Hebron Brick Co. v. Robinson Brick & Tile Co.

• Decision Date: 07 October 1975
• Docket Number: No. 9111,9111
• Citation: 234 N.W.2d 250
• Parties: HEBRON BRICK CO., Plaintiff and Appellant, v. The ROBINSON BRICK AND TILE COMPANY, a Foreign Corporation, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 250

234 N.W.2d 250

HEBRON BRICK CO., Plaintiff and Appellant, v. The ROBINSON BRICK AND TILE COMPANY, a Foreign Corporation Defendant and Appellee.

Civ. No. 9111.

Supreme Court of North Dakota.

Oct. 7, 1975.

Syllabus by the Court

1. A court of this State may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim for relief arising from the person's contracting to supply or supplying services, goods, or other things in this State. Rule 4(b)(2)(B), N.D.R.Civ.P.

2. Rule 4(b), N.D.R.Civ.P., permits North Dakota courts to exercise personal jurisdiction when the nonresident defendant has sufficient minimal contacts with North Dakota to permit the exercise of personal jurisdiction without offending the basic requirements of due process.

3. In analyzing the due-process issue, five factors to be considered are: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum states; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; (5) the convenience of the parties.

4. Each question of personal jurisdiction must be decided on a case-by-case basis.

5. For reasons stated in the opinion, the order of the district court is reversed and the cause is remanded for further proceedings consistent with this opinion.

E. J. Rose, Bismarck, for plaintiff and appellant.

Fleck, Mather, Strutz & Mayer, Bismarck, for defendant and appellee; argued by Mr. Thomas A. Mayer.

PAULSON, Judge.

This is an appeal from an order of the Burleigh County District Court dismissing for lack of personal jurisdiction the action of the plaintiff, Hebron Brick Company (hereinafter 'Hebron Brick') against The Robinson Brick & Tile Company, a foreign corporation (hereinafter 'Robco').

This action by Hebron Brick is the result of earlier litigation venued in Burleigh County District Court (V. J. Speady v. Hebron Brick Co., Civil No. 22330 (April 4, 1974)), in which V. J. Spaedy obtained a judgment against Hebron Brick because certain bricks sold to Mr. Spaedy by Hebron Brick, but manufactured by Robco, were defective.

Robco is a Colorado corporation with its principal place of business in Denver, Colorado. Robco is not authorized to transact business in North Dakota, nor does it maintain an office or agent, as such, in this State. Robco does, however, make wholesale sales of bricks or tile to dealers in North Dakota, and, although the activities of such dealers are not controlled by Robco, the bricks manufactured by Robco are resold to North Dakota customers for use in this State.

The underlying transaction in this case involves the sale by Hebron Brick of certain bricks, which were manufactured by Robco, to V. J. Spaedy of Bismarck for use in the construction of a house. The sale in question occurred on January 11, 1972, when Richard Nelson, an employee of Hebron Brick, telephoned Robco at its Denver, Colorado, office to place an order for a particular type of brick which Mr. Spaedy had chosen from a sample case furnished to Hebron Brick by Robco. Robco had furnished the sample case to Hebron Brick so that representatives of Hebron Brick could show it to prospective customers in North Dakota. Orders for the type of brick exhibited in Robco's sample case were filled by Hebron Brick after purchasing the brick at wholesale from Robco.

An employee of Robco's at Denver, Colorado, Marshall W. 'Dutch' Russell, received the telephoned order from Mr. Nelson and completed an order form. Mr. Nelson subsequently mailed a memorandum dated February 4, 1972, to Robco's Denver, Colorado, office, increasing the quantity of bricks originally ordered by telephone on January 11, 1972. The memorandum was mailed at Bismarck, North Dakota, and was received by Robco in Denver, Colorado.

Terms of the sale were at a net price F.O.B. Robco's Denver plant. Consequently shipping charges were borne by Hebron Brick, although actual arrangements for shipment of the bricks from Denver to Bismarck, North Dakota, were made by Robco.

After the brick was installed in Mr. Spaedy's house, the white veneer finish on such bricks flaked off. It was asserted that shortly after the defective condition of the brick was discovered, Robco offered to send a man to Bismarck to 'touch up' the brick and to guarantee the 'touch up' for one year, but that Mr. Spaedy rejected such offer. Thereafter the original suit by Mr. Spaedy against Hebron Brick was commenced. A third-party complaint filed by Hebron Brick against Robco was dismissed by the trial court for lack of personal jurisdiction.

Mr. Spaedy obtained a judgment against Hebron Brick for the sum of $4,316.84, plus interest and costs, based upon a finding by the trial court that the bricks were defective and that Hebron Brick had therefore breached the implied warranty of fitness for use. Robco did not appear and defend in such action although notified of the suit by Hebron Brick.

The present suit was thereafter commenced by Hebron Brick against Robco, wherein Hebron Brick alleges that Robco was guilty of bad faith in not defending the breach-of-implied-warranty claim in the original suit by Mr. Spaedy. Hebron Brick asserts that it has suffered damages because of Robco's failure to defend against Mr. Spaedy's suit in the following amounts:

a. $4,316.84, plus interest and costs, owed by Hebron Brick to Mr. Spaedy based on the judgment in that earlier action;

b. $813.43 in legal fees and costs incurred in defending against Mr. Spaedy's action; and

c. Reasonable attorney's fees and costs in the present action.

The summons and complaint were served on Robco at its Denver, Colorado, office, pursuant to Rule 4, North Dakota Rules of Civil Procedure. This appeal follows a dismissal of such action by the Burleigh County District Court.

The only issue presented for decision in this case is whether or not Robco is amenable to service of process under the 'long-arm' provisions of Rule 4, N.D.R.Civ.P., and, consequently, subject to the personal jurisdiction of North Dakota courts. The applicable portion of Rule 4, N.D.R.Civ.P., provides:

'Rule 4.--Persons Subject To Jurisdiction--Process--Service

'(a) Definition of person. As used in this rule, 'person' includes an individual or his executor, administrator, or other personal representative, or a corporation, partnership, association, or any other legal or commercial entity, whether or not a citizen or domiciliary of this state and whether or not organized under the laws of this state.

'(b) Jurisdiction of person.

'(1) Personal jurisdiction based upon presence or enduring relationship.--A court of this state may exercise personal jurisdiction over a person found within, domiciled in, organized under the laws of, or maintaining his or its principal place of business in this state as to any claim for relief.

'(2) Personal jurisdiction based upon contacts.--A court of this state may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim for relief arising from the person's

'(A) transacting any business in this state;

'(B) contracting to supply or supplying services, goods, or other things in this state;

'(C) committing a tort within or without this state causing injury to another person or property within this state;

'(D) committing a tort within this state causing injury to another person or property within or without this state;

'(E) owning, having any interest in, using, or possessing property in this state;

'(F) contracting to insure another person, property, or other risk within this state; or

'(G) acting as a director, manager, trustee, or officer of a corporation organized under the laws of, or having its principal place of business within, this state.

'(3) Limitation on jurisdiction based upon contacts. If jurisdiction over a person is based solely upon paragraph (2) of this subdivision, only a claim for relief arising from bases enumerated therein may be asserted against him.

'(4) Acquisition of jurisdiction. A court of this state may acquire personal jurisdiction over any person through service of process as provided in this rule or by statute, or by voluntary appearance in an action by any person either personally or through an attorney or any other authorized person.'

Since this Court's 1969 decisions in Fisher v. Mon Dak Truck Lines, Inc., 166 N.W.2d 371 (N.D.1969), and Scranton Grain Co. v. Lubbock Machine & Supply Co., 167 N.W.2d 748 (N.D.1969), the North Dakota 'long-arm' provisions have undergone significant change. In both of those 1969 cases, this Court held that a foreign corporation which manufactured products sold to North Dakota residents through independent North Dakota businesses was not subject to the jurisdiction of our courts because such corporations were not 'doing or transacting business' within this state.

On July 1, 1969, subsequent to the two decisions cited above, § 28--06.1--02, N.D.C.C., became effective. ¹ Speaking of the Legislature's action in adopting § 28--06.1--02, N.D.C.C., this Court said, in Scranton Grain, supra 167 N.W.2d at 753:

'The Legislative Assembly, which recently concluded its session, obviously realized that our present statutes providing for service upon foreign corporations are not so broad in their scope as are the statutes or rules of procedure in other jurisdictions. In an attempt to bring our statutes on this subject in line with those of other jurisdictions, the 1969 Legislature enacted into law Senate Bill No. 412. This Act, when it becomes effective on July 1, will broaden the jurisdiction of our courts over nonresidents transacting business in this State and permit service of process upon nonresidents previously exempt under our law.'

Finally, our 'long-arm' provisions were again revised by the Court's adoption of Rule 4, N.D.R.Civ.P., in 1971. Adoption of Rule 4 superseded § 28--06.1--02, N.D.C.C. Under Rule 4...