Carmichael v. Snyder

• Decision Date: 06 December 1968
• Citation: 209 Va. 451,164 S.E.2d 703
• Parties: John H. CARMICHAEL et al. v. Joseph C. SNYDER.
• Court: Virginia Supreme Court

Page 703

164 S.E.2d 703

209 Va. 451

John H. CARMICHAEL et al. v. Joseph C. SNYDER.

Supreme Court of Appeals of Virginia.

Dec. 6, 1968.

John M. Court, Phelps & Atkinson, Newport News, on brief, for plaintiffs in error.

Sidney Sacks, Lewis, Sacks & DeLaura, Norfolk, on brief, for defendant in error.

Before EGGLESTON, C.J., and BUCHANAN, SNEAD, I'ANSON, CARRICO, GORDON and HARRISON, JJ.

HARRISON, Justice.

The primary question involved here is the jurisdiction of the court below over the defendant under the provisions of the state's 'Long-Arm Statute', having particular reference to subsections (1) and (6) of § 8--81.2(a) of the Code of Virginia 1968 Cum.Supp.

On March 9, 1967, John H. and Gordon E. Carmichael, plaintiffs, filed in the court below a motion for judgment against defendant, Joseph C. Snyder, a resident of New London, Connecticut, for damages allegedly sustained by plaintiffs as a direct result of the refusal of defendant to perform a contract for the purchase of real estate.

The motion alleges that on May 6, 1966, defendant contracted in writing, in Norfolk, Virginia, to purchase from plaintiffs for $26,500 property located in that city, identified as 4201 Gosnold Avenue, and to make settlement by July 1, 1966; that defendant refused to perform his agreement, and soon after July 1, 1966 moved from Virginia to Connecticut; and that plaintiffs, after mitigating their damages by a sale of the property to another person, incurred the loss which they seek to recover in this action.

Process against Snyder was served on the Secretary of the Commonwealth of Virginia. Defendant filed a motion to quash the service, wherein he denied and put in issue the jurisdiction and venue of the lower court and the right of the court to enter a personal judgment against him, a non-resident of the state. Plaintiffs responded with a motion to strike defendant's motion to quash. The trial court sustained defendant's motion, and the validity of that ruling is before us on this writ of error.

We have no difficulty in finding that, if the trial court had the right to exercise personal jurisdiction over defendant under the 'Long-Arm Statute', service of process on the Secretary of the Commonwealth, as his statutory agent, was authorized by Code § 8--81.3; and that the action was properly brought in the City of Norfolk where the plaintiffs reside and the cause of action arose. Code § 8--81.4.

Chapter 4.1, Title 8 of the Code of Virginia treats of personal jurisdiction in certain actions. It defines persons as including '* * * an individual * * * whether or not a citizen or domiciliary of this state * * *' (Code § 8--81.1), and provides when personal jurisdiction over a person may be exercised. Plaintiffs claim jurisdiction over defendant here by virtue of two subsections of Code § 8--81.2 as follows:

'(a) 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;

'(6) Having an interest in, using, or possessing real property in this State; * * *.'

Since Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), the Supreme Court of the United States has held that the Due Process Clause of the Fourteenth Amendment places some limit on the power of state courts to enter binding judgments against persons not served with process within their boundaries. The line of limitation has been the subject of great controversy and the doctrine there enunciated has undergone a continued process of evolution.

For a review of the numerous opinions reflecting the trend toward expanding the permissible scope of state jurisdiction over foreign corporations and other nonresidents, see State ex rel. Coral Pools v. Knapp, 147 W.Va. 704, 131 S.E.2d 81 (1963); Grobark v. Addo Machine Company, 16 Ill.2d 426, 158 N.E.2d 73 (1959); Beaty v. M. S. Steel Co., 276 F.Supp. 259 (D.Md.1967); Etzler v. Dille and McGuire Manufacturing Company, 249 F.Supp. 1 (W.D.Va.1965); Walke v. Dallas, 209 Va. 32, 161 S.E.2d 722 (1968).

In International Shoe Company v. State of Washington, etc., 326 U.S. 310, 316, 319, 66 S.Ct. 154, 158, 160, 90 L.Ed. 95 (1945), the court made these pertinent observations:

'Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. (Citing case.) But now that the capias ad respondendum has given way to personal service of summons or other form of notice, 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.' (Citing cases.)'

'Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.' (Citing cases.)

In McGee v. International Life Insurance Co., 355 U.S. 220, 222, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957), the court said:

'Looking back over this long history of litigation a trend is clearly discernible toward expanding the permissible scope of state jurisdiction over foreign corporations and other nonresidents. In part this is attributable to the fundamental transformation of our national economy over the years. Today many commercial transactions touch two or more States and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.'

That case involved an action on an insurance contract issued by a foreign corporation to a resident of California and the court said that it was 'apparent that the Due Process Clause did not preclude the California court from entering a judgment binding on respondent. It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State'. 355 U.S. 220, 223, 78 S.Ct. 199, 201.

The statute involved in the instant case is clear and specific. It gives the court the right to exercise personal jurisdiction over a person who acts directly as to a cause of action arising from that person having an interest in, using, or possessing real property in Virginia. Significantly, the statute refers to a Cause of action which Arises from a person Having an interest in real estate.

Defendant and plaintiffs executed a detailed written contract whereby defendant agreed to purchase from plaintiffs real property for a definite sum of money and to make settlement on or before a fixed date. A portion of the purchase price for the property was paid in cash and provision was made as to the manner and time in which the balance was to be paid.

Upon the execution of this contract, defendant thereby became vested of an interest in real estate in Norfolk, Virginia. In Sale v. Swann, 138 Va. 198, 208, 120 S.E. 870, 873 (1924), we held:

'When such a contract is concluded, although it is wholly executory in form, it clothes the purchaser with an equitable estate in the land and the vendor with an equitable ownership of the purchase money. This because equity treats that as done which ought to be done by the terms of such a contract, and as the land ought to be conveyed to the vendee and the purchase money transferred to the vendor, equity regards these as done, and treats the vendee as having acquired property in the land, and the vendor as having acquired property in the price. It follows that as the vendee has thus acquired the full equitable estate, he may convey or encumber it, devise it; if he dies intestate it descends to his heirs at law; his wife is entitled to dower in it, and specific performance may be enforced against his heirs at law after his death. In fact, all the incidents of a real ownership belong to it.' See also 55 Am.Jur., Vendor and Purchaser, § 356, p. 782; 19 Mich.Jur., Vendor and Purchaser, § 224, p. 328; 91 C.J.S. Vendor & Purchaser § 106, p. 1009.

The contract clothed Snyder with an equitable estate or interest in the land he agreed to purchase from plaintiffs, thereby entitling him to the protection of the laws of this state and the machinery which is provided incident to real estate transactions. These laws include the recording statutes; procedures to remove clouds on titles, quiet title to land, establish boundary lines; the zoning statutes and numerous others. Had plaintiffs refused to convey the property in accordance with their contract, defendant could have enforced specific performance. Had defendant decided to cancel, reform or rescind his contract, a forum would have been provided for him to seek such relief.

In the cases discussing 'Long-Arm Statutes', great stress has been given to the enjoyment that a nonresident has of the benefits and protections of a state in which he does business, and to the fact that the exercise of such privilege may give rise to obligations. Protection of life and property within its boundaries is a primary concern of state government, and each state has a vital interest in providing a forum for actions that arise both from torts committed, and out of contracts entered into, within its borders. The interest of the state has necessarily expanded as its citizens have...