General Leisure Products Corp. v. Gleason Corporation

• Decision Date: 10 September 1971
• Docket Number: Civ. 71-0-216.
• Citation: 331 F. Supp. 278
• Parties: GENERAL LEISURE PRODUCTS CORPORATION, a Corporation, Plaintiff, v. GLEASON CORPORATION, a Corporation, Defendant.
• Court: U.S. District Court — District of Nebraska

331 F. Supp. 278

GENERAL LEISURE PRODUCTS CORPORATION, a Corporation, Plaintiff, v. GLEASON CORPORATION, a Corporation, Defendant.

Civ. 71-0-216.

United States District Court, D. Nebraska.

September 10, 1971.

Warren S. Zweiback, of Zweiback & Laughlin, Omaha, Neb., for plaintiff.

Leo Eisenstatt, of Eisenstatt, Higgins, Kinnamon & Green, Omaha, Neb., for defendant.

MEMORANDUM AND ORDER

RICHARD E. ROBINSON, Chief Judge.

This matter comes before the Court upon defendant's motion to dismiss Filing #6 or in lieu thereof to quash the return of service of summons on the grounds that the defendant is not subject to service of process within the District of Nebraska and that the defendant has not been properly served with process.

According to the affidavit of Mark L. Laughlin Filing #3 a copy of the summons and complaint were mailed to defendant Gleason Corporation at its usual place of business at 2266 North Prospect Avenue, Milwaukee, Wisconsin, 53202, attention of the President, A. L. Kotler, by certified mail, return receipt requested. The return receipt is attached to the affidavit.

Both sides have assisted with briefs, oral arguments, and affidavits. The issues generally defined are whether the defendant is amenable to service pursuant to Nebraska's Long-Arm Statute, Neb.R.R.S. § 25-536, et seq. 1969 C.S. and if so whether due process is offended by service under the present facts of this action.

The long-arm statute has been the subject of several recent Memorandums of this District and the subject of a recent Nebraska Supreme Court opinion. See Joedman v. Gamble-Skogmo, Civil #1747-L D.Neb.1971; Carroll v. General Medical Company, 53 F.R.D. 349 D.Neb.1971; Blum v. Kawaguchi, Ltd., 331 F.Supp. 216 D. Neb.1971 and Stucky v. Stucky, 186 Neb. 636, 185 N.W.2d 656 1971. As a general statement it has been decided that the Nebraska long-arm statute is to be interpreted broadly in view of the rationale and philosophy underlying the adoption of the long-arm statute, and not narrowly and strictly. This recent development has placed the application of the cases cited by the defendant in a different light. The Court will not reiterate the reasoning but refers instead to the above-cited cases and notes that neither "presence" nor "doing business" are the pertinent tests to be employed under Nebraska's long-arm statute.

The plaintiff's complaint alleges that the defendant entered into contracts with the plaintiff to supply wheels to be used on mini-bikes, but failed to perform the contracts and that the plaintiff as a result was damaged in the sum of $350,000.00.

Defendant's contacts with Nebraska appear as follows per defendant's sales manager's F. James Perse affidavit Filing #14—From 1969 to 1970 defendant's sales manager made six trips to General plaintiff in Nebraska, 2 for the purpose of acquainting plaintiff with defendant's line of and facilities for wheel products and 4 to collect past due receivables.

According to this affidavit the defendant also sold go-cart wheels to Sensation Mfg. Company of Ralston, Nebraska, not a party. These sales, made between 1969 and 1971, totaled $27,475.20.

The plaintiff's affidavits assert that the total amount of sales made by the defendant to the plaintiff over the past three years totaled $459,847.50. This figure is not challenged. Filing #11.

According to a preliminary prospectus of the defendant attached to the affidavit of David Koentopf president of the plaintiff filing #12 defendant is "a diversified manufacturer deriving its income from the marketing of wheels and casters, outdoor leisure and recreation products, shopping and special purpose carts, highway vehicle safety equipment and miscellaneous products and services. It markets its products through its own sales force and through individuals and organizations acting as manufacturers' representatives to over five thousand customers, including wholesalers, retail chain stores and approximately 400 original equipment manufacturers."

According to the defendant all the business done with the plaintiff was based on purchase orders sent by United States mail to the defendant and were accepted in defendant's Milwaukee office. All the orders, past and present, were for delivery F.O.B. defendants' manufacturing plant at Fort Madison, Iowa, and were shipped from there pursuant to the plaintiff's directions. Filing #6. According to the affidavit of plaintiff's manager some deliveries were made to the plaintiff in Omaha, Nebraska, on defendant's truck. In answer the defendant states deliveries were made to accommodate the plaintiff and plaintiff paid the expenses. Filing #13.

The defendant places stress on the F.O.B. terms but these distinctions are of no importance under the long-arm statute. Neither physical presence or doing business are required. The products in the past were shipped directly from the defendant via an intermediate entity of the defendant to the plaintiff in Nebraska. This Court has recently held that even an indirect shipment via a third-party constituted both a transaction of business in Nebraska and constituted a contract to supply things in Nebraska. In other words when a product is placed in a distributive chain with the destination Nebraska then the requirements of § 25-536 "transacting any business in the state" or § 25-536 (1) b "contracting to supply services or things in this state" are met. Blum v. Kawaguchi, Ltd., supra. Shipping and freight arrangements do not alter the character of the event, and the point at which title passes is not determinative.

Even if the point where title passed was of importance it appears that there is a strong argument title did not pass until the products arrived in Nebraska. The defendant has provided two of the plaintiff's orders sent to the defendant. Filing #6. The purchase orders provide that the orders are subject to several conditions, including among these are:

"3. Any provisions for payment of transportation charges relate to the price only and have no effect on the time of passage of title. Until we shall have inspected the merchandise and thereafter accepted it, delivery thereof shall not be completed nor shall title thereto pass to us; the acceptance of the merchandise by us shall not release or discharge you from legal liability in damages or otherwise for breach of any obligation or warranty, expressed or implied, with respect to the merchandise ordered hereunder.

"4. This order is given by us and accepted by you upon the condition that you will protect and hold us harmless against any and all liability and indemnify us for any loss or expense arising out of any patent, copyright, trade mark or trade name infringement action, now existing or hereafter commenced, in relation to the goods hereby ordered or any part thereof.

"5. The filling of this order by you is an acceptance of the terms and conditions here stated and stated on the face hereof and shall not be qualified by anything appearing on the invoice.

"6. It is understood and agreed that the merchandise described in this order is hereby warranted by you to be free from any and all defects, that the different articles have been manufactured in a good, workmanlike manner and of good material, and that the merchandise is suitable for the normal purpose for which it is intended, and that you shall hold us harmless for any and all claims and expenses that may arise out of the breach of any obligation or warranty expressed or implied with respect to the merchandise ordered hereunder."

The defendant has not shown nor argued that the acceptance of the orders was expressly "made conditional on assent to the additional or different terms." R.R.S.Neb. § 2-207 1. Thus it appears that the F.O.B. designation is without importance even under the...