Kendall v. American Automatic Loom Co.
Headline: Court affirms that serving a company’s treasurer does not count as service on an out-of-state company that does no business in that state, leaving the lower court’s decision intact.
Holding:
- Allows courts to refuse service on out-of-state corporations not doing business in the state.
- Leads lower courts to set aside such defective service attempts.
- Affirms that direct appeals may be reviewable under the 1891 statute in similar cases.
Summary
Background
A party tried to serve a subpoena on the treasurer of a corporation incorporated in West Virginia. The treasurer was served in New York and the corporation challenged that service. The lower federal court set aside the service, and the party appealing sought direct review by this Court. The appellee objected that the appeal was not allowed under the 1891 law, arguing the case did not question the federal court’s status.
Reasoning
The Court first found that an order setting aside service can be reviewed here under the section mentioned in the 1891 act, following a related case decided the same day. The central question was whether serving the treasurer counted as serving the corporation. The Court said it did not because the company was doing no business in New York at the time and never had done business there since it was formed in West Virginia. The opinion noted earlier decisions that allowed service on a resident director when a company was doing business in the State, but stressed those decisions do not apply when the company conducts no business there.
Real world impact
As a result, the Court affirmed the lower court’s order and left the attempted service invalid. That means companies that are not doing business in a State cannot be treated as served just because someone served a local officer. The ruling relies on prior cases and confirms that service attempts against inactive out-of-state companies can be rejected, and the lower-court decision in this dispute was affirmed by the Court.
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