Marshall Exports, Inc. v. Phillips, 74-1362

• Decision Date: 03 December 1974
• Docket Number: No. 74-1362,74-1362
• Parties: MARSHALL EXPORTS, INC., Appellant, v. C. A. PHILLIPS, d/b/a Phillips Hardwood Sales Co., and Takashimaya Co., Ltd., Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 47

507 F.2d 47

MARSHALL EXPORTS, INC., Appellant, v. C. A. PHILLIPS, d/b/a Phillips Hardwood Sales Co., and Takashimaya Co., Ltd., Appellees.

No. 74-1362.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 2, 1974.

Decided Dec. 3, 1974.

Marvin E. Taylor, Jr., Raleigh, N.C. (George B. Mast, Joseph T. Nall and Mast, Tew & Nall, Smithfield, N.C., on brief), for appellant.

Larry B. Sitton, Greensboro, N.C. (Beverly C. Moore, H. Miles Foy, III, and Smith, Moore, Smith, Schell & Hunter, Greensboro, N.C., on brief), for appellees.

Before BRYAN, Senior Circuit Judge, and BUTZNER and WIDENER, Circuit judges.

ALBERT V. BRYAN, Senior Circuit Judge:

With diversity of citizenship undisputed, the controversy in this contract action is on whether personal jurisdiction was ever obtained over the nonresident defendant foreign corporation. The District Court dismissed for want of such jurisdiction.

On February 23, 1973 in the State court, Marshall Exports, Inc. of North Carolina sued C. A. Phillips, a resident of Mississippi, and Takashimaya Company, Ltd., a Japanese corporation, for damages of several million dollars alleged as suffered from the breach by the defendants of two lumber purchase agreements. These documents were signed by Marshall and Phillips, but not by Takashimaya. ¹ The case was duly removed to the Federal court.

Although not a signatory to either of them, liability on the contracts is imputed to Takashimaya by the allegations that each contract was made in this way: the defendant Phillips 'acting as agent for, and on behalf of defendant, Takashimaya, entered into a written contract whereby plaintiff was to sell and to ship from the State of North Carolina to the defendant Takashimaya in Japan, and the defendant Takashimaya was to purchase from plaintiff' the lumber therein described.

These averments are expanded by assertions of Phillips' representations to the plaintiff at the time of the execution and delivery of the contracts, and on numerous occasions during the prior negotiations, of his agency for Takashimaya and his authorization as agent to enter into such contracts for and on behalf of Takashimaya; that Takashimaya clothed Phillips with indicia of agency and held him out as its agent; and that plaintiff relied upon this apparent authority in executing the contracts with Phillips.

Potential personal jurisdiction of Takashimaya was pleaded by the complaint's allegations of its 'doing business in the State of New York, the State of North Carolina and other states with an office in the State of New York'. It also set forth that the contracts on which the suit was brought were entered into within the State of North Carolina by plaintiff and by Phillips acting for Takashimaya, as well as that the contracts were for the sale, and shipment from North Carolina to Japan, of the lumber described in the agreements.

Summons and complaint were attempted to be served upon Takashimaya by delivery of them to the Secretary of State of North Carolina in accordance with 55-146 of the State's General Statutes naming him as the agent for those foreign corporations subject to the jurisdiction of North Carolina. A similar attempt was made through service upon a lawyer in New York City but by affidavit he disclaimed any power to receive process for Takashimaya. This defendant thereafter moved under Rule 12(b), F.R.Civ.P. to dismiss the action for lack of jurisdiction.

To sustain jurisdiction, plaintiff cited the following long-arm statutes of North Carolina:

'G.S. 1-75.4. Personal jurisdiction, grounds for generally.-- A court of this State having jurisdiction on the subject matter has jurisdiction over a person served in an action pursuant to Rule 4(j) of the Rules of Civil Procedure under any of the following circumstances: (5) Local Services, Goods or Contracts.-- In any action which: a. Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services within this State or to pay for services to be performed in this State by the plaintiff; or b. Arises out of services actually performed for the plaintiff by the defendant within this State, or services actually performed for the defendant by ...