Henry L. Doherty & Co. v. Goodman

Background

Henry L. Doherty, a New York citizen doing business as a securities firm, opened an office in Des Moines and employed E. A. King as its district manager. A local sale of stock to Goodman led Goodman to sue Doherty in Polk County for money damages. The summons was served on the Des Moines manager, and Doherty, who never was in Iowa, challenged the service and said the statute allowing such service violated the Constitution (Article IV §2 and the 14th Amendment).

Reasoning

The Court considered whether Iowa Code §11079 — which allows service on an agent or clerk in a local office for actions connected to that office’s business — lawfully applies to a nonresident who establishes an office in the State. The Court relied on the state supreme court’s construction that the statute covers nonresidents and noted King was the manager when the sale occurred and when notice was served. The opinion distinguished earlier cases where service was made on someone who was not an agent and emphasized that Iowa tightly regulates securities businesses. Citing principles that permit a State to require local agents when nonresidents do business there, the Court concluded applying §11079 in these facts did not deprive Doherty of constitutional rights.

Real world impact

The decision means people who open and run a local office in another State can be sued there by having the office manager or clerk served for claims tied to that office’s business. The ruling is limited to the specific facts presented; the Court did not decide how the statute applies in other situations and only resolved the rights claimed on this record.