American Compressed Steel Corp. v. Pettibone Mulliken Corp.

• Decision Date: 21 April 1967
• Docket Number: No. 6277.,6277.
• Citation: 271 F. Supp. 864
• Parties: AMERICAN COMPRESSED STEEL CORPORATION, a New Jersey Corporation, Plaintiff, v. PETTIBONE MULLIKEN CORP., a Delaware Corporation, and Hammermills, Inc., a Missouri Corporation, Defendants.
• Court: U.S. District Court — Southern District of Ohio

271 F. Supp. 864

AMERICAN COMPRESSED STEEL CORPORATION, a New Jersey Corporation, Plaintiff, v. PETTIBONE MULLIKEN CORP., a Delaware Corporation, and Hammermills, Inc., a Missouri Corporation, Defendants.

No. 6277.

United States District Court S. D. Ohio, W. D.

April 21, 1967.

Howard Gould, Cincinnati, Ohio, for plaintiff.

John W. Hudson, Cincinnati, Ohio, Bruce Parkhill, Chicago, Ill., for defendants.

OPINION

HOGAN, District Judge.

The plaintiff, American Compressed Steel Corporation, a New Jersey corporation with its principal place of business in Cincinnati (American), filed a complaint against the defendants, Pettibone Mulliken Corporation, a Delaware corporation having its principal place of business in Chicago, Illinois (Pettibone), and Hammermills, Inc., a Missouri corporation having its principal place of business in Iowa (Hammermills). Neither of the defendants has a place of business in Ohio; neither defendant is "doing business" in Ohio in the generally accepted sense of that term. The complaint sets forth causes of action for damages aggregating $119,500.00 based on the alleged breach of a contract dated December 31, 1962, between American and Hammermills.

Personal jurisdiction is claimed in respect of both defendants under Ohio's recently enacted (1965) "long-arm" statute, Ohio Revised Code § 2307.382, which provides, insofar as applicable to this controversy and necessary to the conclusions arrived at herein, as follows:

"A court may exercise personal jurisdiction over a person who acts directly or by an agent as to a cause of action arising from the person's

"1) Transacting any business in this state; * * *

When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him."

The alleged breach of the contract in this case occurred in 1963 and prior to the effective date of the Ohio "long-arm" statute. The question of the retroactivity of the Ohio "long-arm" statute has not been determined by either the Ohio Supreme Court or any Ohio appellate court. This Court (the Honorable John W. Peck, now Circuit Judge) concluded in Partin v. Hassan et al., No. 5979, that the Ohio "long-arm" statute was not retroactive. The opinion is reported in 363 F.2d 104, although the question was not passed on by the Court of Appeals. The question has been giving the Ohio common pleas courts difficulty, witness conflicting conclusions in O'Mara v. Alberto-Culver Co., 6 Ohio Misc. 132, 215 N.E.2d 735, 35 Ohio Op.2d 30, Hamilton County, Ohio, Common Pleas (1966); and Bruney v. Little, 8 Ohio Misc. 393, 222 N.E.2d 446, 37 Ohio Op.2d 100, Belmont County, Ohio, Court of Common Pleas (1966).

While the question may lurk here, it is unnecessary to meet it since all three parties to this case have conceded retroactivity. The concession of a possible objection to in personam jurisdiction does not waive other objections. It is so held.

In 1962, the plaintiff became interested in a machine advertised by Hammermills and of Hammermills manufacture, called "a Bulldog Special" Hammermills machine. The plaintiff is engaged in scrap metal processing operations. The plaintiff contacted Hammermills in September or October of 1962 and let Hammermills know of its interest in purchasing a machine of the general characteristics noted in the advertising. Subsequently a Mr. Oberhellmann, a Vice President of Hammermills, came to Cincinnati on October 15, 1962, and again on October 31, 1962, and on those dates negotiations took place relative to the machine, particular specifications, and design. The machine involved was not a stock item, but was a "custom" item; preliminary to an order for such a machine, discussions relative to specifications, capacity, operation, maintenance, sales price, selling terms, diagrams, blue prints, and sales aids were in order and took place in this factual situation. On October 27, 1962, and December 17, 1962, the plaintiff's President went to St. Louis and there discussed and negotiated with Hammermills.

Mr. Oberhellmann at the October negotiating meetings in Cincinnati was accompanied by a Mr. W. D. Busch, who was in fact a manufacturers representative for Hammermills (and a number of other companies unrelated to this lawsuit) and who did in fact live in Cleveland, Ohio. He carried a calling card identifying himself as a "Representative" of "Hammermills" (and three other urelated companies) "in the Mideast." The same calling card identified the Hammermills Vice President as the Representative "in the Midwest."

Mr. Busch, as a manufacturers representative, was authorized by Hammermills to solicit interest in Hammermills' products in Ohio and elsewhere. He was an independent contractor; he was not authorized to make any commitment or contract for Hammermills; his repetitive presence in the company of Hammermills' Vice President, during negotiations in Ohio, is indicative of at least a connection between the manufacturers representative and, in the language of the statute, "transacting any business in this state."

The written contract was dated December 31, 1962, the parties being Hammermills (described on the form contract as a "subsidiary of Pettibone") and American. Actually it was signed by American in Cincinnati on January 24, 1963, and it is significant that on that date the Hammermills Vice President Mr. Oberhellmann came to Cincinnati with Mr. Busch and met with the President of American. Hammermills executed the contract in Iowa on January 28, 1963. Mr. Oberhellmann was one of the Hammermills officers who executed the contract. In our view it is not necessary to determine whether the contract was finally executed in Ohio or Iowa; whether it was to be governed by the law of Ohio or Iowa; what, if any, significance is to be attached to the contractual provision of the contract price being "FOB cars, Cedar Rapids, Iowa;" or whether the machine, when made, was to be delivered by somebody to Ohio and used in Ohio. There is no doubt about the latter, although it is unnecessary to decide.

On February 12, 1963, Mr. Oberhellmann returned to Cincinnati to deliver to American drawings for the proposed machine. Again he was accompanied by Mr. Busch. The trip was obviously for the purpose of "transacting * * * business" and not as a substitute for the mails. In July of 1963 officials of American went to the Hammermills plant in Cedar Rapids, Iowa, and at or about that time there arose the differences between the parties to the contract which eventually led to the filing of this case. While there were substantial negotiations between the parties subsequent to July of 1963, some by letter, some by telephone, some by conferences in Cincinnati —all had to do with what appears to be efforts to work out the differences. The tinge in those post-July, 1963, dealings was compromise. We attach no significance to those compromise dealings in determining the question before this Court. While appearances in a state in an effort to compromise a bona fide dispute may be the "transaction of business" in the accepted business of economic sense, it is at least questionable whether the historic policy of the law favoring compromises would permit such activity to be held as "business" in the legal sense as that term is used in "long-arm" statutes. Compare Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502 (C.A.4 1956); Perlmutter v. Standard Roofing, etc., Co., 43 Misc.2d 885, 252 N.Y.S.2d 583 (1964); Ohio Casualty Insurance Co. v. First National Bank, Okl., 425 P.2d 934 (Supreme Court, 2/28/67).

The defendant Pettibone's connection with this entire transaction is as follows: First, Hammermills is a wholly owned subsidiary of Pettibone. Secondly, one of the "compromise" meetings in Cincinnati, on October 3, 1963, was attended by a Mr. Knudten, who was President of Hammermills and a Vice President of Pettibone. However, it clearly appears from the affidavits in this record that Pettibone and Hammermills are entirely separate and independently operated corporations, each of substance and each entitled to the recognition of its "separate entity." The latter wholly owned subsidiary and the former have cross-officerships.

Service on each of the defendants was accomplished in the mechanical manner prescribed by the Ohio "long-arm" statute. The defendants have each filed a motion to dismiss for want of jurisdiction over their respective persons. The defendants urge, first, that to uphold jurisdiction in this case would be violative of the due process guaranteed by the 14th Amendment to the Constitution of the United States; and secondly, that the Ohio statute was copied after a similar Illinois "long-arm" statute after that Illinois statute had received a construction by the highest court of Illinois; that such construction should be given great weight in this state and, if followed, would result in the granting of both motions.

The Constitutional guidelines are set forth in ...