Atkins v. Jones & Laughlin Steel Corp.

• Decision Date: 05 August 1960
• Docket Number: No. 37958,37958
• Citation: Atkins v. Jones & Laughlin Steel Corp., 104 N.W.2d 888, 258 Minn. 571 (Minn. 1960)
• Court: Minnesota Supreme Court
• Parties: Harry ATKINS, Respondent, v. JONES & LAUGHLIN STEEL CORPORATION, Erie Railroad Company, and Chicago, Rock Island and Pacific Railway Company, Respondents, Montanin Company, Inc., Appellant.

Page 888

104 N.W.2d 888

258 Minn. 571

Harry ATKINS, Respondent, v. JONES & LAUGHLIN STEEL CORPORATION, Erie Railroad Company and Chicago, Rock Island and Pacific Railway Company, Respondents Montanin Company, Inc., Appellant.

No. 37958.

Supreme Court of Minnesota.

Aug. 5, 1960.

Rehearing Denied Sept. 27, 1960.

Syllabus by the Court.

1. In Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670, constitutionality of M.S.A. § 303.13, subd. 1(3), was upheld on basis that requirements of minimal contact essential to doing business here, as defined therein, were adequate to meet 'traditional notions of fair play and substantial justice' which would embody right of Minnesota citizen, who has suffered injury here through wrongful conduct of foreign corporation, to seek redress therefor in courts of this state.

2--3. Regardless of privity of contract, manufacturer is liable to ultimate user of his product and to others reasonably in vicinity of its probable use for injuries therefrom due to negligence in manufacture or containment of product. Under this rule, if allegations of complaint here are sustained, defendant would be liable for negligence to plaintiff; and plaintiff could bring action therefor under § 303.13, subd. 1(3), if it be established that defendant's wrongful conduct resulted in commission of tort in Minnesota.

4. Application of such principles compels conclusion that, if allegations of complaint are sustained, defendant was guilty of committing tort in Minnesota against local resident, so as to be doing business here as defined in § 303.13, subd. 1(3), and subject to service of process as prescribed therein.

5. Cases from other jurisdictions involving similar issues distinguished; or not followed because of general objective of § 303.13, subd. 1(3), as expressed in Beck v. Spindler, supra, that Minnesota citizen injured in Minnesota by wrongful acts of foreign corporation should be able to seek recompense therefor in Minnesota courts.

6. Legislative classification embodied in § 303.13, subd. 1(3), which confined its application to foreign corporations exclusive of foreign insurance companies; and which did not extend its provisions to nonresident individuals or copartnerships, held not to involve such an unreasonable or arbitrary classification of subjects as to render enactment invalid under the equalprotection clause of U.S.Const. Amend. XIV.

Faegre & Benson, Paul J. McGough, Wright W. Brooks, Minneapolis, for appellant.

Roger S. Rutchick, Donald E. M. Rockne, Thomas J. Burke, St. Paul, for respondent Atkins.

Tyrrell, Jardine, Logan & O'Brien, Sullivan, Stringer, Donnelly & Sharood, St. Paul, for other respondents.

THOMAS GALLAGHER, Justice.

Action by Harry Atkins against Montanin Company, Inc., a New York corporation, and other defendants, for negligence resulting in injuries. The complaint alleged that on or about May 18, 1958, plaintiff, a truck driver for the Rock Island Transit Company, while hauling and unloading a certain product distributed by defendant Montanin Company, Inc., known as 'Montanin,' had been injured as a result of the negligent, careless, and unlawful acts of the defendants. This is an appeal by Montanin Company, Inc., from an order denying its motion to quash service of process and to dismiss the action on the ground that it is not subject to the jurisdiction of the Minnesota courts.

Montanin Company, Inc., hereinafter referred to as defendant, has no offices outside of New York and has no employees or agents here. It has never qualified as a foreign corporation in this state. Service of process was made upon it pursuant to M.S.A. § 303.13, subd. 1(3), by filing duplicate copies of the summons and complaint in the office of the secretary of the State of Minnesota, from whence one copy was forwarded by registered mail to defendant at 90 West Broadway, New York City. Section 303.13, subd. 1(3), provides that: SU 'If a foreign corporation makes a contract with a resident of Minnesota to be performed in whole or in part by either party in Minnesota, or if such foreign corporation commits a tort in whole or in part in Minnesota against a resident of Minnesota, such acts shall be deemed to be doing business in Minnesota by the foreign corporation and shall be deemed equivalent to the appointment by the foreign corporation of the secretary of the State or Minnesota and his successors to be its true and lawful attorney upon whom may be served all lawful process in any actions or proceedings against the foreign corporation arising from or growing out of such contract or tort. * * * The making of the contract or the committing of the tort shall be deemed to be the agreement of the foreign corporation that any process against it which is so served upon the secretary of state shall be of the same legal force and effect as if served personally within the State of Minnesota.'

Defendant interposed a special appearance and separate answer to the complaint. In the latter it denied that it had ever conducted business in Minnesota and prayed that the service of process as above described be quashed and the action dismissed for lack of jurisdiction. It also interposed special appearances and similar separate answers to cross-claims of other defendants (not parties to this appeal) and interposed a cross-claim against Chicago, Rock Island & Pacific Railway Company. On July 30, 1959, it moved for an order quashing, vacating, and setting aside the service of process and for dismissal of the complaint and cross-claims against it on the same ground stated in its answers and on the further ground that § 303.13 is invalid as a denial of due process under U.S.Const. Amend. XIV.

An affidavit by the president of defendant supporting this motion sets forth that the sole business of defendant is the sale of 'Montanin,' a trade name for hydrofluosilicic acid. Defendant sells this product primarily to the fermentation industry. All sales are made from its New York office and it maintains no salesmen outside of New York. Some of its sales are made directly to breweries and the remainder upon orders from brewery supply houses scattered throughout the country. The latter accept orders for 'Montanin' and forward them to defendant in New York for acceptance and confirmation. Defendant maintains no contract relationship with any of the supply houses but pays commissions upon orders which they send in.

'Montanin' is purchased by defendant from Davison Chemical Company in Maryland. This company arranges to have the product shipped from the Du Pont Company, which produces it, to defendant in care of Robinson Brothers Chemicals, Inc., Brooklyn, New York. Shipments are made from Du Pont to New York in tank trucks. Under agreement with defendant, Robinson Brothers Chemicals, Inc., fills individual 5-gallon containers with the product in its Brooklyn plant. These containers are purchased by defendant from Jones & Laughlin Steel Corporation and are forwarded from Lancaster, Pennsylvania, to defendant in care of Robinson Brothers Chemicals, Inc. Liners for the containers are purchased by Jones & Laughlin from Electronic Wave products of New York City. After inspection by the Jones & Laughlin Container division, the liners are installed, assembled into the containers, and again tested. The filled containers are shipped by defendant f.o.b. New York to the customer. The latter is billed by defendant from New York and payment is made to defendant in New York. None of the persons who handle and package the product are employees of defendant.

Defendant's affidavit also sets forth that, since all witnesses required by defendant live in New York or the vicinity, the expense of arranging for them to leave their business and attend trial in Minnesota would be prohibitive.

In opposition to the motion, an affidavit by one of his attorneys was submitted on behalf of plaintiff which sets forth that defendant has sold its product here for approximately 50 years; that some 50 lay witnesses, as well as 10 expert witnesses and the records from a number of hospitals in the St. Paul area, might be required to establish plaintiff's case; that the other defendants might require witnesses from as many as 10 different states; and accordingly that if the action were brought in New York undue hardship and expense would result to plaintiff and his witnesses.

In a memorandum attached to the order denying defendant's motion, the court set forth that:

'Whether the single transaction law applies to this case depends upon * * * whether the tort was committed in whole or in part in Minnesota. The action is based on 'negligence.' Without doubt the principal act of negligence occurred in the making and sealing of the container; that occurred in an eastern state. However, a mere failure to exercise reasonable care is not a tort. It only becomes a tort actionable as such when someone is injured as a proximate result of the negligent act. Damage is an essential element of the cause of action. * * *

'When a manufacturer or seller of an article, which is dangerous if not safely contained, fails to exercise reasonable care in the packaging of the article, he is liable for the injuries caused by such negligent acts occuring to one into whose hands the article comes in the usual course of business even though there is no contract relation between the latter and the manufacturer or seller. * * * In this case the leakage of the dangerous substance occurred in Minnesota, and the plaintiff was injured thereby in this state. It is the opinion of the Court that the tort occurred therefore in part in Minnesota.'

1. In Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670, in construing § 303.13, subd. 1(3), as it relates to contracts of foreign corporations, we adhered to the principles set forth in International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102, 161 A.L.R. 1057, 1061, that 'due process requires only that in...