Dollar Sav. Bank v. First Sec. Bank of Utah, N.A.

• Decision Date: 01 October 1976
• Citation: 746 F.2d 208
• Parties: DOLLAR SAVINGS BANK, a Pennsylvania Corporation, Appellee, v. FIRST SECURITY BANK OF UTAH, N.A., not in its individual capacity, but solely as Trustee under a Master Trust Agreement dated as of
• Court: U.S. Court of Appeals — Third Circuit

Page 208

746 F.2d 208

DOLLAR SAVINGS BANK, a Pennsylvania Corporation, Appellee, v. FIRST SECURITY BANK OF UTAH, N.A., not in its individual capacity, but solely as Trustee under a Master Trust Agreement dated as of October 1, 1976, a Utah corporation and Farm Fans, Inc., an Indiana corporation, and Royalnest Leasing Corp., a New York corporation Appeal of FIRST SECURITY BANK OF UTAH, N.A.

No. 84-3063.

United States Court of Appeals Third Circuit.

Argued Aug. 14, 1984.

Decided Oct. 17, 1984.

Robert L. Potter (argued), Jon G. Hogue, Titus, Marcus & Shapira, Pittsburgh, Pa., for appellant.

Donald J. Balsley, Jr. (argued), Wick, Rich, Fluke & Streiff, Pittsburgh, Pa., for appellee.

Before ALDISERT, Chief Judge, WEIS, Circuit Judge, and RE, Judge. ^*

OPINION OF THE COURT

WEIS, Circuit Judge.

In this appeal from a proceeding to foreclose on collateral, the issue is whether a district court has personal jurisdiction over an out of state bank because it has received a loan from a bank in the forum district. We conclude that the minimum contacts required for due process have not been established when the non-resident bank does no more than borrow from and repay a loan to the forum bank by wire transfer. Accordingly, we hold that the district court lacked jurisdiction over defendant.

Plaintiff sought a preliminary injunction to gain possession of shipping containers that had been given as security for a loan. The district court granted the injunction against the borrower, defendant Utah bank, but dismissed two other defendants for lack of personal jurisdiction.

As trustee for a group of investors, the First Security Bank of Utah borrowed money in a series of transactions from May 1977 through June 1978 from the Dollar Savings Bank of Pittsburgh and the Presbyterian Ministers Fund of Philadelphia. As part of the arrangements, the United States Trust Company of New York acted as trustee for the lenders.

The Utah bank used the funds to purchase refrigerated shipping containers and gave security interests in them to the United States Trust Company. When the Utah bank defaulted in payments, the United States Trust Company assigned the security interest to Dollar. ¹

Intending to sell the containers, Dollar filed the complaint to foreclose on the collateral. Dollar asserted its need for immediate possession as well as the titles because a prospective purchaser for the containers had been found and the sale had to be completed quickly. If the matter were delayed, Dollar's opportunity would be lost. The Utah bank moved to dismiss the complaint for lack of personal jurisdiction. The district court denied the motion, finding "sufficient evidence of contact upon which to base jurisdiction."

Because a prompt decision was necessary, the parties did not fully develop the record on the jurisdictional issue. However, several affidavits and exhibits in the record provide some basic facts.

The Utah bank negotiated the loans by telephone with Dollar's law firm, Mudge, Rose, Guthrie & Alexander, in New York City. No personnel of the Utah bank traveled to Pennsylvania in connection with the transaction. The notes payable to Dollar and the security agreements with the United States Trust Company were executed by Utah bank officers outside Pennsylvania. Although Dollar executed certain documents at its Pittsburgh headquarters, none of the agreements provide for the application of Pennsylvania law or the exercise of jurisdiction by Pennsylvania courts. The containers were located at various places in the United States outside of Pennsylvania.

Before the default, the Utah bank had made payments on the loan to Dollar by wire transfers to Pittsburgh but the supporting documents were sent by the Utah bank to the United States Trust Company in New York. The Utah bank is not licensed to do business in Pennsylvania and has never maintained an office, telephone listing, or bank account in that state. Moreover, it has never solicited business there and has no employees in the state. The Utah bank has, however, acted as a trustee for certain chattels located in Pennsylvania, but that transaction is unrelated to the one sued on by Dollar.

After determining that it had jurisdiction, the district court directed the Utah bank to deliver the collateral to Dollar. On appeal, the Utah bank argues that it had insufficient contacts with Pennsylvania to be subject to personal jurisdiction in the district court, and accordingly should have been dismissed. Plaintiff contends that, because the secured notes were delivered in Pennsylvania, funds were transferred from and repaid in the state, and the default "impacted" Dollar within the state, enough has been shown to satisfy due process standards.

Until recently the question of personal jurisdiction over a national bank was not difficult because the venue statute permitted suit only in the district in which the bank was established. See 12 U.S.C. Sec. 94 (1976). ² This statute received wide criticism and Congress amended its provisions in 1982. ³ See Citizens & Southern Nat'l Bank v. Bougas, 434 U.S. 35, 39, 98 S.Ct. 88, 91, 54 L.Ed.2d 218 (1977); Radzanower v. Touche Ross & Company, 426 U.S. 148, 158, 96 S.Ct. 1989, 1995, 48 L.Ed.2d 540 (1976) (Stevens, J., dissenting); Michigan Nat'l Bank v. Robertson, 372 U.S. 591, 594, 83 S.Ct. 914, 915, 9 L.Ed.2d 961 (1963) (Black, J., concurring); Ronson Corporation v. Liquifin Aktiengesellschaft, 483 F.2d 852 (3d Cir.1973). See also, Steinberg, Waiver of Venue under the National Bank Act: Preferential Treatment for National Banks, 62 IOWA L.REV. 129 (1976).

The current limited venue provision applies only when the Federal Deposit Insurance Corporation has been appointed as a receiver for a national bank. The Senate Report commenting on the 1982 legislation explained that technological developments "have now surpassed a justification for the old law. The likelihood of disruption to a bank is now no greater than to any other corporation, while the burden imposed on plaintiffs by the special venue law may be substantial." S.Rep. No. 536, 97th Cong., 2d Sess. 3, reprinted in 1982 U.S. Code Cong. & Ad.News 3054, 3082.

No longer sheltered by statute, national banks may now be sued as any other corporation. ⁴ See 28 U.S.C. Sec. 1391(c). Thus, in this diversity case, the district court would have jurisdiction over the defendant only if a Pennsylvania state court would have that power.

The Pennsylvania long arm statute, 42 Pa.Cons.Stat.Ann. Sec. 5322(b) (Purdon 1981), allows a court to exercise jurisdiction over a person "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." See also Fed.R.Civ.P. 4(e). The reach of the statute is coextensive with the due process clause of the federal Constitution.

Although there are distinctions between the various forms of nonresident jurisdiction, the Supreme Court has made it clear that "all assertions of state-court jurisdiction must be evaluated according to the standard set forth in International Shoe and its progeny." Shaffer v. Heitner, 433 U.S. 186, 212, 97 S.Ct. 2569, 2584, 53 L.Ed.2d 683 (1977). (quasi in rem). See also U.S. Industries, Inc. v. Gregg, 540 F.2d 142 (3d Cir.1976), cert. denied, 433 U.S. 908, 97 S.Ct. 2972, 53 L.Ed.2d 1091 (1977) (quasi in rem); Jonnet v. Dollar Savings Bank, 530 F.2d 1123, 1130 (3d Cir.1976) (Gibbons, J., concurring) (foreign attachment statute). In International Shoe, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Court said that the demands of due process "may be met by such contacts of the corporation with the state of the forum as 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." Id. at 317, 66 S.Ct. at 158.

Personal jurisdiction over a nonresident defendant may be asserted in two situations. The first, "general jurisdiction," exists when the claim does not arise out of or is unrelated to the defendant's contacts with the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, --- U.S. ----, ---- nn. 8 & 9, 104 S.Ct. 1868, 1872 nn. 8 & 9, 80 L.Ed.2d 404 (April 24, 1984); Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980); Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 (3d Cir.1984); Hendrickson v. Reg O Company, 657 F.2d 9 (3d Cir.1981). The second, "specific jurisdiction," is invoked when the claim is related to or arises out of the defendant's contacts with the forum. See Keeton v. Hustler Magazine, --- U.S. ----, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984); Calder v. Jones, --- U.S. ----, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Reliance Steel Products Co. v. Watson, Ess, Marshall and Enggas, 675 F.2d 587 (3d Cir.1982). ⁵

The record as it currently stands is insufficient to support general jurisdiction. Therefore, we devote our attention to whether specific jurisdiction is established through sufficient contacts with Pennsylvania in connection with the loans from Dollar to the Utah bank.

Case law reveals an occasional failure to distinguish between the requirements for specific, as contrasted with general jurisdiction. As noted in Schwilm v. Holbrook, 661 F.2d 12 (3d Cir.1981), the minimum contacts analysis is inappropriate when the defendant's forum activities do not give rise to the claim. Id. at 14. In instances of general jurisdiction, a plaintiff must demonstrate that the defendant maintained continuous and substantial forum affiliations.

When the plaintiff's interest is in litigating a claim arising out of a single transaction in a forum where the defendant has no continuing presence--specific jurisdiction--the focus must be on minimum contacts. Paolino v. Channel Home Centers, 668 F.2d 721 (3d...