Eddie Dassin, Inc. v. Darlene Knitwear, Inc.
| Decision Date | 06 December 1977 |
| Docket Number | Civ. No. 137-71. |
| Citation | 441 F. Supp. 324 |
| Parties | EDDIE DASSIN, INC., Plaintiff, v. DARLENE KNITWEAR, INC., and/or Cayey Industries, Inc., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Beverly, Rodriguez, Estrella & Pesquera, San Juan, P. R., for plaintiff.
Ronald L. M. Goldman & Associates, Beverly Hills, Cal., for defendants.
This is an action brought by Eddie Dassin, Inc., a corporation incorporated under the laws of California and with principal offices in California also. Darlene Knitwear is a corporation incorporated under the laws of New Hampshire with principal offices in Massachusetts. Co-defendant, Cayey Industries, Inc., is a corporation organized under the laws of Massachusetts with principal offices in the Commonwealth of Puerto Rico.
It is alleged that defendant Darlene Knitwear, Inc., (hereinafter referred to as Darlene), is not licensed to do business in Puerto Rico, it has no offices, officers, agents or employees in Puerto Rico, maintains no telephone listing nor bank accounts in Puerto Rico, owns or controls no property in Puerto Rico. Darlene obtains orders outside of Puerto Rico from its customers, also located outside of Puerto Rico through salesmen in its employ, and it in turn orders the finished products from Cayey Industries, Inc. (hereinafter referred to as Cayey), with instructions for delivery to its customers.
On or about October 23, 1970, Darlene entered into a contract with the plaintiff, to purchase the goods in question. The value of the goods was $153,810.00. That portion of the order to be paid through letter of credit was paid, but defendants have failed to pay for the remainder, owing plaintiff $49,122.50 with interest payable at the rate of ten per cent from October 23, 1970 until day of payment.
Darlene was first served through Mr. Raymond C. O'Neill, resident agent of Cayey Industries, Inc. On September 3, 1971, the Clerk of this Court issued a summon to be served to Darlene through the Secretary of State of the Commonwealth of Puerto Rico.
On September 9, 1971, defendant Darlene filed a motion to dismiss for lack of sufficiency of service of process, lack of jurisdiction over the person and improper venue.
The question for decision before this Court is whether Darlene, a foreign corporation, has by its activities rendered itself amenable to proceedings in this Court.
Historically, the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence, his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877).
But now, due process requires only that in order to subject a defendant to a 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 traditional notions of fair play and substantial justice. Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278 (1940); Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927).
Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, it is clear that unlike an individual its presence without as well as within the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. To say that the corporation is so far present there as to satisfy due process requirements is to beg the question to be decided. For the terms present or presence are used merely to symbolize those activities of the corporation agent within the state which courts will deem to be sufficient to satisfy the demands of due process. Hutchinson v. Chase & Gilbert, 45 F.2d 139 (2 Cir. 1930). Those demands may be met by such contacts of the corporations 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. An estimate of the inconveniences which would result to the corporation from a trial away from its home or principal place of business is relevant in this connection.
Presence in the state has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given. It has been generally recognized that the casual presence of the corporate agent or even his conduct of single or isolated item of activities in a state in the corporation's behalf are not enough to subject it to suit on causes of action unconnected with the activities there. St. Clair v. Cox, 106 U.S. 350, 1 S.Ct. 354, 27 L.Ed. 222.
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. 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 law which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendants with which the state has no contacts, ties or relations. Pennoyer v. Neff, supra; International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
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 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. International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479; International Shoe Co. v. Washington, supra.
As technological progress has increased the flow of commerce between States, the need of jurisdiction over nonresidents has undergone a similar increase. At the same time, progress in communication and transportation has made the defense of a suit in a foreign court less burdensome. In response to these changes, the requirements for personal jurisdiction over non-residents have evolved from the rigid rule of Pennoyer v. Neff, supra, to the flexible standard of International Shoe Co. v. Washington, supra. But it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. Vanderbilt v. Vanderbilt, 354 U.S. 416, 77 S.Ct. 1360, 1 L.Ed.2d 1456; Hanson v. Denkla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). However, minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the minimal contacts with that State that are a prerequisite to its exercise of power over him. See International Shoe Co. v. Washington, supra.
The issue in the case at bar is whether defendant has had minimum contacts with the Commonwealth of Puerto Rico in order for this Court to have jurisdiction over the defendant Darlene.
Rule 4.7 of the Rules of Civil Procedure of the Commonwealth of Puerto Rico, the long-arm statute, reads as follows:
This Court has interpreted that Rule several times. See Martinez v. Karageorgis, 235 F.Supp. 1012 (D.C.P.R.1963); Executive Air Services, Inc. v. Beech Aircraft Corp., 254 F.Supp. 415 (D.C.P.R.1966); La Electronica, Inc. v. Electric Storage Battery Co., 260 F.Supp. 915 (D.C.P.R.1966); Caribbean Sales Associated, Inc. v. Hayes Industries, Inc., 273 F.Supp. 598 (D.C.P.R.1967); Coletti v. Ovaltine Food Products, 274 F.Supp. 719 (D.C.P.R.1967); San Juan Hotel Corp. v. Lefkowitz, 277 F.Supp. 28 (D.C.P.R.1967); Luce & Co. S. en C. v. Alimentos Borinqueños, S.A., 283 F.Supp. 81 (D.C.P.R. 1968); Credito E Inversiones de San Miguel v. B. F. Goodrich Co., 289 F.Supp. 854 (D.C. P.R.1968); Schering...
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Fash Obalco, Inc. v. MKM Industries, Inc., Civ. No. 95-1110 (DRD).
...within the State, a procedure to enforce them can, in most instances, hardly be said to be undue. Eddie Dassin, Inc. v. Darlene Knitwear, Inc., 441 F.Supp. 324, 326 (D.P.R.1977), applying International Harvester Co. of America v. Com. of Kentucky, 234 U.S. 579 34 S.Ct. 944, 58 L.Ed. 1479 (1......