First United Bank of Mississippi v. First Nat. Bank of Atlanta

• Decision Date: 11 March 1986
• Docket Number: No. 42458,42458
• Citation: 255 Ga. 505,340 S.E.2d 597
• Parties: , 54 USLW 2493 FIRST UNITED BANK OF MISSISSIPPI v. FIRST NATIONAL BANK OF ATLANTA.
• Court: Georgia Supreme Court

Page 597

340 S.E.2d 597

255 Ga. 505, 54 USLW 2493

FIRST UNITED BANK OF MISSISSIPPI v. FIRST NATIONAL BANK OF ATLANTA.

No. 42458.

Supreme Court of Georgia.

March 11, 1986.

Harmon W. Caldwell, Jr., Harry W. MacDougald, Johnson & Montgomery, Atlanta, for First United Bank of Mississippi.

W. Christopher Bracken III, Herbert D. Shellhouse, William G. McDaniel, Atlanta, for First Nat. Bank of Atlanta.

SMITH, Justice.

This case came to us by way of certiorari from the Court of Appeals, and the facts of the case may be found in First United Bank of Mississippi v. First National Bank of Atlanta, 175 Ga.App. 10, 332 S.E.2d 309 (1985). We granted certiorari in this case to answer the following question: "Whether the collection by an out-of-state bank, through normal banking channels, of a check drawn on a Georgia bank constitutes the transaction of business in Georgia so as to subject the out-of-state bank to the jurisdiction of the Georgia courts in a suit alleging that the check was paid on an improper endorsement?"

The Court of Appeals found that the reasoning in J.C. Penney Co. v. Malouf Co., 230 Ga. 140, 143, 196 S.E.2d 145 (1973), and Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga.App. 13, 14, 267 S.E.2d 274 (1980), was applicable to the facts of this case, but we do not, and we reverse. ¹

Both J.C. Penney, supra, and Patron, supra, involved manufacturers that manufactured and shipped merchandise covered by indemnity/warranty agreements into Georgia for resale to Georgia consumers. One can readily find that based on their conduct, they "purposefully directed" their activities at residents of Georgia.

The stream of commerce rationale that was first introduced in Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), has been cited with approval most recently by the United States Supreme Court in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985), where the court citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567-568, 62 L.Ed.2d 490 (1980), stated, that " '[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State' and those products subsequently injure forum consumers." (Emphasis supplied). But it is stretching the concept beyond its rational meaning to apply it to an out-of-state bank that engages in routine and mechanical bank collection procedures.

To allow the Court of Appeals decision to stand is to "appoint the [check] agent for service of process[,]" World-Wide Volkswagen Corp., supra, 444 U.S. at 296, 100 S.Ct. at 566, and to ignore the " 'purposeful availment requirement [that] ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, [cit.]." Burger King Corp., supra, 105 S.Ct. at 2183.

In Davis Metals v. Allen, 230 Ga. 623, 625, 198 S.E.2d 285 (1973), this court announced the three prong test we use in determining whether or not jurisdiction may be exerted over a nonresident pursuant to OCGA § 9-10-91(1). Jurisdiction "exists on the basis of transacting business in this state if the nonresident defendant has purposefully done some act or consumated some transaction in this state, if the cause of action arises from or is connected with such act or transaction, and if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice." We have consistently held that our Long-Arm Statute confers jurisdiction over nonresidents to the maximum extent permitted by due process. Coe & Payne Co. v. Wood-Mosaic Corp., 230 Ga. 58, 195 S.E.2d 399 (1973).

"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful 'contacts, ties, or relations.' [Cit.]. By requiring that individuals have 'fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign,' [cit.], the Due Process Clause 'gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.' [Cit.]."

"Where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, this 'fair warning' requirement is satisfied if the defendant has 'purposefully directed' his activities at residents of the forum, [cit.], and the litigation results from alleged injuries that 'arise out of or relate to' those activities. [Cit.]" Burger King Corp., supra, 105 S.Ct. at 2182.

The Court of Appeals found that the appellant "must be presumed to have acted with knowledge that payment would ultimately be made in Georgia, this being the location of the drawee bank." But this "presumed knowledge" or foreseeability is not that which is critical to a due process analysis. That foreseeability "is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, supra, 444 U.S. at 297, 100 S.Ct. at 567.

We now begin to look at the appellant's connection with Georgia and the appellant's conduct. The appellant is a corporation organized and incorporated under the laws of Mississippi. It is not organized or incorporated under the laws of Georgia and it is not registered or licensed to do business in Georgia. In an affidavit signed by Billy F. Wooten, Sr., Vice President and Cashier of the appellant, he states that the appellant: "(a) does not regularly do business in Georgia; (b) solicits no business in Georgia; (c) engages in no persistent conduct in Georgia; and (d) does not derive substantial revenue either...