Marshville Rendering Corp. v. Gas Heat Engineering Corp., No. 7026SC218

• Decision Date: 16 December 1970
• Docket Number: No. 7026SC218
• Citation: 177 S.E.2d 907,10 N.C.App. 39
• Parties: MARSHVILLE RENDERING CORPORATION v. GAS HEAT ENGINEERING CORPORATION, Ray Burner Company, and Boyd Keziah.
• Court: North Carolina Court of Appeals

Page 907

177 S.E.2d 907

10 N.C.App. 39

MARSHVILLE RENDERING CORPORATION v. GAS HEAT ENGINEERING CORPORATION, Ray Burner Company, and Boyd Keziah.

No. 7026SC218.

Court of Appeals of North Carolina.

Dec. 16, 1970.

Helms, Mulliss & Johnston, by E. Osborne Ayscue, Jr., Charlotte, for plaintiff appellee.

Kennedy, Covington, Lobdell & Hickman, by W. T. Covington, Jr., Charlotte, for defendant Ray Burner Company, appellant.

MORRIS, Judge.

The appellant excepts to certain of the findings of fact and conclusions of law made by the court and assigns them as error. It also assigns as error the failure of the court to adopt findings of fact and conclusions of law tendered by it.

The court found as facts that 'the sales by Ray Burner to North Carolina dealers are accepted outside of the State and payment is received by Ray outside of State,' and that 'the particular shipment involved in this suit was shipped by Ray Boiler (sic) Company from Lancaster, Pennsylvania, to Marshville, North Carolina, where the plaintiff is located, for delivery there to Gas Heat Engineering Corporation, the dealer.' The evidence reveals that Gas Heat is an independent dealer with no authority to act for Ray in North Carolina. All orders for merchandise sold by Ray Burner to Gas Heat were accepted outside of North Carolina and shipments of merchandise were made to Gas Heat by means of common carriers, f.o.b., outside North Carolina. The boiler feed unit involved in this litigation was ordered by Gas Heat from Ray Burner by written order of Gas Heat dated 22 October 1965; received by Ray Burner in San Francisco, California, 25 October 1965. The order was accepted in California and the contract of sale made in California. Ray Burner then ordered the unit from Roy E. Roth Company for shipment from the Roth plant in Illinois to the Ray Burner plant in Lancaster, Pennsylvania. Thereafter, Ray Burner, without opening the crate, delivered the crate containing the boiler feed unit to Moss Trucking Company of Charlotte, North Carolina, for delivery to Gas Heat, freight collect, at Marshville, North Carolina. There is no allegation that Ray Burner participated in any fashion in the installation of the unit.

Among the findings and conclusions of the court denominated as findings of fact are the following:

'7. The alleged wrong to the plaintiff took place in North Carolina where the explosion, the natural consequence of improper construction, assembly, shipment, and installation of the unit occurred.' and

'8. The service of process upon the defendant Ray Burner was proper under sections 55--145 and 55--146 of the North Carolina General Statutes and its application to this defendant is proper under sections 55--145(a)(2), (3) and (4) of the North Carolina General Statutes, the Constitution of the United States and the Constitution of North Carolina.'

G.S. § 55--145 provides:

'(a) Every foreign corporation shall be subject to suit in this State, by a resident of this State or by a person having a usual place of business in this State, whether or not such foreign corporation is transacting or has transacted business in this State and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows:

(1) Our of any contract made in this State or to be performed in this State; or (2) Out of any business solicited in this State by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the State; or

(3) Out of the production, manufacture, or distribution of goods by such corporation with the reasonable expectation that those goods are to be used or consumed in this State and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed, or sold or whether or not through the medium of independent contractors or dealers; or

(4) Out of tortious conduct in this State, whether arising out of repeated activity or single acts, and whether arising out of misfeasance or nonfeasance.'

Fundamental to a determination of the question presented here is a determination of whether G.S. § 55--145 can be applied to the facts of this case to bring defendant Ray Burner under the jurisdiction of the court.

In Atlantic Coast Line R.R. Co. v. J. B. Hunt & Sons, Inc., 260 N.C. 717, 133 S.E.2d 644 (1963), Justice Sharp, speaking for a unanimous Court, said:

'The jurisdiction created by G.S. § 55--145 pertains only to Local actions. It has no application to any cause of action arising outside the State. The draftsmen have expressed the purpose of this section as follows:

'Foreign corporations are by Section 145 made subject to local suits by residents of North Carolina in some situations where they have engaged in specified activity giving rise to a cause of action locally, even though they are not so 'transacting business' as to be required to obtain a certificate of authority.' Latty, Powers & Breckenridge, Op. cit. supra at 54.'

In Hunt, plaintiff, a corporation doing business in North Carolina, sued Hunt, a domestic corporation; Driscoll, a North Carolina resident and salesman for Hunt; and Insto-Gas Corporation, a Michigan corporation, not authorized to do business in North Carolina and with no process agent in North Carolina. Plaintiff sought indemnity from defendants for the amount it paid the estate of a deceased employee, Parrish, for his wrongful death in settlement of a claim under the Federal Employers' Liability Act. Parrish received fatal injuries at plaintiff's yard near Portsmouth, Virginia, when a gas heater, manufactured by Insto-Gas and furnished plaintiff by Hunt through its agent, Driscoll, exploded.

Justice Sharp cited Babb v. Cordell Industries, Inc., 242 N.C. 286, 87 S.E.2d 513 (1955), as controlling. There a resident of Georgia brought suit in North Carolina against a New York corporation on a cause of action arising outside North Carolina. There Justice Higgins, for the Court, said that although there can be no doubt but that a nonresident has access to the courts of this State and can sue a foreign corporation, nevertheless 'to bring the foreign corporation into court the service of process must be made upon an officer or agent as defined in G.S. 1--97, and in the following cases only: (1) Where it has property in this State; or (2) where the cause of action arose in this State; or (3) where the service can be made personally upon some officer designated in G.S. 1--97.' In Hunt, Justice Sharp noted that 'G.S. 55--145 (then G.S. 55--38.1) became effective on May 20, 1955. The opinion in Babb was filed on May 25, 1955 and it is entirely consistent with G.S. 55--144 and G.S. 55--145(a).'

We are aware that there is some authority in this State for the proposition that any one of the subdivisions of G.S. § 55--145(a) is valid as the sole basis for granting jurisdiction. In Byham v. National Cibo House Corp., 265 N.C. 50, 143 S.E.2d 225 (1965), an action for rescission of a contract was brought against a foreign corporation. The contract was executed by plaintiff in North Carolina, accepted by defendant in Tennessee, and was to be performed in North Carolina. There the Court said that subsection (1) was satisfied and found that the assumption of jurisdiction did not offend the due process clause of the Constitution of the United States. In Shepard v. Rheem Mfg. Co., 249 N.C. 454, 106 S.E.2d 704 (1959), defendant was a foreign corporation which manufactured gas hot water heaters. It had agents residing in and working in North Carolina and shipped large quantities of its appliances into North Carolina with the reasonable expectation that they would be used in the homes of the people of this State. Its sales contracts were accepted outside North Carolina. Plaintiff was injured when one of the heaters exploded. The Court said: 'Manifestly, therefore, upon the undisputed facts, the cause of action arises out of activities described in G.S. 55--145(a)(3).' The Court went on to hold that the minimum contacts requirement was satisfied so that the due process clause was not offended. In Painter v. Home Finance Co., 245 N.C. 576, 96 S.E.2d 731 (1957), suit was brought against a foreign corporation for damages resulting from the wrongful taking of her automobile without legal process. The act occurred in North Carolina. Defendant moved to quash service for lack of jurisdiction. The Court said: 'The allegations of the...