Weller v. Cromwell Oil Co.

Citation504 F.2d 927
Decision Date17 October 1974
Docket NumberNo. 74-1350,74-1350
Parties1974-2 Trade Cases 75,339 Henry J. WELLER, Plaintiff-Appellant, v. CROMWELL OIL COMPANY et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Bruce Tittel, John D. Crane, Wood, Herron & Evans, Donald F. Papner, Cincinnati, Ohio, for plaintiff-appellant.

Samuel M. Allen, A. Jeffrey Smith, Strauss, Troy & Ruehlmann, Cincinnati, Ohio, for defendants-appellees.

Before PHILLIPS, Chief Judge, and WEICK and ENGEL, Circuit Judges.

WEICK, J., delivered the opinion of the Court, in which ENGEL, J., joined. PHILLIPS, C.J., (pp. 933-935) filed a dissenting opinion.

WEICK, Circuit Judge.

In this appeal, we construe Ohio's long-arm statute, Ohio Rev.Code 2307.382. 1

Under this statute, plaintiff Weller, a resident of Cincinnati, Ohio, sought to obtain jurisdiction of the United States District Court for Southern Ohio over two corporations organized under the laws of California with their offices and places of business in that state and over two of their officers, also residents of California.

In his complaint for damages, Weller, in five counts, alleged a breach of two distributor contracts entered into with Cromwell Oil Company, fraud and misrepresentation in connection with their negotiations, violation of the Ohio Deceptive Trade Practices Act, (Ohio Rev.Code 4165.02(E), (G) and/or (I)), violation of the Lanham Act, (15 U.S.C. 1125(a)), and violation of sections 3, 4 and 12 of the Clayton Act (15 U.S.C. 14, 15 and 22) and for violations of sections 1 and 2 of the Sherman Act (15 U.S.C. 1 and 2). The only issue in this appeal relates to the jurisdiction over the individuals.

The two officers were Bernard Plotkin, who was President of both corporations, and Harold Plotkin, who was Vice President of Cromwell Oil Company and Secretary and Treasurer of Cromwell Industries, Inc. With respect to the individual officers, Weller claimed that each made false representations to him in telephone conversations and in advertising literature sent through the mails from California to Ohio as a result of which he was induced to enter into the distributor contracts with Cromwell Oil Company.

The distributor contracts were entered into on February 19, 1970 and May 19, 1970 and gave exclusive rights to Weller to purchase and sell at retail Cromwell products in certain counties in Ohio and Kentucky. The second contract merely added additional territory. Cromwell Industries, Inc. was the assignee of the contracts and was alleged to have assumed the obligations thereof. Under these two contracts, over a period of two years the corporate defendants shipped to Weller $40,000 worth of their products.

The two contracts were accepted and signed by a corporate officer in California and are California contracts.

The complaint alleged with respect to the individuals:

8. Upon information and belief, defendant Harold Plotkin and/or defendant Bernard Plotkin have: (A) transacted business in this state; (B) contracted to supply goods and services in this state; and/or (C) caused the tortious injuries to plaintiff in this state as more fully described hereinafter.

The complaint also alleged in conclusory language that the corporations were the alter ego of the individual officers and attempted to pierce the corporate veil.

Messrs. Plotkin filed a motion to quash service of summons and dismiss for lack of jurisdiction and filed affidavits in support thereof. Copies of the affidavits are appended hereto as Exhibits A and B. Plaintiff filed an affidavit in response, a copy of which is appended hereto as Exhibit C.

The District Court granted the motion to quash and to dismiss. Plaintiff has appealed. We affirm.

The affidavits of Messrs. Plotkin contain positive statements that they are both residents of California; that they were served with process by registered mail received in California; that their contact with plaintiff was only as officers of Cromwell Oil Co.; that their contact with plaintiff was in written correspondence and they spoke to plaintiff on the telephone from their offices in California; that Harold Plotkin had not been in Ohio during any of the times mentioned in the complaint; that Bernard Plotkin had not been in Ohio since May, 1971, at which time he was in Cleveland on another matter involving Cromwell Oil Co.

It is obvious that there was no truth in the allegations on information and belief contained in the complaint that Messrs. Plotkin individually transacted business in the state of Ohio and contracted to supply goods and services in this state.

The affidavit of Weller states that with respect to the distributor contract of February 19, 1970 'he received, in Ohio, from defendants Plotkin or Cromwell Oil Company, advertising literature which contained some of the misrepresentations . . ..' On its face, this affidavit, in the disjunctive, is ambiguous and insufficient to establish that the Plotkins individually sent the literature to Weller in respect to the first contract.

With respect to the second contract the affidavit states that the Plotkins made misrepresentations to Weller in Ohio over the telephone.

The Weller affidavit further alleged that 'defendants Plotkin or Cromwell Oil Company or both sent into the state of Ohio authorized agents to negotiate the provisions of Exhibit B (the second contract) . . .' and that the agents made misrepresentations. Here again we have disjunctives in the affidavit. It can hardly be interpreted as a positive statement sufficient to support jurisdiction, that the Plotkins sent their agents, rather than agents of the corporate defendants who were negotiating a distributor contract. With the use of this ambiguous language, it can reasonably be interpreted that the agents were agents of the corporation. This is shown by the further allegation that during the negotiations for the contract the agents called Bernard Plotkin relative to the negotiations and the representations. From all of this it can be inferred that the agents at all times were acting within the course and scope of their employment.

It is settled that jurisdiction over the individual officers of a corporation cannot be predicated merely upon jurisdiction over the corporation. Wilshire Oil Company of Texas v. Riffe, 409 F.2d 1277 (10th Cir. 1969); Path Instruments International Corp. v. Asahi Optical Co., 312 F.Supp. 805 (S.D.N.Y.1970). It was because of the activities of the officers and agents that plaintiff sought jurisdiction over the corporations.

The burden of proof to establish jurisdiction over the individuals was upon the plaintiff. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Schuckman v. Rubenstein, 164 F.2d 952 (6th Cir. 1947).

Where a motion to quash and dismiss is filed, supported by affidavits the non-moving party may not rest upon allegations or denials in his pleadings but his response by affidavit or otherwise must set forth specific facts showing that the court has jurisdiction. In this respect the rule is similar to a motion for summary judgment under Rule 56(e), Fed.R.Civ.P.

In the present case, plaintiff submitted only an ambiguous affidavit in the disjunctive which does not set forth specific facts showing jurisdiction.

In the District Court and on appeal plaintiff relied solely on the following provision of the long-arm statute: '(3) Causing tortious injury by an act or omission in this state.'

Under this statute the tortious act causing the injury must be committed in Ohio.

It is clear from the positive affidavits of Messrs. Plotkin that they were never in the state of Ohio to commit any act or omission. There is no evidence that any agent of anyone was in the state of Ohio to negotiate the first contract. With respect to the second contract, we previously pointed out that the affidavit of Weller can be reasonably read that the agents which Plotkins sent into the state to negotiate a distributor contract for Cromwell Oil Co. were employees and agents of the corporation. Even though authorized or instructed to come to Ohio by the Plotkins, this did not constitute the corporate agents as agents of the individual officers. Unicon Management Corp. v. Koppers Co., 250 F.Supp. 850 (S.D.N.Y.1966).

The telephone conversation between the agents in Ohio and Bernard Plotkin in California was proof indicating that the agents had authority from an officer of the corporation to conduct the negotiations for the second contract and to make representations. In other words, the corporate agents were at all times acting within the course and scope of their employment. It was not proof that the agents were acting for the Plotkins individually.

In the District Court, Weller relied on Murphy v. Erwin-Wasey, Inc., 460 F.2d 661 (1st Cir. 1972), where misrepresentations were made by a non-resident over the telephone and through the mails. The Court held that when the non-resident corporate defendant knowingly sends into a state a false statement with the intent that it should be relied on, that for jurisdictional purposes, the defendant has acted within the state. Only the corporate defendant was held subject to the long-arm statute and not any officer of the corporation.

Murphy, however, was rejected by the Court of Appeals for the District of Columbia in Margoles v. Johns, 157 U.S.App.D.C. 209, 483 F.2d 1212 (1973). In that case, Johns, an agent of 'The Journal' called the office of a congressman in the District of Columbia from the newspaper's office in Wisconsin and made slanderous statements of and concerning Margoles. In an action for damages for slander, filed by Margoles against both the agent and the newspaper, the District Court granted defendants' motion to dismiss the complaint for lack of jurisdiction.

The Court of Appeals in an opinion written by Circuit Judge Tamm, held:

The 'act,' of course, is the act of the alleged tortfeasor-- here that act,...

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