Intercontinental Leasing, Inc. v. Anderson
| Decision Date | 28 April 1969 |
| Docket Number | No. 79-68.,79-68. |
| Citation | 410 F.2d 303 |
| Parties | INTERCONTINENTAL LEASING, INC., Plaintiff-Appellee, v. Chester A. ANDERSON, M.D., et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Richard W. Stavely, Wichita, Kan., for plaintiff-appellee.
William L. Oliver, Jr., Wichita, Kan. (Jones & Givens, Tulsa, Okl., and Martin, Porter, Pringle, Schell & Fair, Wichita, Kan., on the brief) for defendants-appellants.
Before BREITENSTEIN, SETH and HICKEY, Circuit Judges.
In this diversity action tried to the court without a jury, the plaintiff-appellee Intercontinental Leasing, Inc., recovered a joint and several judgment against the defendants-appellants in the amount of $47,581. On the appeal the questions are the jurisdiction of the trial court under the Kansas long-arm statute, the rejection of the defenses of accord and satisfaction and estoppel, the imposition of joint and several liability, and two specific items of damages.
Intercontinental is a Kansas corporation which supplies oil-well equipment on a rental basis. The defendants are all members of a partnership known as Petro-Cap Oil and Gas Program 1964. The partnership acquired working interests in five Kansas oil and gas leases, and in May, 1965, rented equipment from Intercontinental for the operation of the leases. This suit was brought to recover unpaid rental.
The defendants are all citizens of states other than Kansas and were served under the Kansas long-arm statute. Section 60-308(b) of the Kansas Code of Civil Procedure, K.S.A. 60-308(b), provides that a nonresident, who in person or through an agent or an instrumentality transacts any business within the state, submits himself to the jurisdiction of the Kansas courts.1
The partnership agreement says that it is made under "Chapter 323, Minnesota Statutes Annotated, as amended and supplemented, and the rights and liabilities of the Partners herein shall be as provided in that Act except as herein otherwise expressly stated and provided."2 M.S.A. § 323.08 provides so far as material:
"Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership * * *."
The partnership agreement makes defendant Petro-Cap, Inc., the managing partner with "exclusive and sole management and control of the business" of the partnership. The remaining defendants, over 100 individuals, are investing partners who contributed to the capital of the partnership by purchasing units at a price of $5,000 each. The investing partners do not "participate" in the control of the partnership business but have certain rights including voting, inspection of records, information affecting the operations, and accounting.
The partnership was registered with the Securities and Exchange Commission and filed with it a prospectus covering the sale of units. The prospectus stated that:
"As partners, the investors may be liable either jointly, or jointly and severally, for sums in excess of the $5000 per unit originally subscribed."
The prospectus states that the subscriptions will be used to acquire interests "in proven, semi-proven and wildcat oil and gas leases" and that the operations will be carried on in Kansas and other states.
The Kansas long-arm statute applies if a defendant, either in person or through an agent or an instrumentality, has transacted any business in the state and the cause of action which is the basis for the suit arises from such transaction. Wilshire Oil Company of Texas v. Riffe, 10 Cir., 409 F.2d 1277, and National Bank of America at Salina v. Calhoun, D.Kan., 253 F.Supp. 346, 349. The investing partners argue that they transacted no Kansas business because the articles of partnership limit their power to participate in the control and management of the business. They point out that the articles provide that M.S.A., Chapter 323, controls the rights and liabilities of the partners "except as herein otherwise expressly stated and provided." The argument is unpersuasive because the articles do not limit or restrict the authority and power of Petro-Cap to act as agent of the partnership. M.S.A. § 323.08, provides that "every partner is an agent of the partnership for the purpose of its business."
The articles of partnership provide that the managing partner or its designee may hold title to partnership property and, in its discretion, may lease equipment needed for partnership operations. Petro-Cap, the managing partner, took the Kansas oil and gas leases in its own name. Also, it rented the equipment from Intercontinental in its own name. Petro-Cap in its answer admitted that it transacted business in Kansas.
Petro-Cap furnished to Intercontinental a copy of the prospectus which included as an appendix a copy of the articles of partnership. The credit committee of Intercontinental approved the rental application on the condition that the participants in the partnership were jointly and severally liable. Petro-Cap furnished to Intercontinental a list of the Petro-Cap stockholders who were identified as some of the investors in the partnership. The general manager of Intercontinental testified that in making the rental it relied on the credit of the investing partners.
In acquiring the leases and renting the equipment, Petro-Cap acted as agent for the partnership and within the scope of its authority. Its actions were in furtherance of the normal business of the partnership and bound the partnership. The activities of the partnership in Kansas satisfy the minimum-contacts test. See Curtis Publishing Company v. Cassel, 10 Cir., 302 F.2d 132, 136-138. The Kansas long-arm statute applies when a defendant "in person or through an agent or instrumentality" transacts business in the state. Through the instrumentality of the partnership,...
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...( Morgan Guar., supra, 1990 WL 209297, at *2, 1990 U.S. Dist. LEXIS 17048, at pp. 6-7.) In Intercontinental Leasing, Inc. v. Anderson (10th Cir.1969) 410 F.2d 303 ( Intercontinental Leasing ), a partnership formed under the laws of Minnesota acquired working interests in five Kansas oil and......
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