Dahlberg Co. v. Western Hearing Aid Center, Ltd., 38030-1-2

• Decision Date: 27 January 1961
• Docket Number: No. 38030-1-2,38030-1-2
• Citation: 107 N.W.2d 381,259 Minn. 330
• Parties: DAHLBERG COMPANY, Respondent, v. WESTERN HEARING AID CENTER, Ltd., Dahlberg Western Company, Inc., and Oregon Hearing Center, Inc., Appellants.
• Court: Minnesota Supreme Court

Page 381

107 N.W.2d 381

259 Minn. 330

DAHLBERG COMPANY, Respondent, v. WESTERN HEARING AID CENTER, Ltd., Dahlberg Western Company Inc., and Oregon Hearing Center, Inc., Appellants.

No. 38030-1-2.

Supreme Court of Minnesota.

Jan. 27, 1961.

Syllabus by the Court.

1. A nonresident corporate defendant may be subjected to the jurisdiction of the courts of Minnesota under Minn.St. 303.13, subd. 1(3), where such nonresident defendant does some act or consummates some transaction involving at least minimal contacts in this forum which gives rise to a cause of action resulting from activities of the defendant within this state. Where such minimal contacts exist the courts of this state may accept jurisdiction where to do so would be consonant with traditional notions of fair play and substantial justice. The reasonableness of subjecting the defendant to jurisdiction under this rule may be tested by the standards analogous to those of forum non conveniens.

2. Where a foreign corporation entered into contracts with a Minnesota manufacturer for the purchase of its product, which contracts were prepared, executed, and delivered in this forum, pursuant to which goods were shipped to the foreign corporation f.o.b. the address of the local corporation; where officer of foreign corporation attended numerous meetings at the office of the local corporation at which business policies, plans, and procedures were agreed upon; and where notes representing indebtedness for the purchase of such products were made, executed, and delivered by the foreign corporation in Minnesota and were payable in Minnesota, sufficient contacts were created by the foreign corporation to permit our courts to take jurisdiction of an action growing out of such transactions.

Joseph Robbie and Denver Kaufman, Jerome Fitzgerald, Minneapolis, for appellants.

Levitt Palmer & Rogers, John Palmer, Minneapolis, for respondents.

MURPHY, Justice.

This is an appeal from an order of the district court denying the defendants' motion to have service of process quashed and to dismiss six actions instituted by The Dahlberg Company of Minneapolis, Minnesota, against Western Hearing Aid Center, Ltd., Dahlberg Western Company, Inc., and Oregon Hearing Center, Inc., all foreign corporations.

It appears from the record that plaintiff, The Dahlberg Company, is a Minnesota corporation engaged in the manufacture and sale of hearing aids, parts, and accessories. It seeks to recover on five promissory notes which two of the defendants made and delivered to plaintiff at its plant in Minneapolis and upon an open account had with one of the defendants. Each of the notes is payable in Minneapolis. Each of the defendants is a corporation organized and existing under the laws of Oregon. The total amount involved in the six cases is $24,720.79, all of which is payable by the defendants to the plaintiff in Minneapolis.

The defendant corporations are engaged in the sale and distribution of hearing aids and accessory products in areas outside of the State of Minnesota. The defendant Dahlberg Western Company, Inc., entered into two contracts in writing with the plaintiff which were executed in Minnesota. The plaintiff company filled the orders of the defendant corporations at its plant in Minneapolis. The orders were delivered to the defendant corporations f.o.b. the plaintiff's plant at Minneapolis. The president of each of the defendant corporations is one Harold S. Jones. It appears from the record that he attended sales meetings and conferences at the offices of the plaintiff company at Minneapolis, during which meetings business policies, plans, and procedures were discussed, considered, and agreed upon. The promissory notes in question were executed by the defendant corporations at plaintiff's office in Minneapolis, were delivered to the plaintiff in Minneapolis, and made payable there. The defendant corporations have no assets or property in Minnesota nor do they maintain offices or a place of business in this state.

The summons and complaint in each action was served by leaving a duplicate copy with the secretary of state of Minnesota as agent for process pursuant to Minn.St. 303.13, subd. 1(3). ¹ It is the contention of the defendant foreign corporations that they do not have sufficient contacts with the State of Minnesota to render them amenable to the jurisdiction of this state. They contend that the application of § 303.13, subd. 1(3), would be unconstitutional as applied to the particular facts in this case.

1. In two recent cases decided by this court § 303.13, subd. 1(3), the so-called 'single-act' statute, has successfully withstood attacks upon its constitutionality. In Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670, we held that a foreign corporation had established minimum contacts sufficient to subject it to the jurisdiction of the courts of this state when it had granted a local distributor an exclusive franchise to sell its products in St. Louis County; joined with the distributor in filing documents with the secretary of state of Minnesota in order that he might obtain the dealer's license; reimbursed the distributor for a portion of advertising expense; furnished him with conditional sales contract forms; mailed direct to the buyer of its product a written warranty; and later sent its servicemen to the state in an effort to repair defects in the product. In the more recent case of Atkins v. Jones & Laughlin Steel Corp., 258 Minn. 571, 104 N.W.2d 888, which involved an action for negligence resulting in personal injuries, we held that under the so-called 'single-act' statute jurisdiction was acquired against a foreign corporation which did not maintain salesmen in this state nor have contract relations with dealers or distributors here. The complaint in that action alleged that plaintiff while handling a product distributed by defendant had been injured in this state as a result of defendant's negligence. We held that if the allegations of the complaint were established it would follow that the defendant would be subject to the jurisdiction of our courts since the last event essential to the tort liability occurred here. That event, the injury to the plaintiff, would provide sufficient contact between the defendant and the forum to subject it to process under § 303.13, subd. 1(3). In both the Beck and Atkins cases we discussed at length the subject of judicial jurisdiction over nonresident corporate defendants. Most, if not all, of the significant decisions relating to this subject were discussed in those cases.

We observed in those cases that International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057, altered the foundation of the test of due process from the strict requirement of physical power over the defendant to the flexible requirement of minimum contacts between the defendant corporation and the forum state. Based upon the theory of the International Shoe Company case and McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, a number of states, including Minnesota, enacted laws broadening the basis for acquisition of jurisdiction over foreign corporations. ² By these statutes the legislature has recognized that the development of interstate commerce has brought about a fundamental change in our national economy which justifies expanding the scope of state jurisdiction over foreign corporations and other nonresidents. They comprehend, as indicated by the International Shoe case, that one who by his conduct creates a cause of action against himself in a state ought to be subject to action in that state. Under the former concept ³ of 'physical presence,' 'consent,' or 'doing business' as a basis for jurisdiction, defendants have had too much protection. Plaintiffs ought to be entitled to try their cases where the facts occur, the witnesses normally reside, and local law applies. This is in keeping with the 'fair play' and 'substantial justice' standard laid down in the International Shoe case as the proper one to apply to the problem. It is no greater hardship on the defendant to try his case where his voluntary act brought the dispute into being than to require the plaintiff to try it only where he may later be able to get service on the defendant's person. The enactment of the new statutes and the numerous decisions on the subject have given rise to the most extensive reexamination of this area of the law since the early statutes providing for service of process on nonresident motorists by service on a state official were validated by Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091. ⁴ ...