Rosenblum v. Judson Engineering Corp.

• Decision Date: 30 November 1954
• Citation: 99 N.H. 267,109 A.2d 558
• Parties: Lester A. ROSENBLUM v. JUDSON ENGINEERING CORP. et al.
• Court: New Hampshire Supreme Court

Page 558

109 A.2d 558

99 N.H. 267

Lester A. ROSENBLUM v. JUDSON ENGINEERING CORP. et al.

Supreme Court of New Hampshire.

Argued Oct. 6, 1954.

Decided Nov. 30, 1954.

Upton, Sanders & Upton, John H. Sanders, Concord, for plaintiff.

Sullivan & Gregg, S. Robert Winer, Nashua, for defendants.

GOODNOW, Justice.

The motion of the defendant Glenn for dismissal of the action as to him should have been granted. The claim against him is that as one of the four partners in Rockmill Manufacturing Company he participated with the other three defendants in certain activities of the partnership which he knew were in violation of the duties owed to Judson Engineering Corporation by those three as officers and directors of that corporation. None of the defendants are residents of this state but the partnership has systematically and continuously engaged in business here. The other three defendants were personally served with process in this state but personal service was made upon Glenn in the commonwealth of Pennsylvania. No property of Glenn or of the partnership is under attachment.

In this state, a partnership is 'a relation or status between individuals.' Sulloway v. Rolfe, 94 N.H. 85, 87, 47 A.2d 109, 110. Where it has not more than four members, it is not itself subject to suit in the firm name, R.L. c. 387, § 14, but the action must be brought against the partners individually, Restatement, Conflict of Laws, § 86, comment a; see Kaffenberger v. Kremer, D.C., 63 F.Supp. 924, and they must be served individually, Matson v. Mackubin, 61 App.D.C. 102, 57 F.2d 941, except when otherwise specifically authorized, supra, § 14. Service upon a nonresident individual must be made in hand within this state in order to subject him to jurisdiction here, except in certain situations not applicable in this case. R.L. c. 387, §§ 4-6.

A state may by appropriate legislation constitutionally require that a nonresident individual doing business in the state be subjected to its jurisdiction by some method of service other than by service in hand within the state, as to causes of action arising out of the business done there. Restatement, Judgments, § 22; Doherty & Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L.Ed. 1097; Interchemical Corp. v. Mirabelli, 269 App.Div. 224, 54 N.Y.S.2d 522. This power has not been exercised by our Legislature. Section 8 of R.L. c. 387, relied on by the plaintiff, provides that the court may order 'such notice * * * as the case requires' when the defendant is a nonresident 'and no mode of serving the writ is prescribed, or service thereof cannot be made in the mode prescribed.' This statute was adopted in 1852 and contains no reference to jurisdictional matters such as acts or contacts of the defendant in this state. See R.L. c. 116, §§ 42-45; Poti v. New England Road Machinery Co., 83 N.H. 232, 140 A. 587. Cf. Martin v. Bryant, 108 Me. 253, 80 A. 702. It was not intended to express a legislative policy that nonresidents electing to engage in business in this state must be prepared to be subjected to substituted service in any action brought here to which the business in this state gives rise.

Decisions concerning substituted service on nonresident or foreign corporations doing business in a state, LaBonte v. American Mercury Magazine, Inc., 98 N.H. 163, 166, 96 A.2d 200; Taylor v. Klenzade Products, Inc., 97 N.H. 517, 92 A.2d 910; Morris & Co. v. Skandinavia Insurance Co., 7 Cir., 81 F.2d 346, as to which the state has enacted legislation designed to subject them to its jurisdiction are not applicable here. Decisions from other jurisdictions in which the doing of business within the state by a partnership has been deemed sufficient to confer jurisdiction upon the courts of that state turn upon local statutes which differ from those of this state. See Melvin Pine & Co., Inc. v. McConnell, 273 App.Div. 218, 76 N.Y.S.2d 279, 10 A.L.R.2d 194; Kaffenberger v. Kremer, supra; Annotation 10 A.L.R.2d 200.

In the Superior Court, the defendant Glenn reserved his rights under his special appearance and did not participate in the hearings on the motion for discovery. Without objection on the part of the plaintiff, his exception to the denial of his motion for dismissal was transferred to this court together with the exception of the other three defendants to the granting of the plaintiff's motion for discovery. The four defendants are each represented by the same counsel. One brief was filed in this court for the defendants in which the two exceptions were separately argued. This method of procedure did not result in Glenn 'arguing the exception to the order requiring the production of certain documents' as claimed by the plaintiff. By his conduct in this court, Glenn has submitted no other question than the sufficiency of the service upon him and has not thereby yielded to the general jurisdiction of our courts. Lyford v. Trustees of Berwick Academy, 97 N.H. 167, 168, 83 A.2d 302, 31 A.L.R.2d 258.

So far as the defendants La.Penta, Dennison and Miller are concerned, the plaintiff's motion for discovery was submitted to the Trial Court for determination 'on the pleadings', a procedure which was agreed to by the parties and as to which they cannot now object. Kusky v. Laderbush, 96 N.H. 286, 74 A.2d 546, 21 A.L.R.2d 536. No findings were made but it is presumed that in ordering the production of the documents and records sought by the motion all special findings necessary to justify it were made by the Court. LaMarre v. LaMarre, 84 N.H. 553, 147 A. 747.

The defendants' contention that the order can be justified only if the Court found as a preliminary matter that the defendants violated their duties as officers and directors of Judson by participating in the partnership known as Rockmill Manufacturing Company and that Rockmill was impressed with a trust in favor of Judson cannot be supported. Whether Rockmill is or is not a 'private person to whom [the plaintiff] bore no relationship' is not a material question in the determination of the plaintiff's right to examine the documents and records of the partnership. Therrien v. Public Service Co. of N. H., 99 N.H. 197, 108 A.2d 48. That right depends upon whether such an examination is material to the proper preparation of the plaintiff's case and whether justice requires it. Lincoln v. Langley, 99 N.H. 158, 106 A.2d 383; Lefebvre v. Somersworth Shoe Co., 93 N.H. 354, 356, 41 A.2d 924.

So far as we are concerned here, the plaintiff's case revolves principally around his claim that the defendants as officers and directors of Judson violated the duty owed by them to Judson in that as partners in Rockmill they 'took for themselves * * * a business opportunity or opportunities which ought to have been made available to Judson'. The defendants contend that the order of discovery was improperly made because the plaintiff's pleadings do not contain any allegations upon which the defendants could be so charged. We are of the opinion that they do.

The officers and directors of a corporation 'act in a trust capacity, in so far as shareholders * * * are concerned', Mica Products Co. v. Heath, 81 N.H. 470, 471, 128 A. 805, 806, and have the duty of "reasonably protecting and conserving the interests of the corporation". Beaudette v. Graham, 267 Mass. 7, 9, 165 N.E. 671, 673. They are not precluded from entering into and engaging in other business enterprises but when they do so, they are subject so far as the corporate interest is concerned to the rules which apply generally to persons standing in a fiduciary relation. Whether a business opportunity is one which corporate officers or directors are entitled to treat as their own or one which they are obligated to acquire for...