the motion of the defendant to set aside and declare null and void the attempted

Page 198 U. S. 480

service on the corporation of the bill of complaint and writ of subpoena by the service thereof upon Joseph H. Emery, on or about the thirteenth day of December, 1904. The complainant has appealed directly to this Court from the order of the circuit court setting aside the service of the subpoena.

Page 198 U. S. 482

MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the Court.

It is objected in the first place by the appellee that the appellant had no statutory right to appeal directly to this Court from the order setting aside the service of the subpoena. It is asserted that the case does not involve the jurisdiction of the court below within the meaning of section 5 of the Act of March 3, 1891, inasmuch as the jurisdiction of the circuit court as a federal court is not questioned, the jurisdiction being denied upon grounds alike applicable to any other judicial tribunal, state or federal, under the same circumstances. This case is, however, on that point governed by that of Board of Trade v. Hammond Elevator Co., decided this day, ante, p. 198 U. S. 424, where it is held that the order is reviewable by this Court under the section above mentioned.

Regarding the case as properly here, the question is whether the service made upon the treasurer of the appellee corporation was a valid service upon the corporation itself. We think it was not. It is perfectly apparent that the corporation was, at the time of the service on the treasurer, doing no business whatever within the State of New York, and that it had never done any business there since it was incorporated in the State of West Virginia. While we have lately held that, in the case of a foreign corporation, the service upon a resident director of the state where the service was made was a good service

Page 198 U. S. 483

where that corporation was doing business within that state, Pennsylvania Lumbermen's &c. Co. v. Meyer,197 U. S. 407, yet such service is insufficient for a court to acquire jurisdiction over the corporation where the company was not doing any business in the state and was situated like this company at the time of the service upon the treasurer. Conley v. Mathieson Alkali Works,190 U. S. 406.

The order of the Circuit Court was right, and is

Affirmed.

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