State ex rel. White Lumber Sales, Inc. v. Sulmonetti

• Decision Date: 10 May 1968
• Citation: 252 Or. 121,448 P.2d 571
• Parties: STATE of Oregon, ex rel. WHITE LUMBER SALES, INC., Plaintiff, v. Alfred T. SULMONETTI, as Judge of the Circuit Court of the State of Oregon for the County of Multnomah, Defendant. . Argued and Submitted on Defendant's Demurrer to Alternative Writ
• Court: Oregon Supreme Court

Page 571

448 P.2d 571

252 Or. 121

STATE of Oregon, ex rel. WHITE LUMBER SALES, INC., Plaintiff, v. Alfred T. SULMONETTI, as Judge of the Circuit Court of the

State of Oregon for the County of Multnomah, Defendant.

Supreme Court of Oregon, In Banc.

Argued and Submitted on Defendant's Demurrer to Alternative

Writ May 10, 1968.

Decided Dec. 18, 1968.

William B. Crow, Portland, argued the cause for plaintiff. On the brief were Fredric A. Yerke, Jr., Jean P. Lowman, and King, Miller, Anderson, Nash & Yerke, Portland.

Denton G. Burdick, Jr., Portland, argued the cause for defendant. On the briefs were Hutchinson, Schwab & Burdick, Portland.

Before McALLISTER, P.J., and SLOAN, O'CONNELL, GOODWIN, DENECKE, HOLMAN and RODMAN, JJ.

GOODWIN, Justice.

White Lumber Sales, Inc., a Florida corporation, brings an original proceeding in mandamus to compel the trial court to quash the return of service made pursuant to ORS 14.035(1)(a) ¹ in an action by an unpaid seller of plywood. Briefs and argument were addressed to the demurrer to an alternative writ heretofore issued by this court.

The sole question is whether the relator, herein referred to as White, constitutionally can be said to have transacted business within this state so as to bring itself within the long-arm jurisdiction of our courts in the action pending below.

The facts of the case at bar, insofar as they are material to the jurisdictional question, are as follows: Continental Forest Products, Inc., an Oregon corporation engaging in the wholesale lumber and plywood business, has its offices and principal place of business in Lake Oswego, Oregon. White is a lumber and plywood wholesaler with offices and principal place of business in Fort Lauderdale, Florida. White had purchased plywood from Continental in the past, and by telephone requested a quotation on an order of twenty cars of plywood to be manufactured to specifications furnished by White. After consulting its suppliers, Continental quoted White prices and terms for delivery to a site in Gainesville, Georgia. Continental thereafter received a telephoned purchase order from White and instructed a mill in Grants Pass to begin work toward filling the order. In due course of mail, the telephoned order was confirmed in writing. The first three cars of plywood were shipped pursuant to the purchase orders.

After receiving and paying for one car of plywood, White notified Continental of a complaint with reference to the conformity of the plywood to the order. A dispute between buyer and seller over the suitability of the plywood eventually resulted in an action being filed for the purchase price together with damages for the losses incurred in manufacturing plywood not shipped, and further damages for the alleged breach of the contract to buy the remainder of the twenty carloads.

Commendable advocacy on both sides has been expended in an attempt to define the place where and the time when title passed, who paid the freight, who had the risk of loss, and which end of the transcontinental telephone conversation marked the point where the contract was made. While these and similar inquiries may be relevant in solving certain problems in the substantive law of sales, we do not believe such definitions to be determinative of the question involved in this case.

Here, the state's jurisdiction to try a case has been challenged on grounds of fairness and justice. The meaningful inquiry, therefore, is whether a foreign purchaser has produced effects in the forum state of such significance that it is not manifestly unfair to require him to resolve a resulting legal dispute in this state.

We have already settled the question of legislative intent. In State ex rel. Western Seed Production Corp. v. Campbell, Or., 442 P.2d 215 (1968), we held that the Legislative Assembly intended the long-arm statute to reach to the outer limits of federal constitutional due process.

When jurisdiction over an out-of-state defendant is challenged, the due-process question is whether the alleged facts are such that the forum may exercise jurisdiction without offending traditional notions of fair play and substantial justice. Internat. Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). If we can answer that question in favor of jurisdiction, there is no constitutional impediment to holding that the alleged facts constitute, within the meaning of ORS 14.035(1)(a), the transaction of business within this state.

The pending litigation clearly lies in the wake of the order which White placed with Continental. Whether or not 'title passed,' the telephone order produced substantial business consequences in Oregon. Written confirmation merely reinforced the order. Physical presence within the forum state is not necessary to the existence of a tort within the state. State ex rel. Western Seed Production Corp. v. Campbell, supra; Pegler v. Sullivan,6 Ariz.App. 338, 432 P.2d 593 (1967). On the score of physical presence there is no substantial reason for distinguishing business transactions from personal injuries. Koplin v. Thomas, Haab and Botts, 73 Ill.App.2d 242, 253--255, 219 N.E.2d 646, 651--652 (1966).

The difficulty in applying subjective standards like fair play and substantial justice has not kept courts from attacking the due-process problem. The pattern that seems to be developing allows statutes similar to ORS 14.035 to confer jurisdiction. See Buckley v. New York Post Corporation, 373 F.2d 175 (2d Cir. 1967). While the Buckley case involved tort (libel) rather than contract, and the long-arm statute of Connecticut differs in some respects from our own, Judge Friendly's analysis of the due-process issue seems persuasive:

'* * * Once we free our minds from traditional thinking that the plaintiff must inevitably seek out the defendant, such a doctrine would not seem to violate basic notions of fair play; any view that it does must rest on an inarticulate premise, which a legislature is free to question, that plaintiffs are much more given to making unjust claims than defendants are to not paying just ones. Indeed, when the operative facts have occurred where the plaintiff sues, the convenience of both parties would often be served by a trial there, and the chief benefit to the defendant of a rule requiring the plaintiff to seek him out is the impediment this creates to the bringing of any suit at all * * * (citation omitted). Unfairness inconsistent with notions of fair play occurs only when a defendant is 'compelled to defend himself in a court of a State with which he has no relevant connection.' D. Currie, * * * (The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois, 1963 U.Ill.L.F. 533) at 534 * * *.' 373 F.2d at 181.

To like effect, this court held, prior to the enactment of the long-arm statute, that where a nonresident corporation without office or permanent agents in the state nonetheless had sufficient contacts within the state that it should, in fairness, respond to the summons of our courts, due process was not offended when we required it to respond. Enco, Inc. v. F. C. Russell Co., 210 Or. 324, 311 P.2d 737 (1957).

In the case at bar, both parties are lumber merchants engaged in interstate commerce. Both parties used conventional and well-understood methods of communicating offers and acceptances. On the strength of a telephoned offer and acceptance, mills in Oregon were told to fabricate a special order of plywood, railroad cars were ordered, crews were assembled in Oregon to load the cars and in Georgia to unload them.

It is clear that the placing of the telephoned order had effects, or 'significant contacts,' in Oregon. In McGee v. International Life Ins. Co., 335 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), In personam jurisdiction did not offend due process when a California beneficiary sued in his own state to enforce a mail-order contract made by a Texas insurance company. In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), however, it was held that the interest of the local plaintiff would be insufficient to justify a state in asserting jurisdiction beyond its borders. The court held that the defendant must purposefully avail himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.

From the McGee and Hanson cases, three criteria can be said to define the present outer limits of In personam jurisdiction based on a single act: First, the defendant must purposefully avail himself of the privilege of acting in the forum state or of causing important consequences in that state. Second, the cause of action must arise from the consequences in the forum state of the defendant's activities. Finally, the activities of the defendant or the consequences of those activities must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable. Southern Machine Co. v. Mohasco, 401 F.2d 374 (6th Cir. 1968).

Obviously, the convenience of both parties could not be equally served by giving each a wholly free choice of the forum in which to conduct litigation of the type involved here. On the other hand, a defendant has no greater claim to preferred treatment than has a plaintiff. So long as the defendant is not compelled to defend himself in a distant state with which he has had no relevant connection, he cannot be said to have been denied either fair treatment or substantial justice. We are entitled to assume that buyers are as likely to receive justice in the courts of the states in which they choose to do business as in the courts of the states in which they choose to maintain their principal offices.

Accordingly, the demurrer to the alternative writ is sustained and the writ is dismissed.

HOLMAN, Justice (concurring).

One who regularly engages in interstate business subjects himself to the possible...