Gentry v. Wilmington Trust Company

• Decision Date: 31 March 1970
• Docket Number: Civ. A. No. 3605.
• Citation: 321 F. Supp. 1379
• Parties: Wilmer H. GENTRY and Jean Gentry, Plaintiffs, v. WILMINGTON TRUST COMPANY, a Delaware corporation, Approved Ladder & Equipment Co. of Wilmington, Inc., a Delaware corporation, R. D. Werner Co., a Pennsylvania corporation, Spring Lock Scaffolding Co., a Pennsylvania corporation, and 100 West Tenth Street Corp., a Delaware corporation, Defendants.
• Court: U.S. District Court — District of Delaware

321 F. Supp. 1379

Wilmer H. GENTRY and Jean Gentry, Plaintiffs, v. WILMINGTON TRUST COMPANY, a Delaware corporation, Approved Ladder & Equipment Co. of Wilmington, Inc., a Delaware corporation, R. D. Werner Co., a Pennsylvania corporation, Spring Lock Scaffolding Co., a Pennsylvania corporation, and 100 West Tenth Street Corp., a Delaware corporation, Defendants.

Civ. A. No. 3605.

United States District Court, D. Delaware.

March 31, 1970.

Bruce M. Stargatt and Richard H. May, of Young, Conaway, Stargatt & Taylor, Wilmington, Del., for plaintiffs.

B. Wilson Redfearn, of Tybout & Redfearn, Wilmington, Del., for defendants, Wilmington Trust Company and 100 West Tenth Street Corp.

Carl Schnee, Wilmington, Del., for defendant Approved Ladder & Equipment Co. of Wilmington, Inc.

Roger P. Sanders, of Prickett, Ward, Burt & Sanders, Wilmington, Del., for defendant R. D. Werner Co.

Joseph H. Flanzer, of Flanzer & Isaacs, Wilmington, Del., for defendant Spring Lock Scaffolding Co.

MEMORANDUM OPINION

CALEB M. WRIGHT, Chief Judge.

This is an action brought by Wilmer H. Gentry (Gentry) and his wife, Jean Gentry for personal injuries and loss of services caused by Gentry's fall from a scaffold in the city of Wilmington, Delaware, on March 8, 1968. Gentry was an employee of Frederick G. Krapf & Son, Inc., at the time of the accident, and he was engaged in making repairs on a building owned by defendant Wilmington Truck Company (Wilmington Trust). The scaffold in use was furnished by defendant 100 West Tenth Street Corp. (100 West Tenth). Wilmington Trust is the parent corporation of defendant 100 West Tenth and the two are treated together as "Wilmington Trust" for purposes of this opinion. Defendant Spring Lock Scaffolding Co. (Spring Lock) manufactured the end frame portion of the scaffold. Defendant Approved Ladder & Equipment Co. of Wilmington, Inc., (Approved Ladder) owned the scaffold and leased it to Wilmington Trust. Defendant R. D. Werner Co. (Werner) manufactured the platform portions of the scaffold, known as "Alum-A-Planks".

Plaintiffs allege that the accident and injuries occurred as a result of the negligence of all defendants and alternatively that defendants are strictly liable in tort for damages. Plaintiffs also allege that defendants breached implied warranties of fitness in furnishing to Gentry a scaffold unsuitable and unsafe for him to use. They seek a judgment against all defendants jointly and severally.

Jurisdiction is based on diversity of citizenship. Plaintiffs are citizens of Maryland; Wilmington Trust and Approved Ladder are Delaware corporations, and Spring Lock and Werner are Pennsylvania corporations. The requisite jurisdictional amount is present.

Wilmington Trust and Approved Ladder have crossclaimed against all other defendants for contribution and indemnity. Werner and Spring Lock have crossclaimed for contribution against all other defendants. Werner asserts as an affirmative defense that service of process on it was not proper under the Delaware long arm statute, 8 Del.C. § 382.

On the day set for trial plaintiffs settled their claims against Spring Lock, Approved Ladder, and Wilmington Trust and executed a joint tortfeasors release, pursuant to 10 Del.C. § 6304. The Court must now determine (1) whether personal jurisdiction exists over Werner and (2) whether Approved Ladder and Wilmington Trust may continue to pursue their claims for indemnity against Werner.¹

8 Del.C. § 382 provides, in relevant part, "any foreign corporation which shall transact business in this State without having qualified to do business under section 371 of this title shall be deemed to have thereby appointed and constituted the Secretary of State its agent for the acceptance of legal process * * *." "Transaction of business" is defined in § 382(b) as "* * * the course or practice of carrying on any business activities in this State, including, without limiting the generality of the foregoing, the solicitation of business or orders in this State."

Other than the occasional dispatch of brochures into Delaware upon request, Werner's only contact with the state is through its manufacturer's representative, DeJure-Windstein, Inc. (DeJure-Windstein), a Pennsylvania corporation. There is no dispute that Dejure-Windstein is an independent contractor. It serves Werner and other companies in soliciting orders for their products, forwarding orders to the plants, and conducting occasional shows for the products in locations convenient to the customers. Werner reserves the right to accept or reject all orders forwarded by DeJure-Windstein. Customers remit directly to Werner and products are shipped from the Werner plant in Greenville, Pennsylvania, directly to Delaware customers.

Since this is a diversity action, Werner's amenability to suit here is determined by the law of Delaware in accordance with requirements of the Constitution of the United States. International Shoe Company v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed. 2d 223 (1957), Florio v. Powder Power Tool Corp., 248 F.2d 367 (3d Cir. 1957), Meench v. Raymond Corp., D. C., 283 F. Supp. 68 (1968). Fed.R.Civ.P. 4(d)(3) and (7).

None of the parties provide Delaware authority on the interpretation of the relevant statute, and the Court has found none by its own efforts. It is clear from the authorities presented, however, that whether the activities of a manufacturer's representative subject the manufacturer to suit in the states where his representative solicits depends on the liberality with which the statutory language "doing business" is interpreted. Quite independently of restrictions imposed by the Constitution, courts disagree on the effect of systematic solicitations by an independent contractor. Compare Nugey v. Paul-Lewis Laboratories, 132 F.Supp. 448 (S.D.N. Y.1955), Gelfand v. Tanner Motor Tours Ltd., 385 F.2d 116 (2d Cir. 1967) with Schmikler v. Petersime Incubator Co., 83 F.Supp. 869 (D.Mass.1949), Ideal Toy Corporation v. Kaysam Corp. of America, 27 F.R.D. 10 (S.D.N.Y.1961). The more liberal standard, as illustrated by the Nugey and Gelfand cases, is satisfied if the representative is performing services beyond "mere solicitation", and if the services are sufficiently important to the foreign corporation that if it did not have a representative to perform them, its own officials would perform substantially similar ones. Gelfand, supra, 385 F.2d at 121. Those cases recognize that two determinations are implicit in the decision to subject a foreign corporation to process. The first is the substantiality of activities and the second is the effect of the legal relationship between the corporation and the representative. If sufficient services are performed for the foreign corporation to satisfy the definition of "doing business", should the corporation be immune from suit because its representative is called an independent contractor?

The more restrictive standard looks only to the presence or absence of the foreign corporation in the state and at the possibility of finding an agency relationship with the representative. Finding the corporation absent in all physical aspects and the representative an independent contractor, it leaves the corporation immune.

This Court is reluctant to make the first tracks in an area so essentially related to state judicial policy. The statute itself, however, indicates an intent to adopt a liberal definition of "doing business", 8 Del.C. § 382(b), and in the absence of evidence to the contrary, the Court will not assume that the state did not intend to take advantage of all extraterritorial jurisdiction permitted by the Constitution. The cases cited by defendant are not persuasive of the wisdom of a narrow definition, and it is significant that Simpkins v. Council Manufacturing Corp., 332 F.2d 733 (8th Cir. 1964) and Meench v. Raymond Corp., supra, involve distributers rather than representatives. The Court holds that the activities of DeJure-Windstein in systematically soliciting orders from Delaware customers, forwarding the orders to Werner, and occasionally conducting displays of Werner products in Delaware are sufficient to subject Werner to the jurisdiction of Delaware courts. It is persuasive that, inasmuch as Werner retains the right to accept or reject all orders, ships directly from the factory to the customer, and is compensated directly by the customer, Werner products could not find their way to Delaware customers without DeJure-Windstein. It cannot be controlling that DeJure-Windstein is compensated by commission rather than by salary.

The indemnity claims of Wilmington Trust and Approved Ladder are based on asserted rights to shift the burden imposed by law on them to Werner, the party allegedly primarily responsible. They say that Werner is liable to them for all their costs in settling with plaintiffs, in that Werner's negligence was "active", or primary, and theirs was "passive", or secondary, Ianire v. University of Delaware, 255 A.2d 687 (Del.Super.1969), for the reason that Werner is responsible for the damages caused by its breach of warranty, 5A Del.C. §§ 2-315, 2-318, and because Werner is strictly liable in tort. Restatement (Second) of Torts, § 402A. Unless the cross-claimants are entitled to no relief under any state of facts which can be proved, their claims may not be dismissed. Rule 12(b) (6), Fed. R.Civ.P., 2A Moore, Federal Practice ¶ 12.08.

Werner contends that inasmuch as Wilmington Trust and Approved Ladder settled the claims against them without a full-dress, adversary proceeding to determine liability and damages, they forfeited any right to indemnity. Grummons v. Zollinger, 240 F.Supp. 63 (N.D. Ind.1964), aff'd. 341 F.2d 464 (7th Cir. 1965), Stewart and Foulke, Inc. v. Robertshaw Controls Co., 397 F.2d 971 (5th Cir. 1968). The cases relied on, however, arose...