IN-FLIGHT DEVICES CORPORATION v. Van Dusen Air, Inc.

• Citation: 466 F.2d 220
• Decision Date: 10 August 1972
• Docket Number: No. 71-1948.,71-1948.
• Parties: IN-FLIGHT DEVICES CORPORATION, Plaintiff-Appellant, v. VAN DUSEN AIR, INCORPORATED, etc., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

466 F.2d 220 (1972)

IN-FLIGHT DEVICES CORPORATION, Plaintiff-Appellant, v. VAN DUSEN AIR, INCORPORATED, etc., Defendant-Appellee.

No. 71-1948.

United States Court of Appeals, Sixth Circuit.

August 10, 1972.

COPYRIGHT MATERIAL OMITTED

Robert J. Sidman, Mayer, Tingley, Hurd & Emens, Columbus, Ohio, for plaintiff-appellant; Dwight I. Hurd, Columbus, Ohio, on brief.

James S. Monahan, Porter, Stanley, Treffinger & Platt, Columbus, Ohio, for defendant-appellee.

Before PHILLIPS, Chief Judge, CELEBREZZE, Circuit Judge, and McALLISTER, Senior Circuit Judge.

CELEBREZZE, Circuit Judge.

In March 1971, In-Flight Devices, Inc. brought suit against Van Dusen Air, Inc. in the United States District Court for the Southern District of Ohio. In-Flight's complaint set forth claims of breach of contract and damage to business reputation assertedly resulting from Defendant's conduct.

In-Flight is incorporated under the laws of, and has its principal place of business in, Ohio. Van Dusen is incorporated under the laws of Minnesota and has its principal place of business within that State. Jurisdiction over the subject matter of the action properly was predicated upon diversity of citizenship, 28 U.S.C. § 1332. Service of process upon Defendant was made by certified mail sent to, and received, at Defendant's Minneapolis headquarters.

In the District Court Van Dusen moved to dismiss the action on the ground that the Court lacked personal jurisdiction over it. After considering affidavits and briefs filed by the parties, the District Court granted Defendant's motion and dismissed the case. This appeal followed.

The factual pattern giving rise to the present jurisdictional dispute is not a complicated one, although unresolved questions of fact do exist.

In-Flight Devices is a manufacturer of airplane parts. Its offices and plant are located in Columbus, Ohio. Van Dusen Air, Inc. is a distributor of airplane parts with headquarters in Minneapolis, Minn. and a purchasing operation centralized in St. Louis, Mo. Through a network of wholly owned subsidiaries Van Dusen sells airplane parts throughout the country. Van Dusen, is not licensed to do business in Ohio, nor does it have a resident agent within that State. It does, however, control a wholly owned subsidiary known as Van Dusen Aircrafts Supplies, Ohio Div., Inc. hereinafter referred to as "the Ohio subsidiary" which is a corporation organized under the laws of the State of Ohio and having as its principal place of business, Vandalia, Ohio. The Ohio subsidiary is one of the links in the Van Dusen Distribution chain, purchasing parts from the parent corporation and reselling the parts to retail dealers.

In May, 1970 Van Dusen and In-Flight began negotiations directed toward Van Dusen's purchase of 1000 aircraft "transponders" at a total purchase price in excess of $200,000.00. On May 6th of that year the president and several other officers of In-Flight flew to Minneapolis where they discussed the proposed deal with Van Dusen Air's president. Later that same day the In-Flight officers flew to St. Louis, Mo. where they had further discussions with Van Dusen's Vice-President in charge of purchasing, Paul J. Bingaman. At the conclusion of these talks, Bingaman gave the In-Flight officers a hand drawn purchase order for the transponders.

Still later on that same day, however, the In-Flight officers were asked to meet with F. J. Modz, Regional Manager of Van Dusen Aircraft Supplies, Midwestern Division (another Van Dusen subsidiary with a main office in Chicago, Ill.). The meeting with Modz took place in Vandalia, Ohio—a city in which Van Dusen's Ohio subsidiary had its offices.

There is considerable dispute between the parties as to precisely what occurred at this Vandalia meeting.¹ Plaintiff-Appellant maintains that Frank Modz was a member of the "Central Purchasing Committee" of Van Dusen and that Modz' approval of the contract terms was a prerequisite to the final acceptance of those terms by Van Dusen. It is asserted that Modz, in fact, did not agree to the terms as presented and secured a further 10% discount for his Company at the meeting held on the evening of the 6th.

Defendants-Appellees deny Modz had any power to approve or disapprove the contract terms worked out in St. Louis. They acknowledged that Modz discussed the 10% cash discount with the In-Flight representatives, but assert that Modz was simply discussing "his understanding of Van Dusen policy which was to attempt to obtain an additional 10% discount on subsequent orders of new lines of equipment. . . ." Van Dusen asserts that the 10% discount which did appear in the final typed purchase order issued in July was agreed to in Minneapolis before the Modz meeting although it was not written into the handwritten purchase order which emerged from the St. Louis and Minneapolis sessions.

While considerable uncertainty exists on the question of whether or not the May 6th meeting with Modz in Vandalia, Ohio, represented a negotiating session, it is undisputed that plans for the delivery of the Starlight transponders involved in the present suit and detailed discussion of operational features of such transponders took place at the Ohio meeting.²

After the May 6th meetings performance on the contract was begun at In-Flight's Columbus, Ohio plant. Eventually, In-Flight began to ship transponders from its Columbus factory (F.O.B. Columbus) to Van Dusen's St. Louis purchasing center. Occasional rush orders were sent directly to the Van Dusen subsidiaries involved in the actual sale of the transponders to retailers. One such delivery was made to the Ohio subsidiary located in Vandalia, Ohio.

On January 12, 1971, Van Dusen issued a check drawn upon a Minnesota bank as partial payment for its transponder order. Three days later it stopped payment on the check, alleging that the merchandise delivered to it was unsatisfactory. In-Flight claims that it had used the check to cover several of its outstanding bills and that the subsequent stop payment order resulted in considerable commercial embarrassment. Its suit sought recovery for both breach of contract and damage to business reputation.

It is settled law in this Circuit that a federal court sitting on a diversity matter must look to the law of the forum state to determine the extent of its in personam jurisdiction. Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 376 n. 2 (6th Cir. 1968); Velandra v. Regie Nationale Des Usines Renault, 336 F.2d 292 (6th Cir. 1964); Smartt v. Coca-Cola Bottling Corp., 318 F.2d 447 (6th Cir. 1963).³ Plaintiff-Appellant asserts that Ohio law provides for jurisdiction over Van Dusen under the circumstances of this case under Ohio Revised Code § 2307.382.⁴ It also asserts that the exercise of such jurisdiction over Van Dusen is consistent with the due process clause of the Constitution. We now examine the accuracy of these assertions.

Although the Ohio act has not been construed authoritatively by the courts of that State, we are not without guidance as we seek to ferret out the meaning of the legislation. The statute substantially parallels Section 1.03 of the Uniform Interstate and International Procedure Act, which in turn is composed in part of statutory provisions previously adopted in other states.⁵ See, Comment to § 1.03, "A Uniform Interstate and International Procedure Act," in Handbook of the National Conference of Commissioners of Uniform State Laws (1962), p. 219 et seq. hereinafter cited as, Uniform Act Comments, Handbook. As the Comments to the Uniform Act (written long before the adoption of the Ohio act) make clear, the various bases for jurisdiction set forth in the statute exist independent of one another and must be separately considered.⁶

Appellants have relied on Subsection (A) (1)—the transacting any business subsection—as the principal basis for the District Court's assertion of jurisdiction in this case. Theoretically, we have to answer two separate questions with regard to this subsection: How far did the legislature intend the "transaction of any business" jurisdiction to extend? and (2) Is such extension consistent with due process? See Southern Machine Co. v. Mohasco, Industries, Inc., supra, 401 F.2d at 376. Here our real task is simpler since we can conclude that the Ohio legislature intended to extend the jurisdiction of its courts to the Constitutional limits with respect to subsection (A) (1). We come to this conclusion for a number of reasons. Most significant of these is the identity between this subsection and a provision of the Illinois Civil Practice Act,⁷ which has been held to extend jurisdiction to the limits of due process. The opinion in which this interpretation of the Illinois provision was set forth, Nelson v. Miller,⁸ was widely heralded as a decision of major import. Decided a number of years before the Ohio longarm statute was enacted, the significance of the construction could not have escaped the Ohio legislators during their deliberations. It is the settled rule in Ohio that when comparable legislation has been construed in other jurisdictions prior to the enactment of the Ohio statute, the interpretation put on the law elsewhere is to be given great weight in construing the Ohio Statute. Schneider v. Laffoon, 4 Ohio St.2d 89, 212 N.E.2d 801 (1965). Applying this rule we find ample reason to believe that in adopting a provision construed to extend jurisdiction to the Constitutional limits the Ohio legislature intended to achieve an identical result.

Our belief in the accuracy of this evaluation of legislative intent is reinforced by the fact that other courts which have passed on the question have come to the same conclusion. Seilon, Inc. v. Brema S.p.A., 271 F.Supp. 516, 518-519 (N.D.Ohio, 1967); Didactics Corp. v. Welch Scientific Co., 291 F.Supp. 890 (N.D.Ohio, 1968).

Given this understanding of the broad scope of Subsection (A) (1) of the Ohio long-arm statut...