Etheridge v. Grove Manufacturing Company, 19022.

• Decision Date: 07 October 1969
• Docket Number: No. 19022.,19022.
• Citation: 415 F.2d 1338
• Parties: Roy F. ETHERIDGE, Appellant, v. GROVE MANUFACTURING COMPANY and Nixon Machinery & Supply Company, Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

415 F.2d 1338 (1969)

Roy F. ETHERIDGE, Appellant, v. GROVE MANUFACTURING COMPANY and Nixon Machinery & Supply Company, Appellees.

No. 19022.

United States Court of Appeals Sixth Circuit.

July 22, 1969.

As Amended October 7, 1969.

Clifford L. Walters, Paducah, Ky., for appellant, Charles Allen Williams & Associates, Paducah, Ky., on brief.

Earle T. Shoup, Paducah, Ky., for appellee, Grove Mfg. Co.

George R. Effinger, Paducah, Ky., for appellee, Nixon Machinery & Supply Co., Andrew J. Russell, Boehl, Stopher, Graves & Deindoerfer, Paducah, Ky., on brief.

Before PHILLIPS, EDWARDS and COMBS, Circuit Judges.

PHILLIPS, Circuit Judge.

The appeal in this products liability personal injury action requires an interpretation of Kentucky's long arm statute of 1946, K.R.S. § 271.610. The broader long arm statute of 1968, K.R.S. § 454.210 was not in effect at the time the accident occurred, September 20, 1966, or when the complaint was filed on September 19, 1967.

Jurisdiction is based upon diversity of citizenship. Kentucky law controls. The District Court dismissed the complaint and quashed service of process upon the defendants.

The subject of this litigation is a hydraulic crane equipped with an extension boom. The crane was manufactured by Grove Manufacturing Co. in Pennyslvania and sold by Grove to Nixon Machinery & Supply Co., a Tennessee distributor. It was delivered to Nixon in Chattanooga, Tennessee, by common carrier. Nixon then leased the crane in Tennessee to Blount Brothers Construction Co. of Montgomery, Alabama. Blount is not a party to this litigation. Nixon arranged for the crane to be delivered to Blount in Clarksville, Tennessee, by public carrier. The contractor used the crane on a construction project at Fort Campbell, a military reservation which is located both in Tennessee and Kentucky. The plaintiff is a Kentucky resident who was an employee of the contractor. He was injured while using this crane in that part of Fort Campbell situated in Kentucky.

The complaint alleges negligence on the part of defendants in the manufacture, delivery, maintenance and inspection of the crane and also breach of an express and implied warranty. Service of process was attempted on the defendants under K.R.S. § 271.610(2).

This statute, with that portion italicized which under our construction requires affirmance of the District Court, is as follows:

"Any foreign corporation that does business in this state without having complied with the provision of KRS 271.385 as to designation of process agent shall, by such doing of business, be deemed to have made the Secretary of State its agent for the service of process in any civil action instituted in the courts of this state against such corporation involving a cause of action arising out of or connected with the doing of business by such corporation in this state. The plaintiff in such an action shall set forth in his petition the post office address of the home office of the corporation." (Emphasis supplied.) K.R.S. § 271.610(2).

This section of the 1946 long arm statute contains two basic requirements which must be met before jurisdiction can be obtained over non-resident corporations: (1) the corporation must be doing business within Kentucky without having complied with the provisions of K.R.S. § 271.385 concerning the designation of a process agent, and (2) the cause of action must arise out of or be connected with the doing of business by the corporation in Kentucky. The District Court found that neither of these requirements had been met. We agree with the finding of the District Court only as to the second requirement.

As for the first requirement, the record shows that Grove had a salesman who called upon distributors in Kentucky, sold and shipped equipment into the State, and, on occasions, sent maintenance personnel into Kentucky to service equipment. Nixon employed salesmen who regularly solicited sales and sold a significant amount of machinery in Kentucky, and paid the Kentucky sales tax. We think that both defendants under the record in this case had sufficient contacts with Kentucky in their business activities to be considered "doing business" within the jurisdictional due process standards. See International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir.); and Post v. American Cleaning Equipment Corp., 437 S.W.2d 516 (Ky.).

We therefore disagree with the conclusions reached by the District Court with respect to the first requirement of the 1946 Act.

The second requirement of the statute is that the cause of action must arise out of or be connected with the doing of business by the corporation in the State. Senior District Judge Roy M. Shelbourne said in his memorandum opinion:

"Neither of the defendants had any connection in the State of Kentucky with the sale or lease of the accused crane, and hence the suit does not emanate and is not connected with any business done by either defendant in Kentucky. This is not a cause of action arising out of or connected with any business done by either of the defendants in the State of Kentucky as contemplated by Section 271.610(2), Kentucky Revised Statutes."

We agree with Judge Shelbourne's conclusion regarding this aspect of § 271.610(2) as it applies to the present case.

Although the Kentucky Court of Appeals has construed and applied the 1946 long arm statute in a number of decisions, we are cited to no Kentucky case interpreting the second requirement of the statute. Nor have we found any Kentucky decision involving facts similar to...