J.I. Case Corp. v. Williams

• Decision Date: 27 April 1992
• Citation: 832 S.W.2d 530
• Parties: J.I. CASE CORPORATION, d/b/a Case Power and Equipment, Appellant, v. Earl Dean WILLIAMS, Individually and d/b/a Williams Land Company, Inc., Appellees.
• Court: Tennessee Supreme Court

Page 530

832 S.W.2d 530

J.I. CASE CORPORATION, d/b/a Case Power and Equipment Appellant, v. Earl Dean WILLIAMS, Individually and d/b/a Williams Land Company, Inc., Appellees.

Supreme Court of Tennessee at Jackson.

April 27, 1992.

Robert A. Wampler, Cary R. Califf, Memphis, for plaintiff-appellant.

Fletcher Long, Jr., Forrest City, Ark., James T. Allison, Memphis, for defendants-appellees.

OPINION

REID, Chief Justice.

Permission to appeal was granted in order to review the decision of the Court of Appeals that the trial court did not have in personam jurisdiction over the nonresident defendant in this suit for the reformation of a contract between the parties. The record shows facts sufficient to support the trial court's finding of jurisdiction.

The seller, J.I. Case Corporation (Case), d/b/a Case Power and Equipment, operates a farm equipment business in Memphis, Shelby County, Tennessee. Case sells to farmers and other customers throughout the mid-South. The defendant, Earl Dean Williams, owns and operates a farming business in St. Francis County, Arkansas, located approximately 50 miles from Memphis. Williams purchases at retail from Case and other Memphis dealers various services, supplies, and equipment used in his farming operation.

In September 1988, while attending the Mid-South Fair in Memphis, Williams met John Vogel, Case's sales representative assigned to the area that includes St. Francis County. Subsequently, on one of Vogel's several visits to Williams' farm, Williams indicated an interest in purchasing a land excavator, which is a large piece of farm equipment. In February 1989, Williams and Vogel reached an agreement for the purchase of a particular used excavator. The parties executed a written "purchase order" showing the purchase price of $78,000 and the allowance of $25,000 for a trade-in. The parties then executed a "lease agreement" whereby Williams agreed to make an advance rental payment of $12,000 and four annual rental payments of $12,607.95 each. The total payments included the balance of the purchase price plus finance charges for the four-year term of the lease. These instruments were prepared and executed by the seller in Memphis and subsequently executed by Williams in Arkansas. The financing of the rental payments representing the balance due on the purchase price was financed by a company affiliated with Case located in Memphis, and payments were to be made to the Memphis office. The parties also entered into a warranty agreement whereby Case agreed to provide certain repair services and parts needed to keep the excavator in operation.

After a controversy developed regarding the amount of the lease payments, Case filed suit in the chancery court at Memphis seeking reformation of the agreement with regard to the balance due. When the trial court refused to dismiss the complaint for lack of jurisdiction over Williams, Williams filed a counterclaim seeking reformation of the agreement with regard to the ownership of the equipment upon payment of the final lease payment. The trial court found there existed a mutual mistake of fact between the parties upon the execution of the agreement, as indicated by the seemingly inconsistent terms of the two instruments, and ordered that the agreements be reformed and that both parties be granted the relief sought.

The Court of Appeals reversed the judgment of the trial court, holding that the trial court did not have in personam jurisdiction over Williams. The Court of Appeals relied on the United States Supreme Court's decision in Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), in holding that assertion by the trial court of in personam jurisdiction over Williams violated the Due Process Clause of the United States Constitution.

The Tennessee long-arm statute, T.C.A. Sec. 20-2-214(a), pursuant to which the defendant was served with process, provides in pertinent part,

(a) Persons who are nonresidents of Tennessee ... are subject to the jurisdiction of the courts of this state as to any action or claim for relief arising from:

....

(6) any basis not inconsistent with the constitution of this state or of the United States....

This statute reaches as far as the Due Process Clause of the Fourteenth Amendment permits; consequently, the issue is whether the assertion of in personam jurisdiction is consistent with due process. Helicopteros Nacionales de Columbia, S.A. v. Hall, 104 S.Ct. at 1871-72.

In determining whether a state can assert long-arm jurisdiction, due process requires that a nonresident defendant be subjected to a judgment in personam only if he has such minimum contacts with the foreign state that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 158, 90 L.E. 95 (1945); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 564, 62 L.E.2d 490 (1980); Masada Investment Corp. v. Allen, 697 S.W.2d 332, 334 (Tenn.1985). In Burger King Corp. the Supreme Court, quoting Justice Stevens, stated that the Due Process Clause requires " 'fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign.' " 100 S.Ct. at 2182 (quoting Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 2587, 53 L.Ed.2d 683 (1977) (Stevens, J., concurring in judgment)).

For a court to exercise general in personam jurisdiction over a nonresident defendant without violating the requirements of the Due Process Clause, the proof must show that the defendant maintains "continuous and systematic" contacts with the foreign state, and those contacts "give rise to the liabilities sued on." International Shoe, 326 U.S. at 317, 66 S.Ct. at 159. The Court of Appeals, in holding that the assertion of jurisdiction over Williams in this case violates federal due process, found that

Case has simply failed to show that Williams purposefully availed himself of the privilege of conducting any activities within Tennessee and the record reflects Williams engaged in no actions himself that would create a substantial connection with Tennessee.

Alone, the limited purchases made by Williams in Tennessee are not enough to warrant Tennessee's assertion of general jurisdiction over Williams in a cause of action not related to those purchase transactions. Helicopteros Nacionales de Columbia, S.A. v. Hall, 104 S.Ct. at 1874.

However, in the absence of general jurisdiction resulting from continuous and systematic contacts with the forum state, specific in personam jurisdiction still may be found when a commercial actor purposely directs his activities toward citizens of the forum state and litigation results from injuries arising out of or relating to those activities, Burger King Corp. v. Rudzewicz, 105 S.Ct. at 2182. The Supreme Court in Burger King Corp. explained,

[W]ith respect to interstate contractual obligations, we have emphasized that parties who "reach out beyond one state and create continuing relationships and obligations with citizens of another state" are subject to regulation and sanctions in the other State for the consequences of their activities. Travelers Health Assn. v. Virginia, 339 U.S. 643, 647, 70 S.Ct. 927, 929, 94 L.Ed. 1154 (1950). See also McGee v. International Life Insurance Co., 355 U.S. 220, 222-223, 78 S.Ct. 199, 200-201, 2 L.Ed.2d 223 (...