Delray Beach Aviation Corp. v. Mooney Aircraft, Inc., 20878.

• Decision Date: 05 June 1964
• Docket Number: No. 20878.,20878.
• Citation: 332 F.2d 135
• Parties: DELRAY BEACH AVIATION CORPORATION and Bert Boldt, Appellants, v. MOONEY AIRCRAFT, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

332 F.2d 135 (1964)

DELRAY BEACH AVIATION CORPORATION and Bert Boldt, Appellants, v. MOONEY AIRCRAFT, INC., Appellee.

No. 20878.

United States Court of Appeals Fifth Circuit.

May 6, 1964.

Rehearing Denied June 5, 1964.

Preston H. Dial, Jr., Robert B. Thornton, San Antonio, Tex., for appellants.

Hal Rachal, Midland, Tex., Joseph F. Leonard, Jr., Kerrville, Tex., for appellee.

Before HUTCHESON and BROWN, Circuit Judges, and CHRISTENBERRY, District Judge.

JOHN R. BROWN, Circuit Judge.

The question in this case is whether the Florida Long Arm service of process statute reaches as far as Texas. The District Judge, in a suit brought on a Florida State Court default judgment, answered in the negative. Picking our way as best we can on this Erie trail, cf. United Services Life Ins. Co. v. Delaney, Paul Revere Life Ins. Co. v. First Nat'l Bank, 5 Cir., en banc, 1964, 328 F.2d 483 (concurring opinion), we conclude that as Florida construes its Act, the operations of defendant-appellee were within the reach of the statute. And consideration of these same factors demonstrates that for the limited federal due process inquiry, no constitutional obstacle exists. We therefore reverse.

The State Court suit was brought by a purchaser¹ against Mooney Aircraft,² the manufacturer of the Texas-built Mooney Mark 20A. Sought were damages for the total loss of the plane when it crashed in Florida allegedly due to faulty manufacture. Delray had purchased the plane from Metropolitan³ in the regular course of Metropolitan's operations as the distributor for Mooney Aircraft in this particular area. Metropolitan had earlier acquired the plane from Mooney Aircraft. Utterly irrelevant to our problem is Mooney Aircraft's insistence — which we may credit arguendo — that this sale was made in Texas, where title passed, not in Florida. The significant fact is that it was sold to Metropolitan, as a distributor, for its use or resale within the geographical limits of the distribution area. Consequently, one of the some-time obstacles is not present here. We have a Florida suit asserting a cause of action at least coming into being in Florida and closely related to the very activities giving rise to the designation by Mooney Aircraft of a Florida representative — the sale of Mooney planes in Florida.⁴

The Florida arm is not only long. It is strong, and its sinews were strengthened by the legislative reflex to court decisions. In 1951 Florida enacted § 47.16, subsection (1), F.S.A.⁵ This Act like others in Arkansas, Illinois, Maryland, Minnesota, Vermont, Washington, and Wisconsin⁶ reflects a purpose to reach as far as the Federal Constitution permits. The indications are that when the Second Circuit found this statute inadequate to sustain an earlier Florida State Court judgment, Berkman v. Ann Lewis Shops, Inc., 2 Cir., 1957, 246 F.2d 44, affirming S.D.N.Y., 1956, 142 F.Supp. 417, Florida responded to the Court's suggestion that "this is not to say that a statute might not constitutionally be drawn which would make the presence in a state of a wholly-owned subsidiary of a foreign corporation sufficient basis to assert jurisdiction over the parent company."⁷ See 142 F.Supp. 417, at 422. It did this⁸ by adding Subsection (2) to § 47.16, note 5, supra so as to encompass distributors, jobbers, wholesalers, and brokers for foreign corporations.⁹ And the muscles were beefed up by the legislative declaration of policy stated in emphatic terms.¹⁰

Although the cases do speak in terms of the one invoking substituted service having the "burden of presenting a situation that clearly justifies its application," since the "statute must be strictly construed," Fawcett Publications, Inc. v. Rand, Fla.Dist.Ct.App., 1962, 144 So.2d 512, 514, the Florida decisions — many of them prior to the sweeping amendment of 1957 — have given a very liberal application in actual practice to § 47.16.¹¹ And none represents a retreat from the legislative objective. The requirement that one invoking the provisions of § 47.16(2) "has the burden of presenting a situation that clearly justifies its application," 144 So.2d 512, 514, is no judicial contraction. It is primarily the prescription of a sound administrative practice. Florida Courts are rightly conscious that there are limits. They are aware that, as recently put by Judge Jones for this Court, "Hanson v. Denckla¹² * * * teaches that, although the door of non-resident jurisdiction has been opened wider by International Shoe and McGee, it has not been removed from its hinges." Dooly v. Payne, 5 Cir., 1964, 326 F.2d 941, 943. The result is that some party has the obligation of bringing forward the relevant information sufficient to satisfy the due-process and local statutory requirements. Florida puts it squarely on the one invoking the process.

Nor is any such restrictive approach to be found in the dual substantive standard set forth in Fawcett Publications, Inc. v. Rand, Fla.Dist.Ct.App., 1962, 144 So.2d 512, just discussed, supra, and other similar cases, Fawcett Publications, Inc. v. Brown, Fla.Dist.Ct.App., 1962, 146 So.2d 899; Jenkins v. Fawcett Publications, Inc., D.C.Fla., 1962, 204 F.Supp. 361. Giving substantive content to the procedural burden discussed above, the Court in the Rand case requires that the one invoking the process must demonstrate either "(1) that the foreign corporation has some degree of control over the personal property referred to in § 47.16(2), supra, in the hands of the `brokers, jobbers, wholesalers or distributors' selling or distributing the personal property in this State or (2) that the foreign corporation has some degree of control over the `brokers, jobbers, wholesalers or distributors' selling or distributing the personal property in this State." 144 So.2d 512, 514.

In the recent decision in Deere & Co. v. Watts, Fla.Dist.Ct.App., 1963, 148 So.2d 529, the same Court of Appeals deciding Rand sustained service on the non-resident parent by service on the local subsidiary. The action of the subsidiary in Florida was substantially that of a jobber or distributor, and element (2) of Rand was satisfied by evidence showing "the extent of the subsidiary's activities within" Florida and, more important for our situation, "the degree of control which the appellant nonresident parent was capable of exercising over the operations and policies of the subsidiary." (Emphasis added.) The result could not have been surprising since the Court "felt impelled to give full effect to the legislative intent apparent in § 47.16(2)." 148 So.2d 529, 531.

The evidence overwhelmingly demonstrates that Mooney Aircraft had the requisite control over Metropolitan, its distributor. There were two simultaneously executed agreements, the "Distribution and Sales Agreement" and the "Service Agreement." The "Distribution and Sales Agreement" appears to be the master agreement since in § II Par. 2, the distributor is required to "Maintain service facilities in accordance with the terms of the accompanying Service Agreement." The Agreements bound Mooney Aircraft to sell its airplanes to the distributor at wholesale prices, to supply advertising and promotional material and sales aids, to maintain a service department, to maintain a stock of repair parts and a staff of service representatives available to the distributor for personnel training and consultation, to train distributor servicemen at the Texas factory and furnish signs showing a distributor to be an "Official Mooney Service Center" when any of its servicemen had been certificated by Mooney Aircraft and finally, to refrain from appointing any other distributors within the assigned territory.¹³

The Agreements likewise imposed heavy obligations, both express and implied, on the Distributor. Many of these obligations were stated in quantitative or qualitative terms which necessarily implied appraisal of their sufficiency by Mooney Aircraft, Inc.¹⁴

The overriding purpose of the Agreements was to stimulate the sales and service of airplanes manufactured and sold by Mooney Aircraft. The distributor was required to "provide adequate sales facilities, maintain sales staff and cover intensively and consistently through sales solicitation, advertising and promotional activities, the distributor's territory." It was to be identified as a Mooney distributor by ownership of demonstrator aircraft and posting of adequate display signs. And sales were not limited to its own since the distributor was required to "solicit and appoint dealers and representatives within the assigned territory for the promotion of retail sales of new Mooney Aircraft." Virtually unlimited control was given to Mooney Aircraft over the distributor's performance since Mooney Aircraft could cancel for "breach of contract" by immediate written notice and without cause of any kind by thirty days' written notice prior to an anniversary date.

The evidence is also uncontradicted that this was no mere paper arrangement. A representative acting either for Mooney Aircraft, Inc. or its exclusive sales outlet, Mooney Sales Company, made frequent trips into the State of Florida for the purpose of service calls stimulating sales, and the like.¹⁵ And Mooney Aircraft held out to the world — at least the flying world — that its representative in Florida was Metropolitan Aircraft Corporation. In the February 1959 issue of Flying, modestly described as "The World's Most Widely Read Aviation Magazine," there was a double spread ad sounding the praises of Mooney's airplanes and its sales and service distributors and representatives.¹⁶

Mooney Aircraft, engaged in the manufacture of airplanes in Texas, but aware that its commercial success depended on the intensive sale of its airplanes throughout the nation, purposefully sought to enter and compete in the Florida market. With a choice of doing it by direct employees in a company branch, or through a traditional sales and service distributor, it...