Continental American Corp. v. Camera Controls Corp., 81-2264

• Decision Date: 12 November 1982
• Docket Number: No. 81-2264,81-2264
• Citation: 692 F.2d 1309
• Parties: CONTINENTAL AMERICAN CORPORATION, d/b/a Pioneer Balloon Company, Plaintiff- Appellee, v. CAMERA CONTROLS CORPORATION, d/b/a Max Balloon Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1309

692 F.2d 1309

CONTINENTAL AMERICAN CORPORATION, d/b/a Pioneer Balloon

Company, Plaintiff- Appellee, v. CAMERA CONTROLS CORPORATION, d/b/a Max Balloon Company,

Defendant-Appellant.

No. 81-2264.

United States Court of Appeals,

Tenth Circuit.

Nov. 12, 1982.

Alexander B. Mitchell II, of Sargent, Klenda, Haag & Mitchell, Wichita, Kan., for plaintiff-appellee.

Robert T. Cornwell and James L. Burgess of Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., for defendant-appellant.

Before HOLLOWAY, McWILLIAMS and BARRETT, Circuit Judges.

HOLLOWAY, Circuit Judge.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Cir.R. 10(e). The cause is therefore ordered submitted without oral argument.

This is an appeal from a judgment entered after a trial to the court in the amount of $5,158.83 in an action for breach of contract. Subject matter jurisdiction was founded on diversity, 28 U.S.C. Sec. 1332. ¹ Defendant-appellant Camera Controls Corporation, doing business as Max Balloon Corporation, contends that the district court lacked valid personal jurisdiction over it under the Kansas long-arm statute, K.S.A. Sec. 60-308(b)(5).

I

The facts outlined below are pertinent to defendant's attack on the district court's finding of personal jurisdiction. They are all related from plaintiff's evidence, since the defendant presented no evidence and rested entirely on its challenge to the sufficiency of plaintiff's evidence to establish valid personal jurisdiction over defendant. (III R. 32-33).

Plaintiff Continental American Corporation, doing business as Pioneer Balloon Company, is a Kansas corporation with its principal place of business in Wichita, Kansas. (I R. 9, 16). In August 1979, plaintiff purchased the balloon manufacturing business known as Pioneer Balloon Company (Pioneer) from Sherwood Medical Industries, Inc. (III R. 20), incorporated and having its principal place of business in Missouri. The purchase included Pioneer's manufacturing facility in Ohio and its accounts receivable directly involved in the balloon operation. (III R. 21).

One of Pioneer's accounts receivable at the time of plaintiff's purchase was that of the defendant, a California corporation whose principal place of business is in North Hollywood, California. (I R. 9, 16). The two orders creating this account receivable were placed with a Pioneer Balloon sales representative in California. From there the orders were sent to the factory in Ohio. The balloons were shipped directly from the factory to defendant. (III R. 16). The shipments represented $2,628 of merchandise each. Defendant claimed it had been billed twice for one shipment. (III R. 14). Plaintiff notified defendant of the assignment of the account receivable as part of the purchase and requested that payment be made to plaintiff. (I R. 25). Defendant returned an account statement to plaintiff in Kansas denying it owed $2,628. Plaintiff submitted, by letter to defendant, documentation that showed defendant had received two shipments of $2,628 value each and had not, in fact, been double-billed. Apparently defendant had paid for one $2,628 shipment but not the other.

Defendant then placed two orders for balloons with plaintiff after plaintiff's acquisition of Pioneer. (III R. 24). One of these orders--apparently having been received and paid for--is not at issue herein. The consequence of the other order for some $17,991.61 worth of balloons is the subject of this dispute. The circumstances of this order require some explication.

After plaintiff's purchase of Pioneer Balloon, an employee of Sherwood made attempts to collect the $2,628 debt on behalf of plaintiff by telephone and mail contacts with defendant's president. (III R. 13). During a telephone conversation in October 1979 concerning collection, plaintiff's president and defendant's president agreed to place and ship another order of balloons if the disputed $2,628 amount was paid. ² (II R., Plaintiff's Exhibit No. 4; III R. 14, 31). This order, priced at $17,991.61, was shipped from Ohio shortly thereafter. The location of plaintiff's president during the telephone call does not appear in the record. In November, an invoice for the shipment was sent to defendant. The invoice, printed on a Sherwood Medical Industries form, indicated that the order was produced in Ohio and that remittance should be sent to plaintiff in Kansas. (II R. Plaintiff's Exhibit No. 5).

There were subsequent communications between the parties concerning the amount owed. In these communications defendant's president stated that he had sent a payment of $6,203.72 to Sherwood Medical Industries in Missouri which was never received and an additional payment of $17,991.61 to plaintiff in Kansas, also never received. These communications proved unsatisfactory to plaintiff. (II R., Plaintiff's Exhibit No. 6). Plaintiff's president reminded defendant's president to remit to Kansas, not Missouri. After continued nonpayment, plaintiff brought this federal suit in September 1980 for the money owed by the defendant. Prior to filing the complaint, plaintiff had received two payments in Kansas of $1000 from defendant. (III R. 26). Since commencement of suit, plaintiff has received 13 payments, reducing the amount owed to $5,158.83, the amount for which judgment was entered. ³

The answer averred that the district court lacked personal jurisdiction over defendant. (I R. 16-17). Defendant also moved orally at trial to dismiss the complaint for lack of personal jurisdiction, which motion was denied. (III R. 5-8). After a brief trial to the court, judgment was entered for plaintiff in the amount of $5,158.83. Defendant moved to set aside the judgment, again asserting a lack of personal jurisdiction. The district court overruled the motion, stating that (I R. 25-26):

... the Court finds that the plaintiff purchased a certain balloon business of Sherwood Medical Industries and received as a portion of that purchase the account receivable from defendant; that the plaintiff duly notified the defendant of the assignment of the account and requested that payment be made to the plaintiff; that subsequent to the acquisition of the balloon business by plaintiff, the defendant contracted directly with the plaintiff to make two additional purchases of balloons from the plaintiff; that prior to agreeing to send the two additional orders to the defendant, the plaintiff's president obtained the promise of the defendant's president to pay plaintiff the previous balance due on the purchase from Sherwood Medical; that as a consequence of these transactions and events, this Court does have jurisdiction to adjudicate this account. In addition thereto, it is the Court's finding that the defendant has made the last 16 regular and separate payments to the plaintiff, which gives rise to the balance in dispute and for which judgment has been entered. It would appear to the Court that the initial obligation, being the Sherwood Medical Industries account, has now been satisfied and the Court so finds. As a consequence, defendant's motion is also a moot one.

IT IS, THEREFORE, ORDERED that defendant's motion should be and it is hereby overruled.

On appeal, defendant makes two interrelated contentions regarding personal jurisdiction. First, defendant argues that there is no evidence of any contact by defendant with the State of Kansas so that plaintiff's proof on the jurisdictional issue failed to establish a sufficient connection with the forum. Second, defendant asserts that the exercise of long-arm jurisdiction under K.S.A. Sec. 60-308(b)(5) in these circumstances would violate due process principles. Relying on Misco-United Supply, Inc. v. Richards of Rockford, Inc., 215 Kan. 849, 528 P.2d 1248, defendant contends that the facts adduced at trial cannot satisfy the minimum contacts requirement of International Shoe and its later refinements.

II THE KANSAS LONG-ARM STATUTE

K.S.A. Sec. 60-308(b)(5), the jurisdictional statute relied on by plaintiff, provides in pertinent part:

Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:

* * *

* * *

(5) Entering into an express or implied contract, by mail or otherwise, with a resident of this state to be performed in whole or in part by either party in this state; ...

As we understand defendant's argument, the two partial payments were not shown to have been applied to the Sherwood debt assigned to plaintiff. Additionally, there was no proof of any connection between the Kansas and the Sherwood debt. Therefore, to the extent the district court adjudicated liability for the Sherwood indebtedness, it lacked personal jurisdiction over defendant. Regarding the post-acquisition purchase from plaintiff, defendant asserts a complete lack of evidence bringing this case within the language of K.S.A. Sec. 60-308(b)(5).

While plaintiff's evidence that plaintiff and defendant entered a contract "to be performed in whole or in part by either party" in Kansas was less than ideal, we are persuaded that it was sufficient to satisfy plaintiff's burden. It is uncontradicted that after plaintiff's acquisition of Pioneer, notification of the assignment was tendered to defendant. (III R. 13-14). The purchase at issue, though conditioned on payment of the Sherwood account receivable, was negotiated directly with plaintiff. Plaintiff's president testified without contradiction that two partial payments were received in Wichita. (III R. 26). These two payments, along with the...