Northern States Pump & Supply Co. v. Baumann, 46548

• Decision Date: 30 December 1976
• Docket Number: No. 46548,46548
• Citation: 311 Minn. 368,249 N.W.2d 182
• Parties: NORTHERN STATES PUMP & SUPPLY CO., Respondent, v. Melvin BAUMANN, Appellant.
• Court: Minnesota Supreme Court

Page 182

249 N.W.2d 182

311 Minn. 368

NORTHERN STATES PUMP & SUPPLY CO., Respondent, v. Melvin BAUMANN, Appellant.

No. 46548.

Supreme Court of Minnesota.

Dec. 30, 1976.

Syllabus by the Court

Where a nonresident defendant while in Minnesota made inquiries as to the feasibility of leasing a well-drilling rig; subsequently returned to Minnesota to inspect such equipment; here entered into a lease, took possession of the machinery, paid the first installment of rent, and obligated himself to pay the rent as due in Minnesota; and returned the machinery to Minnesota as required by the contract, the exercise of in personam jurisdiction over the defendant in a suit for breach of the lease comports with due process and Minn.St. 543.19, subd. 1(b).

Dorsey, Windhorst, Hannaford, Whitney & Halladay, and Craig A. Beck, Rochester, for appellant.

O'Brien, Ehrick, Wolf, Deaner & Downing and Terence L. Maus, Rochester, for respondent.

Considered and decided by the court without oral argument.

PETERSON, Justice.

Plaintiff, a Minnesota resident, commenced an action for breach of contract against defendant, a North Dakota resident, who was served with process in North Dakota, in personam jurisdiction being asserted under this state's long-arm statute, Minn.St. 543.19, subd. 1(b). ¹ Defendant challenged jurisdiction on both constitutional and statutory grounds and appeals from an order denying his motion to dismiss. The issue presented is whether the defendant has transacted business in this state, within the meaning of § 543.19, subd. 1(b), and with 'minimum contacts' such that the exercise of in personam jurisdiction over him does not offend due process.

The facts essential to determination of this issue are undisputed. Plaintiff, Northern States Pump & Supply Co., is a Minnesota corporation, with headquarters in Rochester. Defendant, Melvin Baumann, is a resident of North Dakota. In March 1974, defendant, while on personal business in Minnesota, conducted general inquiries as to the feasibility of leasing or purchasing a well-drilling rig. Chicago Pneumatic Tool Company in Minneapolis was one company contacted by defendant for this purpose. Defendant thereafter returned to North Dakota. Subsequently, a sales representative of Chicago Pneumatic telephoned defendant at his home in Ashley, North Dakota, expressing the company's interest in doing business with him and inviting him to come to Rochester, Minnesota, to meet one of Chicago Pneumatic's distributors and to inspect the machinery. Accordingly, defendant drove to Rochester, Minnesota, and met with representatives of Chicago Pneumatic and its distributor, plaintiff, Northern States Pump & Supply Co. Defendant inspected the well-drilling equipment and the parties negotiated the terms of the lease agreement. In Rochester that same day, April 28, 1974, defendant and plaintiff entered into the lease agreement. Defendant paid by check the first installment of rent and the purchase price of certain supplies which totaled $6,528.58. Defendant then drove the well-drilling equipment to North Dakota. The lease agreement required defendant to pay the monthly rent at plaintiff's place of business in Rochester and also required defendant to prepay the return transportation charges to Rochester, Minnesota.

After alleged difficulties with the equipment, defendant made no further rental payment and returned the equipment to Rochester on July 24, 1974. ² Plaintiff brought action to recover rent due under the contract, damages for certain missing or damaged equipment, and payment for certain goods sold to defendant.

The exercise of in personam jurisdiction requires compliance with both due process and statutory constraints. See, All Lease Co. Inc. v. Betts, 294 Minn. 473, 199 N.W.2d 821 (1972). Due process establishes minimum standards. States are free to impose more stringent ones. Perkins v. Benquet Consol. Min. Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952); Aftanase v. Economy Baler Co., 343 F.2d 187, 190 (8 Cir. 1965). In construing Minn.St. 543.19, subd. 1(b), we first note that sales or leasing activity is without dispute the sort of activity which falls within the rubric of 'transacts any business.' To determine what more the statute requires, we look to the standards of due process for guidance. Numerous Minnesota cases have described the purpose of this state's long-arm statutes as being the assertion of in personam jurisdiction over nonresidents to the maximum extent consistent with due process. See, e.g., Ellwein v. Sun-Rise, Inc., 295 Minn. 109, 203 N.W.2d 403 (1972) (applying Minn.St. 543.19). In one of its most recent statements to that effect, this court said: '* * * If defendant's activities in Minnesota are extensive enough so that due process requirements are satisfied, then the statute authorizes the exercise of personal jurisdiction.' American Pollut. Prev. Co. v. National Alf. D. & M. Co., 304 Minn. 191, 194, 230 N.W.2d 63, 65, certiorari denied, 423 U.S. 894, 96 S.Ct. 193, 46 L.Ed.2d 126 (1975) (applying Minn.St. 303.13).

Despite these characterizations of the Minnesota long-arm statute as being coextensive with the reach of due process, defendant argues that the exercise of jurisdiction over him offends both due process and the more exacting standards of Minn.St. 543.19, subd. 1(b), as applied by this court to nonresident-buyer defendants. He argues that this court in sustaining jurisdiction over nonresident buyers requires more substantial contacts with this forum than are necessary to support jurisdiction over a nonresident seller. As authority for this proposition, defendant cites Fourth N.W. Nat. Bank v. Hilson Industries, Inc., 264 Minn. 110, 117 N.W.2d 732 (1962), and contends that it is factually similar to the instant case and therefore dispositive.

Hilson was decided on due process grounds and not statutory construction grounds, thus it does not establish that the Minnesota long-arm statute imposes more stringent requirements than does due process. This court in Hilson reiterated and applied the same requirement of 'minimum contacts' as the test of due process requires. The case does not suggest that a different standard of due process is applied to nonresident-buyer defendants than is applied to nonresident sellers. Hilson and subsequent cases controlled by it ³ do distinguish between nonresident buyers and sellers. In Hilson, we quoted the following (264 Minn. 116, 117 N.W.2d 735):

"* * * The general tendency of courts to require less in the way of Sales activity to bring a foreign corporation within the jurisdiction of a state has not been accompanied by any parallel lessening of requirements as to Purchasing activities.' (Italics supplied.) Waltham Precision Ins. Co. v. McDonnell Aircraft Corp. (D.Mass.), 203 F.Supp. 539, 541.'

This distinction, however, merely goes to the difference in nature and quality of the contacts of a buyer and those of a seller. International Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 160, 90 L.Ed. 95, 104 (1945), established that compliance with due process cannot be measured mechanically by counting contacts: '* * * Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.' The contacts of a seller characteristically represent commercial profit and may be accompanied by advertising and other solicitation in an attempt to develop a market in the forum state. One purchase, particularly if by mail order, may be an isolated transaction without commercial profit and accompanied by no incidental activities such as characteristically accompany a sale.

In Hilson, we agreed with the defendant's assertion that the exercise over it of in personam jurisdiction under Minn.St. 303.13 constituted a denial of due process. We stated (264 Minn. 118, 117 N.W.2d 736):

'* * * The only connection with Minnesota in this case, however remote, is the fact that the notes are payable here. This situation arises out of an effort by the nonresident defendant to accommodate plaintiff. Fixing the place of payment at plaintiff's business residence is hardly the kind of commercial benefit to defendant that must be balanced by a countervailing capitulation to jurisdiction under § 303.13. For...