Flint v. Gust

• Decision Date: 07 November 1986
• Docket Number: No. 73392,73392
• Citation: 351 S.E.2d 95,180 Ga.App. 904
• Parties: FLINT v. GUST et al.
• Court: Georgia Court of Appeals

Page 95

351 S.E.2d 95

180 Ga.App. 904

FLINT v. GUST et al.

No. 73392.

Court of Appeals of Georgia.

Nov. 7, 1986.

Rehearing Denied Nov. 20, 1986.

Ernest H. Woods III, Clarkesville, for appellant.

William R. Oliver, Clarkesville, for appellees.

BANKE, Chief Judge.

The appellant sued the appellees, a Wisconsin corporation and its president, to recover damages for fraud and conversion based on their alleged conduct of a "bait-and-switch" operation involving the sale of customized vans and trucks. Jurisdiction over the appellees, neither of whom are Georgia residents, was predicated on subsection (3) of our Long Arm Statute, OCGA § 9-10-91, which is applicable by its terms to tort actions arising from acts and omissions occurring outside the state which lead to injury inside the state. The appellant later amended his complaint to add a claim for breach of contract, predicating jurisdiction over the appellees with respect to that claim on subsection (1) of OCGA § 9-10-91, which applies if the nonresident defendant "[t]ransacts any business in this state." This appeal is from the grant of the appellees' motion to dismiss both counts of the complaint for lack of personal jurisdiction.

The appellant alleged that, acting in response to an ad appearing in a trade magazine distributed in this state, he had transmitted an order to the appellees in Wisconsin for a customized Ford truck and trailer, following which, in response to the appellees' requirements, he had remitted a cashier's check to them for $6,000 as a deposit on the vehicle. He further alleged that, after receiving this check, the appellees had attempted to substitute a different type of vehicle from the one he had ordered and had subsequently refused numerous demands by him for the return of his deposit.

In support of their motion to dismiss the complaint for lack of personal jurisdiction, the appellees submitted affidavits in which they denied that they regularly conducted or solicited business in Georgia, or engaged in any other persistent course of conduct within this state, or derived substantial revenue from goods used or services rendered in this state. Indeed, they denied that they had ever done any business at all in Georgia with the exception of the transaction at issue in this suit. Held:

1. The trial court was correct in concluding that it had no jurisdiction over the appellees with respect to the breach of contract claim. In a breach of contract action not involving real property located in this state (see OCGA § 9-10-91(4)), jurisdiction over a nonresident defendant may be exercised by the courts of this state only upon a showing that the nonresident defendant "[t]ransacts any business in this state...." OCGA § 9-10-91(1). Jurisdiction over a nonresident exists on the basis of transacting business in this state only "if the nonresident has purposefully done some act or consummated 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." Davis Metals v. Allen, 230 Ga. 623, 625, 198 S.E.2d 285 (1973). It is well settled that an out-of-state defendant will not be deemed to have engaged in purposeful business activity in this state merely because he has advertised products for sale in national trade magazines circulating in this state and has accepted orders for such products which have been transmitted to him from this state by mail, telephone, or other instrumentality of interstate commerce in response to such advertisements. See Commercial Food Specialties v. Quality Food Equip. Co., 176 Ga.App. 892, 338 S.E.2d 865 (1985); A.A.A. v. Lindberg, 172 Ga.App. 753, 324 S.E.2d 480 (1984); Graphic Machinery v. H.M.S. Direct Mail Svc., 158 Ga.App. 599, 281 S.E.2d 343 (1981). See also Wise v. State Board &c. of Architects, 247 Ga. 206(2), 274 S.E.2d 544 (1981); Capital Assoc. v. Gallopade, etc., 172 Ga.App. 504, 323 S.E.2d 842 (1984). Compare Hollingsworth v. Cunard Line, Ltd., 152 Ga.App. 509, 515, 263 S.E.2d 190 (1979).

2. The issue of whether the trial court had jurisdiction over the appellees with respect to the tort action is somewhat more problematical. The appellees established without dispute by their affidavits that they had neither engaged in any regular or persistent business activity in this state nor obtained substantial revenue from goods used or services rendered in this state. Therefore, jurisdiction over them clearly could not be predicated on OCGA § 9-10-91(3), which authorizes the exercise of long-arm jurisdiction over a nonresident defendant who "[c]ommits a tortious injury in this state caused by an act or omission outside this state if the tortfeasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state...." (Emphasis supplied.) It follows that any jurisdiction which may exist over the appellees with respect to this litigation must exist pursuant to OCGA § 9-10-91(2). By its terms, that subsection is applicable, without further restriction, to any nonresident defendant who "[c]ommit a tortious act or omission within this state, except as to a cause of action for defamation of character arising from the act...."

The predecessor to OCGA § 9-10-91(3) (former Code Ann. § 24-113.1(c)) was enacted by the Legislature in response to prior decisions of this court adopting the "New York rule" in interpreting the predecessor to OCGA § 9-10-91(2) (former Code Ann. § 24-113.1(b)). See Castleberry v. Gold Agency, 124 Ga.App. 694, 185 S.E.2d 557 (1971); O'Neal Steel v. Smith, 120 Ga.App. 106, 169 S.E.2d 827 (1969). Under the "New York rule," a tort is deemed to have been committed within the state only if the tortious act or omission itself, and not merely the injury resulting therefrom, occurred therein. However, after the predecessor to OCGA § 9-10-91(3) was enacted, our Supreme Court, in Coe & Payne Co. v. Wood-Mosaic Corp., 230 Ga. 58, 195 S.E.2d 399 (1973), rejected the "New York rule" in favor of the "Illinois rule," pursuant to which a tort resulting in damage inside the state is deemed to have occurred inside the state regardless of where the tortious act or omission took place.

At first blush, the holding in Coe & Payne Co. v. Wood-Mosaic Corp. would appear to have made the transaction-of-business requirements set forth in OCGA § 9-10-91(3) entirely superfluous. However, in Clarkson Power Flow v. Thompson, 244 Ga. 300, 301, 260 S.E.2d 9 (1979), the Supreme Court held that "limitations similar to those present in subsection [ (3) ] are constitutionally mandated under subsection [ (2) ]." The Court elaborated as follows: "A nonresident defendant is subject to the jurisdiction of the Georgia...