Auction Effertz, Ltd. v. Schecher

Decision Date25 May 2000
Docket NumberNo. 990385.,990385.
Citation611 N.W.2d 173,2000 ND 109
PartiesAUCTION EFFERTZ, LTD., Plaintiff and Appellee, v. Larry SCHECHER, Defendant and Appellant.
CourtNorth Dakota Supreme Court

Joseph J. Cichy, Olson Cichy, Bismarck, for plaintiff and appellee.

Jerome C. Kettleson, Pearce & Durick, Bismarck, for defendant and appellant.

KAPSNER, Justice.

[¶ 1] Larry Schecher appealed from a judgment awarding Auction Effertz, Ltd., damages for its commission in selling Schecher's cattle and dismissing Schecher's counterclaim seeking damages for breach of fiduciary duty by Neil Effertz. We hold the district court had personal jurisdiction over Schecher in this litigation. We further hold the district court's findings Auction Effertz, Ltd., earned a commission and Neil Effertz did not breach his fiduciary duty to Schecher are not clearly erroneous. We affirm the damage award and the dismissal of the counterclaim.

I

[¶ 2] In the spring of 1997, Schecher placed a telephone call from his home in Bison, South Dakota, to Neil Effertz, the president of Auction Effertz, Ltd., a Bismarck corporation engaged in cattle marketing, asking Effertz to find a buyer and negotiate a private treaty sale of Schecher's herd of Charolais cattle. By June 14, 1997, Schecher and Effertz finalized an oral agreement, under which Effertz agreed to act as Schecher's agent to find a buyer for a private treaty sale of about 220 Charolais cows and 70 to 90 heifer calves. Schecher informed Effertz the minimum price he would accept was $1,200 per head for the cows and $700 per head for the calves. The parties agreed Auction Effertz, Ltd., would receive a five percent commission for locating a buyer and completing the private treaty sale. The parties understood it would not be easy to find a buyer for the sizable number of registered Charolais cattle Schecher was attempting to sell, and they agreed that while Effertz attempted to find a buyer Schecher would make arrangements for an auction sale of the cattle in November 1997 if no private buyer could be found.

[¶ 3] Neil Effertz's parents own a cattle operation in North Dakota known as the Effertz Key Ranch ("EKR"). They gifted each of their seven sons a share of the cattle operation and, consequently, Neil Effertz owns a seven percent ownership interest. Neil Effertz testified he initially had about five names of potential buyers for Schecher's cattle, but by July 1997 he had only a party from Alabama and EKR as potential buyers. After Schecher had expended monies to prepare for the November auction, he told Effertz he would no longer accept $1,200 per head for the cattle but now required $1,250 per head. Thereafter, the only potential buyer was EKR. Schecher testified Effertz did not disclose EKR was the potential buyer until August 5, 1997, after Neil Effertz and Schecher shook hands on a general agreement as to the sale of the cattle. Schecher indicated he was pleased EKR was the buyer, and he later published a newspaper advertisement publicly thanking EKR for purchasing the cattle.

[¶ 4] The agreement included some exchange of cattle, and Schecher testified he worked out the details of the transaction with Roger Effertz, representing EKR, after the general agreement had been made on August 5, 1997. Shortly after negotiations were completed, EKR sent a $40,000 down payment on the purchase to Schecher through Auction Effertz, Ltd., which withheld a $2,000 commission on that amount. In November 1997, Schecher came to Bismarck to attend an educational marketing program sponsored by EKR and at that time he received another $60,000 payment by check written by Roger Effertz. On that same date, Schecher personally gave Neil Effertz a check in the amount of $3,000 as commission on the $60,000 payment. Schecher later hired Auction Effertz, Ltd., to auction some bulls and thereafter Schecher sent Auction Effertz, Ltd., a commission check in the amount of $2,386.75, with an explanation $700 of the amount was commission for the sale of the bulls and the remaining amount was the final payment of the commission for the earlier sale of the cows and calves.

[¶ 5] Auction Effertz, Ltd., did not cash Schecher's last check, but instead sued Schecher for unpaid commissions, claiming Schecher owed Auction Effertz, Ltd., $941 for commission on the bull auction and a balance of $10,512.50 on the prior sale of the Charolais cattle and calves. Schecher answered, denying that he owed Auction Effertz, Ltd., additional commission monies, and Schecher counterclaimed for return of commission paid and for damages, asserting Auction Effertz, Ltd., breached its fiduciary duty as a sale's agent for Schecher. After a hearing, the trial court found Auction Effertz., Ltd., did not breach its fiduciary duty to Schecher and concluded Schecher owed Auction Effertz, Ltd., commissions totaling $11,453.50 plus interest. Judgment for damages was entered, and Schecher appealed.

II

[¶ 6] Schecher asserts the oral agency agreement he made with Neil Effertz by placing a telephone call to Bismarck from his home in South Dakota is not a sufficient contact with North Dakota to give the district court personal jurisdiction over him. The relevant law on jurisdiction is found under N.D.R.Civ.P. 4(b)(2)(A) and (3), and provides in part:

(b) Jurisdiction Over Person.
....
(2) Personal Jurisdiction Based Upon Contacts. A court of this state may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim for relief arising from the person's having such contact with this state that the exercise of personal jurisdiction over the person does not offend against traditional notions of justice or fair play or the due process of law, under one or more of the following circumstances:
(A) transacting any business in this state;

....

(3) Limitation on Jurisdiction Based Upon Contacts. If jurisdiction over a person is based solely upon paragraph (2) of this subdivision, only a claim for relief arising from bases enumerated therein may be asserted against that person.

In United Accounts, Inc. v. Quackenbush, 434 N.W.2d 567, 569 (N.D.1989), we explained:

Rule 4(b)(2), North Dakota's "long-arm" provision, is a codification of the principles announced in International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), in which the United States Supreme Court held that "due process requires 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.'" [Quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)]. Rule 4(b)(2) was "designed to permit the state courts to exercise personal jurisdiction to the fullest extent permitted by due process." Hebron Brick Co. v. Robinson Brick & Tile Co., 234 N.W.2d 250, 255 (N.D.1975) (footnote omitted).

Recognizing that the phrase "transacting any business in this state" should be given an "expansive interpretation" by the courts, id. at 570, we resolve the question of whether the court had personal jurisdiction over Schecher by first determining if the requirements under N.D.R.Civ.P. 4(b)(2)(A) have been satisfied and, secondly, whether Schecher, as a nonresident, had sufficient contact with this state that the exercise of personal jurisdiction over him does not offend traditional notions of justice and fair play under the concept of due process of law. See, e.g., Hust v. Northern Log, Inc., 297 N.W.2d 429, 431 (N.D.1980)

.

[¶ 7] Schecher initiated the agency contract by placing a phone call to Auction Effertz, Ltd., in Bismarck. The agreement contemplated Effertz would facilitate the sale of Schecher's cattle by locating potential buyers and negotiating the terms of sale with the ultimate buyer. From the nature of the contract, one can infer much of that activity would be performed in North Dakota and some of it did, in fact, occur in North Dakota. Schecher accepted the terms of the negotiated sale arranged by Neil Effertz, thereby agreeing to sell his herd of cattle to a North Dakota resident. Schecher also, while in North Dakota, made payment toward Effertz's commission. Under analogous circumstances, other courts have found sufficient contact for personal jurisdiction over a nonresident party who had initiated a business transaction by telephone or other electronic medium within the forum state. See Neways, Inc. v. McCausland, 950 P.2d 420, 424 (Utah 1997)

(prima facie showing of specific personal jurisdiction over nonresident who initiated telephone contacts within the forum state to sell papaya capsules in that state and accepted payments originating in the forum state); Beechem v. Pippin, 686 S.W.2d 356, 363 (Tex.App. 1985) (traditional notions of fair play were not violated by exercising jurisdiction over nonresident who, by telephone contact to a business in the forum state of Texas, initiated agreement to lease equipment for use in the nonresident state); Mendelson v. Fleischmann, 386 F.Supp. 436, 438 (S.D.N.Y.1973) (conduct by owners of property in Ohio, who solicited a real estate broker licensed in New York to find a tenant for the Ohio property which entailed negotiation and other contract performance by the broker in New York, constituted transacting business within New York giving that state personal jurisdiction over the Ohio landowners); see also CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1268-69 (6th Cir.1996) (Texas resident, who subscribed over the Internet to a shareware service agreement with an Ohio corporation expressly stating the agreement was governed by and construed in accordance with Ohio law, had sufficient contacts with Ohio to give that state personal jurisdiction over him).

[¶ 8] Although the operative facts vary, in each of the above-cited cases a nonresident who...

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