People v. Parsons Co.

• Decision Date: 19 March 1984
• Docket Number: No. 83-121,83-121
• Citation: 122 Ill.App.3d 590,78 Ill.Dec. 74,461 N.E.2d 658
• Parties: , 78 Ill.Dec. 74 PEOPLE of the State of Illinois, Plaintiff-Appellant, v. PARSONS COMPANY, an Illinois Corporation, and Dickey-Grabler Company, an Ohio Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 658

461 N.E.2d 658

122 Ill.App.3d 590, 78 Ill.Dec. 74

PEOPLE of the State of Illinois, Plaintiff-Appellant, v. PARSONS COMPANY, an Illinois Corporation, and Dickey-Grabler Company, an Ohio Corporation, Defendants-Appellees.

No. 83-121.

Appellate Court of Illinois Second District.

March 19, 1984.

Neil F. Hartigan, Atty. Gen., Barbara A. Chasnoff, Environmental Control Div., Chicago, for plaintiff-appellant.

Lord, Bissell & Brook, Chicago, for defendants-appellees.

HOPF, Justice:

The State as plaintiff brings this interlocutory appeal, pursuant to Supreme Court Rule 304(a) (87 Ill.2d R. 304(a)), from an order of the trial court granting the motion of defendant, Dickey-Grabler Company (Dickey-Grabler), to quash service of summons on it and to dismiss the complaint against it for want of in personam jurisdiction.

On appeal, the State contends that, under section 2-209 of the Code of Civil Procedure (Ill.Rev.Stat., 1982 Supp., ch. 110, par. 2-209) the Illinois courts have personal jurisdiction over Dickey-Grabler, an out-of-State corporation, in an action for violations of the Illinois Environmental Protection Act (Ill.Rev.Stat.1981, ch. 111 1/2, par. 1001 et seq.), by reason of Dickey-Grabler's control over its Illinois subsidiary, Parsons Company, which was also made a defendant in this action. The State also maintains that personal jurisdiction exists under the due-process clause because Dickey-Grabler had "minimum contacts" with Illinois. Accordingly, the State asserts that the trial court erred in dismissing plaintiff's complaint for want of personal jurisdiction over Dickey-Grabler.

On September 1, 1982, the State filed a three-count complaint against Parsons Company (Parsons) and Dickey-Grabler in which it alleged that the defendants had violated (1) sections 12(d) and 21(f)(2) of the Illinois Environmental Protection Act (EPA) (Ill.Rev.Stat.1981, ch. 111 1/2, pars. 1012(d), 1021(f)(2)), and, (2) various rules and regulations of the Illinois Pollution Control Board concerning the storage and disposal of hazardous wastes and that the presence of the wastes constituted a public nuisance. In particular, the complaint alleged, among other things, that Dickey-Grabler was the parent corporation of Parsons and that all of the actions cited in the complaint which Parsons conducted were controlled by Dickey-Grabler. The State also filed a motion for a preliminary injunction. Dickey-Grabler was served with the summons and complaint in Ohio.

On August 27, 1982, Parsons filed a voluntary petition for bankruptcy. On September 15, 1982, Dickey-Grabler entered a special and limited appearance for the sole purpose of objecting to the jurisdiction of the court over its person, pursuant to section 2-301 of the Code of Civil Procedure (Ill.Rev.Stat.1981, ch. 110, par. 2-301). Subsequently, on October 8 of the same year, Dickey-Grabler filed a motion to quash service of summons on it and to dismiss the complaint for want of in personam jurisdiction. An affidavit of James Wilson, executive vice-president of Dickey-Grabler and chairman of the board of Parsons, accompanied the motion.

The record also reflects that the parties took the discovery deposition of Walter Schubert, the immediate past president of Parsons, on September 21, 1982. In addition, on November 1, 1982, James Wilson, on behalf of Dickey-Grabler, answered a set of interrogatories which the State had propounded to the company.

After hearing the arguments of the parties, the trial court granted Dickey-Grabler's motion to quash the service of summons and to dismiss the complaint for want of personal jurisdiction. On January 24, 1983, the court below made the requisite finding, under Supreme Court Rule 304(a) ( 87 Ill.2d R. 304(a)) that there was no just reason for delaying an appeal of its order quashing service of summons and dismissing the complaint. The State filed a timely notice of appeal on February 9, 1983.

The following uncontroverted facts relevant to this appeal emerged from the affidavit of James Wilson, the discovery deposition of Walter Schubert, Dickey-Grabler's answers to the State's interrogatories, and, to a much lesser extent, from the parties' pleadings.

Parsons is an Illinois corporation, located in Belvidere, that has been engaged in the business of electroplating and selling casket hardware. As a result of its business operations over the years, Parsons generated wastes which were stored on its property. On December 28, 1979, Dickey-Grabler acquired a 66.9% interest in Parsons. Early the following year, Dickey-Grabler purchased additional shares of stock in Parsons, bringing Dickey-Grabler's total ownership interest to 80.5%.

Dickey-Grabler is a small, privately-held Ohio corporation whose only plant is located in Cleveland. It is primarily a manufacturer of steel stampings for the automobile industry. The corporation does not own any real estate in Illinois; has no phones or phone listings in Illinois; does not advertise in any Illinois newspaper, magazine, or electronic media; has no offices, business facilities, or registered agent in Illinois; does not employ any sales representatives or other individuals in Illinois; has no bank accounts in Illinois; and, does not pay Illinois taxes.

Prior to the time Dickey-Grabler acquired a controlling interest in Parsons, both companies did electroplating work and manufactured casket hardware. In effect, they were competitors. After securing a majority ownership interest in Parsons, Dickey-Grabler discontinued its own electroplating business and transferred that operation, including its accounts, to Parsons between April and June 1980. The electroplating work had accounted for less than 5% of Dickey-Grabler's business. In addition to sending electroplating paraphernalia to Parsons, Dickey-Grabler sent to Parsons, during that same time frame, 34 55-gallon metal drums with liners. While all of the barrels may not have contained a solution, the majority of the drums sent to Parsons which contained a solution were filled with usable chemical products. However, seven of the drums contained residual plating sludge, a waste product generated by Dickey-Grabler's electroplating operation. The wastes were sent to Parsons "for proper disposal." According to Mr. Schubert's deposition, if normal practices were followed, and he had no reason to believe that they were not, it was more than likely that the seven drums of sludge were disposed of some time ago. Schubert related that a past president of Parsons had told Parsons' attorney that he (the past president) processed the sludge and disposed of it by the normal methods. It was Schubert's understanding that Parsons neither requested nor paid for the items which Dickey-Grabler sent between April and June 1980.

After Dickey-Grabler purchased a controlling interest in Parsons, Parsons purchased steel stampings from Dickey-Grabler; Dickey-Grabler sold Parsons $90,000 to $100,000 worth of parts per year, for which Parsons paid $25,000. Parsons used the component parts which it purchased from Dickey-Grabler in the assembly of the caskets that Parsons sold. Overall, Parsons annually purchased from 13% to 20% of its total amount of parts from Dickey-Grabler. Parsons purchased parts from Dickey-Grabler in the same manner that it bought them from other vendors, by the use of a purchase order or, alternatively, by telephoning the order and following it up with a purchase order. Parsons mailed the purchase orders to Dickey-Grabler in Cleveland, and Dickey-Grabler mailed invoices back to Parsons. All orders which Parsons sent to Ohio were filled in that State, and the goods were shipped to Parsons by an independent carrier. In addition to the parts it sold Parsons, Dickey-Grabler had sales in 1980, 1981, and 1982 to corporations in Illinois (other than Parsons) that represented approximately 0.01% of Dickey-Grabler's total annual sales.

Subsequent to Dickey-Grabler's acquisition of a majority interest in Parsons, James Wilson, the executive vice-president of Dickey-Grabler, became chairman of the Board of Directors of Parsons, while William Primrose III, also an employee of Dickey-Grabler, became treasurer of Parsons. In addition, several employees of Dickey-Grabler either were transferred to Parsons or secured work with Parsons during the time in question. Also, in the middle of 1980 Dickey-Grabler loaned Parsons $100,000; Parsons had made no payments on that loan at the time it filed for bankruptcy but listed the loan as a liability on its financial statement. After Dickey-Grabler owned a controlling interest in Parsons, Parsons began using two banks in Cleveland, Ohio; Dickey-Grabler also had accounts at the same banks.

Walter Schubert and the department heads of Parsons conducted the company's daily operations and made the day-to-day decisions affecting marketing, policy making, and production scheduling. According to Schubert, Dickey-Grabler did not influence those decisions. When Schubert met with Jim Wilson on a monthly basis to discuss routine business matters involving Parsons, Wilson acted in his capacity as chairman of the Board of Directors of Parsons. Parsons maintained its own books, prepared its own payroll, and kept its own accounts. However, Parsons sent its monthly financial statements to Ohio for review by Jim Wilson and Bill Primrose. Parsons also paid its own employees and set their salaries and bonuses. Mr. Schubert exercised the authority to hire and discharge employees without prior consultation with Dickey-Grabler. In Schubert's mind, Dickey-Grabler did not have the authority to direct Parsons' business methods.

Between April and June 1982, Schubert and Wilson held discussions to determine whether Parsons would file for bankruptcy. They did not discuss specifically the disposal of the wastes which Dickey-Grabler had sent Parsons in 1980, and no one at Dickey-Grabler requested records of wastes stored at Parsons....