A statute of Iowa (Code, § 11079) provides that, where an office
is maintained for the transaction of any business in a county other
than that in which the principal resides, service of process in any
action arising out of the conduct of such office may be made on any
agent or clerk there employed. The statute was construed as
authorizing a personal judgment against a nonresident individual
who, though never personally within the State, established an
office within the State for dealing in securities, a business
subjected to special regulation by the State, the service of
process having been made upon one who was manager of the office
both at the time the contract out of which the suit arose was
executed and at the time of the service. Held,
applied, the statute does not violate any right guaranteed by the
Federal Constitution. Art. IV, § 2; Fourteenth Amendment, § 1. P.
294 U. S.
218 Iowa 529, 255 N.W. 667, affirmed.
Appeal from the affirmance of a judgment entered after the
overruling of a special plea to the jurisdiction, in an action for
damages arising from a sale of stock.
Page 294 U. S. 625
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
In 1926, Henry L. Doherty, citizen of New York, trading as Henry
L. Doherty & Co., established an office at Des Moines, Polk
County, Iowa, and there, through agents, carried on the business of
selling corporate securities throughout the state. E. A. King,
designated as district manager, took charge of this office in
January, 1929, and continued to direct its affairs during the time
here important. Under him were clerks and stock salesmen, paid
directly from New York.
A salesman operating from the Des Moines office, September 1,
1929, negotiated in that city a sale of stock to appellee Goodman,
and out of this the present controversy arose. The only power or
authority expressly conferred upon King by Doherty was to sell
securities and supervise other employees; he never in terms
consented that service of process upon this agent should constitute
service upon himself.
Section 11079, Iowa Code 1927, also 1931, in effect since 1851,
"When a corporation, company, or individual has, for the
transaction of any business, an office or agency in any county
other than that in which the principal resides, service may be made
on any agent or clerk employed in such office or agency, in all
actions growing out of or connected with the business of that
office or agency."
July 31, 1931, appellee Goodman commenced an action against
Doherty in the District Court, Polk County, wherein he sought only
a personal judgment for damages arising out of the sale contract of
September 1, 1929. The usual summons or notice commanding the
defendant to appear was served upon district manager King.
Doherty appeared specially. He challenged the jurisdiction of
the court; claimed he had not been within the state; King had no
authority to accept service of process
Page 294 U. S. 626
in his behalf; the alleged service was ineffective, and that to
hold otherwise would deprive him of rights guaranteed by the
Federal Constitution. The District Court, relying upon Code, §
11079, overruled the special plea and held the service adequate.
Doherty made no further appearance. Judgment against him was
affirmed by the Supreme Court.
The cause is here by appeal. Appellant insists that, if
construed as applicable to him, a citizen of another state never in
Iowa, in the circumstances disclosed by the record, § 11079 offends
the Federal Constitution, § 2, art. 4, and § 1, Fourteenth
The Supreme Court affirmed the action of the trial court upon
authority of Davidson v. Henry L. Doherty & Co.,
Iowa, 739, 241 N.W. 700, 701. The opinion in that cause construed §
11079, and, among other things, said:
"By its terms and under our holding, the statute is applicable
to residents of 'any other county' than that in which the principal
resides, whether such county be situated in Iowa or in some other
state. In other words, the statute does apply to nonresidents of
Iowa who come within its terms and provisions, as well as to
residents. Our construction of the statute has stood since 1887. .
. . We adhere to our former holdings that the statute is applicable
to individual nonresidents who come within its express terms and
provisions. . . ."
"The statute in question does not in any manner abridge the
privileges or immunities of citizens of the several states. It
treats residents of Iowa exactly as it treats residents of all
other states. The citizens of each state of the United States are,
under this statute, entitled to all the privileges and immunities
accorded citizens of this state."
"The justice of such a statute is obvious. It places no greater
or different burden upon the nonresident than
Page 294 U. S. 627
upon the resident of this state. . . . A nonresident who gets
all the benefit of the protection of the laws of this state with
regard to the office or agency and the business so transacted ought
to be amenable to the laws of the state as to transactions growing
out of such business upon the same basis and conditions as govern
residents of this state. . . . 'It makes no hostile discrimination
against nonresidents, but tends to put them on the same footing as
residents.' . . ."
" Four things are, under this statute essential to the validity
of such service. The defendant must: 1. Have an office or agency in
the county. 2. A county other than that in which he resides. 3. The
action must grow out of or be connected with the business of that
office or agency. 4. The agent or clerk upon whom service is made
must be employed in such office or agency. . . ."
"When a nonresident defendant establishes an office or agency
for the transaction of business in any county in this state under
this statute, he thereby voluntarily appoints his own agent, in
charge of said office or agency, as one upon whom substituted
service in actions in personam,
growing out of that office
or agency, may be made. . . . Under our statute, the implied
consent to be sued in this state is limited to proceedings growing
out of the business transacted through the office or agency in this
state. It is required that the agent shall actually receive a copy
of the notice of suit and that it shall be read to him. . . . The
action must grow out of the business of that very agency. Ample
time is given the defendant to appear and defend; there is not only
'reasonable probability,' but practical moral certainty, that the
defendant will receive actual notice of the pendency of the
Iowa treats the business of dealing in corporate securities as
exceptional, and subjects it to special regulation. Laws 1913, c.
137; Laws 1921, c. 189; Laws 1929, c. 10, approved Mar.19, 1929.
The last-cited act requires registration
Page 294 U. S. 628
and written consent for service of process upon the secretary of
state. See Merrick v. Halsey & Co., 242 U.
. Doherty voluntarily established an office in
Iowa, and there carried on this business. Considering this fact,
and accepting the construction given to § 11079, we think to apply
it as here proposed will not deprive him of any right guaranteed by
the Federal Constitution.
Flexner v. Farson, 248 U. S. 289
much relied upon, does not sustain appellant's position. There, the
service was made upon one not then agent for the defendants; here,
the situation is different. King was manager of the appellant's
office when the sale contract was made, also when process was
served upon him. Moreover, under the laws of Iowa, neither her
citizens nor nonresidents could freely engage in the business of
The power of the states to impose terms upon nonresidents, as to
activities within their borders, recently has been much discussed.
Hess v. Pawloski, 274 U. S. 352
Wuchter v. Pizzutti, 276 U. S. 13
Young v. Masci, 289 U. S. 253
Under these opinions, it is established doctrine that a state may
rightly direct that nonresidents who operate automobiles on her
highways shall be deemed to have appointed the secretary of state
as agent to accept service of process, provided there is some
"provision making it reasonably probable that notice of the
service on the secretary will be communicated to the nonresident
defendant who is sued."
So far as it affects appellant, the questioned statute goes no
farther than the principle approved by those opinions permits. Only
rights claimed upon the present record are determined. The
limitations of § 11079 under different circumstances we do not