343 F.2d 187 (8th Cir. 1965), 17587, Aftanase v. Economy Baler Co.

Docket Nº:17587.
Citation:343 F.2d 187
Party Name:Artuur H. AFTANASE, Appellant, v. ECONOMY BALER COMPANY, a corporation, Appellee.
Case Date:April 02, 1965
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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343 F.2d 187 (8th Cir. 1965)

Artuur H. AFTANASE, Appellant,


ECONOMY BALER COMPANY, a corporation, Appellee.

No. 17587.

United States Court of Appeals, Eighth Circuit.

April 2, 1965

Page 188

O. C. Adamson, II, of Meagher, Geer, Markham & Anderson, Minneapolis, Minn., Mary Jeanne Coyne, of Meagher, Geer, Markham & Anderson, Minneapolis, Minn., for appellant.

Wright W. Brooks, of Faegre & Benson, Minneapolis, Minn., Faegre & Benson and Paul J. McGough, Minneapolis, Minn., for appellee.


BLACKMUN, Circuit Judge.

We are confronted here with the old and familiar problem of an alleged interstate tort and claimed in personam jurisdiction, by substituted service, over a foreign corporation.

Arthur H. Aftanase, a Minnesota resident and an employee of Eastern Supply Company, was injured in Minneapolis in January 1962 while at work at his employer's scrap metal baling machine. He instituted this diversity suit in the District of Minnesota against Economy Baler Company, the manufacturer of the baler. He would rest liability on breach of implied warranty and on negligence in design and in failure to provide proper safety devices, suitable guards, and adequate warnings.

Service was purportedly effected, first, upon D. W. Stewart, an alleged agent of the defendant in Minnesota, and, next, upon the Secretary of State of Minnesota under the State's 'single-act' statute, M.S.A. § 303.13, Subdivision 1(3), 1

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and Rule 4(d)(3) and (7), Fed.R.Civ.P. Economy's motion to quash both services was granted and the action was dismissed. Aftanase appeals.

The facts, so far as the present posture of the case is concerned, are not in dispute:

Defendant Economy is a Michigan corporation. It has its principal place of business in Ann Arbor in that state. It manufactures baling equipment there. It has no office, warehouse space, or employee in Minnesota. It has never appointed a Minnesota agent for service of process and has never qualified to do business in Minnesota.

For some years, however, Economy has sold balers to Minnesota residents upon orders solicited by independent Minnesota salesmen working on commission. Each order is subject to approval by the home office. A sale is f.o.b. Ann Arbor. Installation of a baler is handled by the buyer and not by Economy. Economy sells replacement parts for its balers to Minnesota residents. It also sends brochures and parts lists into the state.

The plaintiff's employer Eastern purchased its baler in 1953. Stewart, who is one of the independent salesmen soliciting orders for Economy (but who is not the one who effected the sale to Eastern in 1953), reported the Aftanase accident to Economy.

The trial court ruled that the Minnesota statute was not inapplicable merely because Eastern's baler had been purchased before the enactment of the Minnesota statute; that, although certain Minnesota federal district court cases are at variance with decisions of the Supreme Court of Minnesota, 'the issue is a federal one'; that Economy's contracts with Minnesota 'were so minimal as not to justify the application' of the statute; and that the maintenance of the action would offend the standard of 'traditional notions of fair play and substantial justice' prescribed by International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).

We observe initially:

a. The plaintiff has now withdrawn his claim that the purported service upon salesman Stewart resulted in jurisdiction over the defendant. Instead, he stands on the statute alone.

b. No question is raised as to compliance with the procedural provisions of the Minnesota statute or as to the adequacy of notice to the defendant thereunder.

c. The factual situation here is one where the defendant Economy manufactures its balers in Michigan; where the order for this baler, as for others over the years, was solicited and taken in Minnesota by an independent salesman and then was submitted to Economy in Michigan and accepted there; where Economy shipped the baler f.o.b. Michigan direct to the purchaser; where Economy's tortious act, if there was one, took place in Michigan; and where the plaintiff's injury was sustained in Minnesota.

d. We thus may not be confronted, factually, with a strict 'single-act' situation such as where an isolated offending product is the only contact between the defendant and the forum state. And we thus are not propelled into the very center of the controversial area of pure single act interstate situations where courts, on the constitutional issue, appear still to reach varying results. Compare, for example, despite their factual variances, S. Howes Co. v. W. P. Milling Co., Okl., 277 P.2d 655 (1954), and Wisconsin Metal & Chem. Corp. v. De Zurik Corp., 222 F.Supp. 119 (E.D.Wis.1963), with Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502 (4 Cir. 1956), Chassis-Trak, Inc. v. Federated Purchaser, Inc., 179 F.Supp. 780 (D.N.J.1960), Morgan v. Heckle, 171 F.Supp. 482 (E.D.Ill.1959), and Tyee Constr. Co. v. Dulien Steel Prod. Inc., 62 Wash.2d 106, 381 P.2d 245 (1963). The fact that we are concerned with what is called a single-act statute does not make the present case a single-act case.

This court has already observed and held, and recently, that whether

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due process requirements have been met, so far as jurisdiction in a diversity case over a foreign corporation is concerned, is a question of federal law; that the 'more recent federal cases have greatly relaxed the due process limitations on personal jurisdiction'; that if a foreign corporation's business activity in a state is sufficiently extensive by federal standards it is amenable to suit there so far as federal law is concerned, and even upon a cause of action arising outside the state; that the state, however, may impose limitations, beyond those of due process, upon a foreign corporation's amenability to suit in her courts; and that a federal court sitting in a state should observe these further limitations whether the case be one instituted in the federal court or one removed from a state court. Jennings v. McCall Corp., 320 F.2d 64, 67 (8 Cir. 1963); Simpkins v. Council Mfg. Corp., 332 F.2d 733 (8 Cir. 1964); Ark-La Feed & Fertilizer Co. v. Marco Chem. Co., 292 F.2d 197 (8 Cir. 1961). Compare the dissent in Arrowsmith v. United Press International, 320 F.2d 219, 234 (2 Cir. 1963).

It would seem to follow that out task here is to determine (a) whether the Minnesota statute, because of its enactment subsequent to Eastern's purchase of the baler, has application to this case in the first place; (b) what Minnesota has established as the limits of its jurisdiction over foreign corporations under its statute; and (c), if these limitations do not exclude the present suit, whether its inclusion complies with due process under the Fourteenth Amendment. Pulson v. American Rolling Mill Co., 170 F.2d 193, 194 (1 Cir. 1948); Ark-La Feed & Fertilizer Co. v. Marco Chem. Co., supra, p. 201 of 292 F.2d.

1. The statute's application. Economy's argument here appears to be twofold, first, that the statute on its face, because it speaks in the present tense ('if such foreign corporation commits a tort * * * such acts shall be deemed * * *'), points only to future action and was not intended by the legislature to apply to prior tortious conduct, and, second, that the statute is unconstitutional if it is employed with respect to past actions, for it then changes the legal effect of those actions.

As has already been noted, the baler was sold by Economy to Eastern in 1953. The statute was born in 1957. The plaintiff's injury was in 1962. The mere statement of this chronology should provide the answer to Economy's argument. Economy's negligence, if there was any, existed at the time of manufacture and sale in 1953. But any effect of that negligence upon the plaintiff took place in 1962. Certainly it was then, not before, that his cause of action accrued. And at that time the statute was in existence. This is not retroactive application. It is prospective application, is within the language of the statute, and invokes no problem of retroactivity.

This view of the statute is clearly supported by Beck v. Spindler, 256 Minn. 543, 556-557, 99 N.W.2d 670, 679 (1959). A conditional sale contract was executed in 1956, prior to the statute. Attempts were made after the statute to correct defects in the product. The court held, in response to the retroactivity argument, that the cause of action accrued when there was a failure on the part of the seller to perform and that this was after the statute when it became apparent that the defects would not be corrected. 'Under these circumstances, it cannot be said to have been given retroactive effect here'.

McGee v. International Life Ins. Co., 355 U.S. 220, at 224, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), reveals the attitude of the Supreme Court toward a comparable contract situation under a California statute.

Economy's reliance on State ex rel. Clay Equipment Corp. v. Hensen, 363 S.W.2d 666, 669-672 (Mo.Sup.1963), is misplaced. That case concerned an injury inflicted prior to the passage of the Missouri statute and, in addition, pivoted on a provision of the Missouri Constitution. Cf. Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673 (1957); Hellriegel v. Sears Roebuck & Co., 157 F.Supp. 718, 719-720 (N.D.Ill.1957) ;

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and Cedar Rapids Community School Dist. v. R.F. Ball Constr. Co., 237 F.Supp. 965 (N.D.Iowa 1965). That situation is obviously different from the present one where the plaintiff's injury was received after the Minnesota statute was adopted.

We therefore agree with the district court's conclusion that the statute has application here and, as so applied, does not have improper retroactive effect.

2. Jurisdiction asserted by Minnesota, as delineated by...

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