Davis v. Triumph Corporation

• Decision Date: 12 September 1966
• Docket Number: No. LR-66-C-20.,LR-66-C-20.
• Citation: 258 F. Supp. 418
• Parties: Billy M. DAVIS dba Davis Cycle Company, Plaintiff, v. The TRIUMPH CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

258 F. Supp. 418

Billy M. DAVIS dba Davis Cycle Company, Plaintiff, v.The TRIUMPH CORPORATION, Defendant.

No. LR-66-C-20.

United States District Court E. D. Arkansas, W. D.

September 12, 1966.

COPYRIGHT MATERIAL OMITTED

Jack L. Lessenberry, Little Rock, Ark., for plaintiff.

Don F. Hamilton, Little Rock, Ark., for defendant.

Memorandum Opinion

HENLEY, Chief Judge.

This diversity case is now before the Court on the motion of the defendant to quash service of summons and on a subsequent and more basic motion to dismiss the complaint on the ground that the Court lacks personal jurisdiction with respect to defendant.The motions have been submitted on the record made up in the case as of this time, including affidavits, exhibits, and memorandum briefs.

There is no question of federal subject matter jurisdiction.Plaintiff is an individual citizen of Little Rock, Pulaski County, Arkansas.The defendant is a Maryland corporation, having its principal place of business in the vicinity of Baltimore in that State.Judged by the amount of plaintiff's demand, the sum in controversy, exclusive of interest and costs, is in excess of $10,000.

The record before the Court establishes that from January 1, 1951, to October 1965plaintiff, Billy M. Davis, doing business under the name of Davis Cycle Company, was a franchised dealer in Triumph motorcycles and parts.During and after 1957 his place of business was located at 2317 Wright Avenue in the City of Little Rock.Prior to August 1965plaintiff's territory included all of Pulaski County and he had an exclusive franchise in that county.

Triumph motorcycles and motor scooters, and presumably parts and supplies therefor, are manufactured in England.They are distributed in this country by the defendant, The Triumph Corporation.Defendant franchises dealers throughout the country and sells merchandise to them; the dealers in turn sell the merchandise to the motorcycle and motor scooter riding public.

It appears that the franchises are issued on a year to year basis and are terminable at the will of either party on 30 days notice.Franchised dealers agree, among other things, to promote the sale of Triumph products, including parts, to maintain suitable business premises, to stock and display certain described minimum inventories, to maintain and keep in good working order adequate demonstration models, to display prominently the name "Triumph" in approved form inside and outside places of business, and to pay for all merchandise ordered by them.

For its part Triumph undertakes, among other things, to supply to its dealers such merchandise as might be reasonably required by the dealers in the proper conduct of their businesses to the extent that it was able to do so having due regard for various contingencies referred to in the contract.

The last contract under which plaintiff operated was dated October 23, 1964, and expired by its own terms in October 1965.The formal contract itself is a rather short document, but it recites that supplementary understandings in writing or attached to the formal contract should constitute a part thereof.And the record contains a copy of certain supplementary understandings and explanations, dated October 1963, which supplementary material includes rather detailed requirements and limitations upon the dealer not spelled out in the formal contracts.

The complaint alleges in substance that in the latter part of 1964, presumably after the execution of the October 23 contract, defendant commenced a course of conduct designed to destroy plaintiff's business, terminate the franchise agreement, and deprive plaintiff of his profits.It is alleged that as part of this scheme plaintiff was compelled to agree to a reduction of his territory to the City of Little Rock, a reduction which would take out of his territory the large City of North Little Rock, and the rapidly growing City of Jacksonville near which place is located the Little Rock Air Force Base.

It is further alleged that defendant breached the franchise agreement in a number of ways, including refusal to fill orders for merchandise, favoring competing dealers, failing and refusing to supply plaintiff with adequate information concerning the supply and production of vehicles, refusal to offer adequate assistance in sales promotion and technique, refusal or failure to reply to correspondence and inquiries, setting up a competing business in North Little Rock at a time when plaintiff still had an exclusive franchise covering all of Pulaski County, forcing plaintiff to agree to a reduction of his territory, and cancelling his franchise after agreeing that he would continue to have an exclusive franchise for the City of Little Rock.

Various items of damage are claimed, and plaintiff's total demand is about $30,000.¹

Plaintiff filed this suit originally in this Court on February 10 of the current year.Defendant has not qualified to do business in Arkansas and has no agent for service here; plaintiff undertook to get service under the provisions of the Arkansas version of the Uniform Interstate and International Procedure Act, Ark.Stats. § 27-2501 et seq., read in connection with Rule 4(d), of the Federal Rules of Civil Procedure, as amended in 1963.

The complaint having been filed, the Clerk issued summons thereon and delivered the same to counsel for plaintiff.Counsel on the same day addressed a letter to defendant advising that the suit had been filed and enclosing a copy of the summons and complaint.The letter, a copy of which is in the record, indicates that it was transmitted by certified mail, return receipt requested, but no proof of service has ever been made as required by Ark.Stats. § 27-2503 A2.The motion to quash which has been mentioned is based upon the lack of proof of service and also upon the fact that the attorney for a plaintiff is not a proper person to effect service under the Act.The Court before going further will say that the position of the defendant on that particular motion is well taken, and the motion to quash will be granted.

In support of the motion to dismiss for lack of jurisdictionthe defendant contends, first, that the Act does not apply to defendant at least as far as this case is concerned, and, second, that to apply it to defendant so as to sustain jurisdiction would offend due process of law.The first of those contentions raises simply a question of the construction and application of a State procedural statute, a question of State law.The second question is one of federal constitutional law.The answers to the two questions are not necessarily the same in a particular case.This is true because a State may not constitutionally exercise in personam jurisdiction with respect to a litigant in a manner or to an extent prohibited by the 14th Amendment; however, for reasons of its own a State may not choose to go as far as the Constitution permits in the field of the exercise of such jurisdiction.In other words the Constitution sets certain limits beyond which State jurisdiction cannot be exercised, but the State's own limits may be narrower.SeeAftanase v. Economy Baler Co., 8 Cir., 343 F.2d 187;Ark-La Feed & Fertilizer v. Marco Chemical Co., 8 Cir., 292 F.2d 197;McAvoy v. Texas Eastern Transmission Co., W.D.Ark., 185 F.Supp. 784;Fritchey v. Summar, W.D.Ark., 86 F.Supp. 391.

The federal constitutional standards for the exercise of in personam jurisdiction by a State with respect to a non-domesticated foreign corporation, such as defendant here, are to be found in cases like International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.See alsoMcGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223;Perkins v. Benguet Consolidated Mining Co., 342 U. S. 437, 72 S.Ct. 413, 96 L.Ed. 485.

International Shoe Co. v. State of Washington, supra, the leading case, makes it clear that the right of a State to exercise jurisdiction with respect to a foreign corporation does not depend upon whether it is "doing business" there within the traditional and conservative meaning given to that term.Rather, due process is satisfied if the corporation has "certain minimum contacts with (the forum State) such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'"(326 U.S. at 316, 66 S.Ct. at 158.)The Court also held that the requirements of due process are met by such contacts between the corporation and the forum State "as to make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there."(Ibid at 317, 66 S.Ct. at 158.)

In his recent opinion in the case of Waukesha Building Corporation v. Jameson, W.D.Ark., 246 F.Supp. 183, Judge Miller in speaking of International Shoe had this to say (pp. 186-187 of 246 F. Supp.):

"The so-called `doing business'statutes are bottomed upon the defendant's presence with respect to the cause of action sued upon or certain other minimum contacts.As stated in International Shoe Co. v. State of Washington * * * as a constitutional minimum it must be shown that the defendant has had at least minimum contacts to render it amenable to the jurisdiction of the courts of a state.The underlying principles are, of course, fair play, reasonable notice and opportunity to defend.What constitutes minimum contacts within a state to render a corporation amenable to the jurisdiction of the courts of that state is far less than the traditional concept of doing business."

The International Shoe Co. case was decided in 1945, and at its 1947 session the Arkansas Legislature passed the "long arm statute" which became codified as Ark.Stats. § 27-340 for the rather obvious purpose of taking advantage of the more liberal jurisdictional rule enunciated in that case.However, fifteen years were to pass before the decision of the Supreme Court...