Pasquale v. Genovese

• Decision Date: 11 September 1978
• Docket Number: No. 293-77,293-77
• Court: Vermont Supreme Court
• Parties: Lilia C. PASQUALE, Administratrix of the Estate of Augustine P. Pasquale v. Linda L. GENOVESE, Volkswagenwerk A.G., a/k/a Volkswagenwerk Aktiengesellschaft, Volkswagen of America, Inc., Volkswagen Northeast Distributing, and Lindholm Motors, Inc.

Page 395

392 A.2d 395

136 Vt. 417

Lilia C. PASQUALE, Administratrix of the Estate of Augustine P. Pasquale v. Linda L. GENOVESE, Volkswagenwerk A.G., a/k/a Volkswagenwerk Aktiengesellschaft, Volkswagen of America, Inc Volkswagen Northeast Distributing, and Lindholm Motors, Inc.

No. 293-77.

Supreme Court of Vermont.

Sept. 11, 1978.

Niles, Johnson & Gibbs, Woodstock, for plaintiff.

Bruce M. Lawlor, Law Offices of Douglas Richards, Springfield, for defendant VWAG.

Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.

LARROW, Justice.

Plaintiff's intestate was killed in an automobile accident when the Volkswagen he was driving collided with a car operated by defendant Genovese, in Vermont. By her amended complaint, plaintiff seeks recovery from appellant here, Volkswagenwerk A.G., a/k/a Volkswagenwerk Aktiengesellschaft (VWAG), on a theory of defective design and manufacture. Only Vermont's personal jurisdiction over VWAG is in issue. The trial court denied a timely motion to dismiss, holding jurisdiction to be conferred by virtue of VWAG's 100% Stock ownership of an American subsidiary corporation doing business in Vermont. The order makes no reference to VWAG's alternate claim that even if "long arm" jurisdiction does exist the purported service of process was defective. VWAG has briefed both questions on appeal, even though only the first is referred to as the "controlling question of law" in the trial court order granting permission for interlocutory appeal under V.R.A.P. 5(b)(1). We affirm the ruling of the trial court on the first question, on grounds other than those stated by the trial court, but remand for adjudication of the second claim.

The facts relevant to disposition of the motion to dismiss were not found by the trial court. But they are agreed to by the parties, as contained in an affidavit from the corporate attorney of Volkswagen of America, Inc. (VWoA), upon whom the purported service was attempted. VWoA is the United States importer of Volkswagen products, which are manufactured and sold to it in Germany by VWAG, the German corporation. A New Jersey corporation, VWoA is wholly owned by VWAG. In turn, VWoA resells the automobiles to distributors throughout the United States, who in turn resell them to dealers, who make the retail sales. The agreement between VWAG and VWoA negates agency. Most other Volkswagen importers throughout the world have similar agreements, but are not, for the most part, owned by VWAG. We can, and do, accept the factual background agreed to by the parties, even though it is not the subject of specific findings. See State v. Murray, 134 Vt. 115, 116, 353 A.2d 351, 353 (1976); Oliver v. American Motors Corp., 70 Wash.2d 875, 425 P.2d 647 (1967). Whether the facts are pleaded adequately is not before us. See O'Brien v. Comstock Foods, Inc., 123 Vt. 461, 468, 194 A.2d 568, 573 (1963).

Under the facts set out in defendant's own affidavit, we think it a fair inference that VWAG is engaged in manufacturing and selling cars for the American market, of which Vermont is a part, through the system described. This activity we hold to be the "active participation in the Vermont market" upheld as a basis for jurisdiction in O'Brien, supra, and to meet the "minimum contacts" test first outlined in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Our V.R.C.P. 4(e) embodies the "minimum contacts" test, by permitting out-of-state service upon a person whose contact or activity in the state, or such conduct or activity imputable to him, is sufficient to support a personal judgment against him. This case presents no challenge to the constitutionality of the rule itself, which in effect permits out-of-state service where due process requirements have been met, as provided in 12 V.S.A. § 913(b). The traditional standards of "fair play" and "substantial justice" are embodied in the rule. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). We think it fair to view defendant's general course of conduct as purposefully directed toward Vermont and as inevitably affecting persons in this state; from this activity, it would seem equitable to imply submission to jurisdiction. See Oliver v. American Motors Corp., supra, 70 Wash.2d at 888, 425 P.2d at 655.

While the record does not disclose the volume of Titan's business or the territory in which appliances incorporating its valves are marketed, it is a reasonable inference that its commercial transactions, like those of other manufacturers, result in substantial use and consumption in this State. To the extent that its business may be directly affected by transactions occurring here it enjoys benefits from the laws of this State, and it has undoubtedly benefited, to a degree, from the protection which our law has given to the marketing of hot water heaters containing its valves. Where the alleged liability arises, as in this case, from the manufacture of products presumably sold in contemplation of use here, it should not matter that the purchase was made from an independent middleman or that someone other than the defendant shipped the product into this State. (Emphasis added.)

Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 442, 176 N.E.2d 761, 766 (1961).

We uphold personal jurisdiction here on this basis, rather than on the one suggested by the trial court. There is, to be sure, some slight support in the language, at least, of a few reported cases for the view that total ownership and resulting control of a corporation subject to state jurisdiction, by another corporation, carries with it amenability to long-arm statutes, on an Alter ego...