Harrington v. Croft Steel Products

Annotate this Case

94 S.E.2d 803 (1956)

244 N.C. 675


No. 234.

Supreme Court of North Carolina.

October 31, 1956.

*804 W. H. McElwee, Jr., W. L. Osteen, Ralph Davis, North Wilkesboro, for defendant, appellant.

Whitlock, Dockery, Ruff & Perry by P. C. Whitlock, James O. Cobb, Jr., Charlotte, for plaintiff, appellee.

HIGGINS, Justice.

The defendant is a foreign, corporation. It has neither obtained a certificate of authority to do business in this State nor appointed a process agent. Process was served on the Secretary of State. The plaintiff contends that service was effective to bring the defendant into court under G.S. § 55-38 upon the ground the defendant was doing business in North Carolina. The plaintiff further, contends that if the court should fail to find the defendant was doing business here, the court should find that the contract sued on was made in this State, to be. performed here, and the cause of action arose out of the production, manufacture, and distribution of goods with the reasonable expectation that they were to be used in this State and in fact were so used. The service, therefore, should be held valid under G. S. § 55-38.1(1) (3).

On the other hand, the defendant contends that it was not doing business in this State and that service of process under G.S. § 55-38 was not authorized. The defendant further contends that G.S. § 55-38.1(1) (3) is unconstitutional in that it is an interference with interstate commerce and deprives the defendant of its rights under the due process clause of the 14th Amendment to the Constitution of the United States.

G.S. § 55-38 provides that process may be served upon the Secretary of State against a foreign corporation if it is doing business in North Carolina and has failed to name an officer or agent upon whom process may be served. Lunceford v. Commercial Travelers' Mut. Accident Ass'n of America, 190 N.C. 314, 129 S.E. 805. The act is not in contravention of constitutional guaranties. Currie v. Golconda Mining & Mill. Co., 157 N.C. 209, 72 S.E. *805 980; Fisher v. Traders' Mut. Life Ins. Co., 136 N.C. 217, 48 S.E. 667; Annotation, 145 A.L.R. 630, 667. The defendant's counsel in the argument very frankly conceded the service was valid if the defendant was doing business in North Carolina.

Actually, the question presented is whether the finding of the trial court that the defendant was doing business here is supported by evidence. Radio Station WMFR, Inc. v. Eitel-McCullough, Inc., 232 N.C. 287, 59 S.E.2d 779. In considering the motion, the trial court had before it the verified complaint, to which was attached copy of the contract under which the plaintiff acted as commission agent to sell defendant's products throughout North Carolina. The complaint alleged that sales were made to customers, among others, in the towns of Asheboro, Asheville, North Wilkesboro, and Sparta, beginning in July, 1954 and ending when the defendant canceled the contract in November, 1955. The total amount of the purchase price for the goods sold was approximately $650,000. During the 17 months the contract was in force deliveries amounted to $12,000 for one month, $15,000 for one month, $35,000 per month for three months, $40,000 per month for five months, and $45,000 per month for seven months. The court also had before it the plaintiff's affidavit that the defendant transported the goods into North Carolina in its own trucks, operated by its own agents who delivered the goods to the customers and took receipts for the deliveries. The affidavit also stated that the defendant was doing business in like manner at the time this action was instituted and the process served on the Secretary of State. Does this evidence support the finding the defendant was doing business in North Carolina?

In the case of Lambert v. Schell, 235 N. C. 21, 69 S.E.2d 11, 13, this Court (opinion by Barnhill, C. J.) said: "Doing business in this State means doing some of the things or exercising some of the functions in this State for which the corporation was created." Heath v. Kresky Mfg. Co., 242 N.C. 215, 87 S.E.2d 300; Radio Station WMFR, Inc., v. Eitel-McCullough, Inc., supra; Central Motor Lines v. Brooks Transportation Co., 225 N.C. 733, 36 S.E.2d 271, 162 A.L.R. 1419; C.T.H. Corp. v. Maxwell, 212 N.C. 803, 195 S.E. 36.

In the case of International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 159, 90 L. Ed. 95, Chief Justice Stone said: "`Presence' in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also gave rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given." International Harvester Co. of America v. Commonwealth of Kentucky, 234 U.S. 579, 34 S. Ct. 944, 58 L. Ed. 1479; St. Louis Southwestern Railway Co. of Texas v. Alexander, 227 U.S. 218, 33 S. Ct. 245, 57 L. Ed. 486; Pennsylvania Lumbermen's Mut. Fire Ins. Co. v. Meyer, 197 U.S. 407, 25 S. Ct. 483, 49 L. Ed. 810; St. Clair v. Cox, 106 U.S. 350, 1 S. Ct. 354, 27 L. Ed. 222.

It must be conceded the taking of orders in this State to be transmitted to the home office of a foreign corporation for acceptance and the shipment by common carrier of its goods into this State is not doing business within the meaning of G.S. § 55-3S. In that case the foreign corporation's activities do not take place here. The corporation's control over the shipment ceases at the time and place of delivery to the carrier. However, in this case the defendant not only manufactured the goods, but it transported them to North Carolina in its own trucks. It completed the transactions by making deliveries here. One of the essential purposes of the corporation necessarily was the placing of its manufactured products in the hands of its customers. In making the deliveries here the defendant was performing an essential part of its business. We conclude the evidence before the trial court was sufficient *806 to support the finding the defendant was doing business in North Carolina. Other findings may be treated as surplusage.

It becomes unnecessary to consider or pass upon the constitutionality of G.S. § 55-38.1(1) (3), although invited to do so by the parties both in the oral arguments and in the briefs.

The judgment of the Superior Court of Mecklenburg County is


JOHNSON, J., not sitting.

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