Cook Associates, Inc. v. Lexington United Corp.

• Decision Date: 04 December 1981
• Docket Number: No. 53854,53854
• Parties: , 57 Ill.Dec. 730 COOK ASSOCIATES, INC., Appellant, v. LEXINGTON UNITED CORPORATION et al., Appellees.
• Court: Illinois Supreme Court

Page 847

429 N.E.2d 847

87 Ill.2d 190, 57 Ill.Dec. 730

COOK ASSOCIATES, INC., Appellant, v. LEXINGTON UNITED CORPORATION et al., Appellees.

No. 53854.

Supreme Court of Illinois.

Dec. 4, 1981.

Berger, Newmark & Fenchel, Chicago (Harry D. Lavery and Christopher J. Horvay, Chicago, of counsel), for appellant.

Joel S. Ostrow, Chicago, for appellees.

WARD, Justice:

This appeal arises out of an action for breach of contract brought in the circuit court of Cook County. The plaintiff, Cook Associates, an Illinois corporation, brought the action against Lexington United Corporation, a Delaware corporation not licensed to do business in Illinois. Lexington is a dinnerware manufacturer whose principal place of business is St. Louis, Missouri. Lexington filed a special appearance to contest the court's in personam jurisdiction (Ill.Rev.Stat.1977, ch. 110, par. 20), but its motion to quash service of process was denied. Thereafter, Lexington answered, discovery was taken, and subsequently summary judgment was granted in favor of Cook. The appellate court reversed the judgment (86 Ill.App.3d 909, 41 Ill.Dec. 446, 407 N.E.2d 944), holding that the circuit court lacked personal jurisdiction over Lexington. Because of the disposition it made, the appellate court did not consider the propriety of the summary judgment. We granted Cook's petition for leave to appeal.

Cook is an employment agency whose offices are in Chicago. From July 1973 to July 1976, it also maintained a branch office in Massachusetts, which was operated by Edith McIntosh. Cook specializes in the placement of executive and professional employees with employers who pay Cook a fee if a person referred by Cook is hired. On May 12, 1976, Joseph Runza, a Lexington executive, phoned McIntosh, with whom he had done business before, at Cook's Massachusetts office. He requested assistance in filling a sales management position at Lexington. The record is unclear as to the title of the position discussed. It appears that Runza had first described it as "national sales manager" but later changed the description to "field sales manager."

On May 13, 1976, McIntosh sent Runza the names and resumes of some prospective employees, one of whom was Gregg Hoegemeir. Her accompanying letter stated: "As you know from our previous correspondence, these men, like all of our candidates, are being submitted to you upon the understanding that if they are employed, our fee will be paid by you in accordance with the enclosed schedule." Cook's fee schedule indicated its Chicago address on the letterhead, and stated that the fee would be 20% of one year's salary for positions paying $15,000 per year or more. The schedule also stated: "A fee will be due from you as to any applicant you hire within two years of our disclosure of his identity, or of our submission or referral of him, to you."

Runza communicated with Hoegemeir and arranged to meet him in Chicago. Hoegemeir's resume discloses that he was then a regional sales manager for a Chicago manufacturer and that he resided in Ballwin, Missouri. At the meeting, Runza offered Hoegemeir the position of "field sales manager" at an annual salary of $22,000. Hoegemeir rejected the offer, and the record reflects that there were no further contacts between Lexington and him for several months.

McIntosh's employment by Cook terminated in July 1976. About three months later, she opened her own employment search and placement service in Massachusetts. It appears that soon thereafter, Runza communicated with McIntosh at her home and advised he was seeking a sales manager for Lexington. This time, it appears, the position would be that of "national sales manager" at a salary in excess of $22,000. McIntosh, acting for her own agency, submitted the names of a number of candidates, including that of Hoegemeir. After several interviews with Hoegemeir, Runza offered him the position at a salary of $25,000 and Hoegemeir accepted. The record does not show whether any of the negotiations which led to Hoegemeir's employment took place in Illinois, nor does it make clear where the contract for his employment was made.

Hoegemeir began working for Lexington in December 1976, and Lexington paid McIntosh a $5,000 fee for her services. Cook later became aware of the hiring of Hoegemeir, and it demanded a $5,000 fee, representing 20% of Hoegemeir's starting salary. When Lexington refused to pay the commission, Cook filed the action for breach of contract in July 1977.

Process was served on Lexington's president, Frank Ivitch, when he was attending a trade show in Chicago. Ivitch and several other company officials were appearing in a week-long housewares exhibit of Lexington. Exhibitors were prohibited from selling merchandise at the exhibition. Less than $50,000 in orders was taken by Lexington at the exhibit, according to the answer to an interrogatory, and were later accepted at Lexington's St. Louis office. Officials of Lexington had attended two other trade shows in Chicago in 1976 and 1977. At each of them, a similar volume of orders was received and later accepted.

Lexington's other contacts with Illinois were listed in an affidavit of Ivitch, and in Lexington's answers to interrogatories. Lexington did not have an office or an employee in this State. It had no Illinois telephone number. It did not advertise in Illinois, except in connection with the trade shows held in Chicago. Lexington merchandise was sold by an independent manufacturer's representative in Illinois to his Illinois accounts. The record does not reflect the volume of those sales. The representative sold merchandise of other manufacturers as well. Working strictly on a commission basis, he received no salary from Lexington. In the year preceding the filing of this action an employee of Lexington accompanied the representative on three or four occasions, but the employee did not make any sales.

The appellate court held, on due process grounds, that the circuit court of Cook County lacked personal jurisdiction over Lexington.

When arguing before the appellate court the parties were not in agreement as to the test or standard to be applied for determining whether there was personal jurisdiction. Lexington submitted that our long-arm statute provides the only means of acquiring jurisdiction over a nonresident corporate defendant. That statute provides in part:

"(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;

(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.

(4) Nothing herein contained limits or affects the right to serve any process in any other manner now or hereafter provided by law. " Ill.Rev.Stat.1977, ch. 110, par. 17.

Lexington contended that the requirements of the statute were not satisfied, because the action did not arise from "the transaction of any business" by Lexington in Illinois.

Cook, on the other hand, contended that the long-arm statute does not prohibit the acquiring of jurisdiction according to the doing-business doctrine. Under that doctrine, a foreign corporation is deemed to have submitted to our jurisdiction by doing business in Illinois. The nonresident defendant becomes amenable to service as a resident corporation, under section 13.3 of the Civil Practice Act, which states:

"A private corporation may be served (1) by leaving a copy of the process with its registered agent or any officer or agent of said corporation found anywhere in the State; or (2) in any other manner now or hereafter permitted by law. A private corporation may also be notified by publication and mail in like manner and with like effect as individuals." Ill.Rev.Stat.1977, ch. 110, par. 13.3.

Cook urged that Lexington's contacts with Illinois rendered the corporation subject to the jurisdiction of the circuit court of Cook County under the "doing business" view, or under the due process standard of "minimum contacts."

The appellate court did not bottom its decision on any one of the standards suggested. It stated that "all of the proposed standards are probably one and the same-minimum contacts." (86 Ill.App.3d 909, 912, 41 Ill.Dec. 446, 407 N.E.2d 944.) The court concluded that Lexington did not have sufficient contacts with Illinois to allow a suit against it in this State because "there was an insufficient relationship among the defendant, the forum, and the litigation to show that Lexington could have reasonably anticipated being haled into court here to defend this cause of action." 86 Ill.App.3d 909, 914, 41 Ill.Dec. 446, 407 N.E.2d 944.

The parties reassert here the jurisdictional arguments that they made to the appellate court. Cook further argues that the appellate court's decision was based on a foreseeability analysis, which it says is invalid under World Wide Volkswagen Corp. v. Woodson (1980), 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490.

Under the due process clause of the fourteenth amendment there are limits to which a State is confined in asserting in personam jurisdiction over a nonresident corporate defendant. The Supreme Court in International Shoe Co. v. Washington (1945), 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 described the constitutional requirement:

"(D)ue 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.' (Citations.)"...