GRACE v. MacARTHUR Civ. No. B-306.
170 F.Supp. 442 (1959)
Preston W. GRACE and Charlotte B. Grace, his wife, Plaintiffs, v. John D. MacARTHUR, Ronnie Smith, and Bankers Life & Casualty Co., Defendants.
United States District Court E. D. Arkansas, N. D.
February 16, 1959.
Owens, McHaney, Lofton & McHaney, James M. McHaney, Little Rock, Ark., for defendant, John D. MacArthur.
HENLEY, District Judge.
On motions of the defendants, John D. MacArthur and Ronnie Smith to quash service of summons.
This is an action brought by Preston W. Grace and Charlotte B. Grace, his wife, citizens of Arkansas, against three defendants, referred to collectively as "Bankers Group", for damages for alleged breach of a written contract for the exchange of certain real and personal property, or, in the alternative, for specific performance of said contract and certain alleged amendments thereto. The defendant, Bankers Life & Casualty Co., is an Illinois corporation, authorized to do and doing an insurance business in the State of Arkansas. The defendant, John D. MacArthur, is a citizen of Illinois, and is the controlling stockholder, chairman of the board and president of the defendant corporation. The defendant, Ronnie Smith, is a citizen of Tennessee. The amount in controversy is far in excess of the statutory minimum. As stated, the three defendants are referred to collectively as "Bankers Group", and it is alleged that the defendant, Ronnie Smith, was at all times here pertinent the duly appointed, qualified and acting agent of Bankers Group, and "of the three entities comprising" that group. In other words, it is alleged that he was acting for himself and also for the corporation and for the defendant, MacArthur.
The complaint was filed on July 21, 1958, and summons was issued on the same day. Jurisdiction of the corporate defendant was obtained by service on the Arkansas State Insurance Commissioner, which service is not challenged here. Service on MacArthur was attempted under the provisions of Act 347 of the General Assembly of Arkansas for 1947 (Ark.Stats., Section 27-340) which authorizes service on the Secretary of State for the State of Arkansas with respect to any "non-resident person, firm, partnership, general or limited, or any corporation not qualified under the Constitution, and Laws of this State as to doing business herein" who has done any business or performed any character of work or service in the State. The Marshal's return as to Smith recites that the writ came to hand on July 21, 1958, and that on the same day he served the same "by personally delivering to him a copy of this writ, together with a copy of the Complaint, on the Braniff Airplane, Flight No. 337, non-stop flight from Memphis, Tenn. to Dallas, Texas, said copy being delivered to him at 5:16 P.M. at which time the said airplane was in the Eastern District of Arkansas and directly above Pine Bluff, Arkansas, in said District."
The motion to quash filed by MacArthur alleges that he "has not done any business or performed any character of work or service in the State of Arkansas and has not appointed the Secretary of State of the State of Arkansas as an Agent for acceptance of service of process upon him", and that "there has been no lawful service of process upon (him) and the Court is without jurisdiction over his person". Smith's motion asserts that "he has not been properly served with process in this action within the State of Arkansas, and this Court is without jurisdiction over the person of said defendant". (Emphasis supplied.) Said motions have been submitted upon written briefs.
Taking up first the motion of Ronnie Smith, it is noted that he does not question the recitals in the Marshal's return to the effect that he was served with a copy of the summons and of the complaint while he was a passenger on a Braniff airplane at a time when said aircraft
In their briefs in connection with Smith's motion counsel on both sides state that they have been unable to find any case dealing with the specific problem in hand. The Court likewise has been unable to find such a case. Nonetheless, the Court is persuaded that a person moving in interstate commerce across the State of Arkansas in a regular commercial aircraft, flying in the regular navigable airspace above the State, is within the "territorial limits" of the State and is amenable to service under the provisions of Rule 4(f), supra.
In approaching this question it is well to keep in mind that we are not here concerned with any problem of conflicting regulatory provisions of State and federal governments such as were involved in Alleghany Airlines, Inc., v. Village of Cedarhurst, D.C.N.Y.,
Apart from any supposed effect of the Air Commerce Act of 1926, 49 U.S.C.A. § 171 et seq., as amended by the Civil Aeronautics Act of 1938, 49 U.S. C.A. § 401 et seq., it is clear that an aircraft flying over a State is within that State and is subject to its jurisdiction. For example, in the leading case of Smith v. New England Aircraft Co., Inc., 270 Mass. 511, 170 N.E. 385, 389, 69 A.L.R. 300, 308, the Court said:
The Smith case was cited with approval in State v. Northwest Airlines, 213 Minn. 395, 7 N.W.2d 691, wherein it was said; "The sovereign power and jurisdiction of a state is not limited to the ground. An airplane in the air over the territory of a state is within the state and subject to its sovereign power." 7 N.W.2d at page 694. Similarly, in Erickson v. King, 218 Minn. 98, 15 N.W.2d 201, 204, the same court held that a State's power to control air traffic was
In United States v. One Pitcairn Biplane, D.C.N.Y.,
Moreover, a number of the States have adopted the Uniform Aeronautics Act, which declares, among other things, that sovereignty in the airspace rests with the State, except where granted to and assumed by the United States. Arkansas has adopted a version of that Act which now appears in Ark.Stats., Sections 74-101 et seq. Section 74-111 provides that all crimes, torts, and other wrongs committed by or against a pilot or passengers while in flight over the lands and waters of the State shall be governed by its laws, and that the question of whether damage occasioned by or to an aircraft while over this State constitutes a tort, crime or other wrong shall be determined by Arkansas law. And Sections 74-112 and 74-113 provide, respectively, that contractual relations entered into upon an aircraft over the State shall be governed by the laws applicable to similar relations entered into on the lands of the State, and that the liability of the owner or pilot of an aircraft carrying passengers for injury or death to such passengers shall be determined by the rules of law applicable to torts on the lands or waters of this State arising out of similar relationships.
Obviously, the only rational and legal basis upon which State jurisdiction in the respects above mentioned could be asserted is that an aircraft flying over the State and its passengers are within the borders or limits of the State. That such assertions of jurisdiction are valid where they do not conflict with controlling federal legislation has been recognized by the Supreme Court of the United States in Braniff Airlines v. Nebraska Board of Equalization and Assessment, supra.
It is true that in the Air Commerce Act of 1926 Congress declared that: "The United States of America is declared to possess and exercise complete and exclusive national sovereignty in the air space above the United States, including the air space above all inland waters and the air space above those portions of the adjacent marginal high seas, bays, and lakes, over which by international law or treaty or convention the United States exercises national jurisdiction. Aircraft a part of the armed forces of any foreign nation shall not be navigated in the United States, including the Canal Zone, except in accordance with an authorization granted by the Secretary of State." 49 U.S.C.A. § 176(a). And it is also true that by the Civil Aeronautics Act of 1938 Congress has largely, if not entirely, preempted the field of regulation of air traffic. See
It does not follow, however, from Congressional declarations of National sovereignty over the navigable airspace of this country, or from Congressional regulation of air traffic, that the States have been denuded of all of their sovereignty and jurisdiction with respect to such airspace or that the same has been excluded from their boundaries or limits. That the contrary is true, is shown by the opinion in the Braniff case, supra, wherein the Court, after quoting from 49 U.S. C.A. § 176(a), set forth above, went on to say:
In view of the foregoing, it is concluded that at the time the Marshal served the summons on the defendant, Smith, the plane and its passengers were within the "territorial limits" of the State of Arkansas, as that term is used in Rule 4(f). Hence, Smith's motion to quash will be denied. The result here reached seems to be just, equitable and practical. It cannot seriously be contended that a person moving in interstate commerce is on that account exempt from service of process while in transit, and we think it makes no practical difference whether he is traveling at the time on a plane, or on a bus or train, or in his own car. True, if he is going by plane the duration of his presence in the State will probably be much shorter than if he were availing himself of some other means of transportation, but that is a difference of degree only, not of principle.
It may be conceded, perhaps, that a time may come, and may not be far distant, when commercial aircraft will fly at altitudes so high that it would be unrealistic to consider them as being within the territorial limits of the United States or of any particular State while flying at such altitudes. But no such situation is here presented. We have an ordinary commercial aircraft, flying on an ordinary commercial flight in the ordinary navigable and navigated airspace of 1958.
Passing now to MacArthur's motion, an examination of his brief reveals that said motion is based upon a number of propositions, namely:
1. That the contract in suit was completed in Illinois, and that Act 347 of 1947 is not applicable;
2. That the cause of action alleged in the complaint did not accrue from the negotiation or the making of the alleged contract, and that the statute therefore is inapplicable;
3. That a single isolated transaction, such as is here involved, does not constitute "doing business" or "performing work or services" in Arkansas within the meaning of the statute;
4. That, with respect to venue, Act 347, if applied to actions ex contractu, is unconstitutional as being discriminatory against non-residents.
While the questions presented by this motion may well be serious ones, it is not deemed desirable to pass upon them at this stage of the proceedings. Rather, ruling on said motion to quash should be reserved until the trial, without prejudice to movant's right to renew in his answer his contentions relative to personal jurisdiction over him. See Rule 12(b) and (d), F.R.Civ.P. 28 U.S.C.A. In this connection, even if it be assumed that one or more of his contentions is valid, it is plain that to grant his motion would not dispose of the case, nor, in view of his connection with the corporate defendant, which is such that he will in all probability have to appear and testify at the trial, would an order sustaining his motion achieve any substantial saving in time, effort and expense, either in preparing the case for trial or in the trial. In addition, it would appear that the only basis upon which this court could find that MacArthur had done any business or performed any work or services in Arkansas would be the proposition, advanced by the plaintiffs, that at all pertinent times the defendant, Smith, was the agent of MacArthur.
The issue of the existence and extent of Smith's agency for the other defendants involves disputed factual questions, as all parties recognize; and it appears from the pleadings that those questions go not only to the matter of jurisdiction but in part to the ultimate merits of the case as well. Moreover, should MacArthur's motion be granted, and should it be later determined on appeal that such action was erroneous, the whole case might have to be tried again in order to determine his personal liability, if any. On the other hand, the action that we are
It is, therefore, by the Court considered, ordered and adjudged that the motion of the defendant, Ronnie Smith, to quash service of summons upon him be, and the same hereby is, denied.
Further ordered that ruling on the motion of John D. MacArthur to quash service of summons upon him be, and the same hereby is, reserved until the trial.
Further ordered that both of the above-named defendants file answers to the complaint within ten days after receipt by them of copies of this memorandum and order.
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