Douglas Mach. & Engineering Co., Inc. v. Hyflow Blanking Press Corp.

• Decision Date: 21 May 1975
• Docket Number: No. 56611,56611
• Court: Iowa Supreme Court
• Parties: DOUGLAS MACHINE & ENGINEERING CO., INC., Appellant, v. HYFLOW BLANKING PRESS CORPORATION, Appellee.

Page 784

229 N.W.2d 784

DOUGLAS MACHINE & ENGINEERING CO., INC., Appellant, v. HYFLOW BLANKING PRESS CORPORATION, Appellee.

No. 56611.

Supreme Court of Iowa.

May 21, 1975.

J. Trafford Murray of Dircks & Saylor, P.C., Davenport, for appellant.

Seymore M. Raben, Davenport, for appellee.

Heard before MOORE, C.J., and MASON, LeGRAND, REES and REYNOLDSON, JJ.

MASON, Justice.

This is an appeal by plaintiff, Douglas Machine & Engineering Co., Inc., from the trial court's ruling sustaining the special appearance of defendant, Hyflow Blanking Press Corporation, challenging the jurisdiction of the Iowa court to subject defendant to a judgment in personam. Plaintiff, an Iowa corporation, is a tool and die manufacturer with its principal place of business in Davenport. Defendant, a New York corporation, is a press manufacturer with its principal place of business in Tarrytown. It has no office in Iowa and had never been authorized to do business in this state.

The ruling under attack was made in an action brought by plaintiff to recover a down payment made by it to defendant under a contract which had been cancelled by plaintiff. Plaintiff relied upon compliance with section 617.3, The Code, to acquire jurisdiction of defendant.

This section in pertinent parts provides:

'Foreign corporations or nonresidents contracting or committing torts in Iowa * * *

'If a foreign corporation makes a contract with a resident of Iowa to be performed in whole or in part by either party in Iowa, * * * such acts shall be deemed to be doing business in Iowa by such foreign corporation for the purpose of service of process or original notice on such foreign corporation under this section, and, if the corporation does not have a registered agent or agents in the state of Iowa, shall be deemed to constitute the appointment of the secretary of state of the state of Iowa to be its true and lawful attorney upon whom may be served all lawful process or original notice in actions or proceedings arising from or growing out of such contract * * *. The making of the contract * * * shall be deemed to be the agreement of such corporation * * * that any process or original notice so served shall be of the same legal force and effect as if served personally upon such defendant within the state of Iowa. * * *.' The balance of this statute prescribes the procedures to be followed in making service of such process or original notice.

March 30, 1970, defendant caused a quotation of $67,640 for the manufacture and sale of a 'Hydrel Precision Fine-Blanking Press' to be presented to plaintiff. June 5 plaintiff mailed an acceptance of the terms of the quotation with a $10,000 down payment, agreeing to pay the balance 90 days after 'press is in operation.' July 13 defendant received a letter from plaintiff cancelling the contract due to plaintiff's inability to acquire a bank loan for the purchase of the press. When defendant refused to return the down payment as demanded by plaintiff suit was instituted in the Scott district court.

Defendant filed a special appearance for the sole purpose of attacking the jurisdiction of the Scott district court alleging that:

'1. The Court does not have jurisdiction over the person of this Defendant for the reason that this Defendant has not made a contract with a resident of Iowa to be performed in whole or in part by either party in Iowa.

'2. The attempted service of Original Notice violates the due process clause of the 14th Amendment to the Constitution of the United States.

'3. This Defendant has had no contacts in the State of Iowa which would subject it to the jurisdiction of the Iowa Courts.

'4. This Defendant has not transacted any business in the State of Iowa.

'In support of this Motion, Defendant relies upon the case of Rath Packing Co. v. Intercontinental Meat Traders, Inc., 181 N.W.2d 184 (Iowa 1970).'

Defendant raises no question as to plaintiff's having followed the mechanical provisions of giving notice under this section. Its sole claim is that the transaction between plaintiff and defendant does not give rise to situation which would constitutionally permit use of the statute in acquiring in personam jurisdiction of a foreign corporation.

The record upon which the special appearance was considered consisted of the petition with attached copies of defendant's quotation, plaintiff's purchase order and letter of cancellation plus the affidavit of defendant's president in support of defendant's special appearance and the affidavit of plaintiff's president.

The trial court sustained the special appearance.

The issue presented for review is whether defendant had sufficient minimum contacts with Iowa so that the courts of this state could take jurisdiction of this action seeking a personal judgment without violating the due process clause of amendment 14 of the federal constitution.

I. At the outset, there was a conflict of evidence concerning defendant's contacts with the state. Plaintiff claims the facts are reviewable de novo, as this is an unjust enrichment case in equity, and thus the court should give less weight to the trial court's findings of fact than if the case were at law. Defendant claims this is an action at law.

Plaintiff's assertion is simply incorrect. The decision from which the appeal is taken is not determinative of any unjust enrichment issue, but is a ruling on defendant's special appearance challenging Iowa's personal jurisdiction over it. Thus, the following rules apply:

'In passing on a special appearance we accept the allegations of the petition as true. Plaintiff has the burden of sustaining the requisite jurisdiction, but once it has made a prima facie case, the burden is on defendant to produce evidence to rebut or overcome the prima facie showing. This is a special proceeding in which the findings of the trial court have the force and effect of a jury verdict. * * * (citing authorities).' Rath Packing Co. v. International Meat Trad., Inc., 181 N.W.2d 184, 185 (Iowa 1970).

'* * * (A) hearing on special appearance is a special proceeding not reviewable de novo; and, the finding of the trial court has the force and effect of a jury verdict.' Miller v. Vitalife Corporation of America, 173 N.W.2d 91, 92 (Iowa 1969). See also Tice v. Wilmington Chemical Corp., 259 Iowa 27, 35, 141 N.W.2d 616, 621, supplemented, 143 N.W.2d 86; Bennett v. Ida County, 203 N.W.2d 228, 234 (Iowa 1972); and Edmundson v. Miley Trailer Co., 211 N.W.2d 269, 271 (Iowa 1973).

And, this not being an equity action, '(t)rial court findings of fact * * * are binding on us if supported by substantial evidence. We view the evidence in its most favorable light to sustain those findings.' Long v. Glidden Mutual Insurance Association, 215 N.W.2d 271, 272 (Iowa 1974).

II. Plaintiff maintains the existence of a contract to be performed in whole or in part within the state of Iowa is sufficient to satisfy the jurisdictional requirements of section 617.3, The Code, and if the contract also has substantial connections with the forum state, then the due process clause of amendment 14 of the federal constitution is likewise satisfied and a resident of the forum may maintain an action against a nonresident.

Plaintiff argues in the second division of its brief and argument that the quality and quantity of activities conducted by defendant in Iowa are clearly sufficient to satisfy due process. These contentions will be considered together.

It is sufficient to sustain the jurisdiction of this court if plaintiff makes a prima facie showing of the existence of a contract 'to be performed in whole or in part' in Iowa. For this purpose the allegations of plaintiff's petition are accepted as true. Midwest Packaging Corporation v. Oerlikon Plastics, Ltd. (D.C.1968), 279 F.Supp. 816, 818, and authorities cited.

Plaintiff made a prima facie showing of the existence of a contract between plaintiff, a resident of Iowa, and defendant, a foreign corporation, by alleging the making of the offer by defendant to manufacture and sell to plaintiff a specified press for $67,640 and acceptance of that offer by plaintiff by mailing its purchase order to defendant for the machine with a down payment of $10,000 and a promise to pay the balance 90 days after the 'press is in operation.'

Under the terms of the contract, as accepted, defendant warranteed the press for six months and agreed to repair the press, if requested, after the warranty by the following provisions in its offer:

'MACHINERY

'a.) Warranty: Of within a period of 6 months or 1 million strokes, whichever occurs first, from the date of shipment, any part of the presses is found to be defective in material or workmanship, we will replace or repair such part at our option, as determined after our inspection, provided the machine has been given normal and proper usage, maintenance and care and is still the property of the original purchaser. In the event of defect, our liability, under any circumstances will be limited to the cost of replacement or repair of the parts as per our above option. It shall be further agreed that the seller shall in no event be liable for consequential damages.

'b.) Service: Should service such as erection, demonstration or repair of any machine be requested beyond that specifically included in the quoted price, such service will be rendered at a charge per man per day plus transportation and living expenses.'

It cannot be logically denied that the contract alleged by plaintiff was to be performed 'in whole or in part' in Iowa. By necessity performance of many of defendant's obligations under the foregoing warranty and service agreements would be performed in Davenport.

Although the prima facie showing made here is sufficient to give the court jurisdiction under the provisions of section 617.3, The Code, the question remains whether, under the evidence, an exercise of such jurisdiction would violate the constitutional guarantee of...