Schanno Transp., Inc. v. Smith

• Decision Date: 13 November 1981
• Docket Number: No. 50887.,50887.
• Citation: 312 NW 2d 114
• Parties: SCHANNO TRANSPORTATION, INC., Respondent, v. Cecil SMITH, Appellant.
• Court: Minnesota Supreme Court

312 N.W.2d 114 (1981)

SCHANNO TRANSPORTATION, INC., Respondent, v. Cecil SMITH, Appellant.

No. 50887.

Supreme Court of Minnesota.

November 13, 1981.

Watson, Gilsdorf, Jacobberger & Kelley, St. Paul, for appellant.

Chadwick, Johnson & Bridell, Minneapolis, for respondent.

Considered and decided by the court en banc without oral argument.

OPINION

AMDAHL, Justice.

Defendant Cecil Smith appeals from an order of the district court denying his motion to dismiss for lack of personal jurisdiction. We affirm.

Schanno Transportation, Inc., a Minnesota corporation, brought suit to recover damages for cargo loss it incurred as a result of a hijacking near Chicago, Illinois on July 5, 1977, of a truck owned by defendant and leased to Schanno. Smith was a resident and citizen of the State of Iowa engaged in the trucking business. During 1966 and 1967, the parties entered into a series of contracts whereby Smith leased trucks to, and provided drivers for, Schanno. The leases were negotiated in Spencer, Iowa.

After commencement of the action, the defendant appeared specially to challenge the propriety of this state's exercise of personal jurisdiction over him pursuant to Minn.Stat. § 543.19 (1980).¹

The district court made its determination upon affidavits filed by the parties and a copy of the lease entered into by the parties.

The defendant maintained that none of the routes governed by the leases passed through Minnesota; that the incident that served as a basis for this dispute occurred in Illinois; that the defendant is not alleged to have committed any wrongful acts in Minnesota or outside of the State of Minnesota that resulted in an injury or property damage in Minnesota; and that he personally had no contact with Minnesota because he did no business, owned no property and did not live within the state. He also asserted that he had commenced an action against Schanno in Iowa, which was pending at the time the Minnesota action was commenced, and that the subject matter of this appeal is a compulsory counterclaim there.

The plaintiff argued that the terms of the contract required the defendant to lease a truck licensed in the State of Minnesota to the plaintiff; that the defendant agreed to accept reimbursement for services rendered to the plaintiff on the basis of schedules maintained by the plaintiff at its Minnesota office; and that the contract especially provided that it "shall be interpreted and construed under the laws of the State of Minnesota and all performances hereunder shall be governed by the laws of the State of Minnesota." Plaintiff further alleged that the defendant had had contacts with the State of Minnesota in the furtherance of his business relationship with the plaintiff and that those contacts are evidenced by the fact that all westbound trips that the leased trucks made for the plaintiff were dispatched from either the plaintiff's St. Paul or New Jersey offices; that approximately 30 percent of all of the leased truck trips for the plaintiff were routed through or into the State of Minnesota;² that the defendant received final payment under the leases from the plaintiff by mail from plaintiff's Minnesota office; and that after the loss, the defendant traveled to Minnesota to discuss the loss and further business relationships with the plaintiff.

In denying the defendant's motion to dismiss, the district court found the defendant had contacts with the State of Minnesota in that he leased from³ the plaintiff a truck that was licensed in Minnesota; he entered into a contract with the plaintiff that was governed by the laws of Minnesota; he made trips on business for the plaintiff into and through Minnesota; he received final payment for his trips on behalf of the plaintiff from Minnesota; he permitted his leased trucks and drivers to be dispatched on westbound trips from the plaintiff's Minnesota and New Jersey offices; and he met with the plaintiff in Minnesota to discuss the loss at issue in this case and general business relations between the parties.

The district court concluded that the defendant had transacted business in this state within the meaning of Minn.Stat. § 543.19 (1980), that Minnesota had a substantial interest in providing a forum for the plaintiff in the action and finally, that the defendant had sufficient minimum contacts with the state to meet the constitutional due process requirements of fairness and substantial justice.

The issues are: (1) whether the district court erred in concluding that the requirements of Minn.Stat. § 543.19 (1980) were satisfied so as to allow the exercise of jurisdiction over the nonresident defendant and (2) whether plaintiff's claim is a compulsory counterclaim in Iowa pursuant to Iowa Rule of Civil Procedure 29.

This court has indicated that Minn.Stat. § 543.19 should be interpreted broadly to afford maximum protection to the residents of this state suffering loss or injury by acts of nonresidents and that the trial courts should employ a liberal construction in determining whether a cause of action has arisen from the transaction of business in this state. See Toro Co. v. Ballas Liquidating Co., 572 F.2d 1267 (8th Cir. 1978); B. & J. Mfg. Co. v. Solar Industries, Inc., 483 F.2d 594 (8th Cir. 1973), cert. denied, 415 U.S. 918, 94 S.Ct. 1417, 39 L.Ed.2d 473 (1974); State ex rel. Nelson v. Nelson, 298 Minn. 438, 216 N.W.2d 140 (1974); and Ellwein v. Sun-Rise, Inc., 295 Minn. 109, 203 N.W.2d 403 (1972).

We have held that the primary factors that must be considered in determining whether the exercise of jurisdiction by this state over a nonresident corporation would comport with due process are the quantity of contacts, the nature and quality of the contacts, the source and connection of the cause of action with those contacts, the interest of...