Schilling v. Roux Distributing Co.

• Citation: 240 Minn. 71,59 N.W.2d 907
• Decision Date: 24 July 1953
• Docket Number: No. 36018,36018
• Parties: SCHILLING v. ROUX DISTRIBUTING CO., Inc.
• Court: Minnesota Supreme Court

Page 907

59 N.W.2d 907

240 Minn. 71

SCHILLING v. ROUX DISTRIBUTING CO., Inc.

No. 36018.

Supreme Court of Minnesota.

July 24, 1953.

Syllabus by the Court.

1. Where New York corporation employs a district manager having supervision of a group of from seven to ten other employees working in an eight-state territory, including Minnesota, for the purpose of encouraging the sale of defendant's products, under the facts of this case such corporation is engaged in business in this state so as to be amenable to service of process upon it in an action for damages for a breach of warranty arising out of the sale and use of such product.

2. A district manager operating in and out of this state in a designated territory, including Minnesota, under the facts in this case is a proper agent upon whom service of process may be made.

3. Where all parties agreed at trial that the proper interpretation of a book of instructions prepared by defendant involved a question of law to be determined by the court and no request was made for submission of the question to the jury, it is too late after an adverse verdict to raise question of propriety of manner of determination.

4. Evidence examined and Held that court's interpretation of defendant's instructions is sustained by the evidence.

5. In action for breach of warranty in sale of a bottle of hair dye, proof of harmful ingredients of bottle causing the harm is not required.

Linus J. Hammond and Cummins, Cummins, Hammond & Ames, St. Paul, William J. Hayes, New York City, of counsel, for appellant.

Loftsgaarden & Loftsgaarden, St. Paul, for respondent.

KNUTSON, Justice.

Appeal from an order of the district court denying defendant's motion to dismiss the action for lack of jurisdiction and denying defendant's alternative motion for judgment notwithstanding the verdict or for a new trial after a verdict by the jury in favor of plaintiff.

The action originally was commenced against Roux Distributing Co., Inc., Stuart's Beauty Supplies, and Walgreen Company, a corporation. Prior to the submission of the case to the jury it was dismissed as to Stuart's Beauty Supplies and Walgreen Company, so that when we refer to defendant herein we have reference to Roux Distributing Co., Inc., only.

Prior to answering, defendant appeared specially and moved the court to set aside the service upon it on the ground that the court did not thereby acquire jurisdiction. The motion was supported by affidavits and oral testimony was received on the return date. The motion was thereafter denied, and the answer was thereupon interposed. The jurisdictional question was preserved at the opening of the trial by the answer and at the close thereof by motions to dismiss.

In view of the jurisdictional question raised by this appeal, a detailed statement of defendant's activities in this state is necessary to a proper determination of the question.

Roux Distributing Co., Inc., is a New York corporation, having its office in the city of New York, and is engaged in the business of distributing and selling some 23 cosmetic products, including Roux hair dye. It is represented in Minnesota by Joseph B. Schuser, who lives in Minneapolis and who is employed under the terms of a written contract in which he is designated as district manager over a territory comprising eight states, including Minnesota, Wisconsin, upper Michigan, North and South Dakota, Nebraska, part of Iowa, and part of Illinois. Under his supervision he has from seven to ten other employees, one of which is designated as a supervisor and one as a consultant. Schusser is paid a salary, plus a bonus and expenses while away from Minneapolis. His salary at the time of the trial was $400 per month. He was allowed.$9.00 per night while away from Minneapolis and his railroad fare in traveling. He was assigned a 'quota' and was paid a bonus of one percent on the quota assigned and five percent on all net sales above the quota. His quota for 1951 for his territory was $150,000. Net sales for the same year amounted to approximately $203,000. Of this amount, about $85,000 to $90,000, or a little less than 45 percent of the total sales, represented sales in Minnesota.

The duties of Mr. Schusser, as prescribed by the contract, are as follows:

'* * * The District Manager shall interview prospective employees and then submit reports, with frank recommendations and the applications, to Employer. The District Manager shall obtain all necessary receipts from employees for sample cases, records and other property of the Employer. The decision of Employer in all matters relating to employees shall be controlling.

'16. District Manager shall call upon 'retailers' and 'wholesalers' in Employer's products, cooperate with them in sales of merchandise, render service to them, assist in keeping their stock in order, aid Employer in collecting accounts and originate sales by 'wholesalers' to 'retailers'.

'17. District Manager shall cooperate conscientiously with Employer, devote the entire time and attention during the usual business hours of the day, diligently perform assigned duties, promote good-will of 'retailers', 'wholesalers' and all handlers of Employer's products and encourage and promote display of Employer's products and encourage the increase of sales by 'wholesalers', so as to result in increased purchases by said 'wholesalers' from the Employer and to do nothing to damage the good-will and standing of Employer as to the said products in the said territory or anywhere.'

Defendant sells its products to wholesalers and jobbers, who in turn supply the retail outlets. Goods are ordered by the wholesalers and jobbers directly from the New York office on order blanks furnished by defendant. They are shipped f.o.b. New York directly to the dealers.

Schusser and his staff call on retail dealers and wholesalers or jobbers to encourage the use of defendant's products. They occasionally take orders. When orders are taken from a retail dealer they are turned over to the wholesaler or jobber, who fills the order from stock on hand. When orders are taken from a wholesaler or jobber they are sent to the New York office and filled by sending the product directly to the dealer. All financial transactions are handled by the New York office. Schusser calls on slow accounts and tries to encourage them to make payment but does no collecting himself. When there are complaints, he gathers the facts and sends them to New York. He does not adjust such complaints but receives reports from the home office as to the disposition made of them.

The district manager and other employees attend conventions and clinics conducted by the trade. At conventions, defendant maintains a booth displaying its products, and its representatives put on demonstrations showing the proper use of its products. The purpose of such activities is to increase the sale of its products. Schusser and the crew under him arrange displays in drugstore windows advertising defendant's products, and other advertising is also taken care of by them. In Schusser's contract of employment we find the following with respect to advertising:

'13. Employer may approve advertising to be run by certain retail advertising accounts within said territory, with the payment of said advertising to be made by Employer in cash or in merchandise shipped to such advertising accounts, but no bonus will be allowed or paid to District Manager under any circumstances on such shipments. It is mutually understood that such transactions constitute General business expenses of Employer, made for the purpose of increasing the sale, use and popularity of Employer's products within said territory.' (Italics supplied.)

Prior to his employment by defendant Schusser received training by defendant in New York. He moved to Minneapolis and established his home here when he became district manager for defendant. As part of his contract of employment Schusser entered into the following agreement:

'25. The District Manager agrees that at no time after ceasing to be in the employ of the Employer herein, shall the District Manager represent or advertise himself or herself, as the case may be, In business as formerly with Roux Distributing Co., Inc. or in any similar manner.' (Italics supplied.)

The contract also provides that in case the district manager discontinues his employment for any reason whatsoever he--

'will not, within the period of twelve (12) months from the date of the termination of such employment, engage as principal, agent or employee in any business competing or capable of competing with that of the Employer, nor act as agent, demonstrator, instructor, sales person, representative or otherwise for any person, firm or corporation, which manufactures, sells, develops, distributes or deals in hair colorings or any other products capable of competing with those products sold by Roux Distributing Co., Inc. in any territory or area in which District Manager had been engaged in behalf of Employer within a period of twelve (12) months prior to the termination of this employment;'

Defendant maintains no office in Minnesota. It has no telephone listing, but in 1950 it arranged for a telephone message service. Representatives of defendant would leave a card with a cosmetic dealer or beauty parlor stating that, by calling a designated telephone number on the card, messages could be given to telephone answering exchange and that defendant's representatives would telephone for such messages from time to time and thereafter contact the caller.

Schusser was required to make regular reports to the New York office. His itinerary for stated periods was likewise reported. While the actual hiring of employees working under Schusser was done by the New York office, it was Schusser's responsibility to keep the staff up to the required number. If an employee resigned, Schusser would contact someone else. He would sometimes advertise in the...