Electric Regulator Corp. v. Sterling Extruder Corp.

• Decision Date: 22 January 1968
• Docket Number: Civ. No. 12031.
• Citation: 280 F. Supp. 550
• Court: U.S. District Court — District of Connecticut
• Parties: ELECTRIC REGULATOR CORPORATION, Plaintiff, v. STERLING EXTRUDER CORPORATION, Defendant.

280 F. Supp. 550

ELECTRIC REGULATOR CORPORATION, Plaintiff, v. STERLING EXTRUDER CORPORATION, Defendant.

Civ. No. 12031.

United States District Court D. Connecticut.

January 22, 1968.

COPYRIGHT MATERIAL OMITTED

Lawrence P. Weisman, of Cohen & Wolf, Bridgeport, Conn., for plaintiff.

Lawrence W. Kanaga and Elaine S. Amendola, of Goldstein & Peck, Bridgeport, Conn., for defendant.

TIMBERS, Chief Judge.

QUESTION PRESENTED

In this diversity contract action to recover the price of goods sold, defendant's motion to dismiss for lack of in personam jurisdiction, pursuant to Rule 12(b)(2), Fed.R.Civ.P., presents the question whether defendant, a foreign corporation, is amenable to service of process under Connecticut's long-arm statute, Conn.Gen.Stat. § 33-411 (1962).

The Court holds that, although defendant did not transact business in Connecticut within the purview of Section 33-411(b), the cause of action arose out of contracts made in Connecticut within the purview of Section 33-411(c) (1). Service of process upon defendant as a foreign corporation is authorized. Defendant's motion to dismiss is denied.

On the basis of the pleadings, exhibits and affidavits filed by the parties, the Court makes the following findings of fact and conclusions of law for the purpose of deciding this motion.

FINDINGS OF FACT

(1) Plaintiff is a New York corporation having its offices and principal place of business in the State of Connecticut.

(2) Defendant is a New Jersey corporation having its offices and principal place of business in that state.

(3) The amount in controversy exceeds $10,000 exclusive of interest and costs.

(4) Since the requisite jurisdictional amount is involved and the requisite diversity of citizenship exists, this is a civil action over which this Court would have had original jurisdiction, 28 U.S.C. § 1332(a) (1), and the action therefore was properly removed from the Superior Court for Fairfield County to this Court, 28 U.S.C. § 1441(a).

(5) Between January 8, 1966 and May 26, 1966 defendant placed sixteen separate orders with plaintiff for the purchase of over $45,000 worth of machinery and equipment. Negotiations took place through plaintiff's New Jersey sales representative. The orders were sent either to plaintiff at its Connecticut office or in care of its sales representative in New Jersey.

(6) Defendant requested confirmation of its orders, and plaintiff sent these confirmations from Connecticut.

(7) Each of defendant's purchase order forms specified the address to which plaintiff was to ship the equipment and also instructed plaintiff to make shipment "via best way." The points to which the equipment was to be shipped were both in and out of the State of Connecticut.

(8) Plaintiff made all shipments F.O.B. Norwalk, Connecticut, delivering the equipment to carriers located in Connecticut.

(9) Defendant does not possess a certificate of authority to transact business in the State of Connecticut.

(10) Defendant has no office, place of business, resident employees, officers, directors, or inventory within the State of Connecticut; nor does it have telephone or business directory listings in the state.

(11) Defendant does sell its products to at least three Connecticut companies and sends at least one sales representative to make calls in Connecticut.

(12) At defendant's request, plaintiff has serviced equipment sold by defendant to customers in Connecticut.

CONCLUSIONS OF LAW

(1) The instant cause of action did not arise out of business transacted by defendant in the State of Connecticut within the meaning of Conn.Gen.Stat. § 33-411(b).

(2) The contracts in issue were made in Connecticut and, therefore, Conn.Gen.Stat. § 33-411(c) (1) authorizes the exercise of jurisdiction over defendant.

(3) Risk of loss having passed to defendant in Connecticut, the application of Conn.Gen.Stat. § 33-411(c) (1) is not unconstitutional.

(4) The Court having valid in personam jurisdiction over defendant, defendant's motion to dismiss pursuant to Rule 12(b) (2), Fed.R.Civ.P., must be denied.

OPINION

(1) Applicability of Connecticut's Long-arm Statute, Conn.Gen.Stat. § 33-411.

In the instant action removed to this Court from a state court, as in any diversity action, the rule is clear that the federal court must apply the state standard for determining a defendant's amenability to service of process. Arrowsmith v. United Press International, 320 F.2d 219 (2 Cir. 1963) (en banc), overruling Jaftex Corp. v. Randolph Mills, Inc., 282 F.2d 508 (2 Cir. 1960); Bomze v. Nardis Sportswear, Inc., 165 F.2d 33, 35 (2 Cir. 1948). No federal standard may serve to confer jurisdiction, but where the state standard purports to permit the exercise of in personam jurisdiction, the Court must determine whether the application of the state standard would contravene federal due process requirements. See Arrowsmith v. United Press International, supra, at 223.

Thus, the amenability of defendant, a New Jersey corporation, to service of process in Connecticut depends upon the applicability of Connecticut's long-arm statute, Conn.Gen.Stat. § 33-411. If Section 33-411 properly authorizes service upon defendant in the circumstances presented here, then, since the manner of service is not challenged, this Court has jurisdiction over defendant.¹

Section 33-411 authorizes service of process on foreign corporations in several alternative situations:

"(a) Service of legal process may be made on a foreign corporation authorized to transact business in this state . . .

(b) Every foreign corporation which transacts business in this state in violation of section 33-395 or 33-396 shall be subject to suit in this state upon any cause of action arising out of such business.

(c) Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state; . . ."

Where, as here, a defendant has not obtained a certificate of authority to transact business in Connecticut, Section 33-411(a) does not apply. Nevertheless, Section 33-411(b) sanctions service upon an uncertified foreign corporation if two requirements are met. First, the foreign corporation must have transacted business within the state so as to violate Section 33-396 which requires foreign corporations transacting business within the state to obtain certification.² Second, the cause of action upon which the foreign corporation is being sued must have arisen from those business transactions. It is plaintiff's first contention, disputed by defendant, that defendant transacted business within the purview of Section 33-411(b).

(2) Defendant Did Not Transact Business In Connecticut Within Purview of Section 33-411(b).

Plaintiff claims that, even though defendant maintains no office, resident salesmen, employees, inventory, telephone, or business listing within the state, defendant still has transacted business here. In support of its argument, plaintiff relies on (i) the contracts between it and defendant which form the basis of this action, (ii) the fact that defendant has sent a sales representative into the state and has made sales to several Connecticut customers, and (iii) the fact that defendant has instructed plaintiff to make calls on some of these same Connecticut customers to service equipment sold to them by defendant. But, as has already been noted, Section 33-411 (b) restricts consideration to those activities out of which the cause of action arose. The instant cause of action is based on the purchase of machinery and equipment by defendant from plaintiff; the latter two categories of activities cited by plaintiff, therefore, are not relevant here.

In considering whether the facts surrounding the purchase contracts make Section 33-411(b) applicable, it is important to bear in mind that, while some states hold that the term "transacting business" should be interpreted in the broadest sense constitutionally permissible,³ Connecticut is not such a state. The business transacted must be in violation of Section 33-396 which requires a foreign corporation transacting business in the state to obtain certification. And Section 33-397(b) specifically excludes many business activities from consideration in determining whether an uncertified foreign corporation is transacting business in violation of § 33-396. Among those activities not treated as business transactions under this legislative scheme is "the transacting of business in interstate commerce" and "soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance without this state before becoming binding contracts." Furthermore, Section 33-397(b) provides that the enumeration of certain exempted activities is not meant to preclude the finding that other activities do not constitute the transacting of business. Thus, "Connecticut, as a matter of state policy, has recognized the advantage of not imposing qualifications on the right of foreign corporations to conduct some kinds of commercial and financial transactions . . .." Southern New England Distributing Corp. v. Berkeley Finance Corp., 30 F.R.D. 43 (D.Conn. 1962).

The activities here fall well within the exclusion for interstate commerce. Cf. LaPointe Industries, Inc. v. Model Engineering & Manufacturing Corp., supra note 1. But even if they did not, the Court is convinced that the policy reflected in Section 33-397(b) compels the conclusion that defendant has not transacted business within the state in violation of Section 33-396. If a foreign corporation is not transacting business in the state when it repeatedly sends...