Green v. Advance Ross Electronics Corp.
| Citation | 87 Ill.App.3d 279,42 Ill.Dec. 298,408 N.E.2d 1007 |
| Decision Date | 25 July 1980 |
| Docket Number | No. 79-1489,79-1489 |
| Parties | , 42 Ill.Dec. 298 Roy W. GREEN, Sr., Counterdefendant-Appellee, v. ADVANCE ROSS ELECTRONICS CORPORATION, an Illinois Corporation, and Advance Ross Corporation, a Delaware Corporation, Defendants, Counterplaintiffs-Appellants. |
| Court | United States Appellate Court of Illinois |
Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago (Wm. J. Holloway, Thomas L. Browne, Stephen R. Swofford, Chicago, of counsel), for counterdefendant-appellee.
This appeal raises the question of whether a parent corporation that is headquartered in Illinois and its subsidiary that is incorporated in Illinois can properly invoke the jurisdiction of an Illinois court to adjudicate their claim against a nonresident whose acts in Texas allegedly injured the corporations in Illinois. The corporations, Advance Ross Corp. (Advance Ross) and Advance Ross Electronics Corp. (Electronics) are defendants and counterplaintiffs in a breach of contract action brought against them by Roy W. Green, Jr., the former president of Electronics and Advance Ross Steel Corp. (Steel). 1 The counterplaintiffs seek to hold Green's father, Roy W. Green, Sr., liable along with his son for various allegedly tortious acts. Green, Sr., a Texas resident, entered a special and limited appearance to contest the Illinois court's jurisdiction over him. The trial court denied Advance Ross's and Electronics' motion to join him as counterdefendant. The counterplaintiffs appeal from that order pursuant to Supreme Court Rule 304. (Ill.Rev.Stat.1978, ch. 110A, par. 304.) We affirm.
To determine whether the jurisdictional "minimum contacts" exist between Green, Sr. and Illinois, it is necessary to examine the parties' relationships as well as the circumstances which gave rise to the litigation. Green, Jr., who filed the original complaint, and his father are both Texas residents. Counterplaintiff-defendant Electronics, an Illinois corporation, has its manufacturing plant in Texas. Electronics is a wholly-owned subsidiary of the other counterplaintiff, Advance Ross, a Delaware corporation with its principal place of business in Illinois.
Green, Jr. brought a breach of contract action in the Illinois Circuit Court pursuant to a clause in his employment agreement with Electronics that required Illinois law to be applied to the construction of the agreement. The complaint charges that Green, Jr. was wrongfully terminated, without the contractual 180 day notice, on October 8, 1978.
Central to this controversy is Green, Jr.'s payment of 6 months' "termination pay" to his father, who had been employed as a consultant to Steel from 1970 until August 8, 1978. His son discharged him on that date at the order of Harve Ferril, who is the president of Advance Ross. Green, Jr. (who had succeeded his father as president of Electronics and Steel in 1975) objected to Ferril's order, but discharged his father anyway. Upon doing so, however, he paid him $26,751 as "severance" pay an amount Counterplaintiffs, in contrast, characterize the payment as Green, Jr.'s "unauthorized gift to his father." In Count I of their counterclaim, moreover, they charge both Greens with various acts constituting breaches of fiduciary relationship in their former employment capacities. These acts include the following:
[42 Ill.Dec. 300] equal to six months' salary. Ferril subsequently told Green, Jr. to return the money, but he refused. Consequently, Green, Jr. was discharged, an event that he views as an act of retaliation.
(1) (Green Sr. and his son) "caused counterplaintiffs' employees to work for the benefit of the Roy W. Green Company during the normal business day;
(2) caused work to be performed on behalf of the Roy W. Green Company on the premises and facilities of counterplaintiff's corporations without payment to counterplaintiffs;
(3) caused excessive and improper salary to be paid Roy W. Green in that he received both full salary and disability insurance payments;
(4) caused an unauthorized and improper gift from the corporate funds of Advance Ross Steel Corporation * * * to be given to Roy W. Green in the amount of $26,751;"
The counterplaintiffs contend that the Illinois long-arm statute (Ill.Rev.Stat.1977, ch. 110, par. 17(1)(b) reaches Green, Sr. because he committed the above "tortious acts," the effect of which financially injured the parent corporation, Advance Ross, in Illinois. Alternatively, the counterplaintiffs argue that Green, Jr. acted as his father's agent or co-conspirator. The theory is that, since jurisdiction properly lies over Green, Jr., his contacts with Illinois can be imputed to his father by virtue of their joint activities.
OPINIONCounterplaintiffs' premise concerning the existence of Green, Sr.'s contacts with Illinois is based upon (1) the allegedly adverse economic impact that his acts had on Advance Ross, the Delaware corporation headquartered in Illinois; (2) the affiliation of Green, Sr. with Electronics, the subsidiary that is incorporated in Illinois; and (3) the interrelationship of his acts with those of his son, Green, Jr. We believe that these contacts are insufficient to satisfy either the Illinois long-arm statute or the requirements of due process.
The Illinois statute, Ill.Rev.Stat.1977, ch. 110, par. 17(1)(b) provides:
"(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any such acts:
(a) The transaction of any business within this State;
(b) The commission of a tortious act within this State * * *."
This section has been interpreted as reflecting a "conscious purpose to assert jurisdiction . . . to the extent permitted by the due-process clause." Nelson v. Miller (1957), 11 Ill.2d 378, 389, 143 N.E.2d 673, 679. Thus, a forum state may properly maintain jurisdiction over a nonresident only if there are "sufficient contacts or ties" with (the forum) to make it reasonable and just according to (traditional concepts) of fair play and substantial justice. " International Shoe Co. v. State of Washington (1945), 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95, 104. As the United States Supreme Court recently explained, the concept of minimum contacts "protects the defendant against the burdens of litigating in a distant or inconvenient forum" and ensures "that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. " World-Wide Volkswagen Corp. v. Woodson (1980), 444 U.S. 286, 100 S.Ct. 580, 62 L.Ed.2d 490.
In Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761, the Illinois Supreme Court sustained the use of our long-arm statute to bring a nonresident defendant within the Illinois court's jurisdiction. In Gray, the Supreme Court held that a foreign corporation, which manufactured a safety valve that was incorporated into a hot water heater, was subject to Illinois jurisdiction when the heater exploded in Illinois, causing injury to a consumer. The court noted that the wrong at issue originated at the place of the valve's manufacture, Ohio, and that only the consequences occurred in Illinois. The court held that since "the place of a wrong is where the last event takes place which is necessary to render the actor liable," and since "the alleged negligence in manufacturing the valve cannot be separated from the resulting injury, * * * the tort was committed in Illinois." Gray at 435-36, 176 N.E.2d 762-63.
Counterplaintiffs primarily rely on the rationale of Gray to bring Green, Sr. within the reach of the Illinois long-arm statute. The allegedly tortious activity in the instant case, however, cannot be categorized as neatly as was the situation in Gray. There, the exploding heater clearly gave rise to various product liability theories. In fact, the "tortious act" requirement of the Illinois statute was not disputed; rather, the key inquiry was whether it was "committed" in Illinois. In the instant case the existence of a "tortious act committed in Illinois" is not so clear. Counterplaintiffs, in their brief, characterize Green, Sr.'s activities as "breaches of fiduciary duty which have the effect of wasting corporate assets of an Illinois corporation (Electronics) and a Delaware corporation whose principal place of business is Illinois (Advance Ross)." The allegation is that Green's acts in Texas e. g., using personnel paid by Electronics and Steel to work on projects for the Roy W. Green Company caused a drain of the corporate assets of the corporations in Illinois. Green, Jr. conceded that the non party subsidiary, Steel, was "funded from Chicago," by Advance Ross, the parent company. Counterplaintiffs assert that this is a "financial wrongdoing tort," the impact of which was felt in Illinois, and therefore "occurred" in Illinois.
For jurisdictional purposes, allegedly tortious acts need not fit within the technical definition of a tort as long as there is a breach of duty giving rise to liability. Nelson v. Miller (1957), 11 Ill.2d 378, 143 N.E.2d 673. The case law has given a fairly expansive definition to "tortious acts" under section 17(1)(b). Hence, for example, a defendant's alleged violation of a duty of support under the Paternity Act has been held to constitute a tortious act, for jurisdictional purposes. Poindexter v. Willis (1967), 87 Ill.App.2d 213, 231 N.E.2d 1. Interference with a distributorship agreement, the results of which were felt directly in Illinois, was found to satisfy...
To continue reading
Request your trial
- Engel's Estate, Matter of
-
Green v. Advance Ross Electronics Corp.
...circuit court denied the defendants' motion to join Green, Sr., as an additional party; the appellate court affirmed (87 Ill.App.3d 279, 42 Ill.Dec. 298, 408 N.E.2d 1007). This court granted leave to appeal under Rule 315 (73 Ill.2d R. There is no dispute that the acts and conduct for which......