Scranton Grain Co. v. Lubbock Mach. & Supply Co.

• Citation: 167 N.W.2d 748
• Decision Date: 10 April 1969
• Docket Number: No. 8518,8518
• Court: North Dakota Supreme Court
• Parties: SCRANTON GRAIN COMPANY, a Corporation, Plaintiff and Appellant, v. LUBBOCK MACHINE & SUPPLY COMPANY, a Corporation; Lubbock Manufacturing Company, Inc., a Corporation; and Fargo Foundry Steel & Manufacturing Co., a Corporation; Defendants, and Roper Hydraulics, Inc., a Corporation, Defendant and Respondent. ROPER INDUSTRIES, INC., a Corporation, Defendant, Respondent, and Cross-Respondent, v. LUBBOCK MACHINE & SUPPLY COMPANY, a Corporation, Defendant and Third-Party Plaintiff, v. L. P. GAS TRANSPORT CO.; and Carl J. Austad & Son, a Corporation; Third-Party Defendants, and Scranton Equity Exchange, a Cooperative Association, Third-Party Defendant and Cross-Appellant. Civ.

Page 748

167 N.W.2d 748

SCRANTON GRAIN COMPANY, a Corporation, Plaintiff and Appellant, v. LUBBOCK MACHINE & SUPPLY COMPANY, a Corporation; Lubbock

Manufacturing Company, Inc., a Corporation; and

Fargo Foundry Steel & Manufacturing Co.,

a Corporation; Defendants,

and

Roper Hydraulics, Inc., a Corporation, Defendant and Respondent.

ROPER INDUSTRIES, INC., a Corporation, Defendant, Respondent, and Cross-Respondent, v. LUBBOCK MACHINE & SUPPLY COMPANY, a Corporation, Defendant and Third-Party Plaintiff, v. L. P. GAS TRANSPORT CO.; and Carl J. Austad & Son, a

Corporation; Third-Party Defendants,

and

Scranton Equity Exchange, a Cooperative Association,

Third-Party Defendant and Cross-Appellant.

Civ. No. 8518.

Supreme Court of North Dakota.

April 10, 1969.

Rehearing Denied May 27, 1969.

Syllabus by the Court

1. There is no definite rule by which it can be determined whether a foreign corporation is doing business in this State so as to be subject to service of process in North Dakota, and each case must be decided upon its own facts. It is generally held that a nonresident corporation must have certain minimum contacts within the territory of the forum, which must be of such character that maintenance of a suit against such foreign corporation does not offend traditional ideas of fair play and justice.

2. Where a foreign corporation conducts no activity in the State of North Dakota except to ship its pumps into the State on receipt of orders from an independent dealer in North Dakota, and where such orders must be approved by the foreign corporation at its office in Illinois, the shipping of such pumps into North Dakota does not constitute doing business in this State.

3. Solicitation of business in this State by an independent dealer for sale of pumps manufactured by a foreign corporation does not constitute doing business in North Dakota where such foreign corporation conducted no activity in this State except to ship its pumps into the State on orders sent to it by such independent dealer, which orders were required to be approved by the foreign corporation in Illinois. The fact that such foreign corporation had a sales representative call on the independent dealer three of four times each year does not change this fact, where the foreign corporation has no control or authority over such independent dealer.

4. For reasons stated in this opinion, the order of the trial court quashing service of process on defendants Roper is hereby affirmed.

Mackoff, Kellogg, Kirby & Kloster, Dickinson, and Heineke, Conklin & Schrader, Chicago, Ill., for plaintiff and appellant.

Zuger, Zuger & Bucklin, Bismarck, for defendant and respondent Roper Hydraulics, Inc., and for Roper Industries, Inc.

Frederick E. Saefke, Jr., Bismarck, for third-party defendant and cross-appellant Scranton Equity Exchange.

Fleck, Smith, Mather, Strutz, Mayer & Stewart, Bismarck, for Lubbock Machine & Supply Co. and for Lubbock Mfg. Co., Inc.

Nilles, Oehlert, Hansen, Selbo & Magill, Fargo, for Fargo Foundry Steel & Mfg. Co. (not involved in appeal).

Pearce, Engebretson, Anderson & Schmidt, Bismarck, for L. P. Gas Transport Co. and for Carl J. Austad & Son (not involved in appeal).

STRUTZ, Judge.

This action was commenced by the plaintiff for damages which it claims to have suffered because of the explosion of a transport truck belonging to the defendant Carl J. Austad & Son (Austad), which truck was delivering propane gas to the defendant Scranton Equity Exchange. The plaintiff alleges that such explosion was due in part to a defective fuel pump on the gas transport truck. The fuel pump in question had been sold to Austad by Fargo Foundry, an independent business concern located in Fargo, North Dakota. It had been manufactured by the defendants Roper Hydraulics, Inc., and Roper Industries, Inc. (Roper), and sold by them to Fargo Foundry, such sale being made in the State of Illinois. Fargo Foundry in turn sold it new to the defendant Austad. It is conceded that neither Roper Hydraulics nor Roper Industries has been admitted to do business in the State of North Dakota.

Roper maintained a sales manager for an area which included the States of Minnesota, North Dakota, South Dakota, and Montana. This sales manager lived in Minneapolis, Minnesota. Under the provisions of his written contract with Roper, he was required to use his best efforts to promote the sale of Roper products in the area assigned to him. He further was required to appoint, train, and develop distributors in his territory. He was not to promote the sale of pump products which are competitive to Roper products, and he was required, at the time of the execution of the contract, to notify Roper of any lines of products he was selling and, under the terms of the agreement, he was to keep Roper informed of any change in the sales representations which he maintained for such other products.

Such sales manager was required to maintain an office in the territory to be served by him, which office was located in Minneapolis. The management and operation of such sales office was entirely the responsibility of the sales manager, and Roper was not to be liable for any expenses incurred in the operation of such office, the contract specifically providing:

'* * * it being understood that the District Sales Manager is carrying out this agreement as an independent operation and not as a branch office of Roper; * * *'

The contract also provided:

'(1) All sales of Roper pump products made by you shall be on orders taken in the name of Roper. Final acceptance of said orders shall be on the approval of Roper at its main office at Rockford, Illinois, and Roper reserves the right to refuse to accept orders because of credit rating or for other valid reasons.'

The sales manager, who maintained his residence in Minneapolis, called on the defendant Fargo Foundry three or four times each year, including the year 1960 when the pump in question was sold to Fargo Foundry, and the year 1961 when the explosion in question occurred. During such visits, the sales manager would solicit and take orders for pumps manufactured by Roper. These orders thereafter were sent to Roper in Illinois to be approved and filled. The sales manager also supplied Fargo Foundry with advertising material for Roper pumps.

One of the pumps sold to Fargo Foundry thereafter was sold as a new pump by Fargo Foundry to the defendant Austad and was involved, in June of 1961, in the explosion out of which this action arose. The explosion occurred while Austad was unloading propane gas on the premises of the defendant Scranton Equity Exchange. The explosion damaged the plaintiff's elevators and contents in the alleged amount of $375,000.

Service of process was made upon the defendants Roper as foreign corporations, by mailing a copy of the summons and complaint to Roper Industries, Inc., 340 Blackhawk Park Avenue, Rockford, Illinois, and to Roper Hydraulics, Inc., 340 Blackhawk Park Avenue, Rockford, Illinois, postage paid, certified mail, return receipt requested.

This service, it is asserted, gave the court jurisdiction over the defendants Roper under that portion of Section 10--22--10, North Dakota Century Code, which reads:

'Whenever a claim shall arise out of business transacted in this state by a foreign corporation transacting business without a certificate of authority, service of process may be made * * * by mailing a copy thereof to the defendant corporation by registered or certified mail at its last known post office address.'

The defendants thereupon made a Rule 12 motion to dismiss the complaint and to quash the service of summons, on the ground and for the reason that the court lacked jurisdiction over the defendants and that service of process was insufficient to give the court jurisdiction over them. The trial court, the Honorable Clifford Jansonius presiding, after hearing granted the motion and dismissed the action as to the defendants Roper Hydraulics, Inc., and Roper Industries, Inc. Since the court had not acquired jurisdiction over the defendants Roper, it also dismissed the cross-complaint which had been served upon the defendants Roper by the defendant Scranton Equity Exchange.

From the order dismissing the action and quashing the service of summons, the plaintiff and the cross-appellant, Scranton Equity Exchange, have taken this appeal, demanding trial de novo.

Lubbock Machine & Supply Company and Lubbock Manufacturing Company, Inc., hereinafter referred to as 'Lubbock,' also are foreign corporations, and are joined as defendants in this action. They sold the transport truck which was involved in this action and on which the pump manufactured and sold by Roper was installed at the time of the explosion. Lubbock appeared specially for the purpose of objecting to the jurisdiction of the court over the said corporations, which jurisdiction was attempted to be secured in the same manner as that attempted over the defendants Roper. The motion to quash made by Lubbock came on for hearing before the Honorable W. C. Lynch, judge of the Fourth Judicial District, who denied such motion. The defendants Lubbock, deeming the order denying their motion to quash service of process not a final order, and therefore not appealable, have served and filed their answers. Whether valid service of process has been made on Lubbock must be determined by applying rules laid down in this and other decisions of this court to the...