Miller v. Vitalife Corp. of America

• Citation: 173 N.W.2d 91
• Decision Date: 09 December 1969
• Docket Number: No. 53650,53650
• Parties: Mrs. Evelyn M. MILLER, Appellee, v. VITALIFE CORPORATION OF AMERICA, a corporation, and Edward Weaner, Appellants.
• Court: United States State Supreme Court of Iowa

Page 91

173 N.W.2d 91

Mrs. Evelyn M. MILLER, Appellee, v. VITALIFE CORPORATION OF AMERICA, a corporation, and Edward Weaner, Appellants.

No. 53650.

Supreme Court of Iowa.

Dec. 9, 1969.

John D. Randall, Cedar Rapids, for appellants.

Claassen, Kreuter & Ibeling, Cedar Rapids, for appellee.

BECKER, Justice.

This contract action was brought by plaintiff Miller, a resident of Iowa, against defendant Weaner, a resident of Florida and defendant Vitalife Corporation, a Florida corporation. Notice was served as contemplated by section 617.3, Iowa Code, 1966, popularly referred to as the Long Arm Statute. Defendants each filed special appearance challenging the jurisdiction of the court. The special appearances were overruled. Permission for interlocutory appeal was granted. We affirm and remand for trial.

I. Before reciting the factual framework for the case we review the ground rules set out in Tice v. Wilmington Chemical Corporation, 259 Iowa 27, 34, 35, 47, 141 N.W.2d 616, supplemental opinion, 143 N.W.2d 86. In passing upon a special appearance we accept the allegation of the petition and the contents of uncontroverted affidavits as true; the burden is on plaintiff to sustain the requisite jurisdiction, but once a prima facie showing has been made by him the burden is on the defendant to go forward with the evidence to overcome or rebut, if possible, such prima facie case; a hearing on special appearance is a special proceeding not reviewable de novo; and, the finding of the trial court has the force and effect of a jury verdict.

II. Plaintiff owned and operated a mail order business as a sole proprietorship. She sold vitamins to a large number of customers throughout the United States. The business was offered for sale through Mr. Gettleman as her broker and attorney.

Mr. Weaner became interested as a purchaser and visited the business location in Cedar Rapids in company with Mr. Gettleman and a Mr. Cihla, who had subsequent business dealings with Mrs. Miller, as Weaner's agent. All negotiations were carried on through Mr. Gettleman who received $3500 down payment for the business on the day of the Cedar Rapids visit. The terms were $45,000 for the business, payable $20,000 in cash and $25,000 by $5000 notes with maturity dates of June 1, 1967 and consecutively each year thereafter.

The papers were prepared by Mr. Cypen, Mr. Weaner's Florida attorney, and included formation of a Florida corporation to be wholly owned by Mrs. Miller, transfer of all the assets being sold by Mrs. Miller to the Florida corporation in exchange for capital stock and promissory notes, and sale of all of the capital stock to Mr. Weaner. ¹ The rather complicated formula set out in the contract resulted in Weaner paying $10,000 for the corporate stock and Mrs. Miller receiving an additional $10,000 from surplus paid into the corporation by Weaner. ² The remainder of the purchase price was represented by five $5000 corporate notes.

The papers also included the notes mentioned, payable at such location as the payee might elect, a covenant not to compete for five years in any state in the United States and Mrs. Miller's agreement to serve on the corporate board of directors for three years. Plaintiff alleges the parties knew and intended the assets of the corporation were to be shipped from Iowa to Florida and this was, in fact, accomplished in accordance with the express and implied agreements growing out of the contract made.

The papers were delivered by Mr. Cypen to Mr. Gettleman in Florida, returned to Chicago where they were signed by Mrs. Miller and mailed back to Mr. Cypen in Florida. A $16,500 payment was made by Mr. Weaner's checks at the time of signing. The initial $3500 was delivered to Mr. Gettleman as Mrs. Miller's agent, either in Cedar Rapids (plaintiff's claim) or Illinois or Florida (defendant's claim). The contract was signed by Mrs. Miller; by Vitalife Corporation, by Edward Weaner, President; and by Edward Weaner, personally.

After the papers were signed, Mrs. Miller was asked to and did perform substantial work to keep the business operating and prepare it for shipment. These actions included preparation and shipment of 69,000 labels to Florida, mailing over 16,000 advertising circulars, shipment of free bottles of vitamins to each customer on the customer's birthday accompanied by literature on the corporation, packaging and shipment of a truckload of business equipment from Cedar Rapids to Florida and other substantial activities. When the first note cam edue, defendant Vitalife Corporation failed to pay it and this action was instituted.

III. If a foreign corporation or a nonresident 'makes a contract with a resident of Iowa to be performed in whole or in part by either party in Iowa' such acts shall be deemed doing business in Iowa and service on such corporation or person may be accomplished as provided by statute, section 617.3, Code, 1966. The tort provisions in the same statute were considered and declared constitutional in Tice v. Wilmington Chemical Corp., supra. Defendants do not seriously contend this statute, as it applies to contract actions, is unconstitutional. They question the constitutionality of the act as it applies to the facts of this case. In Tice v. Wilmington Chemical Corporation, supra, we did not squarely pass on the contract provisions of section 617.3 but turned the case on the tort action pled (loc.cit. 259 Iowa pages 41--44, 141 N.W.2d page 625), but we did say: 'We conclude defendant's stand (as to contract theory) is without merit. The basic element of this challenge was for the most part resolved against defendant in McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223. There, under a related statute, the court held a foreign corporate insurance carrier was amenable to process in California even though the insurer had no agents or officers in that state. The court found the nonresident corporation had no vested right not to be sued On its insurance contract in the state of an insured's residence.' (Emphasis added.)

We need go no further than McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, 226: * * * It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with...