Process Church of Final Judgment v. Sanders, 71 C 2490.

• Decision Date: 07 March 1972
• Docket Number: No. 71 C 2490.,71 C 2490.
• Citation: 338 F. Supp. 1396
• Court: U.S. District Court — Northern District of Illinois
• Parties: The PROCESS CHURCH OF the FINAL JUDGMENT, Plaintiff, v. Ed SANDERS and E. P. Dutton & Co., Inc., Defendants.

338 F. Supp. 1396

The PROCESS CHURCH OF the FINAL JUDGMENT, Plaintiff, v. Ed SANDERS and E. P. Dutton & Co., Inc., Defendants.

No. 71 C 2490.

United States District Court, N. D. Illinois, E. D.

March 7, 1972.

Richard Orlikoff, Orlikoff, Prins, Flamm & Susman, Chicago, Ill., for plaintiff.

Lee N. Abrams, Mayer, Brown & Platt, Chicago, Ill., for defendants.

MEMORANDUM OPINION

WILL, District Judge.

Plaintiff, a Louisiana not-for-profit corporation, has brought this libel action against Ed Sanders, a resident of New York who is author of a book entitled, "The Family — The Story of Charles Manson's Dune Buggy Attack Battalion," (hereinafter "The Family" or "the book") and Mr. Sanders' publishing house, E. P. Dutton & Co., Inc. (hereinafter "Dutton"), a New York corporation with its principal place of business in New York. Defendants Dutton and Sanders have moved to dismiss this action on the ground that this court lacks personal jurisdiction over them, or, in the alternative, they have moved to transfer this action to the Southern District of New York pursuant to 28 U.S.C. § 1404(a). Inasmuch as we find that we have personal jurisdiction over the defendants and that no valid reasons have been put forth for transfer, both motions of both defendants will be denied.

I. DUTTON

A. MOTION TO DISMISS

Pursuant to Rule 4(d) (7), Fed.R.Civ. P., plaintiff has served Dutton in accordance with the Illinois long arm statute. Ill.Rev.Stat. ch. 110, §§ 16 & 17. It argues that Dutton is amenable to suit in Illinois under the facts of the instant case and that, therefore, this court has jurisdiction over it. Plaintiff makes no claim that Dutton is "doing business" in the traditional sense and would therefore be "present" in the State for jurisdictional purposes; indeed, such an argument is wholly untenable.

Section 17 of chapter 110 of the Illinois Revised Statutes provides in pertinent part:

(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such 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 such acts:

(a) The transaction of any business within this State;

(b) The commission of a tortious act within this State;

* * * * * *

(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this Section.

Plaintiff advances the argument that Dutton is amenable to suit under both §§ 17(1) (a) and (1) (b) — transacting business within the State and committing a tort within the State respectively.

1. Section 17(1) (a). The relevant facts indicate that Dutton is a New York corporation with its principal place of business in New York. It entered into an agreement to publish the allegedly libelous book "The Family" with defendant Sanders in New York. All work performed by Dutton on the book — editing, producing, promoting, and advertising — was performed in New York. Dutton placed the book on sale at major bookstores in New York, and thereafter shipped it to various bookstores throughout the country.

Dutton maintains no office or place of business in Illinois; it has no director, officer, supervisory or professional employee in Illinois; it is not qualified to do business in Illinois; it has no registered agent or person authorized to accept service in the State; it has no telephone listing in Illinois; it has never owned or leased any real property within the State; it has never signed a contract in Illinois, nor made or received any payment here, nor maintained a bank account here. Since September 1, 1971, Dutton has had a resident salesman in Illinois who solicits orders which are not binding until they are accepted by Dutton's New York office.

It is mandatory in order for jurisdiction to be conferred by § 17(1) (a) that the particular cause of action arise from the transaction of the business that purports to give jurisdiction. Section 17(3) makes this point doubly explicit. This cause of action arises from the publishing of the book, "The Family." The only business that Dutton carries on generally in Illinois is the solicitation of orders for books. With respect to the book "The Family," the only business that Dutton transacted was contracting for the sale of this book with various bookstores and book purveyors. Libel, the cause of action in this suit, certainly does not arise from these contractual arrangements between Dutton and these bookstores and book purveyors.

Libel is a tort action. Section 17(1) (a) was designed to give long arm jurisdiction to the State of Illinois in contract situations; alternatively, section 17(1) (b) was designed to give long arm jurisdiction in tort situations. Since the cause of action in this case does not arise from the transaction of business by Dutton, section 17(1) (a) is inapplicable.

Insull v. New York World-Telegram Corp., 273 F.2d 166 (7th Cir. 1959), is directly in point and a controlling precedent on this issue. That case involved a libel suit brought by an Illinois resident against the owners and publishers of the Scripps-Howard newspapers. The Seventh Circuit held that foreign publishing corporations were not transacting business under § 17(1) (a) merely by shipping their publications into the State to subscribers or to independent contractors for resale. This holding applies equally as well to book publishers as to newspaper publishers.

Plaintiff argues that the famous and subsequent case of Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), undercuts the holding of Insull. With respect to the issue of transacting business in the state and § 17(1) (a), Gray has no application. Gray, no doubt a landmark case, deals with the concept of a tort committed within a state, and more specifically, the timing and spacial placement of a tort for purposes of § 17 (1) (b). While Gray overturns the Insull holding with respect to § 17(1) (b), it has no persuasiveness at all with regard to the transaction of business within the state for § 17(1) (a) long arm jurisdiction purposes.

2. Section 17(1) (b). Plaintiff's second ground for Illinois jurisdiction over Dutton is that by distributing "The Family" in Illinois and thereby publishing allegedly libelous material it has committed "a tortious act" within the State and is therefore amenable to suit under § 17(1) (b).

The definitive interpretation of Section 17(1) (b) came in Gray v. American Radiator & Standard Sanitary Corp., supra. In that case, the Illinois Supreme Court held that an Ohio manufacturer which had sold a valve to an assembler in Pennsylvania where it was incorporated in a water heater which was eventually shipped into Illinois where it exploded and injured an Illinois resident was subject to the jurisdiction of the Illinois courts absent any other contact with the state. The court stated that "as a general proposition, if a corporation elects to sell its products for ultimate use in another State, it is not unjust to hold it answerable there for any damage caused by defects in those products." 176 N.E.2d at 766. In the instant case, defendant Dutton has sold its products (books) in Illinois and has allegedly caused damage in this State. By virtue of the logic of Gray, Dutton is amenable to suit in Illinois under § 17(1) (b).

Dutton argues that the 1959 decision of the Seventh Circuit in Insull v. New York World-Telegram Corp., supra, requires dismissal of the instant action. In Insull, a libel action was brought in the Northern District of Illinois against the Scripps-Howard newspapers which had published an article in its papers allegedly libelling the plaintiff. Service was made on the non-resident defendants pursuant to the Illinois long arm statute. The Seventh Circuit held that such service was improper inasmuch as the court lacked jurisdiction over the non-resident defendants since they had not committed a tort in Illinois for purposes of § 17(1) (b). (As previously noted, the court also held that the defendants had not transacted business in Illinois for purposes of § 17(1) (a).) The court reasoned that by virtue of the so-called "single publication rule" as it had been developed at common law in Illinois, "the cause of action for libel is absolutely complete at the time of first publication," 273 F.2d at 171, in cases of multi-state circulation of periodicals. They continued by stating that "subsequent appearances or distributions of the periodicals are of no consequence whatsoever to the creation or existence of the cause of action but are only relevant in computing damages." 273 F.2d at 171.

Since the first actual publication of the article had been in Memphis, Tennessee, where the Memphis Press-Scimitar had been the first of the Scripps-Howard newspapers containing the allegedly libelous article to hit the stands, the court concluded that the tort was complete as of this publication and that as a result the tort had been committed only in Tennessee. Accordingly, the case was dismissed.

The essential issue for this court to determine then is whether Insull continues to represent the law of Illinois in light of subsequent developments. The obvious irreconcilability of the Insull case with the later Gray case has been noted and discussed. Novel v. Garrison, 294 F.Supp. 825 (N.D.Ill.1969); Buckley v. New York Post Corp., 373 F.2d 175 (2d Cir. 1967); Roy v. North American Newspaper Alliance, Inc., 106 N.H. 92, 505 A.2d 844 (1964); D. Currie, "The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois," 1963 U.Ill.L.F. 533. Inasmuch as Insull's limitation of jurisdiction is inconsistent with the holding of Gray to the effect that a State's jurisdiction should attach wherever damage from defendant's products is incurred, it must give way...