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MAYS v. OXFORD PAPER CO.

June 7, 1961

Edward Aaron MAYS
v.
OXFORD PAPER COMPANY



The opinion of the court was delivered by: WOOD

At the outset, we wish to comment on the comprehensiveness, clarity, and excellence of the briefs of counsel for both plaintiff and defendant. Such briefs are of great assistance to the Court in deciding legal problems.

I. Re Motion to Dismiss

 The defendant, Oxford Paper Company, has moved to dismiss the plaintiff's complaint on the ground that it has not been validly served with process, and that, therefore, this Court has no jurisdiction over it.

 The defendant is a corporation organized under the laws of the State of Maine, and manufacturing paper products in that State. Service of process on the defendant was made by serving the Secretary of the Commonwealth of Pennsylvania pursuant to Rule 4(d)(7) of the Federal Rules of Civil Procedure 28 U.S.C. *fn1" and pursuant to Section 1011 of the Pennsylvania Business Corporation Code (15 Purdon's Stat. 2852-1011). That section provides in pertinent part as follows:

 'B. Any foreign business corporation which shall have done any business in this Commonwealth, without procuring a certificate of authority to do so from the Department of State, shall be conclusively presumed to have designated the Secretary of the Commonwealth as its true and lawful attorney authorized to accept, on its behalf, service of process in any action arising out of acts or omissions of such corporation within this Commonwealth * * *.'

 'C. For the purpose of this section, the entry of any corporation into this Commonwealth for the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object, or doing a single act in this Commonwealth for such purpose, with the intention of thereby initiating a series of such acts, shall constitute 'doing business."

 The defendant contends (1) that it has not 'done business' within this Commonwealth; and (2) that its activities within the Commonwealth bore no relation whatsoever to the plaintiff's injury, and, therefore, plaintiff's action does not arise out of 'acts or omissions' of the defendant within this Commonwealth.

 It is our function as a Federal Court sitting in Pennsylvania to follow the construction accorded these statutory provisions by the Supreme Court of Pennsylvania. Subparagraph C, defining what constitutes 'doing business,' was added to the statute in 1951. *fn2" Prior to its enactment, the Supreme Court of Pennsylvania had judicially defined 'doing business' in a series of cases which limited that concept to activities consisting of more than merely soliciting business within the Commonwealth. As is plain from the language of subparagraph C, the concept of 'doing business' has been broadened to include 'the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit * * * or doing a single act in this Commonwealth for such purpose, with the intention of thereby initiating a series of such acts.' By the addition of subparagraph C, the statute apparently now includes the mere solicitation of business within the Commonwealth in the concept of 'doing business.' The question remains, however, as to the agency relationship necessary between the corporation and its local representative in order to find that the corporation 'entered' this Commonwealth to perform such a series of acts. For example, many corporations have 'manufacturer's representatives' who solicit business in a certain area. Such activities in Pennsylvania would fall within the statutory definition of 'doing business' as set forth in subparagraph C; but would it be the corporation which was doing the business if its local representatives were not its salaried employees or agents?

 This was one of the problems confronting the court in the case of Swavely v. Vandegrift, 1958, 19 Pa.Dist. & Co.R.2d 153; affirmed 1959, 397 Pa. 281, 154 A.2d 779. In that case the corporate defendant manufactured a household disposal device and marketed that device in Pennsylvania through two distributors located in Pennsylvania. The defendant also had two manufacturer's representatives who traveled around Pennsylvania calling on the distributors, aiding in promotional campaigns for the defendant's products, and looking for potential new distributors. In an opinion by Judge Satterthwaite, which was adopted by the Supreme Court, the details of the defendant's contractual relationships with both the Pennsylvania distributors and the manufacturer's representatives who covered Pennsylvania were analyzed in detail. The court concluded that these contracts clearly showed that the distributors and the manufacturer's representatives were not the agents of the defendant corporation, but rather were independent contractors who handled the defendant's products along with the products of other companies. Having found that the defendant corporation had no agent in Pennsylvania, the court held that the defendant had never 'entered this Commonwealth or done any series of similar acts, or even a single act, through its own officers or employes, whether authorized to bind it or not and whether for its pecuniary benefit or not * * *' (Swavely v. Vandegrift, supra, 19 Pa.Dist. & Co.R.2d at page 165.) In the words of Judge Satterthwaite:

 'Obviously, an impersonal corporate entity organized and located in another jurisdiction can be said, in the words of the statute, to have 'entered' the State of Pennsylvania only if its agents or property have been physically present therein on the relevant occasion.' (Emphasis supplied.) At pages 165, 166.

 We stress the fact that the Swavely case held only that the defendant corporation had not 'entered' Pennsylvania because it had no agents acting in Pennsylvania. It did not hold that the distribution of defendant's products, or the promotion of its products by the manufacturer's representatives, were not the kinds of activities which would fall within the statutory definition of 'doing business,' had such activities been carried on by the corporation through its agents. In fact, it seems too clear for argument that such activities would constitute 'a series of acts done for the purpose of realizing pecuniary benefit or otherwise accomplishing an object' within the meaning of subparagraph C of the statute. Judge Satterthwaite said:

 'All we hold is that Calcinator Corporation has not been shown to have 'entered' this Commonwealth or done any 'acts' therein through its agents or employes and therefore is not within the definition of 'doing business' contained in either section 1011C or the prior decisions of the Supreme Court of Pennsylvania.' At page 168.

 The second inquiry is whether the activities of the defendant carried on the Pennsylvania through its representatives constitute 'doing business.' We think their activities fall within the statutory definition of that phrase as 'the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object.' The Swavely case holds nothing to the contrary; and the plain meaning of the statutory language requires the result. Therefore, ...


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