Murphy v. Erwin-Wasey, Inc.

Decision Date26 May 1972
Docket NumberNo. 71-1363.,71-1363.
Citation460 F.2d 661
PartiesPaul I. MURPHY, Plaintiff, Appellant, v. ERWIN-WASEY, INC., et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

J. Chester Webb, Waltham, Mass., with whom Webb, Webb & Martin, Waltham, Mass., was on brief, for appellant.

Edward N. Costikyan, New York City, with whom Paul, Weiss, Rifkind, Wharton & Garrison, New York City, was on brief, for appellees.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

McENTEE, Circuit Judge.

This is an appeal from the district court's order dismissing a complaint for lack of personal jurisdiction over the defendants and for failure to join an indispensable party. The plaintiff, appellant here, is an advertising consultant. The principal defendants are Erwin-Wasey, Inc., an advertising agency, and Interpublic Group of Companies, Inc., Erwin-Wasey's parent corporation. The other defendants are formal parties, it being alleged that they are indebted to Erwin-Wasey and Interpublic. The plaintiff claims that he and Erwin-Wasey entered into a contract in 1954-55 under the terms of which Erwin-Wasey agreed to pay him three and one-third percent of its commissionable billings to the Compana Corporation for a product known as AYDS; that in consideration for these payments plaintiff agreed to serve as a consultant for the marketing of AYDS; and that subsequently the contract was extended to cover other Compana products. Plaintiff alleges that Erwin-Wasey and Interpublic intentionally misrepresented the true amount of the Compana billings and thereby deceived him into accepting less than he was entitled to receive for his services. He demands an accounting and monetary damages.

This is a diversity suit. Erwin-Wasey and Interpublic are foreign corporations with no principal place of business in Massachusetts, and our threshold question is whether the district court had personal jurisdiction over the defendants. Plaintiff asserts jurisdiction under the Massachusetts long arm statute, M.G.L.A. ch. 223A, § 3.1 The defendants strenuously contend that their contacts with the Commonwealth are insufficient to warrant application of this statute. They argue that the contract in issue was made in New York and that they have not committed any acts in Massachusetts which would render them amenable to the personal jurisdiction of its courts in a suit on the contract. Their argument is, however, wide of the mark because the complaint is framed as an action for fraud and deceit as well as in contract.

The full reach of the jurisdiction of Massachusetts courts under ch. 223A, § 3 has yet to be delineated by the Supreme Judicial Court. We are, therefore, required to interpret that chapter without such authoritative guidance, but only with the aid of opinions of courts in other states interpreting similar statutes. We are persuaded that, in the absence of any opinion by the Massachusetts courts to the contrary, Erwin-Wasey is subject to the in personam jurisdiction of the district court under § 3(c).

Plaintiff alleges, in an affidavit, that "false statements have been made by letter and orally both face to face and in telephone conversations while I was in Massachusetts and elsewhere."2 As corroboration, he offers evidence that in 1967 Erwin-Wasey caused a check to be delivered to him in Massachusetts which, he claims, by implication fraudulently misrepresented the amount due. In deciding the jurisdictional question, we are required, in the absence of convincing evidence to the contrary, to accept these allegations as true. At the least, the district court should have asked plaintiff to make his allegations more specific, since, if plaintiff alleges that defendant's agents made misrepresentations to him personally within Massachusetts, defendant would without question be within the jurisdiction of the court. See Hoard v. United States Paint, Lacquer & Chem. Co., 44 Misc.2d 72, 253 N.Y.S.2d 89 (Sup.Ct. 1964). To provide guidance for the district court, should plaintiff's allegations be limited to a claim that defendant, in New York, communicated by mail or telephone false statements to plaintiff in Massachusetts, we proceed to consider whether such allegations would provide a sufficient basis for jurisdiction.

Section 3(c) gives to the Massachusetts courts jurisdiction over parties who cause "tortious injury by an act or omission in this commonwealth." This language is derived from the Uniform Interstate and International Procedure Act and represents an effort to resolve, legislatively, the type of conflict over the meaning of the term "tortious act within this state" which has developed between the Illinois and the New York courts. Compare Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961) with Feathers v. McLucas, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965). Section 3(c) is intended to apply only when the act causing the injury occurs within the Commonwealth. St. Clair v. Righter, 250 F.Supp. 148, 150-151 (W.D.Va. 1966); Commissioners' Note, Uniform Interstate and International Procedural Act, 9B Uniform Laws Annot. § 1.03. To give it any broader meaning would render § 3(d) a nullity. See Beaty v. M.S. Steel Co., 276 F.Supp. 259, 262 (D. Md.1967), aff'd, 401 F.2d 157 (4th Cir.1968), cert. denied, 393 U.S. 1049, 89 S.Ct. 686, 21 L.Ed.2d 691 (1969). The question we must decide is whether the delivery in Massachusetts by mail or telephone of a false statement originating outside the state, followed by reliance in Massachusetts, is an "act . . . within this commonwealth."

The New York courts, which have interpreted the term "commission of a tortious act" in a way that makes the New York statute synonymous with § 3(c), have held that a defendant does not subject himself to jurisdiction under that language simply by shipping into New York and selling there a product defectively manufactured and mislabeled in another state which causes injury in New York. See Feathers v. McLucas, supra; Singer v. Walker, 15 N.Y.2d 443, 209 N.E.2d 68, 261 N.Y.S.2d 8, cert. denied, Estwing Mfg. Co. v. Singer, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d 158 (1965). The Second Circuit, however, has held that the analogous Connecticut statute asserts jurisdiction over a New York publisher whose newspaper was distributed in Connecticut containing an article alleged to libel a Connecticut resident. Buckley v. New York Post Corp., 373 F.2d 175 (2d Cir.1967). There the court pointed out that while sending a defective tool to a dealer as in Singer merely creates the condition from which damage might later arise, sending a libel into a state is indistinguishable from "the frequently hypothesized but rarely encountered gunman firing across a state line." Id. at 179.

We believe that the same is true of the mailing of a fraudulent misrepresentation into a state. We would be closing our eyes to the realities of modern business practices were we to hold that a corporation subjects itself to the jurisdiction of another state by sending a personal messenger into that state bearing a fraudulent misrepresentation but not when it follows the more ordinary course of employing the United States Postal Service as its messenger. See Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506 (1970); R.F.D. Group Ltd. v. Rubber Fabricators, Inc., 323 F.Supp. 521 (S.D.N.Y.1971). Where a defendant knowingly sends into a state a false statement, intending that it should there be relied upon to the injury of a resident of that state, he has, for jurisdictional purposes, acted within that state.3 The element of intent also persuades us that there can be no constitutional objection to Massachusetts asserting jurisdiction over the out-of-state sender of a fraudulent misrepresentation, for such a sender has thereby "purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). We note, in this connection, that, under the controlling Massachusetts choice of law rule, substantive Massachusetts law will govern the adjudication of plaintiff's tort claim, see Doody v. John Sexton & Co., 411 F.2d 1119, 1121 (1st Cir.1969), and that, therefore, Massachusetts is not an inconvenient forum.

Jurisdiction over Interpublic is another matter. Plaintiff asserts that Interpublic also has committed tortious acts within the Commonwealth by communicating with him in Cambridge by telephone and mail and by tendering him a payment "in full & final settlement" there in October 1969. However, in view of the fact that it is clear from his allegation that plaintiff was not deceived by these acts, jurisdiction may not be asserted under § 3(c) at least insofar as the 1969 events are concerned. Plaintiff contends, however, that Interpublic is subject to the jurisdiction of the Massachusetts courts under § 3(a) because the cause of action arises from a transaction of business by Interpublic in Massachusetts, namely, the tender of payment for plaintiff's services. It is doubtful whether the Supreme Judicial Court would interpret "transacting any...

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