Civil Procedure I, Pages 81–85

International Shoe Co. v. Washington

Supreme Court of the United States, 1945

Facts:

Defendant is incorporated in Delaware and has its primary headquarters in Missouri. Defendant makes footwear and distributes it through several states. However, defendant does not have any office in Washington, does not have any contracts for sale or purchase in Washington, does not have an inventory in Washington, and does not deliver any good to Washington. Defendant does employ eleven to thirteen salesmen in Washington however, but they are under the supervision and control of sales managers in Missouri. They are paid by commission, receive one shoe per pair to show to potential customers, and sometimes are reimbursed to rent rooms to sell shoes from. When an order is purchased, that is transmitted to Missouri, from whence the order is then shipped to the customer in Washington. The salesmen sell at the company's fixed prices and cannot make binding contracts or collections for the company, who has the final say on sales.

Issues:

  • Hersch's: Whether corporation subject to personal jurisdiction for doing business in state.

  • Page 81

    Whether, within the limitations of the due process clause of the Fourteenth Amendment, the appellant, a Delaware corporation, has by its activities in the State of Washington rendered itself amendable to proceedings in the courts of that state to recover unpaid contributions to the state unemployment compensation fund enacted by state statutes, Washington Unemployment Compensation Act

  • Page 81

    Whether the state can exact those contributions consistently with the due process clause of the Fourteenth Amendment

Defendant's Arguments:

  • Defendant is not incorporated in Washington, was not doing business in Washington, and did not employ people in Washington. Therefore these statutes do not apply to it and Washington cannot tax them for the collection thereof.

  • Hersch's: Long arm statute violates due process as applied.

Rule:

To be sued in a state, a corporation must have presence there by having sufficient activities in the state. Presence has not been doubted when the activities of the corporation have been continuous, systematic, and given rise to the liabilities sued on. Sometimes such is enough even if the suit is unrelated to the activities. Yet presence is generally not established when a corporation has only isolated items of activities in a state and the suit is on causes unrelated to these activities, to do otherwise would place an unreasonable burden on the corporation. The corporation is liable to the extent it does business in the state.

Reasoning:

The defendant's activities in the state were continuous and systematic. The issue that the suit is over is directly related to those activities. By partaking in continuous and systematic business in Washington, defendant opened itself up to the state's right to tax that business. The defendant was reasonably apprised of the suit by registered mail sent to their headquarters.

Holding:

Yes to both, the defendant has rendered itself liable to taxation and collection thereof by Washington without violating due process. Affirmed.

Takeaway:

Corporations with continuous and systematic activities in a state are responsible for those activities in that state.

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