David M. Rice, Inc. v. Intrex, Inc.

• Decision Date: 12 August 1977
• Docket Number: No. 47174,47174
• Citation: 257 N.W.2d 370
• Parties: DAVID M. RICE, INC., Respondent, v. INTREX, INCORPORATED, Appellant.
• Court: Minnesota Supreme Court

Page 370

257 N.W.2d 370

DAVID M. RICE, INC., Respondent, v. INTREX, INCORPORATED, Appellant.

No. 47174.

Supreme Court of Minnesota.

Aug. 12, 1977.

Syllabus by the Court

1. The proper exercise of in personam jurisdiction over a nonresident defendant requires: (a) compliance with appropriate state legislation enacted to provide the court with jurisdiction; and (b) the exercise of jurisdiction under circumstances which do not offend the due process clause of the United States Constitution.

2. The provisions of the Nebraska long-arm statute are satisfied under the facts of this case in which a Nebraska buyer sued a New York seller in Nebraska, and subsequently brought a quasi-in-rem action on the Nebraska default judgment in Minnesota.

3. For a constitutional exercise of in personam jurisdiction over a nonresident defendant, that defendant must have certain minimum contacts with the state. Those minimum contacts are present in the instant case so that the action was properly maintained in Nebraska without violation of constitutional due process.

Henson & Efron and Peter H. Hitch, Minneapolis, for appellant.

Cousineau, McGuire, Shaughnessy & Anderson and Peter G. Van Bergen, Minneapolis, for respondent.

Considered and decided by the court en banc.

MacLAUGHLIN, Justice.

Plaintiff, David M. Rice, Inc. (Rice), a Nebraska corporation, commenced an action in a Nebraska state court against defendant, Intrex Incorporated (Intrex), a New York corporation, and obtained a default judgment in the amount of $2,249.60. Subsequently, Rice brought an action on the judgment in Minnesota gaining quasi-in-rem jurisdiction by garnishment. The Hennepin County Municipal Court granted Rice's motion for summary judgment and Intrex appeals, alleging that there was no valid in personam jurisdiction over Intrex in the Nebraska court. For the reasons stated herein, we affirm the trial court.

Rice engages in the interior design business in Nebraska and Intrex engages in the manufacture and sale of furniture in New York. The action in Nebraska was commenced by Rice against Intrex and against its manufacturer's representative, Patterson Representation Company, Inc. (Patterson), which is incorporated in Minnesota. ¹ Rice alleged that it had ordered four Deacon tables from Intrex, through Patterson, for resale to a client for whom Rice was performing interior design services. Rice alleged that the tables, for which it paid $605, were defectively manufactured, resulting in a breach of implied warranty.

Intrex was served with process in New York with in personam jurisdiction being asserted under Nebraska's long-arm statute. Neb.Rev.Stat. § 25-535 to 25-541 (Supp.1974). Intrex did not answer or otherwise plead or appear in Nebraska to defend against the action, and a default judgment against Intrex was ordered by the Nebraska district court in December 1973.

In May 1976 Rice commenced this action on the Nebraska judgment acquiring quasi-in-rem jurisdiction by garnishment of Intrex' property located within Minnesota, pursuant to Minn.St. 571.41 to 571.69. Intrex answered, alleging that the Nebraska court lacked proper personal jurisdiction of Intrex so that the Nebraska judgment was null and void and thus unenforceable in Minnesota. ² Thereafter, Rice moved for summary judgment which was granted. The trial court determined that Intrex had been amenable to suit in Nebraska so that it was proper for Minnesota to grant full faith and credit to the Nebraska judgment. This appeal followed.

Intrex contends that the Nebraska judgment is not enforceable in Minnesota because the Nebraska District Court did not validly exercise personal jurisdiction over Intrex when it rendered the default judgment. In support of that contention Intrex established that it had never maintained an office or other facility in Nebraska, had never kept a bank account in Nebraska, had never sent a salesman or agent into Nebraska for any business purpose, and had never entered into a contract in Nebraska to supply merchandise or services in that state.

Intrex does not deny, however, that it shipped goods into Nebraska by common carrier addressed to Rice, and had previously shipped goods to other buyers in Nebraska before the transaction in question pursuant to purchase orders received from out-of-state representatives such as Patterson. Intrex maintains that during the preceding 5 years, orders totaling only $2,500 per year were sent into Nebraska; this amounted to 1/10 of 1 percent of their annual gross sales of $2,500,000. In light of these facts, Intrex concludes that to subject it to the jurisdiction of the Nebraska court would force Intrex to bear an unjust and unconstitutional burden.

1. This court recognizes the right of a defendant to contest an action brought on the basis of a foreign court's judgment by demonstrating that the foreign court rendered judgment in the absence of proper personal jurisdiction. It is clear that such judgments are not entitled to full faith and credit in Minnesota. Hutson v. Christensen, 295 Minn. 112, 203 N.W.2d 535 (1972). The proper exercise of in personam jurisdiction over a nonresident defendant requires: (a) compliance with appropriate state legislation enacted to provide the court with jurisdiction, and (b) the exercise of jurisdiction under circumstances which do not offend the due process clause of the United States Constitution.

2. Applicable to the instant case is Neb.Rev.Stat. § 25-536 (Supp.1974), which provides in pertinent part:

"(1) 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:

"(a) Transacting any business in this state;

"(b) Contracting to supply services or things in this state."

This statute provides broad standards for assertion of in personam jurisdiction over nonresidents of Nebraska. Indeed, the Nebraska Supreme Court concluded in Stucky v. Stucky, 186 Neb. 636, 641, 185 N.W.2d 656, 659 (1971), that the statute indicated "the legislative intention to apply the minimum contacts rule where it does not offend traditional concepts of fair play and substantial justice." The United States District Court for Nebraska in General Leisure Products Corp. v. Gleason Corp., 331 F.Supp. 278, 280 (D.Neb.1971), held that the fact that the...