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Baltimore & Ohio R.r. Co. v. Mosele





Original petition for mandamus.


Rehearing denied October 3, 1977.

This action arises from a petition for a writ of mandamus filed in this court. Petitioner, the Baltimore and Ohio Railroad Company (hereinafter referred to as B & O) is the named defendant in 32 cases now pending in Madison County. The suits allege personal injuries and are brought pursuant to the Federal Employers' Liability Act (45 U.S.C. § 51 et seq. (1970)). A substantial majority of the 32 cases arise from incidents which occurred outside of the State of Illinois. Petitioner contends that venue for these actions does not lie in Madison County. Petitioner's motion to transfer to a county of proper venue was denied by the respondent judge, Mosele, whereupon petitioner instituted the present original action which involves only the case of respondent Robert Genheimer. We granted leave to file a petition for writ of mandamus (58 Ill.2d R. 381(a)) and now hold that the circuit court erroneously failed to grant petitioner's request for change of venue.

The following facts were revealed by discovery procedures instituted in connection with petitioner's motion to transfer venue, and by affidavits submitted to the circuit court. The B & O is a foreign corporation authorized to transact business in this State. It is conceded that the B & O operates railroad facilities and maintains offices in 19 counties in Illinois. The B & O has no offices or operating facilities within Madison County, and the incidents from which the actions arose did not take place in that county. One of the counties in which the B & O operates extensive facilities is St. Clair County, which is immediately south of Madison County.

B & O railroad cars and equipment are used in Madison County by other railroads. B & O cars frequently pass through Madison County under the operation and control of the Terminal Railroad Association (hereinafter referred to as TRRA). The TRRA is an independent railroad corporation, incorporated under the laws of the State of Missouri, which operates throughout Madison County. The B & O owns 6.25% of the stock of the TRRA. The remaining shares are owned by various other railroad companies. The TRRA functions as a terminal and interchange facility for other railroads which ship freight to or from the city of St. Louis, Missouri. The TRRA terminal yards straddle the boundary between St. Clair and Madison counties in Illinois. B & O engines and crews deliver cars to this terminal, where they are turned over to TRRA crews. Though the record is not entirely clear on the matter, it appears that on infrequent occasions parts of a B & O train operated by a B & O crew would cross the county dividing line. These incursions into Madison County all occurred during the process of "yarding" a train in order that it could be turned over to TRRA crews.

The record also discloses that the B & O solicited business from Madison County shippers and that the solicitation generated a substantial amount of revenue for the company. The deposition of the district sales manager of the B & O revealed that he is assigned specific accounts in Madison County and that he spends approximately three days a month contacting shippers within the county. This solicitation of business is not conducted from an office within Madison County.

At issue is whether the B & O railroad is "doing business" within Madison County for purposes of the venue statute. Section 5 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 5) provides that every action must be commenced in the county of the defendant's residence, or in the county where the cause of action arose. Section 6 of the Civil Practice Act defines the residence of a corporation for venue purposes:

"Any private corporation or railroad or bridge company, organized under the laws of this State, and any foreign corporation authorized to transact business in this State is a resident of any county in which it has its registered office or other office or is doing business." Ill. Rev. Stat. 1975, ch. 110, par. 6(1).

As previously mentioned, the causes of action involved in this proceeding did not arise from activities in Madison County, and the B & O maintains no offices in that county. Thus, venue will lie in Madison County only if it can be demonstrated that the B & O is "doing business" in the county.

Respondents assert that the facts reveal several bases upon which venue in Madison County may be upheld. First, respondents contend that the occasional physical incursions of B & O trains into Madison County while in the TRRA terminal yards constitute "doing business" in the county. Secondly, respondents contend that the unique relationship between the TRRA and its shareholders demonstrates that the B & O is doing business in Madison County through the agency of the TRRA. Lastly, respondents contend that the B & O is doing business in Madison County by virtue of its solicitation of shippers within the county.

At the outset, we must emphasize that this case concerns the proper interpretation to be placed upon the phrase "doing business" as it is used in the context of the venue statute. The term has a long history in the law and for many years was utilized as a statement of the test for determining when a corporation would be amenable to suit in a foreign jurisdiction. (See generally 4 Wright and Miller, Federal Practice and Procedure sec. 1066 (1969).) As a result, the phrase "doing business" has been the subject of myriad judicial interpretations, the vast majority of which considered the term only in a jurisdictional context. (See Words and Phrases, "Doing Business".) No firm rule as to what constitutes doing business for jurisdictional purposes is discernible from the cases. As Judge Learned Hand stated: "It is quite impossible to establish any rule from the decided cases; we must step from tuft to tuft across the morass." Hutchinson v. Chase & Gilbert, Inc. (2d Cir. 1930), 45 F.2d 139, 142.

In International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L.Ed. 95, 66 S.Ct. 154, the United States Supreme Court set to rest a great part of the confusion which had resulted from the "doing business" cases. International Shoe determined that a nonresident defendant is amenable to suit in a jurisdiction, and due process of law is satisfied, where he has "minimum contacts" with the forum State "such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" 326 U.S. 310, 316, 90 L.Ed. 95, 102, 66 S.Ct. 154, 158.

We have commented upon the background of the term "doing business" because counsel for both parties have cited and relied upon decisions which interpret the phrase within the context of personal jurisdiction. These decisions are only marginally helpful in determining the issue at hand. Jurisdiction and venue are distinct legal concepts. Jurisdiction relates to the power of a court to decide the merits of a case, while venue determines where the case is to be heard. Statutory venue requirements are procedural only and do not have any relation to the question of jurisdiction. (United Biscuit Co. of America v. Voss Truck Lines, Inc. (1950), 407 Ill. 488.) The Illinois venue statute is designed to insure that the action will be brought either in a location convenient to the defendant, by providing for venue in the county of residence, or convenient to potential witnesses, by allowing for venue where the cause of action arose. Sunderland, Observations on the Illinois Civil Practice Act, 28 Ill. L. Rev. 861 (1934).

We have not previously interpreted the phrase "doing business" as that term relates to venue in section 6 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 6). Respondents would have us incorporate the International Shoe test into our interpretation. In short, respondents contend that venue in Madison County is proper if the B & O had minimal contacts with that county such that maintenance of a suit there would not offend traditional notions of fair play and justice. We reject this contention.

Section 17 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 17) extends the personal jurisdiction of the Illinois courts> to the extent permitted by the due process clause as interpreted in International Shoe and the cases it has spawned. (Nelson v. Miller (1957), 11 Ill.2d 378, 389.) Section 17 accomplishes this expansion, in part, by providing that any person submits to the jurisdiction of the courts> of this State as to any cause of action arising from "[t]he transaction of any business within this State." (Ill. Rev. Stat. 1975, ch. 110, par. 17(1)(a).) Clearly, the language of section 17, referring to the "transaction of any business," is far broader than the language of section 6, which places venue in any county in which the defendant is "doing business." See generally Note, Doing Business as a Test of Venue and Jurisdiction over Foreign Corporations in the Federal Courts>, 56 Colum. L. Rev. 394, 416 (1956).

A comparison of the literal terms of sections 6 and 17 demonstrates that the legislature intended that more extensive contacts with a county are necessary to establish proper venue than are required when the issue is whether the defendant is subject to the jurisdiction of the courts> of this State. It would be a distortion of the plain meaning of the words of the venue statute to hold that a corporation is "doing business" within any county with which it has even minimal contacts. Additionally, such a construction of section 6 of the Civil Practice Act would have the effect of negating the principle of convenience upon which section 5 of the Act is based. To judicially define the "doing business" provision of the venue statute as being synonomous with the test for establishing jurisdiction under section 17 would be to allow the institution of actions in locations with little connection with the defendant and with no connection with the activities which give rise to the suit.

We hold, therefore, that in order to establish that a defendant is doing business within a county for purposes of venue, quantitatively more business activity within the county must be demonstrated than where the question is whether the defendant has transacted any business within the State for purposes of service of process pursuant to section 17. The defendant must, in short, be conducting its usual and customary business within the county in which venue is sought. In the words of one Federal court faced with a similar problem of construction, "the activity must be of such a nature so as to localize the business and make it an operation within the district." (Remington Rand, Inc. v. Knapp-Monarch Co. (E.D. Pa. 1956), 139 F. Supp. 613, 617.) With these principles in mind, we consider the particular bases upon which respondents assert that proper venue lies in Madison County.

We do not accept respondent's initial contention that venue in Madison County is established by the infrequent movements of B & O trains across the county boundary line while in the TRRA terminal yards. As previously mentioned, the record is unclear as to the frequency and extent of the incursions. It is clear, however, that the slight movements of the B & O trains into Madison County occurred only in the course of "yarding" the train in order that it could be transferred to the control of the TRRA crews, and, then, only when the length of the train required that part of it be moved into Madison County so that the rear of the train would clear the B & O yards in St. Clair County. There is no suggestion in the record that the B & O operated trains in Madison County on a scheduled basis, or that it was even aware that parts of its longer trains might cross the county line while in the interchange terminal. Certainly, it cannot be said that these incursions constituted the usual and customary operation of a railroad enterprise within Madison County. In our view, the B & O cannot be said to be "doing business" in Madison County on this basis.

Respondents next contend that the B & O is doing business in Madison County through the agency of the TRRA. The fallacy in respondent's argument, however, is that the record does not, in fact, disclose that the TRRA is the agent of the B & O or that the B & O exercises any influence or control over the TRRA.

Affidavits and answers to respondent's interrogatories reveal that the B & O is the owner of 6.25% of the stock of the TRRA; that one of the directors of the TRRA is also an officer of the B & O; that the B & O and the TRRA are separate and distinct railroad corporations; that the B & O does not exercise any control over the TRRA; that the TRRA is owned by 13 separate railroad corporations; and that the TRRA interchanges cars with approximately 19 other railroads. This was the sum of the information concerning the status of the TRRA which was in the record before the trial court.

At best, this information establishes that the B & O owned stock in another railroad corporation with which it, and numerous other railroads, interchanged cars. The B & O did not direct or control the day-to-day operations of the TRRA, nor did B & O crews operate the trains after they had been placed under the control of the TRRA. Upon the basis of the record before us, we cannot say that the TRRA was the legal agent of the B & O or that the B & O was operating its usual and customary business within Madison County under the aegis of the TRRA.

Respondents rely, however, upon a decision of the United States Supreme Court to support their contention that the TRRA is the agent of the B & O and, presumably, of all the other railroads which utilize the TRRA interchange facilities. In United States v. Terminal Railroad Association (1912), 224 U.S. 383, 56 L.Ed. 810, 32 S.Ct. 507, the United States brought an antitrust action against the TRRA and other defendants. The court found that the TRRA, as then organized, constituted a restraint of trade in that the railroad companies which held a proprietary interest in the terminal association were able to control the commerce entering St. Louis to the disadvantage of the nonproprietary railroad companies. (224 U.S. 383, 409-10, 56 L.Ed. 810, 819, 32 S.Ct. 507, 515.) The Supreme Court remedied this situation by ordering a reorganization of the TRRA, the effect of which was that the association had to act as "the bona fide agent and servant of every railroad line which shall use its facilities." 224 U.S. 383, 410-11, 56 L.Ed. 810, 810, 32 S.Ct. 507, 516.

We do not consider this decision to be relevant to a determination of whether the B & O was doing business in Madison County for venue purposes. The fact that the Supreme Court employed the word "agent" in ordering a remedy for an illegal restraint of trade does not establish that the TRRA is the legal representative of the B & O in Madison County. There is no indication in the record that the B & O controls the daily operations of the TRRA or its personnel. In fact, all evidence in the record is to the contrary. The weakness of respondent's position is indicated by the fact that were we to accept the proposition we would be required to hold that approximately 13 competing railroads are doing business in Madison County merely because they utilize the interchange facilities of the TRRA. In our opinion, the B ...

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