Before BIGGS, Chief Judge, and GOODRICH and HASTIE, Circuit Judges.
This is an action for libel and the question involved on this appeal is the jurisdiction of a federal court to hear the case.The resort to the federal court is on the basis of diversity only, the defendant being a Kentucky corporation and the plaintiff a citizen of Pennsylvania. The defendant in Kentucky wrote a letter which, for the purpose of this case, may be assumed defamatory. The letter was addressed to someone in New Jersey, but the plaintiff charges that the defendant mailed it to a recipient in Pennsylvania. It will be assumed, for the purpose of discussion, that the defendant caused the publication in Pennsylvania, although this may or may not be the fact.
The defendant urges that the action should be dismissed because it is not subject to suit in Pennsylvania. The district court agreed and dismissed. The plaintiff contends that this dismissal was error.
From the findings of fact we learn that the defendant Kentucky corporation has not registered to do business in Pennsylvania. It manufactures and distributes parking meters. Between 1946 and 1950 two orders were received for the installation of parking meters in Pennsylvania. The contracts were made by the acceptance of purchase orders received in Covington, Kentucky. Shipment was made directly to purchasers for installation. The defendant sent a skilled technician to install the meter heads and adjust them. The defendant also manufactures and distributes bronze memorial tablets and other metal products. In the five-year period mentioned above, it received, accepted and filled orders amounting to $138,724 at its offices in Covington, Kentucky, for Pennsylvania customers. The material was shipped directly to the customers and was erected and installed by them. In two instances orders were accepted by the defendant to furnish and install art metal work in Pennsylvania. The material was shipped from Covington, Kentucky, to Pennsylvania where the work was done by local workmen under the supervision of a skilled employee from the defendant's offices. The defendant has sales representatives in Pennsylvania. These representatives are not subject to the control of the defendant but operate independently, meet their own expenses, and are paid on a commission basis. They have no authority to bind the defendant by contract or to collect the price of goods for which they take orders. On the basis of these facts, the district court concluded that the defendant was not doing business within Pennsylvania.
It is now too clear to require discussion and citation of authority that a foreign corporation which carries on activities within a State of the United States is subject to suit there under certain circumstances. There are two questions involved in the assertion of this jurisdiction over a foreign corporation.One is the question whether the State seeks to assert jurisdiction under a given set of facts. The second question is whether the assertion of jurisdiction by the State is permitted, under the circumstances, by the Constitution of the United States.
Because a state may exercise jurisdiction it does not follow that it does do so, much less that it must."A state does not necessarily exercise judicial jurisdiction through any particular court, and it may not choose to exercise the judicial jurisdiction which it has through any court." Restatement, Conflict of Laws, § 73, Comment a. "The existence of jurisdiction in a state does not depend upon its exercise. A state may have jurisdiction although it never exercises it." Restatement, Conflict of Laws, § 46, Comment f.*fn1
This requirement that the state provide for the exercise of jurisdiction in a particular set of circumstances is emphasized by the language of Restatement, Judgments, §§ 22 and 23. Section 22 provides:
"A court by proper service of process may acquire jurisdiction over an individual not domiciled within the State who carries on a business in the State, as to causes of action arising out of the business done in the State, if a statute of the State so provides at the time when the cause of action arises."
"A court by proper service of process may acquire jurisdiction over an individual not domiciled within the State who does acts or owns things in a State which are of a sort dangerous to life or property, as to causes of action arising out of such acts or such ownership, if a statute of the State so provides at the time when the cause of action arises."
And Comment a. following § 23 says:
"The rule stated in this Section is not applicable if at the time when the cause of action arose there was no statute in the State providing for the acquiring of jurisdiction over the defendant."
So the first question which comes up in a case like the one at issue is whether the State, here Pennsylvania, has, through legislation plus the judicial application thereof, asserted jurisdiction over the defendant. The Supreme Court said in an analogous case: "We accept the decision of the Supreme Court of Arkansas as to what constitutes the doing of business in that state within the meaning of its own laws." Kansas City Structural Steel Company v. Arkansas, 1925, 269 U.S. 148, 150,*fn2 46 S. Ct. 59, 60, 70 L. Ed. 204. Judge Hand, in Bomze v. Nardis Sportswear, Inc., 2 Cir., 1948, 165 F.2d 33, 35, thus stated the double consideration; "* * * thus the first question is whether the service was valid under the New York ...