Dillon v. Numismatic Funding Corp.

• Citation: 291 N.C. 674,231 S.E.2d 629
• Decision Date: 31 January 1977
• Docket Number: No. 139,139
• Parties: Thomas A. DILLON, III v. NUMISMATIC FUNDING CORPORATION.

Page 629

231 S.E.2d 629

291 N.C. 674

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

No. 139.

Supreme Court of North Carolina.

Jan. 31, 1977.

Turner, Enochs, Foster & Burnley by James H. Burnley, IV, Greensboro, for plaintiff appellant.

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

MOORE, Justice.

The sole issue posed for decision is whether the trial court acquired In personam jurisdiction of defendant pursuant to G.S. 1--75.4. The resolution of this question involves a two-fold determination. First, do the statutes of North Carolina permit the courts of this jurisdiction to entertain this action against defendant. If so, does the exercise of this power by the North Carolina courts violate due process of law. See Pulson v. American Rolling Mill Co., 170 F.2d 193 (1st Cir. 1948).

G.S. 1--75.4(1) confers jurisdiction upon a court in this State having subject matter jurisdiction in the following instances:

'(1) Local Presence or Status.--In any action, whether the claim arises within or without this State, in which a claim is asserted against a party who when service of process is made upon such party:

a. Is a natural person present within this State; or

b. Is a natural person domiciled within this State; or

c. Is a domestic corporation; or

d. Is engaged in substantial activity within this State, whether such activity is wholly interstate, intrastate, or otherwise. (Emphasis added.)

G.S. 1--75.4 is commonly referred to as the 'long-arm' statute. In Chadbourn, Inc. v. Katz, 285 N.C. 700, 208 S.E.2d 676 (1974), G.S. 1--75.4(6) was discussed and analyzed in conjunction with the United States Supreme Court cases which formed the constitutional basis for such 'long-arm' statutes. In Chadbourn, Justice Huskins stated:

'State legislatures have responded to these expanding notions of due process with 'long-arm' legislation designed to keep abreast of this jurisdictional trend and to make available to the courts of their states the full jurisdictional powers permissible under due process. Chapter 1, Article 6A of the North Carolina General Statutes reflects this national approach to personal jurisdiction. (Citation omitted.)' 285 N.C. at 705, 208 S.E.2d at 679.

See also Sparrow v. Goodman, 376 F.Supp. 1268, 1270 (W.D.N.C.1974), wherein G.S. 1--75.4(3) was interpreted to be a "legislative attempt to assert In personam jurisdiction over nonresident defendants to the full extent permitted by the Due Process Clause of the United States Constitution."

By the enactment of G.S. 1--75.4(1)(d), it is apparent that the General Assembly intended to make available to the North Carolina courts the full jurisdictional powers permissible under federal due process. See 1 McIntosh, North Carolina Practice and Procedure § 937.5 (Supp.1970). Thus, we hold that G.S. 1--75.4(1)(d) applies to defendant and, statutorily, grants the courts of North Carolina the opportunity to exercise jurisdiction over defendant to the extent allowed by due process.

The second inquiry is, therefore, whether due process of law would be violated by permitting the courts of this jurisdiction to exercise their power over defendant. The United States Supreme Court cases of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), are frequently cited to illustrate the modern trend in personal jurisdiction away from the strict common law requirements, as stated in Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878), of either establishing a nonresident defendant's consent to jurisdiction in a state or personally serving a defendant while present within the state's territory. We will use these and other cases to guide our decision in the case at bar.

In Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), defendant, a Philippine corporation, was sued by a nonresident of Ohio in the Ohio courts. Defendant contended that because it was not an Ohio corporation, the Ohio courts could not, as a matter of law, exercise jurisdiction over defendant based upon a claim arising from its activities outside of Ohio. The Supreme Court held that federal due process did not prohibit Ohio from entertaining the action as a matter of law. Rather, the activity of the foreign corporation in the forum state should be analyzed to determine if such activity was sufficiently substantial and of such a nature as to make it proper that defendant be required to defend the suit. The Court further stated, quoting from International Shoe Co. v. Washington, supra:

". . . Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. . . ." 342 U.S. at 447, 72 S.Ct. at 419, 96 L.Ed. at 493.

We find a trilogy of Fourth Circuit Court of Appeals decisions illustrative of the requirements of due process under the pertinent United States Supreme Court cases. In Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745 (4th Cir. 1971), plaintiffs were nonresidents of the forum state--South Carolina. Defendants were two drug companies, one of which had sent occasional mailings into South Carolina; the other had employed several persons to solicit orders in the forum state. It appeared that the claim for relief arose elsewhere than South Carolina and that plaintiffs brought the action in South Carolina to avail themselves of a longer limitations period. The Fourth Circuit held that defendants could not be subjected to In personam jurisdiction in South Carolina. The court was of the opinion that in those cases wherein plaintiff was not a resident of the forum state and the claim for relief arose from activities not occurring in the forum state, defendant's contacts with the forum must be 'fairly extensive.' Within the above stated rule, the court held defendant's activities in the forum were not sufficient and the suit could not be maintained in South Carolina.

Several years later, in Lee v. Walworth Valve Co., 482 F.2d 297 (4th Cir. 1973), plaintiff was a resident of South Carolina and brought an action for the wrongful death of her husband due to conduct by defendant (a foreign corporation) occurring outside of South Carolina. The evidence of defendant's 'contacts' with the forum state tended to show that it sent salesmen into South Carolina with some degree of regularity; that it occasionally sent engineers into the state to examine special problems; and that it derived revenue from its activities in the forum state. The court held that jurisdiction over defendant was proper and did not deny defendant due process. In reaching this conclusion, the court reasoned that in those cases (such as Ratliff v. Cooper Laboratories, Inc., supra) in which the plaintiff is a stranger to the forum state, more 'contacts' are required on the part of defendant than in those cases wherein plaintiff is a resident of the forum state and not forum shopping. For when there is a resident plaintiff, the fairness to the plaintiff in permitting the suit to be maintained in his or her home state and not a distant forum is considered in determining the fairness to defendant of being required to defend the suit.

In O'Neal v. Hicks Brokerage Co., 537 F.2d 1266 (4th Cir. 1976), plaintiffs were residents of South Carolina and were injured in an accident in North Carolina. The evidence showed that defendant Hicks, a corporation, was a cotton broker in Mississippi and had hired the truck, which caused the injury to plaintiff, as an agent for a third party. Defendant Hicks had virtually no contact with South Carolina, except it had occasionally arranged for hauling into the state. The Fourth Circuit again used the test of whether there...