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FORSGREN v. GILLIOZ

March 2, 1953

FORSGREN ET AL.
v.
GILLIOZ.



The opinion of the court was delivered by: John E. Miller, District Judge.

Plaintiffs filed their complaint in the Crawford Circuit Court alleging, insofar as pertinent to the issues now before the Court, that:

Plaintiffs are partners doing business as Forsgren Bros., a partnership, with its principal place of business in Fort Smith, Sebastian County, Arkansas. They are engaged in the general contracting business including dirt moving, right of way construction, and other kindred activities. Defendant is a resident of Monett, Missouri, and is a general contractor engaged in, among other things, the construction of roads, right of way for roads and other types of heavy construction.

Prior to September 16, 1950, the defendant entered into a general contract, which was designated as Arkansas State Highway Department Job No. 4333, Crawford County, Arkansas, under the terms of which he was to engage in the clearing and construction of the right of way and the building of certain bridges on U.S. Highway 64-71 between Van Buren, Arkansas, and Alma, Arkansas, in Crawford County.

On September 16, 1950, plaintiffs and defendant entered into a contract whereby plaintiffs agreed to take over and subcontract from defendant a certain portion of the work covered by the defendant's general contract. As a part of said contract plaintiffs agreed as subcontractors to do in their entirety certain items of work covered by defendant's general contract at the unit prices established in said contract; and it was further agreed in said subcontract that all the terms and conditions of the general contract were made a part of the said subcontract agreement.

One of the items called for in the subcontract agreement was the removing and re-setting of shrubs of the approximate quantity of 40 at the unit price of $5. The said approximate quantity was merely an estimated quantity and under the general contract the defendant was bound to finally complete all of the items covered in said contract, regardless of the over-run or under-run of the quantities as set out in said contract; under the subcontract agreement, the plaintiffs likewise were bound to complete all of the items shown in their subcontract at the unit price, regardless of the number of shrubs to be re-set or the over-run or under-run of approximate quantities shown.

As plaintiffs proceeded with the work it was discovered that there were 5,391 shrubs to be removed and re-set and defendant was advised of the large over-run; that the Arkansas State Highway Department interpreted the general contract as covering the work, regardless of the number of shrubs to be re-set, and defendant accepted said interpretation of the general contract.

Plaintiffs' subcontract also covered the over-run at the unit price of $5. They began removing and re-setting the shrubs, but defendant refused to permit plaintiffs to proceed with the work and did the work on his own account, over the protest of plaintiffs. Defendant's refusal to permit plaintiffs to proceed with the removing and re-setting of the entire quantity of shrubs constituted a violation of the terms of their contract with the defendant, for which violation the plaintiffs claim they are entitled to recover damages.

The case was removed to this Court on the grounds of diversity of citizenship of the parties and the amount involved, and on February 14, 1953, the defendant entered his special appearance for the sole purpose of contesting the jurisdiction of this Court, and filed his motion to quash service of summons upon him and to dismiss the conplaint for lack of jurisdiction and for improper venue.

As grounds for his motion defendant alleges that he is a citizen and resident of the State of Missouri and has never resided in the Western Judicial District of Arkansas; that on the date of the bringing of this action and at all times since he has had no office or place of business, nor any agent in charge of any office or place of business in the State of Arkansas.

Service of process in this action was attempted under Act 347 of the Acts of Arkansas for the year 1947, but that such Act is not applicable to this action and that the service attempted in this action is unauthorized by the laws of the State of Arkansas and the Federal Rules of Civil Procedure.

That to uphold service under Act 347 would be to deny the defendant the privileges and immunities and the equal protection of the laws guaranteed by the Constitution of the United States.

The attorneys for the respective parties have filed excellent briefs clearly and succinctly stating their contentions and citing authorities in support thereof.

The defendant contends (1) that Act 347 of 1947 applies only to tort actions for the recovery of damages to property and injuries or death to persons, and does not authorize service in an action for breach of contract, and (2) that should the Act be held to apply to actions for breach of contract, it would be unconstitutional since it would violate the equal protection and the privileges and immunities provisions of the Constitution of the United States by authorizing venue in any county in Arkansas as to non-residents while strictly limiting venue in suits against residents.

The plaintiffs contend (1) that Act 347 extends to actions for breach of contract as well as to tort actions, and (2) that the Act is constitutional since the Legislature did not act arbitrarily and the classification made by it, in differentiating between nonresidents and residents as to venue, is pertinent to the subject of classification and is reasonable.

The issues as made by the pleadings and the contentions of the parties present to the Court two questions for determination. (1) Does Act 347 of the Acts of the General Assembly of the State of Arkansas for the year 1947 authorize service of process in an action for breach of contract? (2) If said Act does authorize such service, is the Act constitutional?

No Federal statute provides for service of process in an action such as that involved herein, and therefore the validity of service in the instant case depends upon the applicability of Act 347 under the law of the State of Arkansas. See Rule 4(d)(7), Federal Rules of Civil Procedure, 28 U.S.C.A.; Green v. Equitable Powder Mfg. Co., D.C.W.D.Ark., 99 F. Supp. 237, 240.

Insofar as the Court is advised, the only court in Arkansas that has passed upon the applicability of Act 347 to actions other than tort actions is the Circuit Court of Garland County, Arkansas. In the case of Hot Springs School District No. 6 v. F. & J. Appliance Co., et al., Honorable C. Floyd Huff, Jr., Circuit Judge, filed a memorandum opinion in which he held that Act 347 applies only to actions for damages to persons or property resulting from an accident caused by the negligence of non-residents, and does not apply to an action based upon breach of implied warranty.

In deciding the applicability, under Arkansas law, of Act 347, the Court is thus faced with the preliminary question of whether this Court is bound to follow the decision rendered by the Circuit Court of Garland County, Arkansas.

In Standard Accident Ins. Co. v. Roberts, 8 Cir., 132 F.2d 794, the Court at page 799 said:

    "However, even a dictum in a State decision
  should be followed by us unless there is positive
  decision to the contrary. * * * Also, note
  expressions in Supreme Court opinions to the
  effect that `it is the duty of the former
  [federal courts] in every case to ascertain from
  all the available data what the state law is and
  apply it' (West v. American Telephone & Telegraph
  Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85
  L.Ed. 139, 132 A.L.R. 956) and that decisions of
  intermediate State courts are to be followed by
  federal courts as to State law `unless it
  [federal court] is convinced by other persuasive
  data that the highest court of the state would
  decide otherwise' * * *. Certainly, a clear,
  unequivocal dictum in an opinion of the highest
  State court is `available data' and is
  sufficiently `persuasive data' to convince as to
  what it `would decide.'"

Under the broad language used by the Court in that case, it seems that an opinion by a Judge of a Circuit Court would be "available data" or "persuasive data." However, subsequent to the rendering of the opinion in the Standard Accident Ins. Co. v. Roberts, supra, the Supreme Court in King v. Order of United Commercial Travelers, 333 U.S. 153, 68 S.Ct. 488, 92 L.Ed. 608, held that the federal courts were not obliged to follow the decisions of the Courts of Common Pleas of South Carolina, which courts are substantially the same as the Circuit Courts in Arkansas. The Supreme Court based its opinion primarily upon the practical difficulties which would ensue if such decisions were binding upon the federal courts. Beginning at page 160 of 333 U.S., at page 492 of 68 S.Ct., the Court said:

    "While the Courts of Common Pleas are
  denominated courts of record, their decisions are
  not published or digested in any form whatsoever.
  They are filed only in the counties in which the
  cases are tried, and even there the sole index is
  by the parties' names. Perhaps because these
  facts preclude ready availability to bench and
  bar, the Common Pleas decisions seem to be
  accorded little weight as precedents in South
  Carolina's own courts. * * * Thus a Common Pleas
  decision does not, so far as we have been
  informed, of itself evidence one of the `rules of
  decision commonly accepted and acted upon by the
  bar and inferior courts.' Furthermore, as we have
  but recently had occasion to remark, a federal
  court adjudicating a matter of state law in a
  diversity suit is, `in effect, only another court
  of the State'; it would be incongruous indeed to
  hold the federal court bound by a decision which
  would not be binding on any state court."

The statements made by the Supreme Court concerning the Courts of Common Pleas apply with equal force to the Circuit Courts of Arkansas. The fact that decisions of such courts are not binding upon the federal courts is certainly no reflection upon the ability of the Circuit Courts to interpret and apply the law of Arkansas, but is merely a necessary result of the fact that the decisions of the various Circuit Courts are not readily available to the bench and to the bar, and it would be practically impossible for judges and lawyers to search the records of each Circuit Court in an effort to ascertain the law of the State of Arkansas. The futility of such an effort is demonstrated by the fact that various Circuit Courts at times take opposing views as to particular questions of law and the decision of no one of these courts is binding upon the other. Therefore, while the Court believes that a decision of a Circuit Court of the State of Arkansas is persuasive of what the Arkansas law is, nevertheless such a decision is not binding upon this Court.

Thus, inasmuch as the Supreme Court of Arkansas has not passed upon the particular question herein considered, the duty devolves upon this Court to decide what the Arkansas law is and to apply that law to the facts appearing in the instant case. See, Meredith ...


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