Nix v. Dunavant

• Decision Date: 14 December 1970
• Docket Number: No. 5--5403,5--5403
• Parties: Leslie NIX, Appellant, v. W. B. DUNAVANT, Jr., d/b/a W. B. Dunavant & Company, Appellee.
• Court: Arkansas Supreme Court

Page 762

460 S.W.2d 762

249 Ark. 641

Leslie NIX, Appellant, v. W. B. DUNAVANT, Jr., d/b/a W. B. Dunavant & Company, Appellee.

No. 5--5403.

Supreme Court of Arkansas.

Dec. 14, 1970.

Shaver & Shaver, Wynne, for appellant.

Armstrong, Allen, Braden, Goodman, McBride & Prewitt, Memphis, and Rieves & Rieves, West Memphis, for appellee.

GEORGE ROSE SMITH, Justice.

This action was brought by the appellant, Leslie Nix, a resident of Cross county, Arkansas, to recover $9,976 as damages for breach of contract. The defendant, W. B. Dunavant, Jr., a resident of Memphis, Tennessee, appeared specially and moved to quash the service of process, on the ground that he is not subject to suit in Arkansas. The motion was submitted to the trial court upon an affidavit and a counter-affidavit. This appeal is from an order sustaining the motion to quash and dismissing the suit.

The Uniform Interstate and International Procedure Act provides that a court may exercise personal jurisdiction over a person as to a cause of action arising from that person's 'transacting any business in this State.' Ark.Stat.Ann. § 27--2502 (Supp.1969). In construing the statute liberally we have pointed out that the 'transaction of any business' is not synonymous with the earlier restrictive term, 'doing business.' Wichman v. Hughes, 248 Ark. ---, 450 S.W.2d 294 (1970). To the contrary, the purpose of the Uniform Act was to expand the state's personal jurisdiction over nonresidents, within the limits permitted by due process of law. In Professor Leflar's words: 'Plaintiffs ought ordinarily to be entitled to try their cases where the facts occurred, where witnesses reside and the local law is to be applied. This is in keeping with the 'fair play and substantial justice' standard that the International Shoe case (International Shoe Co. v. Washington, 326 U.S. 310, (66 S.Ct. 154, 90 L.Ed. 95) (1945)) laid down.' Leflar, American Conflicts Law, § 41 (1968).

According to Nix's complaint and counter-affidavit, Dunavant is engaged in the business of buying cotton. In December, 1967, Dunavant, acting through Brian Kelley, a resident of Earle, in Crittenden county, Arkansas, negotiated a contract for the purchase of Nix's three-quarters share of the cotton to be produced by him on 475 acres in Cross county. All the negotiations took place in Arkansas. Kelley also obtained for Dunavant similar contracts from five other Cross county farmers. Kelley was paid by Dunavant for obtaining the contracts.

The contract itself was typed on Dunavant's letterhead. Dunavant agrees in the contract to buy the cotton at a stated price per pound. The contract excludes some cotton, such as that below certain grades. It requires that all cotton eligible under the contract be hand or spindle picked. Nix agrees to practice good farming methods in producing and harvesting the crop, to defoliate before machine picking, and to harvest and gin the crop as fast as practicable after maturity. Dunavant has the privilege of controlling the heat and cleaning equipment used in ginning the cotton. The cotton is to be delivered to a specified compress warehouse in Cross County, with samples being sent to Dunavant.

The complaint alleges that Nix complied with the contract in producing, defoliating, spindle picking, and ginning the corp. Dunavant is charged with having wrongfully breached the contract by refusing to purchase and pay for the cotton in accordance with the agreement.

Dunavant's brief affidavit in support of his motion to quash contradicts hardly any of the facts asserted by Nix. Dunavant asserts that neither he nor his company, a partnership, owns any property, maintains any office, or has any agents in Arkansas. We quote the pivotal paragraph in the affidavit:

That the contract which is the basis of this suit was executed in the City of Memphis, Tennessee, by W. B. Dunavant & Co. and was negotiated in the first instance by Brian Kelley, who was an independent cotton broker and merchant in Earle, Arkansas, and who did business as such with W. B. Dunavant & Co., and presumably with other persons and firms who were engaged in the same or similar businesses.

The motion to quash the service of course admits such assertions of fact in the complaint as are not controverted by the motion. Moreover, the burden is on the moving party to produce evidence to sustain the allegations of the motion. Running v. Southwest Freight Lines, 227 Ark. 839, 303 S.W.2d 578 (1957). Tested by that rule, we find Dunavant's affidavit insufficient to sustain his motion.

The only point of fact that might be said to be controverted is whether Brian Kelley acted as Dunavant's agent. Nix asserts positively that Kelley was in fact Dunavant's agent or broker. He asserts that Kelley 'met with Plaintiff and other cotton producers in Cross county and outlined the terms of the contract and whom it was with.' The contract, which was presented by Kelley for Nix's signature, was typed on Dunavant's stationery. Nix also states that Kelley was paid by Dunavant for obtaining the contracts.

None of those statements are actually denied by Dunavant's affidavit. He merely alleges, as a conclusion of law, that Kelley was 'an independent cotton broker and merchant.' A broker, however, is ordinarily the agent of the person who pays him. Morrison v. Bland, 226 Ark. 514, 291 S.W.2d 243 (1956); Bouvier's Law Dictionary (8th ed., 1914). Kelley certainly was not representing both parties in negotiating the terms of the contract. Thus it is actually an undisputed fact that Dunavant, acting through his agent, negotiated the agreement in Arkansas. There is, as we have said, no other point of fact even ostensibly in controversy.

We have said that 'a person who avails himself of the privilege of conducting activities in another state is subject to suit there is his contacts in that state have been such that the maintenance of the suit would not offend traditional notions of fair play and substantial justice.' Wichman v. Hughes, supra. With specific reference to contracts, Leflar states: 'A number of cases have presented the question whether the making of a contract in the state suffices to sustain the state's jurisdiction in causes of action arising out of the contract. If local completion of the contract were by happenstance merely, as between parties who were airline passengers flying over the state, with no other local contacts in the transaction, the answer would be negative. The substantiality of contracts should not be so mechanically measured. But if the contract was made in F by deliberate choice as a place of contracting, or because that was where the contemplated transaction was centered, or because the contract was to be performed there, the contracts are substantial.' Leflar, supra, § 43. Moreover, even though, as here, the final execution of the agreement takes place outside the state, the necessary contracts may be found to exist if the contract is to be performed here. Woods, The Uniform Long-Arm Act in Arkansas, 22 Ark.L.Rev. 627, 633 (1969).

Here the necessary contacts with Arkansas were far beyond the minimum required by due process. Dunavant negotiated the agreement through his paid agent in Arkansas. The contract involved an Arkansas crop to be produced on Arkansas land. The grower was required to conform to exact specifications in the production, harvesting, and ginning of the crop, all of which were to take place in Arkansas. Dunavant reserved the privilege of controlling the heat and cleaning equipment to be used in ginning--activities for his own protection that had to be performed in Arkansas. When ginned, the cotton was to be delivered to a warehouse in Arkansas.

By contrast, the contract has hardly any connection with the state of Tennessee. Dunavant lives there. He signed his name there. The samples and warehouse receipts are to be sent there. That is all. Upon the record we have no hesitancy in reaching the conclusion that Dunavant is fairly and lawfully subject to suit in this state for breach of contract.

Reversed.

FOGLEMAN and JONES, JJ., dissent.

FOGLEMAN, Justice (dissenting).

I disagree with the majority because I think that there was substantial evidence to support the findings of the trial judge.

Appellee alleged that he did not, at any time material, transact any business in this state or contract to supply services or things in this state and was not subject to service of process.

Whenever the trial judge decides any fact question, either interlocutory or preliminary to trial, in a law case, his decision will be sustained on appeal if there is any...