Arkansas Poultry Coop., Inc. v. Red Barn System, Inc.

• Decision Date: 06 November 1972
• Docket Number: No. 72-1068.,72-1068.
• Citation: 468 F.2d 538
• Parties: ARKANSAS POULTRY COOPERATIVE, INC., Appellee, v. The RED BARN SYSTEM, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

468 F.2d 538 (1972)

ARKANSAS POULTRY COOPERATIVE, INC., Appellee, v. The RED BARN SYSTEM, INC., Appellant.

No. 72-1068.

United States Court of Appeals, Eighth Circuit.

Submitted September 12, 1972.

Decided November 6, 1972.

Joseph S. Levy, Kansas City, Mo., for appellant.

James M. Roy, Jr., Fayetteville, Ark., for appellee.

Before BRIGHT and STEPHENSON, Circuit Judges, and TALBOT SMITH,^* District Judge.

STEPHENSON, Circuit Judge.

This cause of action comes before us from the United States District Court for the Western District of Arkansas. Defendant-appellant (hereinafter "Red Barn") appeals from the trial court's entry of summary judgment, D.C., 335 F. Supp. 214, entered under date of December 28, 1971 in the amount of $17,566.66 bearing interest at six per cent (6%) per annum from May 21, 1968.

In keeping with the progeny of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), we are asked to decide whether Red Barn was "doing business" in Arkansas sufficient to warrant the assertion of in personam jurisdiction over the non-resident corporation by the federal district court. Our response is in the negative.

Plaintiff-appellee's (hereinafter "Arkansas Poultry") complaint prayed judgment based upon a letter of guarantee, ostensibly executed by Red Barn to guarantee the debt of the principal debtor, Ollie's Chicken, Inc., a Missouri corporation doing business in Kansas City, Missouri (Ollie's Chicken). Federal jurisdiction was invoked upon the allegation that there was a diversity of citizenship and that the amount in controversy exceeded $10,000.¹

Pursuant to the Arkansas "long-arm" statute, Ark.Stat.Ann. § 27-2502 C 1(a) (1969 Supp.), in personam jurisdiction was asserted upon the theory that the non-resident defendant had transacted business in the forum state making it amenable to service. Red Barn moved to dismiss the action for want of sufficient minimal contacts with the state of Arkansas. The trial court denied the motion.

The record does not contain any specific findings of fact in connection with the denial of the motion to dismiss, and the affidavits filed by the respective parties are in dispute. Nevertheless, assuming arguendo the truth of the matter contained in Arkansas Poultry's affidavit in opposition to the instant motion, in personam jurisdiction cannot be upheld.

Initially we note that Red Barn does no business in Arkansas except in the instance claim in this suit.

Affiant Crawford Palmer, Assistant Manager of Arkansas Poultry, stated that prior to the execution of the guarantee, representatives of Ollie's Chicken and Arkansas Poultry by means of the telephone and U.S. mail agreed that Arkansas Poultry would sell certain quantities of processed chicken on open account to Ollie's Chicken; that during February, 1967, representatives of Arkansas Poultry, Ollie's Chicken and Red Barn met in Kansas City, Missouri at which time the basic provisions of the guarantee agreement were agreed upon; that thereafter Arkansas Poultry drafted the original guarantee agreement and mailed it to Red Barn at the home office of the latter in Fort Lauderdale, Florida; that the agreement was received by Red Barn who re-drafted a new guarantee, executed and mailed it to Arkansas Poultry in Bentonville, Arkansas on or about March 9, 1967; that pursuant to Red Barn's request, Arkansas Poultry mailed duplicate monthly statements to Red Barn showing the current balance of the account of Ollie's Chicken; that through and including February, 1968, shipments were made to Ollie's Chicken and paid for by check drawn upon Ollie's Chicken and mailed into Arkansas; that by letter of March 28, 1968 Red Barn notified plaintiff that said guarantee agreement was terminated; that Arkansas Poultry allegedly has not received payment for merchandise received by Ollie's Chicken during March of 1968; and that representatives of Red Barn and Arkansas Poultry met in Bentonville, Arkansas during March of 1969, in an attempted settlement of the alleged outstanding debt. This meeting was not related to the negotiations leading up to the guarantee agreement.

The trial court based its decision to overrule Red Barn's motion on Pennsalt Chemical Corp. v. Crown Cork & Steel Co., Inc., 244 Ark. 638, 426 S.W.2d 417 (1968). Pennsalt lends no support for that action. In Pennsalt, the Arkansas Supreme Court found in personam jurisdiction in a combined tort and warranty action under the provisions of the "long-arm" statute in issue on findings that a non-resident corporation shipped its manufactured products into Arkansas, received revenue therefrom, and through its agent, physically present in Arkansas, solicited business through advertising brochures left with Arkansas customers. Under the mandate of International Shoe Co. v. Washington, supra, the Arkansas court determined that the nexus between the non-resident defendant and the forum state was substantial enough that in personam jurisdiction would lie. We are not presented with similar substantial contacts.

Arkansas Poultry emphasizes both in its brief and in oral argument Travelers Health Association v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950), cited in Pennsalt, supra, for the proposition that in personam jurisdiction may be effectuated over a non-resident defendant where the only contact with the forum state is by means of the U.S. mail. Travelers Health is likewise distinguishable from our situation. That case involves the solicitation by a Nebraska...