Eyerly Aircraft Co. v. Killian

Citation414 F.2d 591
Decision Date05 August 1969
Docket NumberNo. 26275.,26275.
PartiesEYERLY AIRCRAFT CO., Appellant, v. Jack KILLIAN, Individually and for and on behalf of Jan Killian, a Minor, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

George C. Chapman, Thompson, Knight, Simmons & Bullion, Dallas, Tex., for appellant.

Henry Stollenwerck, Dallas, Tex., for appellee.

Before GOLDBERG and MORGAN, Circuit Judges, and LIEB, District Judge.

GOLDBERG, Circuit Judge.

Our question in this diversity case is whether the Texas "Long Arm" statute has the stretch, within constitutional permissibility, to embrace the products liability action before us.1 We find both the stretch and the embrace.

Jan Killian was seriously injured in a fall from an amusement ride in Dallas, Texas. Seeking to recover damages on account of Jan's injury, Jack Killian, individually and on behalf of Jan (his minor daughter), filed suit against Eyerly Aircraft Company, the manufacturer of the ride which is known as a Rock-O-Plane,2 and against Jack Eyerly, the company's president. Service upon Eyerly Aircraft Company which is an Oregon corporation, and upon Jack Eyerly individually was accomplished through the Texas "Long Arm" statute. Tex.Rev.Civ.Stat. art. 2031b (1964).3 Eyerly Aircraft and Jack Eyerly filed motions to dismiss and quash service. The motion was overruled as to the company and sustained as to Jack Eyerly. Eyerly Aircraft now appeals from that interlocutory order of the trial court under the aegis of 28 U.S.C.A. 1292(b) (1966), contending that its contacts with Texas were insufficient to support in personam jurisdiction. The substantive issues before us, therefore, are: (1) whether Eyerly Aircraft had sufficient contacts with the State of Texas to support in personam jurisdiction against a constitutional attack, i.e., whether the corporation had the "minimum contacts" with Texas necessary in order for the maintenance of the suit not to offend due process; and (2) whether, assuming that the assertion of jurisdiction is constitutionally permissible, the Texas "Long Arm" statute was intended to reach as far as the controversy at bar.

The Rock-O-Plane in question was manufactured by Eyerly Aircraft in Oregon approximately twenty years ago, and from there this ride indirectly peregrinated to Texas through interstate commerce. In 1949 the Rock-O-Plane was sold and shipped to an amusement company in Chicago. Then in 1964 that company sold the ride to William D. Stanley Shows, Inc., in Fargo, North Dakota. During the years intervening between that sale and the injury to Jan Killian in Dallas, this ride toured numerous states with Stanley Shows.

Although there is nothing in the record to indicate that Eyerly Aircraft ever saw the ride after it was shipped to Chicago, the record does clearly reflect that Eyerly Aircraft contemplated that the ride would ambulate from state to state throughout the nation and that it would eventually tour Texas.4 Moreover, Eyerly Aircraft through other transactions had made numerous and repeated contacts with Texas and has purposefully availed itself of the protections of her laws. Included in this enumeration of contacts with Texas are the following: (1) sales and deliveries of amusement devices and parts directly into the state; (2) the extension of credit in the state; (3) the retention of liens on items sold; (4) the filing of such liens with state and county authorities; (5) the servicing of machines in the state; and (6) the solicitation of business in the state.5 These contacts with Texas were neither occasional nor sporadic — they were both continuous and substantial.

I.

Our first concern is whether the assertion of Texas "Long Arm" jurisdiction in this diversity case was consistent with due process. The scope of permissible state jurisdiction over the person of foreign corporations has broadened considerably in the last twenty-five years, but the power of states and federal courts sitting in diversity cases over foreign corporations still has constitutional limits. Hanson v. Denckla, 1958, 357 U.S. 235, 251, 78 S.Ct. 1228, 2 L. Ed.2d 1283, 1296. The legal evolution of subjecting foreign corporations to forum process reflects a rejection of the primeval requirement of forum corporeality expressed in Pennoyer v. Neff, 1878, 95 U.S. 714, 24 L.Ed. 565, and an adoption of the principle that a foreign corporation is subject to forum tentacles whenever the corporation has such "minimum contacts" with the forum state "that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 1945, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102; McGee v. International Life Ins. Co., 1957, 355 U.S. 220, 222, 78 S. Ct. 199, 2 L.Ed.2d 223, 225-226. What "is essential in each case is that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus involving the benefits and protections of its laws." Hanson v. Denckla, supra, 235 U.S. at 253, 78 S.Ct. at 1240, 2 L.Ed.2d at 1298. See Annot., 2 L.Ed.2d 223 (1958); Annot., 19 A.L. R.3d 13 (1968).

Here the defendant corporation has purposefully conducted business activities in Texas, but the plaintiff's cause of action, which sounds in tort, did not arise out of those contacts. Eyerly Aircraft not only actively solicited business in Texas, but it also sold and serviced its products in the state. If the plaintiff's cause of action arose out of these contacts, e.g. if the child's injury had resulted from a defect in a ride shipped directly into Texas by Eyerly Aircraft, due process would unquestionably be satisfied. Hardy v. ReKab, Inc., D.Md. 1967, 266 F.Supp. 508; Farmer v. Ferris, N.C. 1963, 260 N.C. 619, 133 S. E.2d 492; see International Shoe Corp. v. Washington, supra. The plaintiff's cause of action, however, arises out of an alleged defect in a Rock-O-Plane which the defendant corporation had neither sold nor serviced in Texas. Eyerly Aircraft manufactured the ride in Oregon and has had no contact with the ride since introducing it into interstate commerce by selling it to a Chicago amusement show some twenty years ago. The question in this case, therefore, is whether the unrelated business contacts plus the introduction of the ride into interstate commerce are sufficient to support Texas in personam jurisdiction over Eyerly Aircraft. We hold that these contacts are sufficient.

Where a foreign corporation does substantial business within a state, that state may assert in personam jurisdiction over the corporation to enforce a cause of action arising out of a tort committed in part within its boundaries. Smyth v. Twin State Improvement Corp., Vt. 1951, 116 Vt. 569, 80 A.2d 664, 25 A.L.R.2d 1193. Thus where a corporation with substantial contacts within state X ships into that state a product which it has manufactured in state Y and an injury occurs in state X because of an alleged defect in the product, the corporation may constitutionally be called upon to defend a products liability suit brought in state X where the injury occurred. Deveny v. Rheem Mfg. Co., 2 Cir. 1963, 319 F.2d 124; Shealy v. Challenger Mfg. Co., 4 Cir. 1962, 304 F.2d 102; cf. Carter v. American Bus Lines, Inc., D.Neb. 1959, 169 F.Supp. 460. This result also obtains where the manufacturer has elected to distribute his wares through independent wholesalers instead of through its own corporate apparatus so that it is only very indirectly responsible for the product reaching the injured consumer. Florio v. Powder Power Tool Corp., 3 Cir.1957, 248 F.2d 367; Etzler v. Dille and McGuire Mfg. Co., W.D. Va. 1965, 249 F.Supp. 1. The present trend is to take the next logical step and hold that a corporation is answerable where it introduces its product into the stream of interstate commerce if it had reason to know or expect that its product would be brought into the state where the injury occurred:

"Where a defendant does business of such a volume, or with such a pattern of product distribution, that he should reasonably anticipate that his product may be ultimately used in any state, he has done the act required for the exercise of jurisdiction by the state where the injured user resides.
* * * * * *
"When a manufacturer voluntarily chooses to sell his product in a way in which it will be resold from dealer to dealer, transferred from hand to hand and transported from state to state, he cannot reasonably claim that he is surprised at being held to answer in any state for the damage the product causes. Nor can he deny the substantial interest of the injured person\'s state in providing a convenient forum for its citizens." Keckler v. Brookwood Country Club, N.D. Ill.1965, 248 F.Supp. 645, 648-649.

See also Harford v. Smith, N.D.W.Va. 1966, 257 F.Supp. 578; Jackson v. National Linen Service Corp., W.D.Va.1965, 248 F.Supp. 962; Anderson v. Penncraft Tool Co., N.D.Ill. 1961, 200 F.Supp. 145; contra O'Brien v. Comstock Foods, Inc., 1963, 123 Vt. 461, 194 A.2d 568; see Yules v. General Motors Corp., D.Mont. 297 F.Supp. 674.

The primogenial case for subjecting a non-resident corporation to forum process where the corporation has shipped its product into the forum state indirectly through the stream of interstate commerce is Gray v. American Radiator & Standard Sanitary Corp., 1961, 22 Ill.2d 432, 176 N.E.2d 761. In Gray the plaintiff was injured in Illinois when a water heater exploded because of a defective valve. Service of process was sustained against the defendant foreign corporation which manufactured the valve even though the corporation's only contact with Illinois was very indirect. The defendant corporation manufactured the defective valve in Ohio and, subsequently, that valve was incorporated into a hot water heater in Pennsylvania. That heater was then sold in the course of commerce through which it eventually...

To continue reading

Request your trial
77 cases
  • Rice Growers Assn. v. First National Bank
    • United States
    • California Court of Appeals Court of Appeals
    • April 30, 1985
    ...know that they will reach the forum state and that they create a potential risk of injury." (At p. 1140; see also Eyerly Aircraft Co. v. Killian (5th Cir.1969) 414 F.2d 591; Duple Motor Bodies, Ltd. v. Hollingsworth (9th Cir.1969) 417 F.2d The order as to each respondent is reversed with di......
  • Wells Fargo & Co. v. Wells Fargo Exp. Co.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • April 22, 1977
    ...Inc., 444 F.2d 745 (4th Cir.), cert. denied, 404 U.S. 948, 92 S.Ct. 271, 30 L.Ed.2d 2652 (1971); Eyerly Aircraft Co. v. Killian, 414 F.2d 591, 595-98 & n.7 (5th Cir. 1969); Southern Machine Co. v. Mahasco Indus., Inc., 401 F.2d 374, 376-77, 380-83 (6th Cir. 1968); Volkswagen Interamericana,......
  • Edwards v. Associated Press
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • April 25, 1975
    ...723, reh. denied, 474 F.2d 1347, 1348 (5th Cir.), cert. denied, 414 U.S. 830, 94 S.Ct. 60, 38 L.Ed.2d 64 (1973); Eyerly Aircraft Co. v. Killian, 414 F.2d 591 (5th Cir. 1969), the cause of action sued upon usually must stem from the defendant's activities in the local forum, Curtis Publishin......
  • Nippon Emo-Trans Co., Ltd. v. Emo-Trans, Inc.
    • United States
    • U.S. District Court — Eastern District of New York
    • September 14, 1990
    ...137 U.S. 15, 11 S.Ct. 9, 34 L.Ed. 604 (1890). While this rule might well be considered "unfortunate", see Everly Aircraft Co. v. Killian, 414 F.2d 591, 599 n. 10 (5th Cir.1969), and, indeed, while every sister state currently refrains from exercising such jurisdiction, Restatement (Second) ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT