Wylie Permanent Camping Co. v. Lynch

PRITCHARD, Circuit Judge. This is an action at law instituted in the.Circuit Court of the United States for the Southern District of West Virginia on the 1st day of January, 1909, to recover damages for injuries alleged to have been caused by the negligence of the defendant ■company. The case was argued and submitted) at the November term, 1910, of this court, and on the 11th day of October, 1911, was restored to the docket for further argument on the question as to whether the court below had jurisdiction; that question not having been raised at the time of the first argument nor had it been raised in the court below. The following is a statement of the facts incorporated in the opinion of the learned! judge who heard the case below: “The plaintiff in tbis action is a young married, woman, a citizen and resident of the state of Ohio, and the defendant is a corporation chartered under the laws of the state of West Virginia, and doing business in the Yellowstone National Park, in the states of Wyoming, Montana, and Idaho, inter alia, as a carrier of passengers by stage coach for hire and reward. ' “In August, 1908, plaintiff and her husband, who is an attorney at law, were visiting the Yellowstone National Park as tourists, and plaintiff, in consideration of the sum of $40 paid by her to the defendant, became a passenger on one of the defendant’s coaches, to be carried upon a journey through the Yellowstone National Park. “On August 7, 1909, while a passenger on the said coach, the left front wheel came off the spindle on which it turned, the front of the coach dropped down on the road, the horses ran away, the coach overturned, and the plaintiff was violently precipitated to the ground, and dragged by the overturned coach, witfi the result that she was seriously and permanently injured, her various injuries being thus' described in the declaration: ‘A frac-, ture of the right humerus, near the shoulder; a fracture of the right humerus near the elbow joint, and which fracture extended into and involved said elbow joint, producing anchylosis of said elbow joint; a displacement of the bones forming the right elbow joint; severe contusions of the chest; severe contusions of the left hip; severe sprains in the dorsal and lumbar region; severe abrasions on the chin and right cheek, producing an extreme surgical shock, causing neuritis to the nerves of the right arm, right shoulder, and right lower extremity, severe injury to the hamstring muscles of the right lower extremity, and a severe injury to the nerves supplying the right — 395 — shoulder, right arm, and right lower extremity.’ The declaration avers, and the medical evidence had a1 the hearing of the writ of inquiry substantiated the claim, that, on account of her said injuries, plaintiff was unable to flex her right arm at the elbow, or to raise her right arm, and that these conditions as to her right arm are permanent. X-ray photographs taken by a medical witness were introduced before the jury showing the several fractures of the right arm, and the anehylosed condition of the elbow joint; and the plaintiff testified to the pain and suffering that she had undergone, and still undergoes daily, and the jury were able to see to a certain extent, the permanent nature of the injuries from which she suffered. “Plaintiff, in her declaration, set forth that about four years and eight: months prior to said accident she had suffered a stroke of paralysis affecting her right arm and right limb, but averred (which averments were supported by medical evidence by two physicians who had treated her) that at the time of the accident she had regained a very good use of her arm and limb, and suffered no pain whatever. I mention this at this place to show that her former condition was set forth in the declaration, and was the subject of evidence before the jury. “A summons against the defendant was sued out in the clerk’s office of this court, and was issued on the 5th day of January, 1909, returnable to February rules, 1909, and on January 7, 1909, was duly served upon the State Auditor, who, under the present laws, is made the attorney in fact for all nonresident domestic corporations chartered under the laws of the state. At March rules, 1909, the declaration was filed in the clerk’s office. No appearance being entered on behalf of the defendant, the usual rules were taken in the clerk's office, and an order for the execution of a writ of inquiry of damages was awarded, and the case was placed on the office judgment docket, for the June term, 1909, convening on the first Tuesday in June. This docket, together with the trial docket of law causes at issue, was caused to be printed, and copies thereof were furnished generally to counsel accustomed to practice at this bar. Ifarly in the term the attorney for the plaintiff appeared in open court and asked that a day be set; for the execution of the writ of inquiry, and the 2d day of July, 1909, was accordingly fixed, at which time the plaintiff and her witnesses, including several eye-witnesses to the accident, and two physicians (one of whom had made X-ray photographs of her arm), were introduced before the jury, and were cross-examined by the court, so far as such cross-examination suggested itself to the court by reason of the prior condition of the plaintiff. The jury awarded to the plaintiff the sum of $35,000 by way of damages, that being the amount of damages laid in the declaration, and judgment was rendered thereon by the court. “On the same day, but after the rendition of the judgment, Mr. Buckner Olay, a member of the firm of Price, Smith, Spiiman & Olay, attorneys residing in the city of Charleston, where the court was in session, appeared in court, and stated that he had just; heard that this trial was in progress, and he thereupon made the statement contained in his affidavit. On the gist day of July, 1909 (and before the close of the term), the present motion to vacate and set aside the execution of the order of inquiry of damages and the judgment entered upon the finding of the jury in default of the appearance of the defendant was duly filed, based upon the following grounds set up' in said motion: “(1) That the failure of said defendant to appear and plead to this aciion and to make defense herein was due ro an excusable misunderstanding between said defendant, residing in the state of Montana, and its said attorneys, Price, Smith, Spiiman & Olay, residing in the state of West Virginia, as to the defense of said action, and that, by reason of such misunderstanding, the said defendant and its said attorneys failed to appear or plead to said action or to make defense to the same on said second day of July, 1909, when said order of inquiry of damages was executed, and said judgment by default entered thereon. “(2) Because the failure of said defendant to appear and plead to said action and to make defense thereto was due to mistake, surprise, and excusable neglect on the part of said defendant or its said attorneys. — 396 — “(.■>) Because such failure of said defendant to appear and to plead to said action and to make defense to the same was caused by adventitious circumstances beyond tlie power of said defendant reasonably to foresee or control. “(4) Because the return of service upon the defendant of the summons issued in this action made by tbe marshal of this court is insufficient, illegal, and improper, and does not show due and legal service of process upon said defendant. “(5) Because the sum of $15,000 awarded "the said plaintiff as damages against said defendant, by the jury which executed the order of inquiry in this action, was greatly in excess of the damages, if any, which said plaintiff was entitled to recover against said defendant on account of the alleged injuries sustained by her, mentioned in the plaintiff’s declaration filed herein. “(0) Because said defendant has a meritorious and just defense to said action which it has been prevented from making by reason of the mistake, surprise, and excusable neglect of said defendant and its attorneys, and because of excusable misunderstanding between said defendant and its said attorneys, as aforesaid. “(7) Because of other reasons which will be assigned upon the hearing of this motion. “In support of said motion the defendant tendered the affidavits of A. AV. Miles, Charles W. Maydwell,' Buckner Clay, II. D. Anthony, Wallace De AATtt, and Clifford Berry, and thereupon an order was made suspending the operation and effect of the' said judgment pending the hearing and decision of said motion, and it was ordered that no execution be issued on said judgment until the further order of the court, and the motion was set down for hearing and was argued on November 2, 3909. “On October 21, 1909, the plaintiff filed the counter affidavits of Dr. J. A. Clark, Dr. J. T. McCartney, I. D. McKeever, Myrtle Clements, Sallio A. Du Bois, Charles X Bynch, Gail V. Lynch, Cora Spriggs, and J. B. Ilandlan, and on the day of hearing the defendant filed the supplemental affidavits of A. W. Miles, Dr. AA'allace De Witt, and Buckner Clay, and the affidavits of O. M. Ilarvey and John Andrews Heinlein; and the plaintiff, in resistance of the motion, filed tlie supplemental affidavit of Charles J. Lynch/’ [1] As we have already stated, the question as to the jurisdiction of the court below was not raised at the first hearing, but for convenience we will dispose of that matter before considering the assignments of error, which relate to the rulings of the lower court. It is insisted by counsel for the plaintiff in error that: “The record not only fails to show jurisdictional facts, but affirmatively shows that the federal court never acquired jurisdiction of the defendant, because the service of its process—which was a substituted service—was had in a manner unauthorized by law.” The defendant company being what is known under the West Virginia statute as a “nonresident domestic corporation,” it is insisted that the proper service has not been had upon said company, and that for this reason the lower court was without jurisdiction. Under the laws of the state of West Virginia there is a classification of corporations into “resident domestic corporations” and “nonresident domestic corporations” for the purpose of convenience in assessing license taxes on charters, etc. Chapter 32, § 124 (section 1046), of the Code of West Virginia, 1906, which prescribes such classification, reads as follows: “For convenience in classification for prescribing and assessing license tax on charters or certificates of incorporation, corporations are divided into two classes, domestic and foreign. A domestic corporation is (a) one incorporated by or under the laws of this state or (b) under tbe laws of tbe state of Virginia before the twentieth day of June, eighteen hundred and sixty-three, and — 397 — which has its principal place of business and chief works (if it have chief works) in this state. Every other corporation is a foreign corporation. Domestic corporations are subdivided into two classes, resident and nonresident. A resident corporation is a domestic corporation whose principal place of business and chief works (if it have chief works) are located within this state; and a nonresident corporation is a domestic corporation whose principal place of business or chief works is located without this state. The words, ‘chief works' as used in this chapter, include shops, factories, mines, manufacturing plants, or any building or other place where mechanics, artisans or laborers are employed.” The classification of corporations as provided for in the foregoing section was intended to provide a means by which the state of West Virginia could, at all times, be in a position where its courts would have jurisdiction to determine any question affecting such corporations, such as the payment of license tax on charters, the institution of suits, as in this instance, etc. The term “nonresident” domestic corporation is inconsistent and contradictory, but it is used in the West Virginia statute merely as a means of designation, and does not change the legal residence of such corporation. This corporation being created by and under the laws of the state of West Virginia, it necessarily follows that its legal residence is in that state. The law on this point is well stated in the case of Germania Fire Insurance Company v. Francis, 11 Wall. 210, 20 L. Ed. 77. Mr. Justice Davis, who delivered the opinion of the court, used the following language: “The declaration avers that the plaintiff in error (the defendant in the court below) is a corporation created by an act of tlio Legislature of the state of New York, located in Aberdeen, Miss., and doing business there under the laws of the state. This, in legal effect, is an averment that the defendant was a citizen of New York, because a corporation can have no legal existence outside of the sovereignty by which it was created. Ohio & Mississippi R. R. Co. v. Wheeler, 1 Black, 286, 17 L. Ed. 130; Louisville R. R. Oo. v. Letson, 2 How. 497. 11 L. Ed. 353. Its place of residence is there, and can be nowhere else. Unlike a natural person, it cannot change its domicil at will, and, although it may he permitted to transact business where Its charter does not operate, it cannot on that account acquire a residence there.” Also in the case of Ex parte Shaw, 145 U. S. 444, 12 Sup. Ct. 935, 36 L. Ed. 768, Mr. Justice Gray, who delivered the opinion of the court, after quoting from the opinion of Mr. Chief Justice Taney, in the case of Hank of Augusta v. Earle, 13 Pet. 519, 10 L. Ed. 274, to the effect that “ * * * a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created,” said : “This statement has been often reaffirmed by this court, with some change of phrase, bul always retaining the idea that tlie°legal residence, the home, ■the domicil, the lmhHut, the residence, the citizenship of the corporation can only be in the state by which it was created, although it may do business in other states whose laws permit it.” It is undisputed that the plaintiff is a resident and citizen of the state of Ohio. Thus we have at the outset a case wherein there is a diversity of citizenship, and where it is shown that the requisite jurisdictional amount is involved, and the only question open for consideration is as to whether the defendant company has been duly served in accordance with the laws of the state of West Virginia. Chapter 124, ,§ 8a (sec. 3805), of the Code of West Virginia 1906, reads as follows: — 398 — “The Auditor of this state shall be and he is hereby constituted the attorney in fact for and on behalf of * * * every nonresident domestic corporation. * * * Every such * * * nonresident corporation shall, by power of attorney duly executed, acknowledged and filed in the Auditor’s office of this state, appoint said Auditor and his successors in office attorney in fact to accept service of process and notice in this state for such corporation.” The marshal’s return of service is in the following language: “Received this writ at Oharleston, West Virginia, on the 7th day df January, 1909, and served the same on the within named Wylie Permanent Camping Company, a corporation, by delivering an office copy thereof to A. C. Scherr, Auditor of the state of West Virginia, at Charleston, West Virginia, on this the 7th day of January, 1909. The said A. C. Scherr being the person appointed pursuant to law for the service of legal process on the said corporation in the state of West Virginia. The said A. C. Scherr being a resident of the said county of Kanawha and within said county at the time of the service as aforesaid.” The amended return of the marshal is in the following language: “Received this writ at the city of Charleston, county of Kanawha, and state of West Virginia, on the 7th day of January, A. D. 1909, and executed the same as to the within named defendant, Wylie Permanent Camping Company, a corporation, by then and there, upon the 7th day of January, A. D. 1909, in the said city of Charleston, in the county of Kanawha, and state of West Virginia, delivering an office copy thereof to A. C. Scherr, Auditor of the state of West Virginia. “That said A. C. Scherr, Auditor of the state of West Virginia, then and there at the time of such service, being the person and officer designated and appointed by the laws of the state of West yirginia upon whom legal, process against said corporation could be served within the state of West Virginia, and he, the said A. C. Scherr, Auditor of the state of West Virginia, at the time of such service and delivery as aforesaid, then and there being a resident of said city of Charleston, county of Kanawha and state of West Virginia, and did then and there have his said office of Auditor located within and was then and there discharging his duties as such Auditor in the said city, county and state aforesaid, and at the time of said service and delivery as aforesaid neither the president, vice president, treasurer, secretary, general manager, nor any director, nor any other officer or agent of said corporation, nor any other person resided in said state, nor was found therein upon whom such legal process could be served with respect to said corporation.” However, it is. insisted that, inasmuch as it does not affirmatively appear from the marshal’s return that the Auditor had been appointed the attorney in fact for the defendant company, that the service was incomplete and, therefore, fatally defective. If this contention be true, then it would be an easy matter for a corporation, refusing to comply with the requirements of the law, to enjoy the rights and privileges granted in its charter and at the same time be immune from suits of any character whatsoever. The statute in question provides: “ * * * The Auditor shall be and he Is hereby constituted the attorney in fact for and on behalf of * * * every nonresident domestic corporation.” Thus it will be seen that the Auditor, upon whom service was had in this case, was by law constituted the attorney in fact for .and on behalf- of the defendant company; — 399 — The West Virginia statute to which we have referred as classifying-corporations was passed upon by the Supreme Court of the United States in the case of St. Mary’s Petroleum Company v. West Virginia, 203 U. S. 183, 27 Sup. Ct. 132, 51 L. Ed 144. The question of the constitutionality of the statute was before the court in this case. Mr. Chief Justice Fuller, in speaking for the court, among other things, said: “The state had the clear right to regulate its own creations, and, a fortiori, foreign corporations permitted to transact business within its borders. In this instance it put all nonresident domestic corporations, which elected to liave their places of business and works outside of the state, and all foreign corporations coming into the state, on the same footing in respect of the service of process, and the law operated on all these alike. Such a classification was reasonable, and not open to constitutional objection. Orient Insurance Co. v. Daggs, 172 U. S. 557, 563 [19 Sup. Ct. 281, 43 L. Ed. 552]; Waters-Pierce Oil Company v. Texas, 177 U. S. 43 [20 Sup. Ct. 518, 44 L. Ed. 657): Central Loan & Trust Company v. Campbell, 173 U. S. 84 [19 Sup. Ct. 346. 43 L. Ed. 623]: National Council v. State Council (decided November 19, 1906) [203 U. S. 151, 27 Sup. Ct. 46, 51 L. Ed. 132]; Northwestern Life Insurance Co. v. Riggs [203 U. S. 243, 27 Sup. Ct. 126, 51 L. Ed. 168, 7 Ann. Cas. 1104]: Brannon on Fourteenth .Amendment, c. 16. It is true that the prior law left it to the corporation to appoint an attorney to represent it, and that the act of February, 1905, changed this so as to make the Auditor such attorney, hut this at the most was no more than an amendment as to the appointment of an agent, and, when the St. Mary’s Company accepted its charter, it did so subject to the right of amendment. * * * ” It will be observed that the Supreme Court called attention to the fact that the status of corporations of this character "was changed hy virtue of the enactment of the statute of West Virginia, which provides for the classification of resident and “nonresident domestic corporations,” and, in referring to that point the court, said: “It is true that the prior law left it to the corporation to appoint an attorney to represent it, and that the act of February, 1905 [Acts 1905, c. 391, changed this so as to make the Auditor such attorney, but this at ihe most was not more than an amendment as to the appointment of an agent, and, -when the St. Mary’s Company accepted its charter, it did so subject to the right of amendment. * * V’ While the question before us was not considered hy the Supreme Court in that case, nevertheless, there is a clear and well-defined expression by the court to the effect that the Auditor by virtue of this statute was constituted and designated as the attorney of the company for the purposes hereinbefore mentioned. We have carefully considered the amended return of the marshal, and it clearly shows that A. C. Scherr was the Auditor of the state of West Virginia at the time of this service, that he was served with process in this case, and that he had been designated and appointed by the laws of the state as the person upon whom legal service against such a corporation could be served within said state. The return appears to be full and complete, and certainly was as full as the marshal could have made it under the circumstances. The defendant company accepted the charter which was granted to it by the state, and the provisions of this act became as much a part of the same as if they had been written into or incorporated as a part of the charter. The com — 400 — pany- having operated under its charter, in pursuance of the laws of that state, it cannot now be heard to say, in a case like the one at bar, that it did- not comply with the law by appointing the Auditor its attorney in fact. We are therefore of the opinion that this contention is without merit. It is also, insisted that the allegations of the declaration contradict the return of the marshal. We do not think so. The return of the marshal shows that the service was had upon the Auditor of the state, and that he was the person appointed by law upon whom such service should be made. It is shown by the declaration that the defendant company was a citizen and resident of the state of West Virginia, duly incorporated under the laws of that state, and that it was engaged in carrying on the business of “a common carrier of passengers for hire ápd reward, by means of coaches, wagons, carriages and horses, .through the National Yellowstone Park, in the states of Wyoming, Montana, and Idaho.” These statements, when considered with the return of the marshal, furnish a complete description of a “nonresident domestic corporation” as contemplated by the West Virginia statute. Therefore there is nothing in the declaration that in the slightest con,'flicts with the. return of the marshal. ' However, it is further insisted that it does not affirmatively appear that the defendant corporation’s office or chief place of business, etc., was without the state of West Virginia. As respects this question, it is shown by the amended return of the marshal that : “ * ' * * At the time of said service and delivery as aforesaid neither the president, vice president, treasurer, secretary, general manager, nor any director, nor any other officer or agent of said corporation, nor any other person resided in said state, nor was found therein upon whom such legal process could be served with respect to such corporation.” ■ We do not deem it necessary to a determination of this point to .pass,'upon, the legal effect of this portion of the marshal’s amended return in view of other facts which appear in the record. "'[2] However, we are not confined to the return of the marshal and the declaration as to the question of jurisdiction. It has been repeatedly held that the court may look to the entire record for the purpose of determining this question. Even if the return of the marshal and the allegations of the declaration are not sufficient to show that the defendant company belongs to the class known as nonresident domestic corporations, the record contains the affidavit of A. W. Miles, president of the defendant company, in which, among other things, it is stated, in effect, that the defendant is a “nonresident domestic corporation” of the state of West Virginia under the classification of the statute of that state. Paragraph 2 of the affidavit in question reads as follows; “The summons and complaint in the above-entitled action, or pretended summons and complaint, were received by me through the United States mail on or about the 8th day of January, 1909, at my residence in Livingston, Park county, Montana; that the said above-named defendant corporation did not at said time nor prior thereto, and has not at this, time, nor at any time whatsoever, maintained any office or owned any property whatsoever in the state of West Virginia.” — 401 — This statement clearly shows that at the time this suit was instituted the defendant company did not, nor at any time prior thereto, maintain any office or own any properly in the state of West Virginia; and it is shown by the declaration that this corporation at the time of the bringing of this action was engaged in carrying on its business as a common carrier of passengers, etc., in the states of Montana, Wyoming, and Idaho. In section 163; Loveland’s Appellate Jurisdiction of Federal Courts, it is stated: “Tf the plaintiff rests his ease solely on the ground of diversity of citizenship. and fails to properly aver facts to Tiring the ease within the jurisdiction of the circuit court, the jurisdiction of the Circuit Court of Appeals over it may he maintained if the jurisdictional facts exist and appear anywhere in the record. "For the purpose of maintaining its jurisdiction on this ground, the Circuit Court of Appeals may look for a statement of the requisite citizenship of tile parties to any part of the record of the Circuit Court, including the pleadings, the summons, or the evidence, or an amendment to the pleadings, allowed after judgment and while the Circuit Court had control of the record. or any other paper properly within the record. A remittitur of a part of the verdict cannot be used to cure a defect of jurisdiction. The recital of citizenship forms no part of a remittitur, “The appellate jurisdiction, therefore, of the Circuit Court of Appeals, does not fail because of the insufficiency of the allegations of citizenship if it appears from the record of the Circuit Court that the case is in truth a suit or controversy between an alien and a citizen of the United States, or between citizens of different states: In such cases the Circuit Court of Appeals will proceed to dispose of the case on its merits to the same extent as if the jurisdiction had been properly set- forth in the first pleading in the case.” Also, in the case of Sun Printing & Publishing Ass’n v. Edwards, 194 U. S. 377, 24 Sup. Ct. 696, 48 L. Ed. 1027, the court, in discussing this phase of the question, said: "Had the transcript shown nothing more as to the status of Edwards than the averment of the complaint that he was a ‘resident of the state of Delaware.' as such an averment would not necessarily have imported that Edwards was a citizen of Delaware, a. negative answer would have'been impelled by prior decisions. Mexican Central Ry. Co. v. Duthie, 189 U. S. 76 123 Sup. Ct. 610, 47 L. Ed. 715]; Horne v. George H. Hammond Co., 155 U. S. 393 [15 Sup. Ct. 167, 39 L. Ed. 197]; Denny v. Pironi, 141 U. S. 121 [11 Sup. Ct. 966, 35 L. Ed. 657]; Robertson v. Cease, 97 U. S. 646 [24 L. Ed. 1957]. Tile whole record, however, may be looked to, for the purpose of curing a defective averment of citizenship, where jurisdiction in a federal court is asserted to depend upon diversity of citizenship, and if the requisite citizenship is anywhere expressly averred in the record, or facts are therein stated which in legal intendment constitute such allegation, that is sufficient. Horne v. Hammond Co., supra, and eases cited.” For the reasons stated we are of the opinion that the court below had jurisdiction to hear and determine the questions involved in this controversy. It is ..also insisted by counsel for the defendant that the court below erred in entering judgment in default of the appearance of the defendant ; the cause not having been regularly matured; also, that the court erred.in overruling the defendant’s motion to vacate and set aside the execution of the order of inquiry of damages made by the jury im — 402 — paneled in this cause on the 2d day of July, 1909, and the judgment •entered upon the finding of said jury in default of the appearance of said defendant on said date, and to allow the defendant to plead to issue and make defense upon the merits to this action. It is further contended that the court erred in refusing to open or to vacate the default judgment herein for the purpose of giving the defendant, an opportunity to make defense before the jury. • We have read and carefully considered the able and exhaustive opinion of the learned judge who tried this case in fhe court below, and, in view of the facts and circumstances surrounding this case, we are of opinion that his refusal to vacate the judgment was eminently proper. The opinion of the lower court meets with our hearty approval, and we hereby adopt the same as the opinion of this court on this phase of the case. For the reasons herein stated the judgment of the lower court is Affirmed.