Precision Const. Co. v. J.A. Slattery Co., Inc., 84-2623

• Citation: 765 F.2d 114
• Decision Date: 13 June 1985
• Docket Number: No. 84-2623,84-2623
• Parties: PRECISION CONSTRUCTION CO., and William R. Montgomery & Associates, Inc., Appellants, v. J.A. SLATTERY CO., INC., d/b/a All-State Belting Co., Inc., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 114

765 F.2d 114

PRECISION CONSTRUCTION CO., and William R. Montgomery &

Associates, Inc., Appellants, v. J.A. SLATTERY CO., INC., d/b/a All-State Belting Co., Inc., Appellee.

No. 84-2623.

United States Court of Appeals,

Eighth Circuit.

Submitted April 12, 1985.

Decided June 13, 1985.

John L. Davidson, Clayton, Mo., for appellants.

M. Jill Wehmer, Clayton, Mo., for appellee.

Before LAY, Chief Judge, McMILLIAN, Circuit Judge, and WOODS, ^* District Judge.

HENRY WOODS, District Judge.

Appellant Precision Construction Co. and William R. Montgomery & Associates, Inc. formed a partnership (hereafter Precision) in June, 1983 with offices in St. Louis County, Missouri, to bid on construction work at the Pillsbury company's Sauget, Illinois plant. The work included installation of a conveyor belt. After Precision was given the contract, Pillsbury asked it to install an additional conveyor belt at the Pillsbury plant at Cahokia, Illinois. The two belts were ordered from appellee, J.A Slattery Co. d/b/a All-State Belting Co., Inc. (hereafter All-State). Appellee is an Iowa entity which had previously written and solicited orders from Precision. The belts were shipped to Precision in Missouri and transported by it to the Pillsbury plants in Illinois for installation. Subsequent to their installation, both belts failed. All-State had two resident employee-salesmen in Missouri, neither of whom was involved in the above-described transaction. After failure of the belts, one of these employees became involved in an attempt to resolve the ensuing dispute, along with employees who came from Iowa for the same purpose. The Cahokia belt was manufactured by B.F. Goodrich under a warranty. In response to a claim by Precision, Goodrich sent a check covering costs of repairs to All-State, which has declined to forward the funds to Precision. In addition to breach of contract claims, Precision claims a tortious conversion of these monies and also claims that All-State committed a fraud in representing by telephone and mail that the Sauget belt was manufactured by Goodrich when All-State knew otherwise.

Service was attempted on All-State in a Missouri diversity action under the provisions of the Missouri Long-Arm Act, Sec. 506.500 R.S.Mo.1978. ¹ The district court quashed service. Precision appeals, claiming that All-State's activities in Missouri meet the test of the first three sections of the Long-Arm Act, namely, transaction of any business, making of any contract, and the commission of a tortious act. ² We reverse, but in fairness to the District Judge note that the case which we consider dispositive of the issue, State ex rel. Metal Service Center of Georgia, Inc. v. Gaertner, 677 S.W.2d 325 (Mo.1984) (en banc), was published after the memorandum and order quashing service was filed and was not considered in the court's memorandum opinion.

The problem which arises in this type of case requires a two-step analysis. First, is the defendant's activity within the forum state embraced within the wording of the statute, as interpreted by the state courts? Second, assuming the defendant's activity to be within the statutory language, is it a denial of due process to assert jurisdiction on the basis of such activity? Mountaire Feeds, Inc. v. Agro-Impex, S.A., 677 F.2d 651, 653 (8th Cir.1982); State ex rel. Metal Service Center v. Gaertner, supra at 327. The first question is one of state law, and the second is one of federal law. Iowa Electric Light & Power Co. v. Atlas Corp., 603 F.2d 1301, 1303 (8th Cir.1979), cert. denied, 445 U.S. 911, 100 S.Ct. 1090, 63 L.Ed.2d 327 (1980); Mountaire Feeds, Inc. v. Agro Impex, S.A., supra.

I. THE STATUTORY LANGUAGE

It is not necessary for us to decide the troublesome question of where this contract was made or whether defendant committed a tortious act in Missouri, because we hold that the defendant transacted business within the State of Missouri. In State ex rel. Metal Service Center v. Gaertner, supra, the Missouri Supreme Court noted that the statutory language was intended "to provide for jurisdiction within the specific categories enumerated in the statutes, to the full extent permitted by the due process clause of the Fourteenth Amendment," citing State, ex rel. Deere & Co. v. Pinnell, 454 S.W.2d 889 (Mo.1970) (en banc). See also State ex rel. Newport v. Wiesman, 627 S.W.2d 874, 876 (Mo.1982) (en banc).

The Missouri Act was borrowed in large measure from the Illinois Act and the Uniform Interstate and International Procedure Act, generally called the Uniform Long-Arm Act, 9B Uniform Laws Annot. The subsection which we apply here is identical to Sec. 103(a)(1) of the Uniform Act and Ch. 110, Sec. 17(1)(a), Ill.Ann.Stat.1968, from which it was copied. See State ex rel. Newport v. Weisman, supra. "We have held that when a state adopts a statute of another state which the courts of the latter state have construed, such construction will be held to have been adopted with the statute." Id. at 877. With regard to this section, the Uniform Commissioners' comments are significant. "This provision should be given the same expansive interpretation that was intended by the draftsmen of the Illinois Act and has been given by the courts of that state." An Illinois case is then cited which is closely akin to the facts of the case at bar. ³

In Scullin Steel Co. v. National Railway Utilization Corporation, 676 F.2d 309 (8th Cir.1982), Judge McMillian, a member of this panel, affirmed a holding of the district court that a South Carolina corporation with its principal place of business in Pennsylvania was not "transacting any business" in Missouri. We agree with Judge Blackmar's remarks in State ex rel. Metal Service Center v. Gaertner, supra, distinguishing the latter case. "Here Metal Service supplied the raw materials and shipped them into Missouri for working by Roton. There, so far as the opinion shows, Scullin obtained its raw materials from other sources, produced the 'car sets' as required by the contract, and then shipped them to its customer in another state at the customer's expense." Id. at 328. The same distinctions apply in the case at bar. There are others. In Scullin the defendant had no office or personnel in Missouri (in sharp contrast to defendant All-State); a Scullin officer went to Pennsylvania to negotiate the contract (here an All-State representative solicited Precision by a communication addressed to the latter in Missouri). All-State attempts to distinguish State ex rel. Metal Service Center v. Gaertner, supra on the ground that in the latter case work was performed on the unfinished materials after they were shipped into Missouri. The cases have not drawn such a distinction in their interpretation of the "transacting any business" subsection. One of the leading cases is Singer v. Walker, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965), cert. denied, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d 158 (1965), a decision of the Court of Appeals of New York. The Illinois defendant shipped a geologist's hammer to a New York retailer who sold it to plaintiff's aunt in New York. On a field trip to Connecticut, the hammer broke and damaged plaintiff's eye. New York's long-arm jurisdiction over the Illinois manufacturer was sustained. "The basic logic forcing an expansive interpretation is that when a company invades a state for pecuniary gain it should be prepared to defend any suit arising out of that invasion." ⁴

Other than the expansive interpretation given to "transacting any business" in Gaertner and Wiesman, supra, ⁵ we are cited to no cases in which the Missouri Supreme Court has interpreted the "transacting any business" subsection in a context similar to that obtaining herein. There is however an expansive interpretation by an intermediate Missouri appellate court sustaining jurisdiction in a similar situation. Where a Texas corporation through a distributor sold plaintiff electronic equipment and advertised the product through literature distributed in Missouri, personal jurisdiction could be obtained under the "transacting business" subsection of the Long-Arm Act. Simpson v. Dycon Intern, Inc., 618 S.W.2d 455 (Mo.App.1981). See also State ex rel. Farmland Industries, Inc. v. Elliott, 560 S.W.2d 60 (Mo.App.1977). "The Missouri Courts have liberally construed the statutory requirement of 'transacting business' within the state for the purpose of long-arm jurisdiction." Scullin Steel v. National Railway Utilization Corp., supra at 312, citing Wooldridge v. Beech Aircraft Corp., 479 F.Supp. 1041, 1053 (W.D.Mo.1979); J.F. Pritchard & Co. v. Dow Chemical of Canada, Ltd., 331 F.Supp. 1215, 1218 (W.D.Mo.1971), aff'd, 462 F.2d 998 (8th Cir.1972); American Hoechst Corp. v. Bandy Laboratories, Inc., 332 F.Supp. 241 (W.D.Mo.1970).

II. THE DUE PROCESS ISSUE

The present due process requirement for asserting jurisdiction over nonresident defendants has evolved from a requirement of presence, ⁶ consent, ⁷ doing business, ⁸ and domicile. ⁹ The modern rule was stated by Chief Justice Stone in International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) as requiring only "that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice'." Id. at 316, 66 S.Ct. at 158.

While the activities of the defendant in International Shoe were rather substantial, ¹⁰ such cannot be said of McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957) in which the contacts with the forum were indeed minimal. The insured made an insurance contract with an Arizona company whose assets were later absorbed by a Texas company. A reinsurance certificate was mailed to the insured, who was then residing in California, and he continued the policy in...