Long v. Mishicot Modern Dairy, Inc.

• Decision Date: 07 July 1967
• Court: California Court of Appeals Court of Appeals
• Parties: Joe E. LONG, Plaintiff and Appellant, v. MISHICOT MODERN DAIRY, INC., a Wisconsin Corporation, Defendant and Respondent. Civ. 8329.

Page 432

60 Cal.Rptr. 432

252 Cal.App.2d 425

Joe E. LONG, Plaintiff and Appellant, v. MISHICOT MODERN DAIRY, INC., a Wisconsin Corporation, Defendant and Respondent.

Civ. 8329.

Court of Appeal, Fourth District, Division 2, California.

July 7, 1967.

[252 Cal.App.2d 426] Wm. L. Anderson, Santa Ana, for plaintiff and appellant.

Arnold G. Hewett, Santa Ana, for defendant and respondent.

OPINION

TAMURA, Associate Justice.

Plaintiff appeals from an order granting a motion to quash service of summons on defendant, a Wisconsin corporation. Defendant was served in the manner provided by section 411(2) of the Code of Civil Procedure by service upon the Secretary of State of the State of California who, in turn, sent defendant a copy of the summons and complaint by certified mail to its address in Wisconsin.

Section 411(2) of the Code of Civil Procedure provides that if the suit is against a foreign corporation 'doing business in this state,' summons may be served in the manner provided by sections 6500--6504 of the Corporations Code. The sole issue on this appeal is whether defendant was 'doing business' in this state within the meaning of section 411(2).

Plaintiff filed an action against defendant in the Superior Court in Orange County for breach of contract for the sale of land alleging that defendant, through its duly authorized agent, Hugo C. Drumm, entered into a written agreement to sell plaintiff some 13 acres of land owned by defendant and situated in Orange County, that an escrow was opened in Orange County to consummate the transaction, that pursuant to the terms of the agreement plaintiff paid defendant, through escrow, $10,000.00 which was to be applied to the purchase price, and that defendant breached the agreement. The complaint sought damages in the sum of $80,000.00 and, by a separate cause of action, restitution of the $10,000.00.

Defendant appeared specially and moved to quash service of summons and complaint. In support of its motion, it submitted a declaration signed by Hugo C. Drumm in which he stated that he was not and never had been an officer or shareholder of defendant, its general manager in California, or its agent in California for service of process. He declared that the primary business of defendant is the manufacture and sale of cheese in Wisconsin and that its only activity in California was the ownership of the land in question and the entry into the escrow agreement for its sale to plaintiff.

In opposition, plaintiff filed his declaration setting forth the following facts: Plaintiff is a resident of the State of California. Defendant, a Wisconsin corporation, listed the subject property for sale with a firm of California realtors. Thereafter plaintiff and defendant executed an agreement and escrow instructions for the sale of the property to plaintiff, defendant at all times being represented by and acting through its agent, Hugo C. Drumm. Under the agreement defendant was to procure a survey and title policy and assist in obtaining a rezoning of the property to make it available for subdivision purposes. In order to eliminate a title problem pertaining to an access easement, defendant, during the pendency of the escrow, commenced a quiet title action in the Superior Court of Orange County. In addition, also pending the escrow, defendant petitioned the Planning Commission of the City of Orange for a rezoning of the subject property and made appearances before that body as well as before the Orange County Planning Commission and the Orange County Board of Supervisors in support of the requested rezoning and in connection with a proposed street alignment affecting the property. Defendant breached the agreement. A school district thereafter filed an action in eminent domain to acquire the property for a school site and the defendant subsequently deeded it to the district. The agreement between plaintiff and defendant was made in and was to be performed in Orange County, California. All of the original documents pertaining to the sale including escrow instructions, title reports, surveys, and other pertinent records are located in the County of Orange. Defendant's agent, Hugo C. Drumm, is a resident of Orange County, California.

Since the material facts are not in conflict, the question whether the defendant is subject to jurisdiction in personam presents a question of law. The trial court's determination of that issue is, therefore, not binding on this court. (Cosper v. Smith & Wesson Arms Co., 53 Cal.2d 77, 346 P.2d 409, cert. den. 362 U.S. 927, 80 S.Ct. 755, 4 L.Ed.2d 746; H. Liebes & Co. v. Erica Shoes, Inc., 237 Cal.App.2d 25, 30, 46 Cal.Rptr. 470.)

Service of process may be made on a foreign corporation in the manner provided by section 411(2) of the Code of Civil Procedure if the corporation is 'doing business' in the state. The reach of the 'doing business' requirement of section 411(2) of the Code of Civil Procedure has been equated with the limits of the due process requirement as defined in International Shoe Co. v. State of Washington, Etc., 326 U.S. 310, 66 S.Ct. 154 (1945), 90 L.Ed. 95, 161 A.L.R. 1057; that is, the foreign corporation must have '* * * certain minimum contacts with (the forum) such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice. '' (Empire Steel Corp. v. Superior Court, 56 Cal.2d 823, 829, 17 Cal.Rptr. 150, 366 P.2d 502; Fisher Governor Co. v. Superior Court, 53 Cal.2d 222, 224, 1 Cal.Rptr. 1, 347 P.2d 1; Cosper v. Smith & Wesson Arms Co., supra, 53 Cal.2d 77, 82, 346 P.2d 409, cert. den. 362 U.S. 972, 80 S.Ct. 755, 4 L.Ed.2d 746; Henry R. Jahn & Son v. Superior Court, 49 Cal.2d 855, 858, 323 P.2d 437.) 'Whatever limitation (the doing business' requirement) imposes is equivalent to that of the due process clause.' (Fisher Governor Co. v. Superior Court, supra; Henry R. Jahn v. Superior Court, supra; Cosper v. Smith & Wesson Arms Co., supra.)

In determining what 'minimum contacts' are sufficient, a distinction must be drawn between a cause of action arising out of or related to activity within the state and one not so related. In the latter instance, more extensive contacts are required. (Fisher Governor Co. v. Superior Court, supra, 53 Cal.2d 222, 225, 1 Cal.Rptr. 1, 347 P.2d 1; Henry R. Jahn & Son v. Superior Court, supra, 49 Cal.2d 855, 860, 323 P.2d 437.)

Thus, although mere ownership of land may not be sufficient to subject a nonresident to personal jurisdiction in an unrelated cause of action, it may be sufficient if the cause of action is related to such ownership. (Goodrich, Conflict of Laws, (4th ed.), § 73, p. 118.)

Where the cause of action arises out of economic activity within the forum state, the contacts need not consist of repeated or continuous business transactions. (McGee v. International Life Insurance Company, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Goodrich, Conflict of Laws, supra, (4th ed.) § 76, p. 135.) An isolated transaction may be sufficient. In McGee the issuance of a single policy of insurance by mail to a resident of California was held sufficient to confer in personam jurisdiction on a cause of action arising out of the contract of insurance, the court stating, '* * * It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State. * * *' In James R. Twiss, Ltd. v. Superior Court, 215 Cal.App.2d 247, 30 Cal.Rptr. 98, the only contact of the foreign corporation with California was the single entry of its vessel into a California port for emergency repairs. In plaintiff's personal injury action for injuries allegedly sustained in the repair of the vessel, the court held that the foreign corporation was amenable to substituted service.

In Henry R. Jahn & Son v. Superior Court, supra, 49 Cal.2d 855, 860, 323 P.2d 437, 441, the court noted that '* * * (T)here is jurisdiction when the cause of action arose out of the breach of a contract made and to be performed in the state * * *,' citing Compania De Astral, S.A. v. Boston Metals Co., 205 Md. 237, 107 A.2d 357, 108 A.2d 372, 49 A.L.R.2d 646; cert. den., 348 U.S. 943, 75 S.Ct. 365, 99 L.Ed. 738. Compania De Astral, supra, held that as applied to the facts before it, a Maryland statute permitting substituted service in an action by a resident of the state or by one having his usual place of business in the state against a foreign corporation on a cause of action arising out of a contract made in Maryland met the due process standards enunciated in International Shoe Co. v. State of Washington, Etc., supra, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057. The action arose out of a contract, made and to be performed in Maryland, for the sale of vessels located in that state. Although there was but a single transaction within the state, the fact that the foreign corporation engaged in various preliminary activities in the state in negotiating the contract, including inspection of the vessels, the fact that the escrow was established in Maryland, and the fact that the contract provided that it should be interpreted in accordance with Maryland law were held to constitute sufficient contacts with the state and reliance upon its laws and the protection which they afforded to meet the jurisdictional test of International Shoe Co. v. State of Washington, Etc., supra.

Statutes similar to the Maryland statute have been enacted in other states. (Goodrich, Conflict of Laws (4th ed.), supra, § 73, p. 129, fn. 209.) In State ex rel. Weber v. Register, Fla., 67 So.2d 619, the...