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HAAS v. FANCHER FURNITURE COMPANY

December 5, 1957

JOHN H. HAAS, PLAINTIFF,
v.
FANCHER FURNITURE COMPANY, A CORPORATION, STANDARD CHAIR COMPANY, A CORPORATION, AND C. LEONARD ERICKSON, DEFENDANTS.



The opinion of the court was delivered by: Campbell, District Judge.

Plaintiff, John H. Haas, has filed this action against defendants Fancher Furniture Company, a New York corporation, Standard Chair Company, a Pennsylvania Corporation, and C.L. Erickson, as president and secretary of defendant corporations, alleging breach of an employment contract. The contract was entered into in Chicago, Illinois, and it is alleged that by its terms defendants agreed to employ plaintiff as general sales manager in Illinois. Jurisdiction is based on diversity of citizenship.

Fancher Furniture Company and Standard Chair Company have filed a motion to quash service of summons. Defendant, C. Leonard Erickson has filed a motion to be dismissed from this action in the event that it be held that service of summons on defendant corporations is invalid.

The affidavits filed by Fancher Furniture Company and Standard Chair Company in support of their motion to quash service of summons may be summarized as follows:

No Fancher Furniture Company products are manufactured in Illinois, and no inventories of merchandise are maintained in this State. All purchases by Illinois customers are shipped f.o.b. from Salamanca, New York, to the Chicago, Illinois, area. Billings for merchandise sold in Illinois are mailed direct from Salamanca, New York, to the customer, and payment is made direct to Salamanca, New York, or to a factor in New York, New York. All matters pertaining to warranty, credit or collection of accounts are handled by Fancher at Salamanca, New York. Fancher maintains no bank accounts in Illinois, and owns no real estate situated in Illinois.

Fancher has an agreement with George Hildreth, who is engaged in the solicitation of orders for the purchase of merchandise and the promotion of good will in Illinois. Under the terms of the agreement, Fancher does not direct or in any way control the conduct of George Hildreth's solicitation of orders. It is not bound by orders solicited by George Hildreth until the order has been accepted by it in writing in Salamanca, New York. George Hildreth has no authority to create obligations, adjust or collect accounts receivable, or authorize a return of merchandise on behalf of Fancher. George Hildreth is not paid a salary, but receives compensation in the form of commissions.

The affidavit filed by Standard Chair Company sets forth the same set of facts except that it is located in Union City, Pennsylvania. Standard has an agreement with William Kauss which is the same as that which Fancher Furniture Company has with George Hildreth.

Service of summons upon Fancher Furniture Company and Standard Chair Company was made on September 21, 1956, by serving George Hildreth and William Kauss and again on January 10, 1957, by serving C.L. Erickson, who was visiting Chicago, as president and secretary of the two corporations.

It is unnecessary here to decide whether service upon defendant corporations was effected by delivering copies of the summons to George Hildreth and William Kauss. It is clear that the subsequent delivery of the summons to C.L. Erickson was "delivery * * * to an officer" of the defendant corporations within the meaning of Rule 4(d)(3) Federal Rules of Civil Procedure, 28 U.S.C.A.

Defendant corporations contend, however, that this court does not have jurisdiction over their corporate "persons" because they are not "doing business" within this State. They contend that, in a diversity case, the question of personal jurisdiction of this court must be resolved by reference to the law of this State. While the lower Federal courts have not been in agreement on this point (see Kenny v. Alaska Airlines, D.C., 132 F. Supp. 838), the Court of Appeals, Seventh Circuit, has consistently held that State law is applicable to this issue in such cases. Riverbank Laboratories v. Hardwood Products Corp., 220 F.2d 465, 467; Roberts v. Evans Case Co., 218 F.2d 893. It is true that its decision in Riverbank Laboratories was reversed by the Supreme Court, 350 U.S. 1003, 76 S.Ct. 648, 100 L.Ed. 866, saying "The Court is of the opinion that the District Court correctly found there was proper service * * *."

I do not think that, by this memorandum decision, the Supreme Court can be taken to have overruled or distinguished Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832, and Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524, which have hitherto been relied on for the view that State law is applicable to the question of personal jurisdiction in diversity cases (see contra K. Shapiro, Inc., v. New York Central Railroad Co., D.C., 152 F. Supp. 722, 726).

In this case, however, the question of applicable law is immaterial, for the jurisdiction of this court is sustained both by Federal and State law. It is clearly sustained by Federal law, Travelers Health Ass'n v. Com. of Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154; Scholnik v. National Airlines, 6 Cir., 219 F.2d 115; K. Shapiro, Inc., v. New York Central Railroad Co., D.C., 152 F. Supp. 722. Plaintiff's affidavit filed with this Court discloses that defendant corporations have been engaged in the solicitation of business in this State for over ten years and that they maintain offices in Chicago, Illinois, for this purpose, with telephone listings under their names.

Defendant corporations refer, on the question of Illinois law, to Bull & Co. v. Boston & Maine R.R. Co., 344 Ill. 11, 175 N.E. 837; Booz v. Texas & Pacific Ry. Co., 250 Ill. 376, 95 N.E. 460, and the decisions of the courts of this circuit in Roberts v. Evans Case Co., 7 Cir., 218 F.2d 893; Canvas Fabricators, Inc., v. William E. Hooper & Sons Co., 7 Cir., 199 F.2d 485; and Olshansky v. Thyer Mfg. Corporation, D.C., 13 F.R.D. 227. Those cases were all decided prior to the enactment of sections 16 and 17 of the Illinois Civil Practice Act, Ill.Rev.Stat. 1957, Chap. 110 par. 16 and 17.

So far as material here, section 17 provides:

    "(1) Any person, whether or not a citizen or
  resident of this State, who in person or through an
  agent does any of the acts hereinafter enumerated,
  thereby submits said person, and, if an individual,
  his personal representative, to the jurisdiction of

  the courts of this ...

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