Deardorf v. Idaho Nat. Harvester Co.

BURNETT, J. As early as Hacheny v. Leary, 12 Or. 40 (7 Pac. 329), this court held that soliciting business in a state for a nonresident corporation was not doing business within that state. That was a case where the plaintiffs claimed as indorsees of a note said to have been given in payment of an overdue premium on a previously issued policy of life insurance held by one of the defendants in a Kansas life insurance company. The company had an agent in Seattle, Washington, who solicited one Yesler to take out a policy on his own life. He received Yesler’s application with the amount of the first premium in cash and forwarded them to the home office at Leavenworth, Kansas, for examination and approval by the company. Thereupon the insurance company accepted the application in Kansas, issued the policy and sent it by mail to the insured at Seattle. The second premium was not paid and the local agent then took from the insured a note for that amount and sent it to the company in Kansas. This was afterwards assigned to the plaintiff, who brought the action, and the defense was that — 431 — the note was taken in violation of the Washington law that foreign corporations conld not do business in that state except under certain conditions with which the company had not complied. Treating, however, of the application for the policy sent for acceptance by the company in Kansas and the forwarding of the policy from that state, the court, spealdng by Mr. Justice Lord, said: ‘ ‘ The final act which made the transaction a binding contract .upon the parties was the acceptance of the application. Until this took place it was a mere proposition tendered, to be accepted or rejected. The contract was consummated when the company acted upon the proposal and issued the policy, for then the minds of the parties had met and agreed, ‘What was before,’ says Harris, J., ‘a mere proposition then became invested with the attributes of a contract, and from that time each party became bound for its performance. If this be so, the contracts are to be regarded as having been made when the company received and accepted the defendant’s application, and issued and transmitted to him their policies’: Hyde v. Goodnow, 3 N. Y. 270. It was, therefore, a contract of insurance made and executed in Kansas”: Citing authorities. The court, however, went on to hold that subsequently taking the note in Washington for the overdue premium was transacting business within that state in violation of its statute and hence that the plaintiff’s claim on that note would not be enforced. This last feature, however, was disregarded by this court in Bertin & Lepori v. Mattison, 69 Or. 470 (139 Pac. 330). There, a traveling man employed by the plaintiff, a corporation of California, took the orders of a Portland firm for goods which were sent by the plaintiff from San Francisco to the purchaser in Portland. Not having the ready cash when the shipment arrived, — 432 — the Portland firm gave its note in Oregon, which Mattison and another there signed as accommodation makers. This court held that our statute restricting the operation of foreign corporations has no application to a case where such a concern sends into the state its traveling salesman, who takes orders and forwards them to the home office for its approval, the orders being afterwards filled by shipment to the customer. Substantially the same principle was upheld in Spaulding v. McNary, 64 Or. 491 (130 Pac. 391, 1128). There, the plaintiff manufactured carriages in Iowa. To effect sales of the same he employed agents who traveled through this state, among others, taking orders for vehicles of the kind, sending the orders to the plaintiff in Iowa, who after ascertaining the financial standing of the proposed buyer and being satisfied concerning it, shipped the carriage to Oregon to-be delivered to the buyer by another agent. It was there held that this constituted a transaction of interstate commerce business which this state had no right to hamper by restrictive regulations. The same principle is reiterated by Mr. Justice Bean in Vermont Farm Machine Co. v. Hall, 80 Or. 308 (156 Pac. 1073), to the effect that since taking orders to be filled by shipment of goods from another state or making sales by sample, by agents coming into the state for that purpose, is interstate commerce, in order to constitute “doing business” within this state by the plaintiff, the agent must have ample authority to transact some substantial portion of the seller’s business or to make complete sales and not merely to take orders for goods. 1, 2. It is true that the general words of the contract were that Mathes was appointed for a year, “to handle, sell and dispose of harvesting-machines and extras therefor.” We must, however, take the whole — 433 — instrument together and the ease must turn upon the manner in which he was to carry out his part of the appointment. Succinctly stated, he had no authority in the premises further than to solicit a written application from a prospective buyer and tender it with the notes required to the defendant at its home office in Idaho, when if approved by it the machine applied for would be forwarded to the purchaser. It is plain that under all decisions this does not constitute doing- business within the state so as to subject the corporation to the jurisdiction of our courts. Section 528, L. O. L., as amended by the act of February 18, 1911, Laws of 1911, Chapter 103, reads thus: “No corporation is subject to the jurisdiction of a court of this state, unless it appears in the court, or have been created by or under the laws of this state, or have an agency established therein for the transaction of some portion of its business, or have an agency established therein for the purpose of soliciting some portion of its business to be transacted in this state or elsewhere, or have property in this state; and in the last case only to the extent of such property at the time the jurisdiction attached.” 3-6. It is axiomatic that the laws of a state have no extraterritorial effect. It is equally evident that until a foreign corporation comes within the state to do business as the term would be applied to an instance where it permanently locates here and actually transacts its business here, the state laws cannot have any effect upon it. Under the well-established principle, therefore, that the mere solicitation within a state of orders to be sent out of that state to the home office of a foreign corporation as offers to be accepted there or rejected by it, the goods ordered to be forwarded — 434 — to the would-be purchasers only in the event of acceptance, constitutes interstate commerce and does not amount to the foreign concern’s coming into the state where the orders, were solicited” so as to subject itself to that jurisdiction, we must lay out of this case that part of this statute which asserts authority over a foreign corporation if it has an agency established in this state for the purpose of soliciting some portion of its business to be transacted “elsewhere.” It is, indeed, possible for a foreign corporation or a citizen of another state to come into this state and become subject to the jurisdiction of the Oregon courts even while transacting interstate commerce from within this state, but that result is not to be predicated upon the fact that an agent only solicited residents here to • send out of the state an offer to be accepted and filled in another state. As said by Mr. Justice Day in People’s Tobacco Co. v. American Tobacco Co., 246 U. S. 79 (62 L. Ed. 587, Ann. Cas. 1918C, 537, 38 Sup. Ct. Rep. 233): “As to the continued practice of advertising its wares in Louisiana, and sending its soliciting agents into that state, as above detailed, the agents having no authority beyond solicitation, we think the'previous decisions of this court have settled the law to be that such practices did not amount to that doing of business which subjects the corporation to the local jurisdiction for the purpose of service of process upon it: Green v. Chicago, B. & Q. R. Co., 205 U. S. 530 (51 L. Ed. 916, 27 Sup. Ct. Rep. 595); Philadelphia & Reading R. R. Co. v. McKibbin, 243 U. S. 264 (61 L. Ed. 710, 37 Sup. Ct. Rep. 280).” To like effect is General Investment Co. v. Lake Shore & M. S. Ry. Co. (C. C. A.), 250 Fed. 160. — 435 — 7. The return of the sheriff is not conclusive upon the court when called upon to decide its own jurisdiction. The officer’s.report of his doings may be contradicted by evidence aliunde. It is not within his power to forestall the decision of the court upon the question of whether the person upon whom service was attempted is such an individual as represents the corporate defendant for that purpose. The conclusion of the whole matter is that it appears without dispute that Mathes had no authority to do more than to solicit business for the approval of the company at its home office in Idaho; that the offer was accepted there, making it an Idaho contract, and that the transaction involved did not constitute doing business within this state amounting to an appearance or presence of the corporation here. For the error of refusing to quash the service, the judgment is reversed, with directions to the Circuit Court to set aside the service of summons. Reversed. Mr. Justice Harris was not present at the hearing of this case.