Bankers Trust Co. v. Fidata Trust Co. New York

• Decision Date: 21 March 1990
• Docket Number: No. 89-657,89-657
• Citation: 452 N.W.2d 411
• Parties: BANKERS TRUST COMPANY, Appellee, v. FIDATA TRUST COMPANY NEW YORK f/k/a Bradford Trust Company, Appellant, and General Growth Limited Partnership f/k/a General Growth Properties, Appellee.
• Court: Iowa Supreme Court

Page 411

452 N.W.2d 411

BANKERS TRUST COMPANY, Appellee, v. FIDATA TRUST COMPANY NEW YORK f/k/a Bradford Trust Company, Appellant and General Growth Limited Partnership f/k/a General Growth Properties, Appellee.

No. 89-657.

Supreme Court of Iowa.

March 21, 1990.

Louis J. Maione of Maione & Collins, New York City, and Steven M. Augspurger of Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, for appellant.

Joseph G. Van Winkle of Gamble, Riepe, Webster, Davis & Green, Des Moines, for appellee Bankers Trust.

Jay Eaton and John F. Lorentzen of Nyemaster, Goode, McLaughlin, Voigts, West, Hansell & O'Brien, P.C., Des Moines, for appellee General Growth.

Considered by HARRIS, P.J., and SCHULTZ, LAVORATO, SNELL and ANDREASEN, JJ.

SCHULTZ, Justice.

The principal issue in this case is whether the nonresident defendant had sufficient minimum contacts with Iowa to subject it to the jurisdiction of the courts of this state. An additional issue is whether defendant consented to jurisdiction in Iowa. The trial court overruled defendant's motion to dismiss for lack of personal jurisdiction. We reverse and remand.

In 1983 General Growth Limited Partnership (General) decided to offer its shareholders subscription rights to additional shares. It hired Bankers Trust Company (Bankers) to act as its agent for the rights offering. Both General and Bankers have their principal places of business in Des Moines, Iowa. Bankers engaged Bradford Trust Company of New York, now known as Fidata Trust Company New York (Fidata), ¹ to act as its New York agent for the acceptance of hand deliveries of these subscriptions. Each company agreed to hold harmless and indemnify the party acting as its agent from liability for good faith performance. This provision does not apply to acts performed in bad faith or with gross negligence.

A Maryland shareholder sustained a loss when its subscription to additional shares was misdelivered in New York. It brought an action and recovered damages against various defendants, including a $76,000 judgment against Fidata. Fidata commenced an action against Bankers for indemnification in the United States District Court for the Southern District of New York. While this action was pending, Bankers brought this action for a declaratory judgment and breach of contract, joining General and Fidata as defendants. Fidata was personally served in New York pursuant to Iowa Rule of Civil Procedure 56.2. General filed a counterclaim against Bankers and a cross-claim against Fidata. In its amended answer and later by a motion to dismiss, Fidata claimed that it did not have sufficient minimum contacts with Iowa to give the Iowa courts jurisdiction.

I. Minimum contacts. Bankers bases its claim of personal jurisdiction in Iowa on its service of Fidata under rule 56.2. ² This rule only requires that the out-of-state defendant have minimum contacts with Iowa and further permits Iowa jurisdiction to the extent allowed by the federal constitution. Al-Jon, Inc. v. Garden St. Iron and Metal, Inc., 301 N.W.2d 709, 711 (Iowa 1981) (citing Larsen v. Scholl, 296 N.W.2d 785, 788 (Iowa 1980)). We indicated in Al-Jon that the issue is whether personal jurisdiction over the nonresident defendant offends the due process clause of the fourteenth amendment to the United States Constitution. 301 N.W.2d at 711.

The principles of due process as applied to a forum state's claim of jurisdiction over a nonresident require an examination of the facts of each case to determine whether the assertion of personal jurisdiction satisfies "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283 (1940)). The due process clause protects an individual's liberty interest in not being subject to the binding judgment of a forum with which the defendant has established no meaningful contact, ties or relation. Id. 326 U.S. at 319, 66 S.Ct. at 160, 90 L.Ed. at 104.

The minimum contacts "test" is meant to insure the fairness and reasonableness of requiring a nonresident to defend a law suit in the forum state. See id. at 317, 66 S.Ct. at 158, 90 L.Ed. at 102. In determining whether the contacts were sufficient we consider:

(1) the quantity of the contact;

(2) the nature and quality of the contact;

(3) the source and connection of the cause of action with these contacts;

(4) the interest of the forum state; and

(5) the convenience of the parties.

Larsen, 296 N.W.2d at 788. The first three factors are the most important. Id.

Here, the trial court overruled Fidata's motion to dismiss by simply concurring "with the reasons set out in the resistances filed in opposition to this motion." The trial court was remiss in its ruling, because the hearing and disposition of a motion involving personal jurisdiction is a special proceeding requiring it to find facts and draw conclusions of law in its decision. Kagin's Numismatic Auctions, Inc. v. Criswell, 284 N.W.2d 224, 226 (Iowa 1979). Fidata did not, however, seek an enlargement of the ruling pursuant to Iowa Rule of Civil Procedure 179(b). We, therefore, presume the court decided the facts necessary to support its decision in Bankers' favor. Brunner v. United Fire & Casualty Co., 338 N.W.2d 151, 152 (Iowa 1983).

In a proceeding involving personal jurisdiction, the court accepts the allegations of the petition as true. Larsen, 296 N.W.2d at 787. "Plaintiff has the burden to sustain the requisite jurisdiction, but when a prima facie case is established, defendant has the burden to produce evidence to rebut or overcome it." Id. As the trial court's findings have the force and effect of a jury verdict, we must assume the trial court rejected Fidata's evidence. Consequently, the question is whether the facts presented here, when viewed in a light most favorable to Bankers, support the trial court's conclusion that it had submitted to the jurisdiction of the Iowa court.

Bankers advances two theories to support the grant of personal jurisdiction over Fidata in Iowa. First, it claims Fidata's activities in the subscription offering established minimum contacts with this state even though Fidata was not physically present in Iowa. Second, it argues that Fidata's alleged physical presence within the state at other times permits the Iowa court's exercise of in personam jurisdiction.

We first examine the evidence of contacts arising from the subscription offering. In its resistance to the motion to dismiss, Bankers submitted the deposition of the former Fidata officer who was in charge of the New York operation in 1983 and the affidavit of its own corporate officer at that time. In addition, the court had Bankers' petition which included the agreement between the parties. Under the agreement and according to the two officers, Fidata was to act as a depository for the subscription rights in New York. It received, examined and photographed the material and then compiled a report which it sent to Des Moines. Fidata would then call to inform Bankers of the contents of the package it was sending. Fidata had no duties in Des Moines, and its only contact with Bankers was by telephone and mail.

It is undisputed that Fidata was employed in New York, performed its duties in New York and that none of its employees or representatives had physical contact with the state of Iowa. Bankers urges, however, that the telephone calls and the mailings were vital to the subscription offer in Iowa and constituted minimum contacts sufficient to trigger jurisdiction. The nonresident corporation's physical presence within the forum state is not essential to a finding of sufficient minimum contacts; contacts by telephone or mail may suffice. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528, 543 (1985); McGee v. International Life Ins. Co., 355 U.S. 220, 222-23, 78 S.Ct. 199, 200-01, 2 L.Ed.2d 223, 226 (1957) (jurisdiction found in California when nonresident insurance company solicited California resident to transfer insurance, transfer was accepted in California, and policy mailed to policy holder in California); Hager v. Doubletree, 440 N.W.2d 603, 606-09 (Iowa 1989) (jurisdiction found in Iowa when nonresident agents conducted business with Iowa insurance company by mail and telephone).

When we examine the mail and telephone contacts, we consider not only the quantity of the contacts but their nature and quality. It is critical that Fidata's conduct in Iowa must be such that it should have reasonably anticipated being haled into state court. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490, 501 (1980). The Supreme Court held that accepting the benefits of affiliation with a nationwide organization doing business in the forum state and sending magazines into a state are significant activities. Burger King, 471 U.S. at 479-80, 105 S.Ct. at 2186, 85 L.Ed.2d at 545; Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781, 104 S.Ct. 1473, 1481-82, 79 L.Ed.2d 790, 801-02 (1984).

When we analyze the type of connections that Fidata had with Iowa, we conclude they are not the type that would have led Fidata to believe it would be haled into court. While the quantity of the communications from Fidata to Iowa was plentiful, the nature and quality of these contacts was trifling. The phone calls were to notify Bankers that the subscriptions were on the way or concerned activities in New York. The mailing was merely a ministerial act. The affiant stated that Fidata's "only responsibilities were to collect and relay the packages of stock certificates it had collected as the New York drop." Fidata was not attempting to conduct business in Iowa; it performed the contract in New York.

The incident that gave rise to this suit was the misdelivery of stock subscriptions in New York by a...