Jennings v. McCall Corporation

Decision Date28 June 1963
Docket NumberNo. 17271.,17271.
PartiesBertha JENNINGS, Appellant, v. McCALL CORPORATION, Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Larry L. McMullen, Kansas City, Mo., made oral argument for the appellant and William H. Sanders, Dean F. Arnold of Caldwell, Blackwell, Sanders & Matheny, Kansas City, Mo., together with Robert E. Seiler, of Seiler, Blanchard & Van Fleet, Joplin, Mo., were with him on the brief.

James F. Duncan, Kansas City, Mo., made oral argument for the appellee and Carl E. Enggas, of Watson, Ess, Marshall & Enggas, Kansas City, Mo., were with him on the brief.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and YOUNG, District Judge.

VAN OOSTERHOUT, Circuit Judge.

Plaintiff Bertha Jennings appeals from final judgment quashing service and dismissing her complaint against the defendant McCall Corporation for want of jurisdiction. The question raised by motion in the trial court and urged here is the jurisdiction of the trial court to entertain the action, that is, (1) whether McCall, a foreign corporation, is amenable to a suit based upon diversity of citizenship in a federal court sitting in Missouri, and (2) if so, whether McCall was properly served. The motion also urged that venue, pursuant to 28 U.S.C.A. § 1391 (c), was not proper. Such issue was not reached or passed upon by the trial court and because of the view we take on the jurisdiction issue we do not reach the venue problem.

The factual background is to be found in the complaint, the motion to dismiss and supporting affidavits, interrogatories and answers thereto, and other affidavits filed by the plaintiff.

McCall is a Delaware corporation engaged in the publishing business. Its principal business is the publication of McCall and Redbook Magazines. It is also engaged in the design, manufacture and sale of dress patterns. McCall is not licensed to do business in Missouri and has no executive office, manufacturing plant, warehouse, or retail or wholesale establishment in Missouri.

McCall maintains a rented office in Missouri for supervision and solicitation of magazine subscriptions over an eight-state area, including Missouri. Three Missouri residents are employed in such office. They supervise the activity of twenty-one salesmen employed to solicit subscriptions on a commission basis. The subscription business in Missouri amounted to $1,051,000 in 1961. All subscriptions solicited in Missouri are sent to New York for acceptance or rejection.

McCall's pattern receipts in Missouri in 1961 amounted to $290,400. Mr. Bleuher is the only person in the pattern division who engages in activities in Missouri. His territory also includes three other states. He is a salesman who attempts to secure new retail accounts that will carry McCall patterns. He also calls on existing accounts to suggest ways of improving pattern sales. Mr. Bleuher is not vested with discretion in establishing prices, terms, or conditions of contracts or orders and any contracts entered into or orders taken are subject to company approval outside the state.

During 1959, '60 and '61, in cooperation with non-owned Missouri stores, McCall participated in 61 style shows featuring McCall's patterns. McCall furnished a style commentator for such shows and in some instances furnished garments and printed programs. The sponsoring store furnished the space and the live models. McCall also provided personnel to conduct educational programs for high school teachers and students relating to styles, dressmaking, and the like.

In 1961, some $35,000 was spent in radio, TV and newspaper advertising in Missouri. McCall is listed in the Kansas City business directory and in the Kansas City phone directory, including the yellow pages thereof.

Plaintiff in her complaint asserts that McCall has wrongfully appropriated a novel method which she developed for transferring patterns onto dress material. She alleges that such appropriation constituted a breach of contract and unjust enrichment, and claims damages of $500,000.

The basis here asserted for McCall's amenability to suit is that McCall is "doing business" in the state of Missouri. The trial court in its memorandum opinion (not reported) observed that McCall's business activity in Missouri is extensive, and among other things said: "I think there would not be the slightest doubt but that if a controversy arose between the defendant and one of its advertisers or subscribers in Missouri involving a transaction that originated or took place in Missouri, that defendant would be amenable to suit here." See Wooster v. Trimont Mfg. Co., 356 Mo. 682, 203 S.W.2d 411.

The trial court found, however, that plaintiff's cause of action did not arise out of any business conducted by the defendant in the State of Missouri, but "it pertained, according to the petition, her affidavit and that of the defendant, to a phase of its business that was entirely in the state of New York." Such finding is fully supported by the record.1 The trial court emphasized that plaintiff's cause of action is unlike that in Wooster v. Trimont Mfg. Co., supra, since it did not arise out of a Missouri transaction. The court's opinion concludes as follows:

"It is also my conclusion, in view of the pleadings, affidavits and answers to interrogatories, that insofar as the relationship between the plaintiff and defendant is concerned, it was not doing business within-the State of Missouri, and was not subject to process within this state."

The question of whether a foreign corporation is doing business within a state is usually one of fact. Findings of fact by the trial court will not be upset unless they are without substantial evidentiary support or are induced by an erroneous view of the law.

Neither party seriously contends that jurisdiction is precluded in this case by federal due process requirements. Determination of whether the due process requirements are met is, of course, a question of federal law. The more recent federal cases have greatly relaxed the due process limitations on personal jurisdiction. McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. Compare McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 343, 61 L. Ed. 608; Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. If a foreign corporation's business activity in a state is sufficiently extensive by federal standards, such corporation is amenable to suit in that state (as far as federal law is concerned), even upon a cause of action arising outside of the state. Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 446-447, 72 S.Ct. 413, 96 L.Ed. 485; Vilter Mfg. Co. v. Rolaff, 8 Cir., 110 F.2d 491, 497. McCall's contacts with the state here are clearly sufficient to meet due process tests.

Plaintiff-appellant urges that once federal standards are met nothing else is required. She contends that (1) federal law controls on the issue of amenability to suit in a federal court sitting in diversity, and alternatively, (2) even if state law controlled, Missouri has adopted the liberalized federal standards. We do not agree with either contention. We hold, as hereinafter set out in greater detail, (1) that it is Missouri's prerogative to impose further limitations, beyond those of due process, upon a foreign corporation's amenability to suit in her courts; (2) that a Missouri federal court exercising diversity jurisdiction should observe such further limitations; and (3) that the trial court did not misinterpret or misapply the Missouri law in this case.

I.

If minimum federal due process standards are met, state law is controlling upon what constitutes doing business for the purpose of conferring personal jurisdiction in the state courts. Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 440-446, 72 S.Ct. 413, 96 L.Ed. 485; Ark-La Feed & Fertilizer Co. v. Marco Chem. Co., 8 Cir., 292 F.2d 197, 200; Pulson v. American Rolling Mill Co., 1 Cir., 170 F.2d 193, 194.

In Perkins v. Benguet Consol. Min. Co., supra, suit was brought in personam in the Ohio state court against a foreign corporation upon a cause of action arising out of the corporation's activities outside the state. The Ohio courts had dismissed the complaint for lack of jurisdiction. The Supreme Court determined that the corporation's contacts with the state were sufficient to meet due process requirements, but reversed and remanded because it found it to be unclear whether the dismissal was based upon federal due process standards or state standards. The Court, in the course of its opinion, states:

"The suggestion that federal due process compels the State to open its courts to such a case has no substance.
"`Provisions for making foreign corporations subject to service in the State is a matter of legislative discretion, and a failure to provide for such service is not a denial of due process. Still less is it incumbent upon a State in furnishing such process to make the jurisdiction over the foreign corporation wide enough to include the adjudication of transitory actions not arising in the State.\' Missouri P. R. Co. v. Clarendon Co., 257 U.S. 533, 535 42 S.Ct. 210, 66 L.Ed. 354.
* * * * * *
"Consideration of the circumstances which, under the law of Ohio, ultimately will determine whether the courts of that State will choose to take jurisdiction over the corporation is reserved for the courts of that State. Without reaching that issue of state policy, we conclude that, under the circumstances above recited, it would not violate federal due process for Ohio either to take or decline jurisdiction of the corporation in this proceeding." 342 U.S. at 440, 448, 72 S.Ct. at 415-416, 419-420, 96 L.Ed. 485.

In Ark-La Feed & Fertilizer Co. v. Marco Chem. Co., supra, this court was presented with a problem very similar to that here presented. We discussed the due process jurisdiction as set forth in International...

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