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Coons v. American Honda Motor Co.

Decided: August 3, 1983.

WALTER P. COONS, PLAINTIFF-RESPONDENT,
v.
AMERICAN HONDA MOTOR CO., INC., A CORPORATION, ET AL., DEFENDANTS, AND HONDA MOTOR COMPANY, LTD. OF JAPAN, A CORPORATION, DEFENDANT-APPELLANT, AND ATTORNEY GENERAL OF NEW JERSEY, INTERVENOR-RESPONDENT



On certification to the Superior Court, Appellate Division.

For reversal -- Justices Clifford, Handler, Pollock and Garibaldi. For affirmance -- Chief Justice Wilentz and Justices Schreiber and O'Hern. The opinion of the Court was delivered by Clifford, J. Schreiber and O'Hern, JJ., dissenting. Chief Justice Wilentz joins in this opinion.

Clifford

This appeal addresses the interpretation and validity, in the context of the Commerce Clause, of N.J.S.A. 2A:14-22, which tolls the running of the applicable statute of limitations in actions against foreign corporations that are not "represented" in this state. Before reaching the constitutional question we must determine how a foreign corporation may be "represented" in New Jersey in order to avoid the tolling provision. We hold that a foreign corporation must obtain a certificate to do business in this state, under N.J.S.A. 2A:13-4, in order to achieve "representation" in the context of N.J.S.A. 2A:14-22. Further, we hold that N.J.S.A. 2A:14-22 unconstitutionally burdens interstate commerce by requiring a foreign corporation engaged exclusively in interstate commerce to obtain a certificate to do business in order to gain the advantage of the statute of limitations.

I

Plaintiff commenced this suit in 1978 against defendant Honda Motor Co., Ltd. (Honda) and its wholly-owned American distributor, American Honda Motor Co., Inc. (American Honda). The action seeks damages for personal injuries and consequential losses occasioned by an accident on October 30, 1974, when

plaintiff was thrown from a motorcycle manufactured by Honda and distributed by American Honda. At all relevant times American Honda was a California corporation that maintained facilities in New Jersey. In contrast, Honda is a Japanese corporation that has never been authorized to do business in this or any other state and carries on no activities here or elsewhere in the United States.

Because plaintiff had started suit four years after the accident, both Honda and American Honda raised as a defense the two-year statute of limitations for personal injury actions, N.J.S.A. 2A:14-1, and moved for summary judgment. The trial court granted American Honda's motion but denied that of Honda, ruling that the two-year statute of limitations had been tolled by N.J.S.A. 2A:14-22 because Honda was a foreign corporation that was not "represented" in New Jersey by a person upon whom process could be served.*fn1 In addition, the trial court held that there were sufficient bases for the exercise of in personam jurisdiction against Honda and that the tolling statute did not violate the equal protection clause of the federal Constitution.

The Appellate Division affirmed the judgment of the trial court. Coons v. Honda Motor Co., Ltd., of Japan, 176 N.J. Super. 575 (1980). After this Court denied cross-motions for leave to appeal, the parties sought review by the Supreme Court, which consented to hear only Honda's appeal. That Court vacated the judgment below and remanded to the Appellate Division. Honda Motor Co., Ltd. v. Coons, 455 U.S. 996, 102 S. Ct. 1625, 71 L. Ed. 2d 857 (1982). Thereafter we certified the cause on our own motion. R. 2:12-1.

That this appeal may be set in its proper context we digress briefly from this chronological recitation to focus on the action of the Supreme Court. The purpose of that Court's remand was to afford the New Jersey court opportunity for reconsideration in light of the Supreme Court's decision in G.D. Searle Co. v. Cohn, 455 U.S. 404, 102 S. Ct. 1137, 71 L. Ed. 2d 250 (1982), a case raising precisely the same issue as is presented here. In Searle, the Supreme Court held that N.J.S.A. 2A:14-22 survived equal protection and due process challenges. The Court did not resolve the commerce clause challenge, however, stating that the issue was "clouded by an ambiguity in state law" concerning the requirement of representation under the statute.*fn2 Id. at 413, 102 S. Ct. at 1144, 71 L. Ed. 2d at 259. Justice Blackmun wrote that the ambiguity was created by the following language in a footnote in this Court's opinion in Velmohos v. Maren Eng'g Corp., 83 N.J. 282 (1980), in which we held the tolling statute constitutional in the face of equal protection and due process attacks: "We note that whatever hardship on foreign corporations might be caused by continued exposure to suit can be easily eliminated by the designation of an agent for service of process within the State." 83 N.J. at 293 n. 10. Justice Powell

dissented from so much of Searle as discussed the Commerce Clause. He found the Velmohos footnote unambiguous, stating that it was "simply a neutral observation that says nothing as to the means of designation of an agent under New Jersey law." 455 U.S. at 416, 102 S. Ct. at 1145, 71 L. Ed. 2d at 261 (emphasis in original).

However unfortunate our failure to articulate clearly our position in the Velmohos footnote, our intention was, as accurately perceived by Justice Powell, to make no more than a "neutral observation." At least that was our intention as currently recalled by three members who vote with this opinion and who also sat in the Velmohos case, and as appears to the other majority member to have been the intention of the Velmohos Court. That we were not entirely successful in expressing that intention is now all too painfully apparent. Although it may be "clear" to our dissenting colleagues what it was that the Velmohos footnote was meant to mean, it should suffice to point out that it was not at all clear to a majority of the Supreme Court, to say nothing of the fact that five of us who participated in Velmohos cannot now agree upon what it was we were saying in footnote 10. And what we said there takes on considerable significance in this case.

II

We are called upon to examine the suggested forms of representation that would permit a foreign corporation to avoid the tolling statute and avail itself of the statute of limitations. The parties discuss three procedures by which a foreign corporation can gain representation: (1) obtaining a certificate of authority to transact business in the state; (2) merely designating an agent without filing notice thereof with a government agency or official; (3) filing with the Secretary of State a notice designating a representative to accept service of process.

It is indisputable that a foreign corporation can gain the benefit of the statute of limitations by receiving a certificate of

authority to do business under N.J.S.A. 14A:13-4.*fn3 The issue is whether another statutorily-authorized procedure exists that would establish representation for the limited purpose of avoiding the tolling effect of N.J.S.A. 2A:14-22.

Plaintiff looks to the language of R. 4:4-4(c)(1) as support for its contention that foreign corporations need only appoint an agent for service of process in New Jersey, rather than register to do business here. That Rule substantially tracks the language of the former statutes, R.S. 2:26-43 to -44, which were amended in 1948 to provide for service on corporations.*fn4 Notwithstanding these statutory amendments, when the legislature in 1949 amended the tolling statute to provide the exemption for corporations represented in the state, it chose not to incorporate the concept of "long-arm" jurisdiction that had been sanctioned by the Supreme Court in International Shoe Co. v. Washington,

326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 2d 95 (1945). "Long-arm" service over corporations was not adopted until 1958, by then R.R. 4:4-4(d) (now R. 4:4-4(c)(1)). See discussion infra at 315. Even a cursory examination of the Rule discloses that it does not purport to serve the purpose of announcing where an identified agent can be found. It in no wise discusses the designation of an agent. An uninformed plaintiff would be faced with the virtually impossible task of locating the unknown appointee and would, in effect, lose the protection that the tolling provision is designed to afford. In addition, the Rule does not provide an independent basis for the designation of an agent to accept service -- it merely directs service on a person so designated.

Plaintiff argues that a mechanism that provides notice can be found in N.J.S.A. 14A:1-6(4), which reads in relevant part as follows: "The Secretary of State shall record all documents, excepting annual reports, which relate to or in any way affect corporations, and which are required or permitted by law to be filed in his office." The Secretary of State previously held the view that unless a foreign corporation has qualified to do business in the state, it would be unable to designate a registered agent for service of process.*fn5 Recently, however, the Secretary has acceded to the Attorney General's contrary position that in accordance with N.J.S.A. 14A:1-6(4) and N.J.S.A. 2A:14-22, a foreign corporation may file with the Secretary of

State a notice designating a representative in New Jersey as its agent to accept service of process.

Implicit in the Attorney General's interpretation is the notion that the tolling statute authorizes foreign corporations to designate agents without registering to do business in the state. Without such authorization foreign corporations would not be able to file notice with the Secretary under N.J.S.A. 14A:1-6(4) because that statute directs the Secretary to record documents that are filed as required or permitted by law. It does not independently authorize the filing of any documents. Inasmuch as there is nothing in N.J.S.A. 2A:14-22 or any other section or rule that authorizes the designation of an agent without registering to do business in the state, we conclude that a foreign corporation cannot file with the Secretary of State notice designating a representative as its agent to accept service of process under N.J.S.A. 14A:1-6(4).

Plaintiff also contends that the legislative history to the predecessor of N.J.S.A. 2A:14-22 supports the position that a foreign corporation need not register to do business in the state in order to designate an agent for service of process. As indicated supra at 313-14 in 1949 the tolling statute was amended and for the first time dealt specifically with a corporate defendant. The amendment excepted from the statute domestic corporations and those foreign corporations maintaining representatives in New Jersey. See Velmohos v. Maren Eng'g Corp., supra, 83 N.J. at 289. The statement accompanying the amendment reads as follows:

Foreign corporations licensed to do business in New Jersey are now deprived by judicial construction of the benefit of the statute of limitations. The purpose of this bill is to correct that situation. New York State found it necessary to make a similar change in its law in view of recent court decisions. [Statement Accompanying Assembly No. 467 (1949) (quoted in Velmohos, 83 N.J. at 290).]

Plaintiff focuses on the language alluding to "a similar change" in New York law. That change had been interpreted to except from the tolling provision those foreign corporations that had

appointed agents for service of process but had not registered to do business in New York.

Although plaintiff asserts that reference to the New York amendment evidences intent to allow a foreign corporation to appoint an agent for service of process without registering to do business in New Jersey, it is abundantly clear to us that New Jersey's statute was meant to be "similar" to New York's, not "identical." Moreover, we give great weight to the clear expression of legislative intent found in the first two sentences of the statement accompanying the amendment -- the purpose was to provide foreign corporations licensed to do business in New Jersey the benefit of the statute of limitations -- in concluding, as did Justice Powell in his separate opinion in Searle, that "foreign corporations may designate an agent for service of process only by obtaining a certificate of authority to do business." 455 U.S. at 419, 102 S. Ct. at 1147, 71 L. Ed. 2d at 262-63.*fn6

III

Having established the means by which a foreign corporation represents itself in order to gain the benefit of the statute of limitations, we now address the Commerce Clause issue: is interstate commerce unconstitutionally burdened by the requirement that in order to avoid the effect of N.J.S.A. 2A:14-22, a foreign corporation must qualify to do business in New Jersey?

As Professor Tribe discusses, in most cases "[s]tate regulation affecting interstate commerce will be upheld if (a) the regulation is rationally related to ...


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