Bendix Autolite v. Midwesco Enterprises, 486 U.S. 888 (1988)

Bendix Autolite Corp. v. Midwesco Enterprises, Inc.

No. 87-367

Argued March 23, 1988
Decided June 17, 1988
486 U.S. 888

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

Syllabus

In 1974, appellant, a Delaware corporation with its principal place of business in Ohio, and appellee, an Illinois corporation with its principal place of business in Illinois, entered into a contract for appellee’s delivery and installation of a boiler system at appellant’s Ohio facility. After a contract dispute arose, appellant filed this diversity action in the Northern District of Ohio in 1980. When appellee asserted the Ohio statute of limitations as a defense, appellant responded that the limitations period had not elapsed, because, under an Ohio statute, the running of the time is tolled for claims against corporations that are not present in the State and have not designated an agent for service of process. The District Court dismissed the action, finding that the Ohio tolling statute constituted an impermissible burden on interstate commerce in violation of the Commerce Clause. The Court of Appeals affirmed.

Held: The Ohio tolling statute violates the Commerce Clause, since it imposes an impermissible burden on interstate commerce. To gain the protection of the limitations period, appellee -- which has no corporate office in Ohio and is not registered to do business there -- would have had to appoint a resident agent for service of process in Ohio and subject itself to the Ohio courts’ general jurisdiction. Ohio’s statutory scheme thus forces a foreign corporation to choose between exposure to the general jurisdiction of Ohio courts or forfeiture of the limitations defense, remaining subject to suit in Ohio in perpetuity. Although statute of limitations defenses are not a fundamental right, they are an integral part of the legal system and are relied upon to project the liabilities of persons and corporations active in the commercial sphere. Such defenses may not be withdrawn from out-of-state persons or corporations on conditions repugnant to the Commerce Clause. The ability to execute service of process on foreign corporations is an important factor to consider in assessing the local interest in subjecting out-of-state entities to requirements more onerous than those imposed on domestic parties. However, Ohio cannot justify its tolling statute as a means of protecting its residents from corporations who become liable for acts done within the State but later withdraw from the jurisdiction, for the parties concede that the Ohio long-arm statute would have permitted service on appellee throughout the period of limitations. Moreover, the suggestion that appellee had the simple alternatives of designating an agent for service of process in its contract with appellant or tendering an agency appointment to the Ohio Secretary of State is not persuasive. Appellant’s argument that a finding that the Ohio statute is unconstitutional should be applied prospectively only, and not to the parties in this case, will not be considered by this Court, since the argument was not presented to the courts below. Pp. 891-895.

820 F.2d 186, affirmed.

KENNEDY, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and O’CONNOR, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment. REHNQUIST, C.J., filed a dissenting opinion.