Kircos v. Lola Cars Ltd.

• Decision Date: 06 May 1980
• Docket Number: Docket No. 78-5218
• Citation: 296 N.W.2d 32,97 Mich.App. 379
• Parties: Louis KIRCOS and Donald James Brodowicz, Plaintiffs-Appellees, v. LOLA CARS LIMITED, Defendant-Appellant, and Goodyear Tire and Rubber Company: Roger Penske Chevrolet, Roger PenskePerformance Division; Sports Car Club of America, Inc., and Carl A. HaasAutomobile Imports, Inc., jointly and severally, Defendants. 97 Mich.App. 379, 296 N.W.2d 32
• Court: Court of Appeal of Michigan — District of US

Page 32

296 N.W.2d 32

Louis KIRCOS and Donald James Brodowicz Plaintiffs-Appellees, v. LOLA CARS LIMITED, Defendant-Appellant and Goodyear Tire and Rubber Company: Roger Penske Chevrolet Roger PenskePerformance Division; Sports Car Club of America, Inc., and Carl A. HaasAutomobile Imports, Inc. jointly and severally, Defendants.

Docket No. 78-5218.

97 Mich.App. 379, 296 N.W.2d 32

Court of Appeals of Michigan.

May 6, 1980.

Released for Publication Sept. 24, 1980.

[97 MICHAPP 381] Nazar Berry, Troy, for Goodyear Tire & Rubber.

John A. Kruse, Detroit, for Penske Chevrolet.

William P. Cooney, Detroit, for Sports Car Club.

Robert G. Russell, Detroit, for Carl A. Haas Auto.

Robert R. Rekiel, Mary Ann Zito, Farmington Hills, for Lola Cars Ltd.

David H. Paruch, Detroit, for plaintiffs-appellees.

Before KAUFMAN, P. J., and RILEY and THEILER, ^* JJ.

PER CURIAM.

Defendant Lola Cars Limited appeals by leave granted from the trial court's decision that it is subject to the jurisdiction of Michigan courts under M.C.L. § 600.711; M.S.A. § 27A.711.

Lola manufactures race cars and related products in England. All Lola products imported into the United States were purchased in England by Carl A. Haas Automobile Imports, Inc. Haas was the exclusive North American importer and distributor of Lola products under a written contract [97 MICHAPP 382] executed between them. The contract provided that Haas "may appoint sub-agents in the designated territory", and it also provided for renewal at the end of three years at the option of either party. Lola was given renewal option rights of control over operations of Haas.

In a prior, related case, Kircos v. Goodyear Tire & Rubber Co., 70 Mich.App. 612, 247 N.W.2d 316 (1976), this Court found that the defendant, Haas, carried on a continuous and systematic part of its general business within the State of Michigan; and, thus, Michigan courts could properly assert general personal jurisdiction over Haas.

In the instant case, the trial court found that Haas was the agent of Lola, and thus general personal jurisdiction was conferred on Michigan courts over Lola by reason of the agency relationship, since Lola, through its agent, Haas, was carrying on a continuous and systematic part of its general business within the state. (M.C.L. § 600.711(3); M.S.A. § 27A.711(3). However, the trial court found Michigan courts could not assert limited personal jurisdiction over Lola under M.C.L. § 600.715; M.S.A. § 27A.715. ¹

On Appeal, Defendant Lola argues that no agency relationship exists between it and the distributor, Haas, and, absent such an agency relationship, Michigan courts have no basis to assert jurisdiction over Lola pursuant to M.C.L. § 600.711; M.S.A. § 27A.711. We agree and find the trial court clearly erred in finding such a relationship.

The scope of review of a trial court's decision is specified by GCR 1963, 517.1, as follows:

[97 MICHAPP 383] "Findings of fact shall not be set aside unless clearly erroneous."

The standard is amplified by the classical statement as found in Tuttle v. Dep't of State Highways, 397 Mich. 44, 46, 243 N.W.2d 244, 245 (1976):

" '(A) finding (of fact) (by a court sitting in a bench trial) is "clearly erroneous" when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' "

Reversal follows where the reviewing court finds such error, National Car Rental v. S & D Leasing, Inc., 89 Mich.App. 364, 280 N.W.2d 529 (1979).

In People v. Ramsey, 89 Mich.App. 468, 474, 280 N.W.2d 565, 567 (1979), it is stated: "(T)he evidence in a nonjury case is subject to a more rigorous review than that in a jury case", citing Schneider v. Pomerville, 348 Mich. 49, 54-55, 81 N.W.2d 405-408 (1957).

There have been suggestions that Michigan, by its statutory provisions relative to which corporations are subject to its jurisdiction, intends to extend its power to the full constitutional limit. In considering the "Underlying Theory of RJA Chapter 7", Honigman and Hawkins state:

"This underlying theory, which contemplates the optimum use of the state's judicial power to protect its citizens and others having basic ties with the state, is sanctioned by contemporary decisions of the United States Supreme Court." 1 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed.), p. 123.

Unless clearly erroneous, it may well be that a trial court's finding of facts is determinative as to [97 MICHAPP 384] what were the acts and activities of a defendant within the jurisdiction, but a trial court's determination that such activities are sufficient to bring a corporation within the jurisdiction of the court is a legal question subject to direct review.

"The minimum amount of activity which a foreign corporation may have within a state so as to be amenable to suit there, should the state choose to subject it to process, is a matter of constitutional law governed, in the last resort, by the supreme court." 16A C.J.S., Constitutional Law, § 616, p. 781.

Since Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), it has been recognized that failure to properly acquire jurisdiction over a defendant renders any judgment null and void as being a denial of due process. It is not only a question of service of process or notice, but also a question of whether or not the exercise of jurisdiction by the court is proper under the circumstances.

Whether a State can assert jurisdiction over a nonresident must be evaluated according to certain minimum-contact standards, International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977).

Where a corporation is involved, testing whether it is present within a state will require, in almost all instances, a determination that it was present because of the presence of a person who was its agent.

As stated in International Shoe Co. v. Washington, supra, 326 U.S. at 316-317, 66 S.Ct. at 158: "Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, it is clear that unlike an individual its 'presence' [97 MICHAPP 385] without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. To say that the corporation is so far 'present' there as to satisfy due process requirements, for purposes of taxation or the maintenance of suits against it in the courts of the state, is to beg the question to be decided. For the terms 'present' or 'presence' are used merely to symbolize those activities of the corporation's agent within the state which the courts will deem to be sufficient to satisfy the demands of due process." (Citations omitted.)

and at 319, 66 S.Ct. at 159:

"It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitive. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less.

Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.

"But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations; and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to...