Monroeville Land Co., Inc. v. Sonnenblick-Goldman Corp. of Western Pennsylvania

• Citation: 371 A.2d 1326,247 Pa.Super. 61
• Decision Date: 31 March 1977
• Docket Number: SONNENBLICK-GOLDMAN
• Parties: MONROEVILLE LAND COMPANY, INC., a corporation v.CORP. OF WESTERN PENNSYLVANIA, a corporation, et al. Appeal of Sidney TROY.
• Court: Superior Court of Pennsylvania

Page 1326

371 A.2d 1326

247 Pa.Super. 61

MONROEVILLE LAND COMPANY, INC., a corporation v. SONNENBLICK-GOLDMAN CORP. OF WESTERN PENNSYLVANIA, a corporation, et al. Appeal of Sidney TROY.

Superior Court of Pennsylvania.

Argued Nov. 9, 1976.

Decided March 31, 1977.

T. Lawrence Palmer, Pittsburgh, for appellant.

Harry J. Gruener, Pittsburgh, for appellee.

Before WATKINS, President Judge, and JACOBS, HOFFMAN, CERCONE, PRICE, VAN der VOORT and SPAETH, JJ.

HOFFMAN, Judge:

Appellant contends that the lower court erred in dismissing his preliminary objections to its In personam jurisdiction. ¹ We affirm the order of the lower court.

In 1968, Monroeville Land Co., Inc., appellee, sought to secure interim and permanent financing for a commercial construction project in Monroeville, Allegheny County, Pennsylvania. Appellee planned to build an office building complex. Appellee is a Pennsylvania corporation with its principal office in Monroeville. On October 28, 1968, appellee entered an agreement with Sonnenblick-Goldman Corporation of Western Pennsylvania (hereinafter SBG--Pa.) whereby the latter undertook to negotiate for appellee any mortgage commitments necessary to ensure the financing of the Monroeville project. SBG--Pa. is a Pennsylvania corporation with its principal office in Pittsburgh; it is also the Pennsylvania affiliate of Sonnenblick-Goldman Corporation, a nationwide corporation engaged in arranging loan financing (hereinafter SBG). The parties negotiated and executed the contract in Pennsylvania, and stipulated that all services would take place in Pennsylvania and that Pennsylvania law would govern questions arising under the contract. Through the efforts of SBG--Pa., Monroeville obtained a permanent loan of $1,575,000 from the New York State Teachers Retirement System, a gap loan commitment of $350,000 from the North American Mortgage Investors (hereinafter NAMI), and a construction loan commitment of $1,575,000 from Western Pennsylvania National Bank (hereinafter WPNB). Sidney Troy, appellant, was substantially involved in planning these commitments in his capacity as the National Mortgage Director of SBG and as an agent and employee of SBG--Pa. At various times, appellee found it necessary to secure extensions of the several loan commitments. SBG--Pa. and appellant negotiated the needed extensions.

In October, 1969, appellee requested that appellant secure an extension of the NAMI gap loan commitment. Appellee alleges that appellant orally represented to counsel for appellee that such an extension had been procured, conditioned only upon appellee's forwarding a letter of acceptance and a $7,000 check to SBG--Pa. Appellee sent the letter of acceptance and, in February, 1970, forwarded the $7,000 check to SBG--Pa. Appellee then secured a new construction loan commitment of $1,575,000 from WPNB. However, in April, 1970, prior to the WPNB loan closing, SBG--Pa. advised appellant that NAMI had not agreed to extend its gap loan commitment, and that SBG--Pa. was returning appellee's $7,000 check. Appellee could not obtain gap loan financing from other sources and, as a consequence, could not close its construction loan with WPNB by December 31, 1970. Appellee alleges that as a result, it forfeited $67,625 in non-refundable loan commitment fees and that its attempts to build the contemplated office complex were frustrated.

On May 19, 1972, appellee filed a complaint in trespass and assumpsit against SBG--Pa., NAMI and appellant. Appellee alleged two causes of action against appellant: one for fraud and deceit and one for negligence. Appellant allegedly deliberately or negligently misrepresented the status of a possible gap loan commitment by NAMI to appellee in October, 1969. On June 15, 1972, pursuant to the Pennsylvania long-arm statute, ² appellee served notice of suit upon appellant at his New York office and upon the Pennsylvania Secretary of State. At that time, appellant was president of SBG--Pa. Appellant filed preliminary objections to the lower court's jurisdiction. Appellant claimed that at all times material to appellee's cause of action, he lived and conducted his business affairs in New York. On December 18, 1975, the lower court denied appellant's preliminary objections. This appeal followed.

I

To decide whether appellant is subject to the In personam jurisdiction of Pennsylvania courts, we must answer two questions a) whether appellant's conduct was within the relevant provisions of the long-arm statute and b) whether the exercise of jurisdiction over appellant under the particular circumstances of this case complies with the constitutional mandate of due process of law. Kitzinger v. Gimbel Bros. v. Textile Alliance, Ltd., 240 Pa.Super. 345, 368 A.2d 333 (filed April 22, 1976).

A

In the instant case, both appellant and appellee agree that § 8305 of the long-arm statute ³ governs the question of whether the long-arm statute authorized service of process on appellant. Section 8305 provides as follows: 'Any nonresident of this Commonwealth who, acting outside of this Commonwealth, individually, under or through a fictitious business name, or through an agent, servant or employee, shall have caused any harm within this Commonwealth on or after August 30, 1970, shall be subject to service of process in any civil action or proceeding instituted in the courts of this Commonwealth arising out of or by reason of any such conduct. Service of process in any such civil action or proceedings shall be effected through the Department of State as provided in this chapter.' Appellant contends that he cannot be served under § 8305 unless the acts underlying the cause of action were committed subsequent to August 30, 1970. He asserts that the acts of alleged fraud or negligence occurred prior to this date. Appellee responds that the date that it suffered harm is the relevant date for purposes of § 8305 and that the collapse of the project and the loss of the nonrefundable fees occurred after August 30, 1970. This question is potentially difficult, but it need not be resolved because § 8305 did not become effective until February 15, 1973. Appellee filed its complaint in this case on May 19, 1972, and effected service of process on appellee on June 15, 1972. Because 'procedural matters relating to service are governed by the law existing at the time the action is commenced,' § 8305 is not applicable. Proctor & Schwartz, Inc. v. Cleveland Lumber Co., 228 Pa.Super. 12, 15, 323 A.2d 11, 13 (1974). See also Sussman v. Yaffee, 443 Pa. 12, 275 A.2d 364 (1971); Deere v. Zilber, 234 Pa.Super. 273, 338 A.2d 615 (1975). Therefore, we must consider the applicability of § 8305's predecessor: 12 P.S. § 343. ⁴

12 P.S. § 343 provided as follows: 'From and after the passage of this act, any nonresident of this Commonwealth who, acting outside of the Commonwealth, individually under or through a fictitious business name, or through an agent, servant or employee, shall have caused any harm ⁵ within this Commonwealth, shall be subject to service of process in any civil action or proceedings instituted in the courts of the Commonwealth of Pennsylvania, arising out of or by reason of any such conduct; service or process in any such civil action or proceeding shall be effected through the Secretary of the Commonwealth as herein provided.' Section 343 became effective on July 1, 1970. Therefore, we must determine whether service of process could be effected under this section when the allegedly tortious conduct was committed prior to the effective date of this section, but harm resulted after its effective date.

In Sussman v. Yaffee, supra, the Supreme Court construed a companion section to § 343. That section ⁶ provided, in pertinent part: 'From and after the passage of this act, any nonresident of this Commonwealth who . . . shall be have committed a tortious act within this Commonwealth, . . .' shall be subject to service of process under the long-arm statute. The Court rejected a contention that the section could be utilized against non-residents only for incidents arising after its effective date. The words 'who shall have committed' signified the legislative intent to allow service of process pursuant to the long-arm statute in cases arising from tortious conduct before the effective date. Furthermore, the Court stated, 'it is well established that when the General Assembly enacts legislation such as Act No. 152 providing for service of process on nonresidents, it is deemed to have created a procedural rights to be given full effect as of the time an action is instituted.' 443 Pa. at 15, 275 A.2d at 366. See also Kilian v. Allegheny County Distributors, 409 Pa. 344, 185 A.2d 517 (1962).

Sussman offers persuasive guidance in our task of interpreting § 343. The Legislature's selection of the phrase 'shall have caused any harm' cannotes a desire to allow service of process in cases involving allegedly tortious conduct before July 1, 1970. If the Legislature had intended to say 'who shall cause harm', with its obvious import, then that is what they would have said. Sussman v. Yaffee, 443 Pa. at 15, 275 A.2d at 366. Our reading of § 343 is buttressed by the presumption, articulated in Sussman, that legislation concerning service of process is to be given full effect as of the time an action is instituted. Moreover, to reject our interpretation of § 343 would be to accuse the Legislature of desiring inconsistent results in two closely related sections authorizing service of process over non-residents who commit tortious acts. Therefore, we hold that § 343 of the 1970 long-arm statute authorized service of process upon appellant in this case. ⁷

B

We must now determine if the exercise of In personam jurisdiction over appellant under the particular circumstances of this case offends due process. In International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), the Supreme...