service on the particular defendant was authorized by statute and when, under International Shoe, the propriety of jurisdiction was solely dependent upon the qualitative fairness of requiring the defendant to answer in the forum.
Cannon, however, did retain some marginal vitality in two situations one statutory and one constitutional. The Cannon rule and alter ego principles generally still applied in cases that raised the statutory issue of the sufficiency of the method of service under state or federal law namely, whether a particular statute authorized service on a given defendant. Thus, if a statute authorized service on "anyone who does business in the forum," satisfaction of the alter ego test was necessary to permit service, under the statute and Rule 4(e), Fed.R.Civ.P., on a non-resident who did business in the forum through an alter ego corporation. Alter ego principles might thus be an appropriate device to extend extraterritorial service to persons not specifically within the literal ambit of the statute or rule that authorized service.
Similarly, if a non-resident corporation was not personally served, but rather received service solely on its subsidiary in the forum, as in Cannon, then alter ego analysis was necessary to resolve the issue of the sufficiency of the manner of service. Alter ego principles essentially would permit treatment of two corporations as one. Domestic service on a subsidiary corporation in the forum would be sufficient, under Rule 4(d)(3) or (d)(7), Federal Rules of Civil Procedure, for service on the non-resident corporation. In neither statutory situation, however, would the Cannon doctrine or alter ego principles bear on the constitutional power of the state to authorize that service.
Cannon retained some modest constitutional vitality after International Shoe in only one limited context, but one that saw substantial usage in cases decided prior to Shaffer. The Court in International Shoe only rejected the necessity of a quantitative "presence" within the forum as a constitutional basis for jurisdiction. The Court did not expressly reject the territorial power theory as the foundation for state court jurisdiction. Thus, if a defendant "be not present within the territory of the forum," his amenability to suit in that forum became dependent upon the analysis of the due process considerations noted above. International Shoe therefore left open the alternative that domestic service on a non-resident physically present in the forum might alone be a sufficient basis for the constitutional exercise of jurisdiction over the non-resident, notwithstanding the balancing of interests enunciated in that opinion.
Thus, the constitutional exercise of jurisdiction over a non-resident could still be predicated on the presence of an alter ego in the forum as a sufficient, though no longer necessary basis for jurisdiction. Jurisdiction over the non-resident could justifiably be predicated on the court's jurisdiction over the domestic alter ego and the court's ability to impute to the non-resident the alter ego's physical presence in the forum. Jurisdiction could be invoked under this rationale by domestic service either on the alter ego or on its designated agent. Because of its imputed "presence" in the forum, the non-resident could be made to answer on any cause of action, whether or not related to the domestic alter ego corporation's activity in the forum. See International Harvester Co. v. Kentucky, supra.
At least one court acknowledged the disparity in standard between a non-resident corporation "present" in the forum for purposes of domestic service of process and a corporation with a sufficient "nexus" with the forum to render constitutional the court's exercise of jurisdiction over the non-resident once properly served. Szantay v. Beech Aircraft Corp., 237 F. Supp. 393, 403-04 (E.D.S.C.1965). After International Shoe, reliance on alter ego principles may have been statutorily necessary to authorize domestic service on a non-resident present in the forum, but reliance on alter ego principles to establish presence as a constitutional basis for jurisdiction over a non-resident was judicial overkill. See Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 420 n. 13 (9th Cir. 1977) (noting alter ego principles employed as an alternative ground to support jurisdiction under a quantitative "presence" analysis, in contrast with the minimum contacts approach employed when extraterritorial service was had on the non-resident itself). The availability of this alternative basis for jurisdiction persisted, however, until the Supreme Court decision in Shaffer.
With the decision in Shaffer, the Supreme Court thoroughly undermined the remaining constitutional value of Cannon. Shaffer emphatically announced that "all assertions of state court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny." Shaffer, supra, 433 U.S. at 212-13, 97 S. Ct. at 2584-85. The Court in that case indicated 433 U.S. at 213, 97 S. Ct. at 2585, n. 39:
"It would not be fruitful for us to reexamine the facts of cases decided on the rationales of Pennoyer and Harris ( V. Balk, 198 U.S. 215, 25 S. Ct. 625, 49 L. Ed. 1023) to determine whether jurisdiction might have been sustained under the standard we adopt today. To the extent that prior decisions are inconsistent with this standard, they are overruled." (Emphasis added.)