Hodge v. Sands Mfg. Co.

• Decision Date: 25 October 1966
• Docket Number: No. 12549,12549
• Citation: 150 S.E.2d 793,151 W.Va. 133
• Court: West Virginia Supreme Court
• Parties: Tufe HODGE v. The SANDS MANUFACTURING COMPANY, a corporation, et al.

Page 793

150 S.E.2d 793

151 W.Va. 133

Tufe HODGE v. The SANDS MANUFACTURING COMPANY, a corporation, et al.

No. 12549.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 21, 1966.

Decided Oct. 25, 1966.

Syllabus by the Court

1. The standard of jurisdictional due process is that a foreign corporation must have such minimum contacts with the state of the forum that the maintenance of an action in the forum does not offend traditional notions of fair play and substantial justice.

2. When each of two foreign corporations is not authorized to do business, has no representative, has not done business, or maintained a place of business, or entered into any contract to be performed by any party to such contract, or owned any property, or appointed anyone as its attorney in fact for the acceptance of process, in this State, but one of which foreign corporations in another state manufactured and sold thermostats to the other foreign corporation which in the same state manufactured a hot water heater in which the thermostats were installed and sold such heater to an independent dealer in this State which subsequently sold and delivered it to the plaintiff, a resident of this State, who caused it to be installed in an apartment of the plaintiff where it exploded and caused substantial damage to the property of the plaintiff, and neither foreign corporation has engaged in any persistent course of conduct in selling such heaters to purchasers or engaged in other transactions in this State, the contacts of such foreign corporations in this State, disclosed by the foregoing acts of such foreign corporations do not satisfy the essential requirement that there must be minimum contacts by such foreign corporations with this State to confer jurisdiction upon a court of this State, under Section 71, Article 1, Chapter 31, Code 1931, as amended, to entertain an action instituted by the resident plaintiff to recover from such defendant foreign corporations damages caused by a tort committed in whole or in part by them in this State.

Campbell, McNeer, Woods, Bagley & Emerson, C. F. Bagley, R. G. McNeer, Huntington, for appellant.

Jenkins, Schaub & Fenstermaker, John E. Jenkins, Jr., Huntington, Kay, Casto & Chaney, George S. Sharp, Hoyt N. Wheeler, Charleston, for appellees.

HAYMOND, Judge.

The single question to be determined upon this appeal, granted upon the application of the plaintiff, Tufe Hodge, is whether, under the applicable statute of this State and upon the facts set forth in the complaint of the plaintiff and disclosed by the record, the Circuit Court of Cabell County, upon service accepted by the auditor in behalf of the nonresident defendants, The Sands Manufacturing Company, an Ohio corporation, and Therm-O-Disc. Inc., also an Ohio corporation, has jurisdiction to hear and determine this case as to them. The circuit court by final judgment rendered June 18, 1965, dismissed this case as to the nonresident corporate defendants on the ground of lack of jurisdiction of that court to hear and determine the questions involved against those defendants.

The plaintiff is a resident of Huntington, Cabell County, West Virginia, and instituted this action to recover from the nonresident corporate defendants and the defendant Russell L. Blevins, a resident of Cabell County, damages to certain improved real estate on which were located two apartment buildings, at No. 1024 Eighth Street and rear of Eighth Street, in the City of Huntington, Cabell County, West Virginia, resulting from an explosion which occurred on August 24, 1963, and alleged to have been caused by the negligence of and the breach of implied warranty by the defendant The Sands Manufacturing Company in the design and construction of a hot water heater, the negligence of and the breach of implied warranty by the defendant Therm-O-Disc. Inc., in the design and construction of thermostats with which the heater was equipped when it was shipped to a dealer in Huntington from whom it was purchased by the plaintiff, and the negligence of the defendant Blevins, who installed the heater, or the combined negligence of all three defendants.

The facts disclosed by the record, including the complaint, the motion to dismiss of the defendant The Sands Manufacturing Company, and a supporting affidavit, and the motion to dismiss of the defendant Therm-O-Disc. Inc., and a supporting affidavit, are undisputed, and the question for decision is a question of law.

As previously indicated the plaintiff is the owner of certain real estate on Eighth Street, in the City of Huntington, on which is located an apartment building; and during the fall of 1962 he began the construction of another building to contain four apartments on the same real estate. In connection with the construction of the foregoing building the plaintiff employed the defendant Russell L. Blevins to do certain plumbing work which included the installation of an electric hot water heater. Prior to December 21, 1962, the defendant The Sands Manufacturing Company, an Ohio corporation, engaged in the business of manufacturing, constructing and assembling in that state electric hot water heaters, manufactured the particular hot water heater Model No. 40SGC involved in this action. The principal place of business of that defendant is located in Cleveland, Ohio, and the electric hot water heaters which it manufactures were sold by it throughout the United States. The defendant Therm-O-Disc. Inc., also an Ohio corporation, is engaged in the business of manufacturing thermostats at its principal place of business in Mansfield, Ohio, for use in the operation of electric hot water heaters, and manufactured and sold to the defendant The Sands Manufacturing Company two thermostats which were installed in the above mentioned electric hot water heater.

Neither of the nonresident defendant corporations is authorized to do business in the State of West Virginia.

Sometime prior to December 21, 1962, the defendant The Sands Manufacturing Company, by virtue of a contract of sale and acting through an independent representative, sold the electric hot water heater involved in this action to a dealer, Emmons-Hawkins Hardware Company, of Huntington, West Virginia, and on December 21, 1962, that dealer sold the heater to the plaintiff and a short time afterwards the defendant Blevins installed it in one of the new apartments located on the rear portion of the real estate of the plaintiff on Eighth Street.

On the evening of August 24, 1963, the hot water heater exploded with the result that the new apartment building was destroyed and the other apartment building was materially damaged.

This action was instituted in the Circuit Court of Cabell County and personal service was obtained on the defendant Blevins. Service on the nonresident corporate defendants was obtained by serving the auditor of West Virginia, as provided in Section 71, Article 1, Chapter 31, Code, 1931, as amended.

On August 19, 1964, the defendant Therm-O-Disc. Inc. filed a motion and supporting affidavit to dismiss this action as to it on the ground that it is an Ohio corporation and not subject to service of process within this State; and on August 25, 1964, the defendant The Sands Manufacturing Company also filed a motion to dismiss this action as to it on the ground that it has never done business in this State and that service upon the auditor of this State was void and of no effect, and filed an affidavit in support of its motion.

The affidavit in support of the motion of the defendant Therm-O-Disc. Inc. to dismiss this action states that its principal place of business is located at Mansfield, Ohio; that it has not been authorized to do and has not done business in this State; that it has had no servants, agents or employees in this State; that it has not entered into any contract to be performed in whole or in part by any party to any contract in this State; that it has committed no tort in whole or in part in this State; that it has owned no property in this State; and that it has not appointed anyone as its attorney in fact for acceptance of process against it.

The affidavit in support of the motion of the defendant The Sands Manufacturing Company states that on or about June 30, 1962, another corporation purchased the defendant The Sands Manufacturing Company, which was an Ohio corporation; that the defendant The Sands Manufacturing Company was not authorized to do and has never done any business in this State; that it has never maintained any office in this State; that sales of its products were made f.o.b. Cleveland, Ohio; and that its sales to Emmons-Hawkins Hardware Company were conducted by another company which acted as an independent representative on a commission basis.

The statute, Section 71, Article 1, Chapter 31, Code, 1931, as amended, upon which the plaintiff seeks a recovery against the nonresident defendants in the Circuit Court of Cabell County, to the extent here pertinent, provides:

'Any foreign corporation which shall do any business in this State without having been authorized so to do pursuant to the provisions of section seventy-nine of this article shall be conclusively presumed to have appointed the auditor of the State as its attorney in fact with authority to accept service of notice and process on behalf of and upon whom service of notice and process may be made in this State for and upon every such corporation in any action or proceeding described in the next following paragraph of this section. * * *.

'For the purposes of this section, a foreign corporation not authorized to do business in this State pursuant to the provisions of section seventy-nine of this article shall nevertheless be deemed to be doing business herein if such corporation makes a contract to be performed, in whole or in part, by any party thereto, in this State, or if such corporation commits a tort in whole or in part in this...