Fields v. Peyer

• Citation: 250 N.W.2d 311,75 Wis.2d 644
• Decision Date: 15 February 1977
• Docket Number: No. 75--50,75--50
• Parties: Gilbert J. FIELDS, by Rex Capwell, his Guardian ad Litem, and Gilbert W. Fields, Plaintiffs, v. James A. PEYER et al., Defendants, James A. Peyer and James B. Peyer et al., Defendants and Third-Party Plaintiffs-Respondents, Township of Lyons, etc., Third-Party Defendant, Archie D. Walker, Jr., et al., Defendants and Third-Party Plaintiffs-Respondents, Audi Nsu Auto Union, A.G., Third-Party Defendant-Appellant.
• Court: United States State Supreme Court of Wisconsin

Page 311

250 N.W.2d 311

75 Wis.2d 644

Gilbert J. FIELDS, by Rex Capwell, his Guardian ad Litem and Gilbert W. Fields, Plaintiffs, v. James A. PEYER et al., Defendants James A. Peyer and James B. Peyer et al., Defendants and Third-Party Plaintiffs-Respondents Township of Lyons, etc., Third-Party Defendant Archie D. Walker, Jr., et al., Defendants and Third-Party Plaintiffs-Respondents, Audi Nsu Auto Union, A.G., Third-Party Defendant-Appellant.

No. 75--50.

Supreme Court of Wisconsin.

Argued Nov. 29, 1976.

Decided Feb. 15, 1977.

Joseph D. McDevitt, Milwaukee (argued), for Audi Nsu Auto Union, A.G.; Borgelt, Powell, Peterson & Frauen, Milwaukee, on the brief.

Frank M. Coyne, Madison, for James A. Peyer, James B. Peyer and Ohio Cas. Ins. Co.

Wayne R. Van Ert, Milwaukee (argued), for Archie D. Walker, J., and Michael H. Ankeny, Inc.; Otjen, Philipp & Van Ert, S.C., Milwaukee, on the brief.

HEFFERNAN, Justice.

The order appealed from had the effect of finding that the Audi NSU Auto Union, A.G., hereinafter Audi, was amenable to the jurisdiction of the courts of Wisconsin and that jurisdiction was obtained over Audi by the proper service of summons. Audi appeals from the order, claiming that, because of lack of sufficient contacts with this state and because the parties on which service was attempted were not Audi's agents, jurisdiction was not obtained. While we conclude that there were sufficient contacts to make Audi amenable to the jurisdiction of the Wisconsin courts, we conclude that service was not sufficient, and accordingly we reverse the order of the trial judge.

The action arose out of an automobile accident which occurred on a Wisconsin highway on May 21, 1971. The principal plaintiff, Gilbert J. Fields, was a passenger in a 1966 NSU Spider automobile manufactured by Audi and driven by James A. Peyer. Fields sued Peyer and his insurer alleging negligence. The plaintiffs also alleged a cause of action against the Playboy Club because of loose gravel on a private road, a cause of action against Clifford J. Meyer, doing business as Cliff Meyer Import of Kenosha, which sold the vehicle to Peyer, and against Archie D. Walker, Jr., Michael H. Ankeny, Inc., a Minnesota corporation, which sold the automobile to Cliff Meyer, against the Transcontinental Motors Corporation, which allegedly imported the automobile and sold it to Walker in defective condition, and against Audi, the German manufacturer, which allegedly manufactured a defective vehicle.

Peyer and Walker answered separately, denying liability, and each of them cross-complained against Audi for contribution.

Peyer served his summons and cross-complaint against Audi on the Secretary of State pursuant to sec. 180.847(4), Stats., and also sent a copy of the summons to Audi at its address in Bavaria, Germany. Peyer also attempted service on Volkswagen of America, which was designated as its agent for the service of process under 15 U.S.C. § 1399(e), the National Traffic and Motor Vehicle Safety Act. Service was not completed, because the registered agent under the federal act denied that he was Audi's agent for the service of process arising out of an action in the state's courts.

Walker followed a similar procedure, attempting service through the Secretary of State, with a copy to Audi in Bavaria, and served Volkswagen of America as Audi's registered agent under the federal act.

Audi appeared pursuant to sec. 262.16, Stats., objecting to jurisdiction in respect to both cross complaints. It moved to quash the attempted service of Peyer's complaint and moved to dismiss the third-party complaint of Walker.

In respect to the jurisdiction sought to be obtained by both Peyer and Walker, Audi claimed that service upon the Secretary of State's office under sec. 180.847(4), Stats., was defective because Audi was not 'transacting business' in Wisconsin. It claimed that the service upon Volkswagen of America was insufficient, because Volkswagen, although its agent for the service of process under the National Traffic and Motor Vehicle Safety Act, was not its agent for actions and proceedings not brought under that federal act. Additionally, it argued that it was not amenable to jurisdiction of the Wisconsin courts even though proper service were obtained, because there were insufficient contacts by Audi with the Wisconsin jurisdiction and that the record was totally devoid of any conduct in Wisconsin which would, under standards of due process, make it amenable to the jurisdiction of the courts of this state.

We conclude that Audi was amenable to the jurisdiction of the Wisconsin courts by virtue of sec. 262.05(4), Stats.:

'262.05 Personal jurisdiction, grounds for generally. A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to s. 262.06 under any of the following circumstances:

'(4) Local injury; foreign act. In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury either:

'(a) Solicitation or service activities were carried on within this state by or on behalf of the defendant; or

'(b) Products, materials or things processed, serviced or manufactured by the defendant were used or consumed within this state in the ordinary course of trade.'

At the jurisdictional hearing, pursuant to sec. 262.16, Stats., evidence was submitted showing that automobile agencies in Illinois had sold 41 Porsche-Audis to Wisconsin residents in 1970 and in 1971 to the day of the accident. There was evidence to show that Porsche and Audi were manufactured by the same company. There was evidence to show that Audi, at and prior to the time of the accident, had no dealers or distributors in Wisconsin. There was also evidence to show that in 1970 and during the relevant period in 1971, 25 advertisements for Porsche and Audi appeared in Time, Newsweek, Motor Trend, and Playboy, all of which magazines were widely distributed in Wisconsin. Many of these advertisements listed toll-free numbers, which were designed for the purpose of inviting potential customers, including those in Wisconsin, to call the nearest dealer.

The trial judge found that these contacts of Audi with Wisconsin by virtue of the solicitations and by the sale to Wisconsin residents were sufficient to satisfy the requirements of due process and to make Audi amenable to Wisconsin's jurisdiction. That finding is supported by the evidence.

In the instant case there was a local injury or tort to the plaintiffs, which the cross complaints allege arose out of the negligent act or omission outside of the state by the defendant Audi. The evidence is uncontroverted that solicitation of the Audi product was carried on in the state by a relatively massive course of advertising with advertisements circulated within the state with no less than 25 separate publications of national magazines.

Not only was the particular product, the NSU Spider, which allegedly caused the injury, within the state; but also the evidence showed that there were some 41 vehicles manufactured by Audi that were sold to Wisconsin residents in the period of less than a year and a half. The very allegations of the complaint, tracing the steps through which these vehicles passed from the time of manufacture in Germany to their final sale to consumers who lived in Wisconsin, indicate without doubt that the vehicles manufactured by Audi were used in the State of Wisconsin as the result of the ordinary course of trade.

The revision notes of the Judicial Council's reporter, Professor G. W. Foster, Jr., indicate that, in all probability, a single tortious act in connection with a product that entered Wisconsin in the ordinary course of trade would be sufficient to permit the exercise of Wisconsin's jurisdiction as a matter of due process. The Wisconsin statutes, however, require an additional contact. Solicitation carried on in the state, service activities, or the use of the product in the state in the ordinary course of trade furnish these additional contacts. The revision notes state:

'Three jurisdictional facts are required by this subsection: (1) an act or omission outside the state by the defendant or his agent; (ii) an injury to person or property within the state which is claimed to arise out of the foreign act or omission; and (iii) some additional contact, not necessarily related to the injury sued on, which links the defendant to the state. . . .

'The jurisdictional facts required by this subsection call for proof of two contacts between the defendant and the state: (i) the occurrence in the state of the injury which the defendant is claimed to have caused; and (ii) some additional contact not necessarily related to that injury. . . .

'Perhaps the occurrence of the injury in the state is alone a sufficient 'minimum contact' to sustain jurisdiction.' Wis.Annot., 1960, p. 1234.

Accordingly, under the statutes and under the comments explanatory of the statutes, the amenability to jurisdiction is established by the tort and by the presence of numerous Audi automobiles in Wisconsin in the course of trade and by the solicitation of Audi business in the state.

The second type of contact--products used or consumed within the state in the ordinary course of trade--was discussed in Hasley v. Black, Sivalls & Bryson, Inc., 70 Wis.2d 562, 235 N.W.2d 446 (1975). In that case the minimum contact required under sec. 262.05(4)(b), Stats.--products used within this state in the ordinary course of trade--was satisfied by the sale of two bull plugs, which were used in a dust-scrubbing device installed in this state. The court relied on the reasoning of McPhee v. Simonds Saw and Steel Co., 294 F.Supp. 779 (W.D.Wis., 1969), which interpreted sec. 262.05(4)(b) to require that there be plural products, or more than one item manufactured by the...