Shellenberger v. Tanner

• Citation: 138 Ga.App. 399,227 S.E.2d 266
• Decision Date: 05 April 1976
• Docket Number: No. 3,3
• Parties: C.G. SHELLENBERGER v. Howard TANNER et al. Arthur MODESTO v. Howard TANNER et al. REBEL AVIATION, INC. v. Howard TANNER et al. H. D. POWER v. Howard TANNER et al. Nos, 51911, 51912, 51914 and 51915
• Court: United States Court of Appeals (Georgia)

Page 266

227 S.E.2d 266

138 Ga.App. 399

C.G. SHELLENBERGER v. Howard TANNER et al.

Arthur MODESTO v. Howard TANNER et al.

REBEL AVIATION, INC. v. Howard TANNER et al.

H. D. POWER v. Howard TANNER et al.

Nos, 51911, 51912, 51914 and 51915.

Court of Appeals of Georgia, Division No. 3.

April 5, 1976.

Rehearing Denied April 16, 1976.

Rehearing Denied April 16 and 21 in No. 51914.

Swift, Currie, McGhee & Hiers, Glover McGhee, Atlanta, for C. G. Shellenberger.

Stanford & Dunaway, Richard L. Stanford, Dallas, Tex., for Arthur Modesto.

E. R. Smith, Jr., H. J. Quincey, Douglas, Robert F. Bourk, Oklahoma City, Okl., for Rebel Aviation, Inc. and H. D. Power.

Neely & Player, Edgar A. Neely, III, William F. Welch, Donner, Brown & Rosenbluth, Jerrell P. Rosenbluth, Atlanta, Brandel, Olson, Johnson & Erickson, Richard L. Swedberg, Chicago, Ill., for appellees.

DEEN, Presiding Judge.

1. Development of the Exercise of Jurisdiction Over Nonresident Defendants.

Any analysis of the power of a forum's courts to exercise in personam jurisdiction over a nonresident defendant must begin with the decision of the United States Supreme Court in Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. The court there held that the due process clause of the Fourteenth Amendment is violated when a court renders a personal judgment against a nonresident defendant over whom jurisdiction has not first been obtained; the requisite personal jurisdiction cannot be supplied by service of process outside the territory of the forum or through publication. Jurisdiction over nonresidents was held to be predicable upon either their presence within the forum or upon their waiver of objection to the exercise of jurisdiction by the forum's tribunals. Reduced to its legal essence, the holding in Pennoyer v. Neff was that '. . . The foundation of jurisdiction is physical power . . .' McDonald v. Mabee, 243 U.S. 90, 91, 37 S.Ct. 343, 61 L.Ed. 608. Notwithstanding such language in the cases, it is clear (and the court has itself recognized ¹) that when the traditional notion of in personam jurisdiction met head-to-head with the phenomenon of American industrialization and its consequent 'national' economy, resort was made to judicial sanctioning of 'legal fictions' as the bases for exercising jurisdiction over nonresident corporations. The following theories are examples of such expediencies: (1) 'Consent' to suit ²; (2) 'Presence' in the forum ³; and (3) 'Doing business' in the forum thereby submitting to its jurisdiction. ⁴

It was not until the decision in International Shoe Co. v. Washington, 326 U.S. 310 66 S.Ct. 154, 90 L.Ed. 95, that such 'fictions' were discarded and the impetus toward expansion of the permissible scope of in personam jurisdiction over nonresidents was heralded by a new test: '(D)ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice. " Id. 326 U.S. 316, 66 S.Ct. at 158. In rejecting the prior 'fictions' and in adopting the 'minimum contacts and fair play and substantial justice' rule, the court propounded a more flexible test for delineating the scope of in personam jurisdiction over nonresident defendants-a test to which it has adhered in all subsequent decisions on the issue. Unhappily however, the flexibility gained has too often been at the cost of confusion over application of the International Shoe test to differing factual situations. This confusion has no doubt been the result of a rush by the states to enact 'long arm statutes' so as to facilitate suits by their resident plaintiffs against nonresident defendants. Georgia herself is no stranger to either the 'long arm statute' or the confusion over its interpretation.

A warning has been issued however to the states and their 'long arm' reaction stimulated by International Shoe. In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283, the court cautioned that restrictions on the exercise of personal jurisdiction over nonresident defendants are more than a mere guaranty of immunity from inconvenient or distant litigation; they are rather a consequence of a territorial limitation on the power of the forum state. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the 'minimal contacts' with that state that are the prerequisite to its exercise of jurisdiction over him. And most significantly, the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact between that defendant and the forum itself. The application of the 'minimum contacts' rule will vary with the quality and nature of the defendant's activity but it is essential in each case 'that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws.' Id. 357 U.S. at 253, 78 S.Ct. at 1240.

Having established the framework for a 'minimum contacts' rule, the court was called upon to determine the sufficiency of a single act or transaction by the nonresident in the forum as the basis upon which to predicate in personam jurisdiction. In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, jurisdiction was sustained over a nonresident corporation whose sole 'contact' with the forum was the policy of insurance at issue; it is 'sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State.' Id. 355 U.S. 223, 78 S.Ct. at 201. The McGee decision stands alone as the court's expression on the constitutionality of predicating jurisdiction upon a single act or transaction by the nonresident with or in the forum. This lack of further guidance has resulted in differing interpretations of McGee itself ⁵ but the clear and discernible trend of recent authority is to the effect that a single act by the nonresident in the forum, whether it be a contract or a tort, having its impact within the territory of the forum may satisfy the 'minimum contacts' test. ⁶

From International Shoe's 'skeleton' and the subsequent 'fleshing out' cases can be gleaned three 'rules' by which to judge the power of a forum state to exercise jurisdiction over a nonresident defendant. They are: (1) The nonresident must purposefully avail himself of the privilege of doing some act or consummating some transaction with or in the forum. ⁷ It is not necessary that the defendant or his agent be physically within the forum, for an act or transaction by mail may suffice. ⁸ A single event may be a sufficient basis if its effects within the forum are substantial enough to qualify under Rule 3; (2) The plaintiff must have a legal cause of action against the nonresident, which arises out of, or results from, the activity or activities of the defendant within the forum ⁹; and (3) If (and only if ¹⁰) the requirements of Rules 1 and 2 are established, a 'minimum contact' between the nonresident and the forum exists; the assumption of jurisdiction must be found to be consonant with the due process notions of 'fair play' and 'substantial justice.' ¹¹ In other words, the exercise of jurisdiction based upon the 'minimum contact' must be 'reasonable.' And this test for 'reasonableness' has frequently been analogized to that which is applicable in a forum non conveniens issue. ¹² L. D. Reeder Contractors v. Higgins Industries, Inc., 265 F.2d 768 (footnote 12) 9 Cir.; Kourkene v. American BBR, Inc., 313 F.2d 769, 9 Cir.; Tyee Construction Co. v. Dulien Steel Products, Inc., 62 Wash.2d 106, 381 P.2d 245.

On this analysis it is deduced that in order to subject a nonresident defendant to the forum's jurisdiction, what must be considered is more than a mere determination that through purposeful actions the nonresident defendant has established a 'minimum contact' with the forum and that a cause of action results therefrom. What is required is a 'minimum contact' such that its use as the predicate for establishing in personam jurisdiction does not offend 'traditional notions of fair play and substantial justice.' Several factors enter into this test for 'reasonableness' but since the International Shoe test will vary with the quality and nature of the defendant's activity with or in the forum, no inclusive catalog of 'reasonable' factors is possible. We find however the list compiled by the Supreme Court of North Carolina in Byham v. National Cibo House Corp., 265 N.C. 50, 143 S.E.2d 225 to be illustrative of relevant factors. In the greater number of cases an affirmative answer to the first two 'rules' will perhaps obviate an extensive investigation of the factors relevant to the third; this is true because there usually will exist more 'contacts' between the nonresident and the forum than the isolated activity which gives rise to the resident plaintiff's cause of action. For example, it is 'reasonable' to subject a nonresident to suit in Georgia if, due to some purposeful activity here, he causes a tortious injury to a resident and if in addition he 'regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenues from goods used or consumed or services rendered in this State.' Code Ann. § 24-113.1(c). It is thus perceived that due process, which is the only limitation on jurisdiction, requires less connection between the nonresident and the forum than under the old legal 'fictions' and if jurisdiction would be valid under a stricter test it will unquestionably be valid under the less stringent and more flexible mandate of International Shoe. ¹³ It is rather in those cases wherein the sole 'contact' between the...