Hunt v. Nevada State Bank

• Decision Date: 22 October 1969
• Docket Number: Nos. 41697--41703,41855--41857,41885,41884,s. 41697--41703
• Citation: 285 Minn. 77,172 N.W.2d 292
• Court: Minnesota Supreme Court
• Parties: Thomas C. HUNT, Conservator and Trustee of North Central Fire & Casualty Co., et al., Appellants, v. NEVADA STATE BANK, et al., Appellants, Harold L. Burke, et al., Respondents. Thomas C. HUNT, Conservator and Trustee of North Central Fire & Casualty Co., Respondent, v. NEVADA STATE BANK, et al., Defendants, Don F. Roberts, et al., Appellants, First National Bank of St. Paul, Respondent. Thomas C. HUNT, Conservator and Trustee of North Central Fire & Casualty Co., Plaintiff, v. NEVADA STATE BANK, et al., Defendants, Murphy Finance Co., Appellant, Pioneer Casualty Co., et al., Respondents, Delta Insurance Company, Ltd., Respondent.

Page 292

172 N.W.2d 292

285 Minn. 77

Thomas C. HUNT, Conservator and Trustee of North Central

Fire & Casualty Co., et al., Appellants, v. NEVADA STATE BANK, et al., Appellants, Harold L. Burke, et al., Respondents.

Thomas C. HUNT, Conservator and Trustee of North Central

Fire & Casualty Co., Respondent, v. NEVADA STATE BANK, et al., Defendants, Don F. Roberts, et al., Appellants, First National Bank of St. Paul, Respondent.

Thomas C. HUNT, Conservator and Trustee of North Central

Fire & Casualty Co., Plaintiff, v. NEVADA STATE BANK, et al., Defendants, Murphy Finance Co., Appellant, Pioneer Casualty Co., et al., Respondents, Delta Insurance Company, Ltd., Respondent.

Nos. 41697--41703, 41855--41857, 41884, 41885.

Supreme Court of Minnesota.

Oct. 22, 1969.

Syllabus by the Court

1. In reviewing orders granting or denying pretrial motions to dismiss actions pursuant to Rule 12.02, Rules of Civil Procedure, the allegations of the complaint, together with the collateral evidence supporting them, are assumed to be true.

2. Orders granting or denying pre-trial motions to dismiss for lack of jurisdiction are appealable of right. An order granting such motion is an order which determines the action. Rules of Civil Appellate Procedure, Rule 103.03(f). An order denying such motion is not merely a retention of the action for trial, but is a determination of a fundamental right, compelling the defendant to take up the burden of litigation.

3. Denial of leave to serve third- and fourth-party complaints is not appealable of right, but the court will reach the merits of the appeal under the provision allowing for discretionary review, Rule 105.01, Rules of Civil Appellate Procedure, when decision on issues presented in appeals of right cannot be made without consideration of issues presented in otherwise nonappealable matters.

4. An order denying a motion to dismiss for nonjoinder of an indispensable party plaintiff, in a case subjecting defendant to a substantial risk of multiple liability in favor of a nonresident plaintiff, raises constitutional issues of due process and is appealable of right.

5. Minn.St. 543.19, as a nonconsensual long-arm statute under which extraterritorial jurisdiction is asserted over nonresident individuals and foreign corporations, is construed to be applicable to actions arising prior to its enactment. The legislature's basic interest is interpreted to be that extraterritorial jurisdiction should be asserted to its maximum reach consistent with the constitutional limitations of due process. When statutes are modeled after, or are uniform with, statutes of other states, moreover, weight will be accorded the other states' interpretations and constructions of those statutes. Minn.St. 645.22. The Illinois statute upon which § 543.19 is modeled was applied retroactively in that state and this decision has been followed by the majority of jurisdictions which have adopted the Illinois statute. It is constitutionally permissible to apply a long-arm statute retroactively where a defendant's substantive rights are unaffected, there being no vested right not to be sued in the jurisdiction in which the injurious effects of the defendant's acts are felt.

6. Although Minn.St. 303.13, the corporate long-arm statute, specifically excludes insurance companies from its coverage because the Insurance Code, § 60A.21, provides for service of process upon nonresident insurance corporations, and although the latter section allows service only for insurance-related acts, the legislature did not intend to permit an insurance company to escape responsibility for its tortious acts only because those acts did not involve insurance. A harmonious mesh between these sections was intended, so that if § 60A.21 does not apply, § 303.13 does.

7. Although § 303.13 expressly confers its benefit upon residents, a corporation which has its principal place of business or other significant business contacts in this state is deemed a resident for the purposes of this statute.

8. Where it appears that a corporation, through a resolution of its directors, has provided security necessary to effectuate the loan which was an important part of an alleged conspiracy to convert the total assets of an insurance company, a factual issue as to the corporation's involvement in the conspiracy is created.

9. When the officers and only owners of a closely held corporation use their holdings in that corporation to negotiate a transaction, part of an allegedly illegal scheme, they act also in behalf of that corporation, and the corporation as well as the individuals may be held responsible.

10. When a corporation, through its agents, takes part in a tortious plan, and is designated the ultimate recipient of converted funds, it has sufficient contacts with the state in which the injurious effects are felt for valid jurisdiction to be asserted against the corporation in that state.

11. Banks which do no business in a state, except for an isolated loan transaction which facilitates the conversion of the assets of an insurance company, nevertheless subject themselves to suit in that state based upon that transaction.

12. Once participation in a tortious conspiracy--the effect of which is felt in the forum state--is sufficiently established, the actual physical presence of the alleged conspirators in the state is not essential to a valid assertion of jurisdiction.

13. Although Minn.St. 543.19 by its title refers only to individuals, whereas the body embraces both individuals and corporations, there is no such coverage of different and disconnected subjects as to violate Minn.Const. art. 4, § 27.

14. Minnesota possesses subject-matter jurisdiction over an action filed by the state insurance commissioner before formal consent of the West Virginia commissioner has been obtained, notwithstanding any provision of the Uniform Liquidation of Insurance Companies Act, where the latter commissioner subsequently consented to continuance of the action.

15. A motion by defendants to dismiss the actions against them on the ground of plaintiff's failure to join a Texas receiver as an indispensable-party plaintiff was properly denied on the basis of plaintiff's showing that the Texas receiver will be bound by the outcome of the action in Minnesota, thus avoiding the danger to the movant defendants of multiple liability for the same acts; provided, however, that the trial court shall allow opportunity for defendants to prove otherwise in pretrial discovery proceedings or in the trial itself, in which event the motion to dismiss should be granted.

16. Motions to serve third- and fourth-party complaints, made after 45 days after the service of summons, should be granted because, in the exceptional circumstances of this case, there is a substantial likelihood that duplication of effort and a burden upon the judicial process would otherwise result.

Douglas M. Head, Atty. Gen., Clay R. Moore, Sp. Asst. Atty. Gen., Minneapolis, for Hunt.

Goff & Goff, St. Paul, for Nevada St. Bank.

Van Valkenburg, Moss & Flaherty, Minneapolis, for Bank of Nevada.

Feidt, Lang & Pauly, and Robert L. Smith, Minneapolis, for Fidelity & Deposit Co.

Henson & Webb, and Walter Richey, Minneapolis, for Roberts, Riley, Yearbury, Balsiger & Delta Ins. Co.

Dorsey, Marquart, Windhorst, West & Halladay, James B. Vessey and William B. Payne, Minneapolis, for Murphy Finance Co.

O'Connor, Green, Thomas, Walters & Kelly and Frank J. Walz, Minneapolis, for Burke & Pioneer companies.

Henson & Webb and Walter Richey, Minneapolis, for Roberts, Riley, Yearbury and Delta Ins. Co.

Briggs & Morgan, and Samuel Hanson, St. Paul, for First Nat. Bank of St. Paul.

Heard before KNUTSON, C.J., and OTIS, ROGOSHESKE, SHERAN, and PETERSON, JJ.

OPINION

PETERSON, Justice.

The central issue in this case is whether Minnesota can assert jurisdiction over numerous nonresident defendants in actions arising out of an alleged conspiracy to convert assets of an insurance company, most of whose policyholders are residents of Minnesota. Twenty of the original defendants are nonresident corporations and individuals; three of the defendants are residents of this state. Twelve of these, either as defendants or as third- and fourth-party plaintiffs, are involved in these appeals from various orders granting and denying motions to dismiss the actions. The result of our decision is to permit the exercise of jurisdiction by the state over all defendant named in the appeals.

The legal questions have been raised in the context of pretrial motions to dismiss, pursuant to Rule 12.02, Rules of Civil Procedure. Some of these motions were granted and some were denied, in each case primarily upon jurisdictional grounds. It is clear that in reviewing the granting of motions founded upon Rule 12(b), Federal Rules of Civil Procedure, the model for our Rule 12.02, allegations in the complaint must be taken as true. Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456; Guessefeldt v. McGrath, 342 U.S. 308, 72 S.Ct. 338, 96 L.Ed. 342; Collins v. Hardyman, 341 U.S. 651, 71 S.Ct. 937, 95 L.Ed. 1253; 1A Barron & Holtzoff, Federal Practice and Procedure (Rules ed.) § 350. The same standard of review must apply when reviewing denials of motions to dismiss; for if a standard more favorable to movants were established, a type of forum shopping would be encouraged in that a defendant who lost on his pretrial motion would be heartened to know that the appellate court, with the same allegations and facts before it, would demand more of the plaintiff to keep the action alive. We therefore rely on the plaintiffs' complaints and the evidence adduced at the hearings upon the various motions for a statement of the facts: ¹

North Central Fire and Casualty Co. is an insurance corporation organized under the laws of West Virginia, but it had its executive offices and transacted most of its business in Minnesota....