Chicago Silver Exchange v. United Refinery, Inc.

• Decision Date: 20 May 1975
• Docket Number: No. 74 C 3613.,74 C 3613.
• Citation: 394 F. Supp. 1332
• Parties: CHICAGO SILVER EXCHANGE, Plaintiff, v. UNITED REFINERY, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

394 F. Supp. 1332

CHICAGO SILVER EXCHANGE, Plaintiff, v. UNITED REFINERY, INC., Defendant.

No. 74 C 3613.

United States District Court, N. D. Illinois, E. D.

May 20, 1975.

Adam Bourgeois, Chicago, Ill., for plaintiff.

Frederic J. Artwick, Sidley & Austin, Chicago, Ill., for defendant, United Refinery, Inc.; E. H. Fankhauser, Cotro-Manes, Warr, Fankhauser & Beasley, Salt Lake City, Utah, of counsel.

MEMORANDUM OF DECISION

JULIUS J. HOFFMAN, Senior District Judge.

This is an action in contract, with jurisdiction based upon diversity of citizenship, 28 U.S.C. § 1332. The plaintiff, Chicago Silver Exchange, is an Illinois corporation having its principal place of business in Chicago. The defendant, United Refinery, Inc., is a Nevada corporation, whose principal place of business is in Utah.

In count I of the amended complaint it is alleged, in substance, that on April 18, 1974, the plaintiff ordered the LaSalle National Bank of Chicago to transfer the sum of $20,000.00 to the First Security Bank of Utah as payment for an order placed by the Chicago Silver Exchange with United Refinery, Inc. for 5000 troy ounce silver ingots. The plaintiff contends that United Refinery, Inc. has received the payment, but has refused to fill either the requested order, or return plaintiff's money.

Count II of the amended complaint reasserts the principal allegations contained in count I, and further alleges, in substance, that the plaintiff has sustained damage from the defendant's "wilfull and wanton tortious interference with contractual relationships," as well as from the "loss of customers and business and destruction of the company's good name through attack and accusations following the failure to fill orders."

The action is now before the court on the motion of United Refinery, Inc. to dismiss the complaint for lack of jurisdiction over the person of the defendant and for improper venue. In addition, at page 14 of its memorandum in support of the motion, the defendant seeks, in the alternative, dismissal of count II of the amended complaint for failure to state a claim upon which relief may be granted.

Rule 4(e) of the Federal Rules of Civil Procedure provides that federal courts are to follow state rules regarding the assertion of in personam jurisdiction over non-residents to the extent that such rules are consistent with due process. Rosenthal & Co. v. Dodick, 365 F.Supp. 847 (N.D.Ill.1967). In the case at bar it is undisputed that if jurisdiction is to be sustained, it will be sustained pursuant to the so-called "Illinois Long-Arm Statute," Ill.Rev.Stat., ch. 110, § 17, which provides, in pertinent part, as follows:

(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any such acts:

(a) The transaction of any business within this State;

(b) The commission of a tortious act within this State;

. . . . . .

(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this Section.

Although it is well settled that in enacting the long-arm statute the Illinois legislature intended to exert jurisdiction over non-residents to the extent permitted under the due process clause, O'Hare International Bank v. Hampton, 437 F.2d 1173 (7th Cir. 1973); Nelson v. Miller, 11 Ill.2d 378, 143 N. E.2d 673 (1967), sufficient "minimum contacts" must nevertheless exist in the forum state so that jurisdiction over non-resident defendants is reasonable and just according to traditional concepts of fair play and substantial justice. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Since there is no set formula or rule of thumb for determining whether there are sufficient minimum contacts, short of ascertaining what is fair and reasonable in the circumstances of a particular case, Hutter Northern Trust v. Door County Chamber of Commerce, 403 F.2d 481 (7th Cir. 1968), the relevant inquiry, therefore, is whether the defendant engaged in some act or conduct by which it may be said to have invoked the benefits and protection of the law of the forum. Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d 432, 176 N.E.2d 761 (1961); Consolidated Laboratories, Inc. v. Shandon Scientific Co., 384 F.2d 797 (7th Cir. 1967).

In support of the motion, defendant contends that it was not amenable to service of process under the Illinois long-arm statute, because it was neither qualified to do business, nor transacting business in Illinois, and that the transaction upon which the amended complaint is based occurred outside Illinois.

Moreover, defendant has submitted the affidavit of Mr. Lynn Burr, the former president of United Refinery, Inc., in which he states, among other things, that he has never been in Illinois on business on behalf of United Refinery, Inc., nor has he ever contacted the plaintiff about business between plaintiff and defendant. Mr. Burr further states that his only contact with the plaintiff occurred prior to December, 1973, when he was employed by Associated Smelters, Inc., a Nevada corporation havings its principal place of business in Las Vegas. He also states that the only contacts between the Chicago Silver Exchange and United Refinery, Inc. were initiated by an officer of the Chicago Silver Exchange, Irving Dorfman, either by telephone calls from Florida or Illinois to Utah or, on one occasion, by Mr. Dorfman's personal visit to Utah. Furthermore, Mr. Burr states that all business of United Refinery, Inc. is conducted f.o.b. Salt Lake City, Utah.

Thus, it is the position of the defendant that United Refinery, Inc. has not had the "minimum contacts" with Illinois necessary to sustain personal jurisdiction under the Illinois long-arm statute.

The plaintiff, on the other hand, alleges in the amended complaint, that from on or about December 1, 1972 to on or about April 18, 1974, plaintiff and defendant engaged in the purchase and sale of silver which was subsequently shipped to the plaintiff in Illinois. The plaintiff contends that these transactions also involved visits by Mr. Lynn Burr to Chicago.

In addition, to support the court's jurisdiction, plaintiff has submitted the affidavit of Mr. Irving Dorfman, the president of the Chicago Silver Exchange, in which he states, in part, that the initial contact between "the parties" was on or about December 1, 1972, and that in the spring of 1973 defendant's agent, Mr. Lynn Burr, president of United Refinery, Inc., came to Chicago to speak with him in person regarding silver transactions. He further states that thereafter, Mr. Burr was in Chicago several times on the same business, and that he and Mr. Burr spoke often by long-distance telephone about related matters.

At the outset, the court observes that the affidavits filed pursuant to the motion to dismiss contain contradictory factual allegations from which the court must decide the jurisdictional issue. For purposes of determining whether a prima facie case for in personam jurisdiction has been established, such conflicts must be resolved in favor of the plaintiff. United States Ry. Equip. Co. v. Port Huron & Detroit R.R. Co., 495 F.2d 1127 (7th Cir. 1974).

Thus, accepting the validity of plaintiff's allegations, for the purposes of this motion the facts would appear to be as follows:

In the spring of 1973, Mr. Lynn Burr came to Chicago to speak, in person, to Mr. Irving Dorfman regarding...