Oswalt Industries, Inc. v. Gilmore

• Citation: 297 F. Supp. 307
• Decision Date: 10 January 1969
• Docket Number: Civ. A. No. W-3986.
• Parties: OSWALT INDUSTRIES, INC., a Kansas Corporation, Plaintiff, v. Thomas W. GILMORE, Jr., et al., Defendants.
• Court: U.S. District Court — District of Kansas

297 F. Supp. 307

OSWALT INDUSTRIES, INC., a Kansas Corporation, Plaintiff, v. Thomas W. GILMORE, Jr., et al., Defendants.

Civ. A. No. W-3986.

United States District Court D. Kansas.

January 10, 1969.

Corley & Braun, Garden City, Kan., for plaintiff.

Foulston, Siefkin, Powers, Smith & Eberhardt, Wichita, Kan., and Gignilliat & Abbott, Savannah, Ga., for defendants.

MEMORANDUM SUSTAINING MOTIONS

WESLEY E. BROWN, District Judge.

A jurisdictional issue is presently before the Court upon defendants' motion, filed under the provisions of Rule 12, Fed.R.Civ.Proc. for order quashing the purported service of summons, upon the ground of insufficiency of process and lack of in personam jurisdiction in this Court. The defendant, referred to as Gilmore, further requests that the action be dismissed for lack of jurisdiction of his person.

The burden of proving that this Court has in personam jurisdiction rests upon Oswalt. Delray Beach Aviation Corp. v. Mooney Aircraft, Inc., (5 Cir. 1964) 332 F.2d 135, cert. den. 379 U.S. 915, 85 S.Ct. 262, 13 L.Ed.2d 185; Dahlberg Co. v. American Sound Products, Inc., (D.C.Minn.1959) 179 F.Supp. 928.

Plaintiff, referred to as Oswalt, a Kansas corporation, with its principal place of business located at Garden City, Kansas, is a manufacturer of farm equipment. It brought this diversity action against Thomas W. Gilmore, Jr., a resident and citizen of the State of Georgia, individually, and as partner with Winifred R. Gilmore, now deceased, in the business known as "Gilmore Brothers, Fern Crest Plantation." It also appears that Gilmore is the Executor of the Will of his deceased wife and partner, Winifred Gilmore. The complaint is in the nature of a suit on account for an alleged debt incurred by the partnership for merchandise sold by Oswalt, and the amount in controversy is stated to exceed the sum of $10,000. Its claim is for $13,670.87, less credit of $2,638.06 for returned goods, plus $632.24 in shipping charges which were incurred by it on Gilmore's account.

The file reflects that Gilmore in his various capacities as defendant, was personally served with summons on April 25, 1968 by a United States Marshal at his home address, R. F. D., Sandersville, Georgia.

Oswalt's complaint is directed to sales within the period of March 10, 1966, and November 23, 1966, and a statement attached to the complaint reflects charges for parts and equipment purchased February-November, 1966. This equipment was manufactured at Oswalt's plant in Garden City, Kansas. In its second claim for relief, Oswalt asserts that on or about June 8, 1967, Gilmore shipped to it at Garden City certain new parts and equipment purchased from Oswalt, and Oswalt agreed to accept the same and allow credit therefore in the sum of $2,638.06, but that at the time this new equipment was returned, Gilmore also included certain used equipment for the purpose of having Oswalt sell the same on his account. Oswalt alleges that such equipment is worn out and not marketable, and tenders back the same. The claim for repayment of the freight bill is attributable to the returned goods.

Oswalt does not controvert any factual statement contained in affidavits filed by Gilmore, but has moved to suppress his first affidavit on the ground that it relates to facts going back to the year 1960, while plaintiff's complaint is directed to events occurring after March 10, 1966. The history of transactions between Gilmore and Oswalt bears relevance to a proper determination of whether or not Gilmore was transacting any business for the purposes of the Kansas statute and the court has therefor considered both of Gilmore's affidavits.

Gilmore, individually, and through the partnership, operates a farm wholly within Washington County, Georgia; the principle enterprise is cattle production. Gilmore first obtained knowledge of Oswalt's equipment through an advertisement which appeared in a 1960 issue of the Farm Quarterly, delivered to his farm at Sandersville, Georgia; after noting the advertisement, he telephoned Oswalt and received photographs and other literature describing the equipment. Thereafter, an Oswalt salesman called upon Gilmore at his home in Georgia, and the first item of equipment which Gilmore purchased was a forage box, delivered in Georgia by Oswalt's sales representative in 1960. Thereafter, Oswalt's salesmen called upon Gilmore at his home in Georgia, taking orders, and servicing equipment purchased from it. It was the custom between the parties for Oswalt's salesmen to take verbal orders from Gilmore in Georgia, to ship direct to the farm, freight collect, on open account. Some equipment was also purchased through Oswalt's distributor at Americus, Georgia. Gilmore avers that his sole residence and place of business is, and always has been in Washington County, Georgia; that he has never done any business in the State of Kansas, and that in fact he has been to Kansas but once in his life — that on January 10, 1964, for one day. On that date, he visited Oswalt's facilities, at its invitation, to examine new manufacturing facilities which were under construction, but no purchases were made during that visit. Copies of bills of lading and invoices attached to Gilmore's affidavit reflect the course of dealings between the parties, as described by Gilmore.

In addition, by letter of July 12, 1968 Oswalt advised the Court that:

"Subsequent to the filing of our action we determined that in addition to what was presented on the facts before the court the defendants had shipped back to Oswalt Industries certain equipment previously purchased by the defendants from Oswalt Industries for credit and/or sale in behalf of the defendants. This equipment is now located on the Oswalt Industries property, the title to which is in the defendants. Since the defendants have shipped this property back in to Kansas to place the same with the plaintiff for re-sale in behalf of the defendants we construe the same to constitute `transactions' within the State of Kansas and that the same fall within the rules of the Woodring case."

It further asserts that telephone conversations were had between the parties concerning the returned equipment, and that although attachment papers covering the same were filed in this case, for the purpose of invoking the in rem jurisdiction of the court, Oswalt is "abandoning the attachment theory" at present, to await the decision of the court on the motion to quash.

The validity of the out-of-state service of summons in this case depends upon the provisions of the Kansas "long-arm" statute, K.S.A. 60-308(b) (1), which provides:

"(b) Submitting to jurisdiction — process. Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:

"(1) The transaction of any business within the state; * * *

Service of process upon any person who is subject to the jurisdiction of the courts of this state, as provided in this subsection (b) of this section, may be made by personally serving the summons upon the defendant outside this state * * * with the same force and effect as though summons had been personally served within this state * * *."

Rule 4(d) (7), (e), (f), Fed.R.Civ. Proc. confers jurisdiction on this court if the service here in question is in accordance with the applicable Kansas law, to the extent that such service would be consistent with principles of due process of law under the Constitution of the United States. The questions thus before the court are: 1. Whether Gilmore has "transacted any business" in the State of Kansas within the meaning of K.S.A. 60-308(b) (1), as interpreted by the Supreme Court of Kansas; and 2. If so, whether or not assumption of jurisdiction over the nonresident would be consistent with federal principles of due process of law. The first question is to be determined by state law — the second by federal law. See, Arrowsmith v. United Press International (2 Cir. 1963) 320 F.2d 219, 223, 6 A.L.R.3d 1072; Agrashell, Inc. v. Bernard Sirotta Co. (2 Cir. 1965) 344 F.2d 583; Aftanase v. Economy Baler Co., (8 Cir. 1965) 343 F.2d 187, 192; and see, Anno. 20 A.L.R. 3d 1201, 1210, 1223.

The only reported state opinion construing the provisions of K.S.A. 60-308 (b) (1) which has been cited to this Court is Woodring v. Hall (1968) 200 Kan. 597, 438 P.2d 135. It appears to be a case of first impression as to a definition of the term "transacting business." The case involved a suit upon a note filed by defendant's former mother-in-law, for recovery of money lent to defendant from December, 1952 through April, 1962 for the purpose of living and school expenses. At the time the money was advanced, defendant was a resident of Kansas, but after divorce from his wife in a Kansas Court in 1962, defendant moved to Texas, where personal service was had upon him in 1965. Default judgment was entered, and the case came up on defendants' motion to set aside the judgment upon the ground that the court lack in personam jurisdiction. In ruling that defendant had "transacted business" in the state of Kansas for the purposes of service by out of state process, the court made the following comments upon the Kansas statute:

"In a broad sense, `business' is transacted within the state when an individual is within or enters this state in person or by agent and, through dealing with another within the state, effectuates or attempts to effectuate a purpose to improve his economic conditions and satisfy his desires.

* * * * * *

"The statute may not be given a restrictive interpretation based upon the Kansas `doing business' cases * * *. The phrase `doing business' is not to be confused with the `transaction of business'

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