Dillon v. Numismatic Funding Corp.

• Decision Date: 02 June 1976
• Docket Number: No. 7518SC949,7518SC949
• Court: North Carolina Court of Appeals
• Parties: Thomas A. DILLON, III v. NUMISMATIC FUNDING CORPORATION.

Page 137

225 S.E.2d 137

29 N.C.App. 513

Thomas A. DILLON, III v. NUMISMATIC FUNDING CORPORATION.

No. 7518SC949.

Court of Appeals of North Carolina.

June 2, 1976.

Dameron, Turner, Enochs & Foster, by James H. Burnley, IV, Raleigh, for the plaintiff.

Jordan, Wright, Nichols, Caffrey & Hill, by William L. Stocks, Greensboro, for the defendant.

BROCK, Chief Judge.

The sole question presented by this appeal is whether defendant, a foreign corporation with no office, agents, or regular business activity in North Carolina, is subject to the In personam jurisdiction of the North Carolina courts for pourposes of a cause of action arising outside North Carolina, brought by a plaintiff who was a resident of another state at the time the action arose, and which is entirely distinct from defendant's nominal contacts with North Carolina.

First, defendant contends that the plaintiff lacks adequate statutory authority upon which to base In personam jurisdiction. Apparently plaintiff relied upon several alternative statutory grounds for In personam jurisdiction: G.S. § 55--144, G.S. § 55--145, G.S. § 1--75.4(3), and G.S. § 1--75.4(1). General Statute § 55--144, authorizes substituted service upon the Secretary of State in actions against foreign corporations transacting business within the State, provided the cause of action arises out of the business transacted in the State. This statute 'provides no jurisdiction . . . for foreign transitory causes of action.' R.R. v. Hunt & Sons, Inc., 260 N.C. 717, 133 S.E.2d 644 (1963). It is clear that the cause of action for breach of contract arose at the time defendant notified plaintiff by phone in Greenville, South Carolina, that the job previously offered to plaintiff was no longer available. A cause of action for breach of contract arises at the time the breach occurs. See 5 Strong, N.C. Index, Limitation of Actions § 4, p. 235. In this case the breach occurred in South Carolina. Thus, due to the fact that plaintiff's cause of action did not arise out of business transacted by defendant in North Carolina, G.S. § 55--144 does not apply.

General Statute § 55--145 confers In personam jurisdiction over foreign corporations not transacting business in North Carolina, in special instances. Like G.S. § 55--144, this statute only applies to actions arising in North Carolina. Rendering Corp. v. Engineering Corp., 10 N.C.App. 39, 177 S.E.2d 907 (1970). Since plaintiff's cause of action arose outside of North Carolina, G.S. § 55--145 is inapplicable.

Alternatively plaintiff posits G.S. § 1--75.4(1) as an appropriate statutory basis for In personam jurisdiction in this case.

General Statute § 1--75.4(1) is entitled 'Local Presence or Status.' General Statute § 1--75.4(1)(d) grants In personam jurisdiction 'in any action, whether the claim arises within or without this State, in which a claim is asserted against a party who . . . Is engaged in substantial activity within this State. . . .' (Emphasis added.) Defendant argues that its business activities within the State during the past six years do not approach the magnitude of 'substantial activity' as defined by G.S. § 1--75.4(1)(d). In our opinion it would serve no useful purpose to decide this case on the basis of whether defendant's activities amount to 'substantial activity' within the meaning of G.S. § 1--75.4(1)(d). Due process and not the language of G.S. § 1--75.4(1)(d) is the ultimate test of North Carolina's 'long-arm' jurisdiction over a nonresident, Chadbourn, Inc. v. Katz, 285 N.C. 700, 208 S.E.2d 676 (1974); and it is generally accepted that North Carolina's longarm statute (G.S. § 1--75.4) should be liberally construed in favor of finding personal jurisdiction, subject of course to due process limitations. See Trust Co. v. McDaniel, 18 N.C.App. 644, 197 S.E.2d 556 (1973). Thus we are reluctant to define and apply the meaning of 'substantial activity' in G.S. § 1--75.4(1)(d) apart from considerations of due process.

Defendant contends that the trial court's finding of In personam jurisdiction in this action constitutes a violation of its rights to due process. We agree.

The test for determining whether the assertion of In personam jurisdiction over a nonresident defendant satisfies due process is well-known: 'due process requires only that in order to subject a defendant to 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 'the traditional notions of fair play and substantial justice. " (Emphasis added.) International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). 'It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. . . . But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations; and, so far as those obligations Arise out of or are Connected with the activities Within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. (Citations omitted.)' (Emphasis added.) International Shoe Co. v. Washington, Id. The underlying concern of the 'minimum contacts' test is fairness: 'The essence of the issue here, at the constitutional level, is . . . one of fairness to the corporation. Appropriate tests for that are discussed in International Shoe Co. v. Washington, supra. . . . The amount and kind of activities which must be carred on by the foreign corporation in the state of the forum so as to make it reasonable and just to subject the corporation to the jurisdiction of that state are to be determined in...