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Hartley v. Sioux City and New Orleans Barge Lines Inc.

decided as amended july 31 1967.: January 27, 1967.


Biggs, Hastie and Freedman, Circuit Judges.

Author: Biggs


BIGGS, Circuit Judge.

Hartley, a seaman, sued his employer, Sioux City and New Orleans Barge Lines, Inc., to recover damages for personal injuries allegedly suffered in the course of his employment. The accident occurred aboard the M.V. Waverly, owned and operated by Sioux City, on the Illinois River in the neighborhood of Morris, Illinois. There are two separate suits before us for review. Jurisdiction in one was asserted under the Jones Act, 46 U.S.C.A. ยง 688. The complaint alleges negligence on the part of Sioux City. Hartley also filed a libel in admiralty alleging the unseaworthiness of the Waverly, and seeks damages and maintenance and cure. The appeal from the Jones action is at our No. 15747 and the appeal from the admiralty judgment is at our No. 15820. For the opinion of the court below see 247 F. Supp. 1015 (1965).

According to the complaint, Sioux City was "incorporated in a state other than Pennsylvania with its principal office at Houston, Texas, and is doing business in Pennsylvania." These allegations were not denied and therefore are admitted. Substituted service of process was made upon the Secretary of the Commonwealth of Pennsylvania pursuant to 15 P.S. Section 2011(B). The court below granted motions to quash and dismiss on the grounds that the substituted service was invalid since the actions did not arise within Pennsylvania and that the venue was incorrectly laid in Pennsylvania under the Jones Act in that Sioux City was not incorporated in Pennsylvania. The appeals at bar followed.

The last point, i.e., that venue was incorrectly laid in Pennsylvania under the Jones Act, is disposed of by Pure Oil Co. v. Suarez, 384 U.S. 202, 16 L. Ed. 2d 474, 86 S. Ct. 1394 (1966).*fn1 We are concerned, therefore, only with the first point, the legal adequacy of the substituted service made upon the Secretary of the Commonwealth in both suits.

We direct our attention to the manner in which service of process was made on Sioux City, a foreign corporation, which, although admittedly doing business in Pennsylvania, was not registered with the Secretary of the Commonwealth. To determine whether or not the service of process was adequate, we must determine the standard against which its adequacy is to be measured. Sioux City contends that Rule 4(d) (7) of the Federal Rules of Civil Procedure, 28 U.S.C., provides the standard for service in accordance with state procedures and that the service here was deficient because not in accordance with Pennsylvania law. We will refer to this point later. Hartley, on the other hand, contends that Rule 4(d) (3) of the Federal Rules of Civil Procedure, 28 U.S.C., provides a federal standard which should govern service in the cases at bar. Rule 4(d) (3), 28 U.S.C., provides for service "upon a * * * foreign corporation * * * by delivering a copy of the summons and of the complaint to * * * agent authorized by appointment or by law to receive service of process * * *."

Comparatively recent decisions have held that federal courts considering questions arising under the Constitution of the United States or federal statutes properly may exercise jurisdiction limited only by the due process clause of the Fifth Amendment. Even where the procedure for exercising that jurisdiction is prescribed by state law, these courts need not be bound by restrictions found in the state law. See, e.g., Lone Star Package Car Company v. Baltimore & Ohio Railway Company, 212 F.2d 147 (5 Cir. 1954); Goldberg v. Mutual Readers League, Inc., 195 F. Supp. 778 (E.D. Pa.1961). See also Green, Federal Jurisdiction in Personam of Corporations and Due Process, 14 Vand.L.Rev. 967 (1961). But in the cited cases, the manner of serving process was provided for both by federal rule and by state law. It was possible, therefore, to use Rule 4(d) (3) to the exclusion of any procedures under state statutes, and to disregard their limitations. In the instant cases, however, this principle is not applicable. Rule 4(d) (3) applies only to the manner of personal service of process, i.e., the method by which process is served on an agent who is within the jurisdictional reach of a federal court. The record does not demonstrate whether or not Sioux City had an agent in Pennsylvania. It does not show that any agent of Sioux City was served. It is obvious that although a federal court may have a foreign corporation within its territorial jurisdiction, the court may not have procedure available under the Federal Rules of Civil Procedure to bring the corporation into court. Where no agent is served in fact a federal court must look to the state statutory procedure. A federal court is authorized to do this under Rule 4(d) (7). It follows that the adequacy of service of process must be determined by that rule.*fn2

We refer to the Pennsylvania statutory law which now provides, 15 P.S. Section 2011(B), "Any foreign business corporation which shall have done any business in this Commonwealth, without procuring a certificate of authority to do so from the Department of State, shall be conclusively presumed to have designated the Secretary of the Commonwealth as its true and lawful attorney authorized to accept, on its behalf, service of process in any action arising within the Commonwealth."

Two questions of law are presented. To have served Sioux City validly it is necessary that the corporation (1) was doing business within the State, and (2) that the action was one "arising within * * * [the] Commonwealth." Sioux City admits that it has "done business in Pennsylvania". Our consideration, therefore, is limited to whether or not the cases at bar are actions "arising within this Commonwealth" within the meaning of the statute.

Ambiguity haunts the legislative history of the Pennsylvania rule. In 1963 Section 2011(B) was amended to allow substituted service of process "in any action arising within this Commonwealth".*fn3 Prior to this amendment, the section read "in any action arising out of acts or omissions * * * within this Commonwealth."*fn4 As was commented, "The change in language in 1963 without clear legislative history creates a patent ambiguity." Goodrich-Amram, Pennsylvania Procedural Rules Service 64-65 (Supp.1966). The division in judicial interpretations reflects this ambiguity.

The United States District Courts for the Eastern and Western Districts of Pennsylvania take different views as to how the phrase quoted should be interpreted. Judge Rosenberg and Chief Judge Gourley of the Western District of Pennsylvania expressed the view that if the action be commenced in Pennsylvania the provisions of the statute are satisfied.*fn5 On the other hand, Judge Van Dusen of the Eastern District of Pennsylvania concluded that the cause of action must arise within the Commonwealth; i.e., that the operative facts giving rise to the cause of action must have taken place within Pennsylvania.*fn6

Before the 1963 amendment, this court decided Florio v. Powder Power Tool Corporation, 248 F.2d 367 (3rd Cir. 1957). We held that where a Pennsylvania distributor had entered into a contract with an Oregon corporation for the sale of powder power tools and had done acts within the Commonwealth sufficient to constitute "doing business," that these "acts" satisfied the statutory requirement that the "action [be one] arising out of acts * * * within this Commonwealth," within the purview of 15 P.S. Section 2011(B) (as it existed prior to the 1963 amendment) providing for service on foreign corporations by serving the Secretary of the Commonwealth. We took the position that the purpose of the statute militated against a narrow construction. Our decision was handed down in September 1957. It was declared erroneous by the Supreme Court of Pennsylvania in Rufo v. Bastian-Blessing Company, 405 Pa. 12, 173 A.2d 123, in July 1961. The Supreme Court of Pennsylvania held that it was necessary to establish that the cause of action itself arose out of acts or omissions of the foreign corporation within Pennsylvania in order that valid service could be made on the Secretary of the Commonwealth.

The court below relied on Rufo in granting Sioux City's motions to quash the service of process, to quash the marshal's return of service, and to dismiss the suits. The court laid emphasis on those portions of Rufo which read: "The question is not where the injury occurred or where the cause of action arose; where did the company's negligent acts or omissions take place?", and "If the legislature mean [sic] 'cause of action' or 'right of action', it could and would have so stated. Indeed, if the legislature meant 'right of action' or 'cause of action', it would have ...

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