-defeatlii\!!)rigbtof recdverjll.> 'Thetoa:dway on which h4 WItS dlliving 'Was known toiti:M sane'tibnM by 'the clElfendants;'atid 1#iirossthat l'Md:' slgnl\ll warDIng 'of ,thelll.pp'fQachmg''tram, was not i!JterCl8eof'Taa'sbnitb}e: and on;tJ;1epart'ofd:efendant's eroployeedncharge of f3ueli'train.' iWhetllel'tlHill fitiltlte to exercise proper care ih 'erossing this cit the dfproper 'cautioiHh ¢rbSSitJg the track, 'case, a fact to be'determined by the coucnrwith the lenmeddistrict judge in the opinion that the question of Il;egligence was properly left ,to the jury, and in t,he; conclusion reached by hiro there 'shou.ldbe ,no new tril:l.l in this case. ,,', I ' " , · '::':,
or
<e!i:tEnlt"aB
Ving8:1?'!
,
,·i.i '. ,(cJircuit ,Oofldlt.:1J. D. I.'
T. & S. F. R; ,
qo. 'J
,Micliiigan.' March :19,1888;)
i
1.
. 2. RAILRO.An CO)iPA'NIES-'-A6TIONS";,,SERVIClll O:S' PROCESS. ' ;In:an .action against 81lailwaiV c ltporation of another at8te, service of process Qallnot be made uppn,a passen,&,er agent whose sola duty it is to solicit travel for the defendant road, notwithstimdlng he, may' have been employed to effect a compromise Of plaintiff's claim. " " 8. JURISDICTION.-ToR'ts--AMoUNT ,IN CoNTROVERSy-ACT OF under the act of in actions of tort. it it c1earIylTom-the plairitiff's own statement 'or the testhnony of his witness-es th80t averdicHor $2,000 would be. so, excessive as 'to require to set it aside, !\ndgi'ant a. neW' trial, it is its dutrto dis!Jlissthe c8sefor th.e want of jurisdiction., ' , " . " , (Sgllab'U8 by ,I
A (lause oK action ,up,01! is dlade;brlt' where It lS broken.
arises, not in .'
J':\;"
st,ate. ':Vhere .
. ,
:, ";
Court.) ';
"
',
At Law.. Oh demurrer to replication. ' , This was an action of trespass case to recover damages for the alleged' expulsion of :plaiI).tiff of, defendant's passenger alrs within the state' of Kaiisas.' , Plaintiff,' who' is a resid'entand citizen of thisC6unty, boughtfro'nrthe Company, inpetroit, a for Denver, Colo., and- ;tt'ri;urn .' This 'ticket was composed of, severa} coupons,oneofwhichentitled him to ,Pe. transported over the railroall of the defendant in the state of Kansas," Hisexpo;lsion took place on his returnifromDenvei':' "'Defendant ,pleaded to of the oouirt:' ,Firat·. That defendll,nt' under the, has nO' agent upoI1whom processcpuld be lawfully served; that GeotgeE; <WIman, "t'l'pon ",liom' siIch was desk-rooID.;ifor which this defendant pays,in'acoab>ffi6b inthis'dty;and has merelj'atIthority so.icit persons intending in KatiSas to patroriizetb.e defendant'rohdi thathe'baino authority to
to
287 sell is not olothed' with any agency whatever from this de(endant,except as such solicitor. Second. That the ejection ofthe plaintiff <:lhttrgedin. the deolaration ,1;(}ok place in the state of. Kansas; that· man did, not solicit the, plain:tiffto travel upon the defendant road, and the purchase of the ticket flor the cause of.action grew out of the agenoy"oisaid Gillman as passenger this plea plaintiff re. Ji1lrl¢, that Gillmllin was, an agent of .the defendant within this was represented by the defendant upon one of it.'! printed folders as a:l1pas,senger agent," and that the defendant recognized Gillman as l3uch agen,tiby authorizing him to compromisetQissuit against it for a specifiedsU'llil; ,and, sec.ond, that the cause of action did accrue to" the plaintifi';within the state of Michigan, booause. the :contract was .made .with agent by the purchase ofa tioket in Detroit to DenVer and I:e,t\lr.;Q,andwas a,continuing contract upon which a tPaIlSttory Action arja¢ll.i Defendant' demurred to this replication, and plaintiff joined iUl.tbe.;demurrer. ' , 14f.ned and D. A. Straker, for plaintifi'. :AljredR.'WJ8eU, for defendant. BROWN'jJ. \ (after BtafiJng the facts as above.) Two questions are presented by. the pleadings'in this case: .First, whether Gillman was such a reprasentati,veiOr'fJgent of the defendant company that such company can be .said to ;be ufound" within, this :district, within the meaning of the act of ,congress;'3I1OOnd, whether' 'this court has jurisdiction of an action' for a trespass committed upon the plaintiff in another state. The 'defendant de a corporation organized under the laws of Kansas, and its several lines ohailwayrun westward foomthe Missouri river. It was represented in ,Detroit by one Gillman, who is.described upon 'its folders as·a ll,passen,ger agent." His. business is to solicit passengers for the defendant, but 'he has nooothority to sell tickets, He also seems .to have been employed :byithe,defendant to effect'a.settlement of plaintiff'scla.im, and, in pur-sua,nce of: his instructionsjmade an offer oficoll'lpromise. It does 'not .appear. to.me.that the law of ,this state with respactto suits against foreign corporations (How. St. §8145)cuts any figureiq the case,since it provides fO:l':sprv.iee of proeeS8 upon .the agento£a foreign corporation only!Where'. Of action 1arises within this. state. I am clearly of the opinion ,thatthe cause of .action arises, notwhere the contract is made, but whereit:is broken; and that, as the expulsion of the plaintiff took place in the state of Kansas, the cause ofaction must be deemed to have arisen. there. But, in addition· to that, the statute provides that service may be made upon any officer or agent of. the cOl;poration; and the question who shallt be deemed, an ,'lagent "within the . meaning of the statute is left :all; open one, to be, determined irrespective of the statute., . '"The.genemlrule appears now,to be well settled that a foreign corporation maY'rbelsuedwithinatiy jurisdimionwherein it carries onandniportant parti'o,fitEl, Where, under tbe.laws of, the, atatevit is required as a condition .of dQing. business within the state that it· shall upoDwhom processtriay beserved j such corappoint
288
FlIJDERAL REPORTER.
poratiOn ,isralways treated as ','found" within thestate-ivithinthemeaning of the'jtitliciary act; and suits in the.federal courts may be instituted by service upon him. Ex parte Sclwllenberger,96 U.S.S69; Brownell v. Railroad CoWS Fed. Rep. 761;' Runkle v. Fed. Rep. 9; Knott v.Inwurana Co., 2 Woods, 479; Fonda v. AS8Wf'anlJil 00., 6 Cent. LawJ.S05.,Qn the other hand, when an officer ora foreign corporation is temporarily visitingortra,veling within the state, it is equally well settled Unit service of process against the corporation cannot be made upon him if the corporation iis n6t actually doing business within the state.. St.. (Jlair v.Cox, l06U. S, 850, 1 Sup. Ct-Rep. 354; Newell v. Rai7:way Co., 19 Mich. the character or' amount of business which 'the to subject its agent to the service of process withiIi the foreign state, is ,left in some doubt by' the If it have an office for the generaJ ,transaction of its' business',-the sale ofits gQo<!ls,-if it be a manufucturirigcorporation; o:dhe makilig of tracts, and the receipt of freight and passengers fortransportatioh, if it be a railroad,-itwould appear to be sufficient.. 'Hayiienv.Mills, IFed. Rep. 93; Railroad Co. v. Harris, 12 Wall.. 65, Railroad Co. v.Cram':102 Ill. 249; Li,bbey v. Hodgdon, 9 N. H. 394. So it was held that the cir<mit court,of Illinois hadjtlrisdictionof an actioft!llgaitl$,ta, beef.;canrling corporation organized under the laws of Missouri; :ilthichowned:a slaughter-houseand, stock-yard withinthe<state of IllinOi'l3; where-beef to be canned was slaughtered and dresseddbr ,and in the nanle of the company. Packing v.·Hunter, 7 Reporter, 455., So in,Wilbililms v. Transportq,tion Co., 14 O. G. 523, it waS held rthatthe'station agantof a foreigntl'an:sportation company :was a representative upon whom process might; be ,sArved, thqughhehad nothing tod6 with the construction orC!JperatibR of the cars"ner with the running of. the same; hisdtity being ,inerelytb keep the books of, the to'oollectthe 81110uhtdue for. freight.a receivedandJshipped, and to make returns of llo the; office of theoompany ,at :Philadelphia; "In that caae the state law provided that actions might, be brought against foreign eorporations by serviCe of process upon,any'officer, director,agent, clerk, or engineer. . The same principle has heenapplied to foreign, insurance companies having an agent .within the juriSdiction of theoourt, with power to. receive premiuinsand issue poHaies. Moch v. InsumncB 00.,10 Fed. Rep. 696; Moulinv.lnsurance Co., 25 N. J. Law, 57; Michael v. Insurance Co., 10 La. 737. Upon the other hand, if the agent be a local one, with authority only to receive applications and give receipts for the same, it has been held that service upon such agent ,is insufficient to ,bind the corporation. Weight v. Insurance Co., 30 La. Ann. 1186. Much the strongest case, in favor of the plaintiff is that of Block v. Railroad Co., 21 Fed. Rep. 529. This 'was also an action for an injury rein Kansas through the negligence of this"same defendant. The defendant's road did not run into the jurisdiction, but it harlan office in Kansas City and St. Louis. Service was made upon theofficerin oharge of the company's office at St. Louis.. Judge BREWER held that aathe corporation had an established bjlsiness office and agency within
MAXWELL fl. ATCHISON, T. & S. F. R. CO.
289
trict, an aglrot employed for the purpose of furthering the tation business of the corporation, the corporation be considered as found wherever such office and agency was established. By reference to the folders of the company, it will appear that these were general agents, with aUthority to make contracts and sell tickets for the company, and not mere solicitors of business, as in this case. In England the rule is that if the foreign corporation has a place of business, or a subordinate board of directors acting for the corporation in England, it may be sued there. Newby v. Manufacturing Co., L. R. 7 Q. B.293. The English courts, however, are less liberal in their application of this rule than our own. By statute, process against private corporations must be served upon .the head officer, clerk, trp,fI,surer, or secretary; and in Mackereth v. Railway OJ., I,. R. 8 Exch. 149, it was held that service upon a ticket agent of a Scotch railway at Carlisle was insufficient to charge the corporation, notwithstanding it ran its cars into the railway station at that place. The general subject of the power of the federal courts to entertain suits against foreign corporations received a very exhaustive consideration by Judge JACKSON in U. S. v. Telephone OJ., 29 Fed. Rep. 17. This was a bill in equity against the Bell Telephone Company. The marshal r6" turned ser\1.ce of process by qelivering a copy of the subprena to the vicepresident of the Cleveland Telephone Company, such company being an agent and partner of the Bell Telephone Company within the Northern district of Ohio. The learned judge held the service to be insufficient, and in delivering the opinion observed"That, in the absence of a voluntary appearance, three conditions must concur or co-exist in, order to give the federal courts jurisdiction in personam over a corporation created without the territorial limits of the state in which the court is held, viz.: Fint, it must appear as arnatter of fact that the corporation is carrying on its business in such foreign state or district; second, that such business is transacted or managed by some agent or officer appointed by and representing the corporation in such state; and, third, the existence of some local law making such corporation, or foreign corporations generally, amenable to suit there as a condition, expl'essed or implied, of doing business in the state." It is evident that this ruling is fatal to the maintenance of the case under consideration, inasmuch as by the state law jurisdiction is given over foreign corporations only where the cause of action arises within this state. I have already held that the cause of action in this case arose within the state of Kansas. But even if it be conceded that jurisdiction might be maintained, irrespective of the state statute, wherever service could be made upon an authorized agent of the corporation, it does not seem to me that the business which the defendant carried on in this stat.e was of such a character as to make it amenable to suits within this jurisdiction. Gillman was not an officer and managing agent, or even a ticket agent of the company. He had no independent office or place of business, but simply occupied a desk in a coal office. His authority was limited to soliciting business,-to turning, as far as he could, the tide of western travel over the defendant road. In fact, he was a mere
v.34F.no.4-19
FEDERA"L .REPORTER.
of the company:it appears that it has agents of tliis description in at least a dozendifferlmt sUites. If it can be sued in this state:fora,cause of action arisingOlio<I{ansas, it is equally amenable to suit-iu.anyone of these states in which it. may happen to have a passenger agent for soliciting ' It would, in my opinion, be an w:al1rantedextetision of the law of constructive presence to hold the road liable to suit in all these different states as a corporation inhabitant or found The same principle would make every manufacturing or trading corporation liable to 8uit,inany state in which 'it sent a commercial'agent or "1 drummer " to' solicit patronage. Thera is. another point with respect to our cognizance M this case, \Vbichdoeanot properly arise upon these pleadings, but may perhaps be aUudlld to ,here in view of the facts stated by.counsel upon the argument. l.havegrave doubt whether the amount of damages is :sufficient to give the courtjul'isdiction. Whilethegenel'al rule announced in Gordon v., Longest, 16 Pet. 97, is unquestioned, that in actions of tort the amount claimed in the declarationis the of jurisdictioDj;this case must be conlltru!;ld in conneotion with the act of 1875, the fifth section of which makedtthe duty of the60urt to dismiss the .case, when: it shall appear to its satisfaction that the suit does not really and' sUbstantially involve a dispute oroontroversy properly within its jurisdiction. This duty was dwelt upon.aIldenforced in the case ofWilliarnsv.Nottawa, 104 U. S. 209. 1 had frequent occasion to apply this rule in actions upon contract, and,also in actions of ejectment, where it clearly appeared that the value of the land in controversy. was less· than the minimum dictjonal am.ount. I know of no .reason why the same rule should not be applied,imactions of tort, except that in such cases the damages are not susceptible of mathematical computation,and are more largely hi the discretion of the jury than actions upon contract. I apprehend. however, there is still some discretion in this clltss of eases. Suppose all actioij WerE! brought for a manifestly trivial injury; such as a bruise or a sprained ankle, and the court can see that by no possibility could a verdict for $2,000 be sustained,-I know of no reason why it should not refuse cognizance of the case, and remit the parties to their proper forum. Indeed,it seems to me that wherever itappears clear from the plaintiff's own statement,or the testimony of his witnesses, that a verdict of $2,000 would be so grossly excessive as to require the court in the exercise of its judicial discretion to set it aside, and direct a new trial, it is equally its duty to dismiss the case for ,want of jurisdiction. In the case under considemtion .the,l>laintiff was not actually ejected from the cars. The conductor refused to receive his ticket, and threatened ,to eject him, butafter some trouble and: delay he succeeded in- borrowing $15 from a fellowpassenger, with which his fare to Detroit, and was permitted to continue. ,upon, the same 'train. 'He was undOUbtedly subjected to some inconvenience from his inability to procure food. He alleges, and I ani bound to presume, that he suffered from the pangs of hunger; at the llame time,upon. his own statement, it appears, to me exceedingly improbable that he could obtain a verdict for $2,000, and equally improho;
ETNA LIFE ,iNS. 'co;
'II;
SURETY CO.
tbA:t',such Ii verdict ,cbti,ld. be' sUstairi!¥l,)(ft is ,however, to pass upon ,this question·. I make the suggestion, rather, as an intimation of what I propose to do in cases of this description. The time ofthe court is largely taken up in the trial of negligence cases in which the amount recovered is less than $1,000; and the .only penalty seems to be that a party shall not recover costs, if the amount of the verdict be less than $500, unless there is power to apply the summary remedy which I have indicated. This power I propose to exercise where it clearly appears to me that the action should not have been brought bere. An order will be entered sustaining the demurrer to the replication, for the reason that the defendant was not found within this district.
lETNA LIFE
INs. Co.
'D. AMERICAN SURETY
Co.
(Oircuit (Jourt,D. (Jonnecticut. March 21, 1888.)
BONDS..,..SURETY COMPANffiS-MISREPnESENTATIONS-PREVIOUS DEFALCATIONS.
P., the general agent of a life insurance company, having, on his own motion, applied to plaintiff, a surety company, to go on his bond, that company forwarded to the secretary of the insurance company a certificate which. when filled out and signed by him, recited that the agent, "so far as the secretary's knowledge went, "had a!ways faithfully performed his duties, and that he was not then "in arrears or default." It also stated that his accounts "were last examined June 18, 1884;and found to be correct in every respect." This certificate bore date June 16, and the bond June 15, 1884. As a matter of fact P. was then in the company's debt $150, on a draft which he had drawn on the company in March. 1884, and which it had paid, but had required an explanation, and demanded repayment. He had had correspondence with the secretary about renewal receipts, the natural inference from which was that ihe monel which they called for had been paid.. The company did a very large busmess, its cash premium income for 1884 being about $2,400,000; and P,'s agencY was a comparatively small one: It was also its practice to leave accurate investigation of such agencies until the annual examination, which was had in December. Held, that the unpaid draft was not "arrears or default" within the meaning of the certificate, which referred to collection accounts, and, that the secretary was not guilty of such laches as would discharge the surety company from liability on the bond for a subsequent defalcation. The practice of an insurance company required its general agents to remit or account for all moneys the next succeeding month. Renewal receipts, however, could be held for 60 days after premiums thereon were due, and were often retained by agents longer without objection. P., an agentappointed April 2, 1883. began making defalcations May 15th following, his system being to postpone his monthly accounts as long as he could, and to apThis was kept up until December 4,1884, ply recent 'payments to old when he was discovered, and found to be in arrears $3,041.94, of which amount $2,823.80 had been collected after June 15, 1884. On that day (June 15th) P., on his own motion, procured. a bond from a surety company. one provision of which 'was that the insurance company should notif!. the surety of any act of omission or commission on the part of P. which 'may involve a loss for which the surety is responsib1e hereunder." P. thereafter continued the same system; sending his June report August 4th, his July report August 24th, and his August report September 29th. He was written to October 1st.
,. SAME-EXISTING ACTS OF OMISSION.