Sun-X Intern. Co. v. Witt, SUN-X

• Decision Date: 07 March 1967
• Docket Number: SUN-X,No. 7797,7797
• Parties: INTERNATIONAL COMPANY, Inc., Appellant, v. Arthur J. B. WITT, Appellee. . Texarkana
• Court: Texas Court of Appeals

Page 761

413 S.W.2d 761

SUN-X INTERNATIONAL COMPANY, Inc., Appellant, v. Arthur J. B. WITT, Appellee.

No. 7797.

Court of Civil Appeals of Texas.

Texarkana.

March 7, 1967.

Rehearing Denied April 4, 1967.

Arthur L. Forbes, Houston, for appellant.

James C. Slaughter, Fulbright, Crooker, Freeman, Bates & Jawortski, Houston, for appellee.

FANNING, Justice.

Plaintiff-appellant, Sun-X International, Inc., a Texas corporation, with its principal offices in Houston, Harris County, Texas, filed suit in a District Court of Harris County, Texas, against defendant-appellee, Arthur J. B. Witt, a resident of California, alleging breach of a certain distributordealer contract. Service of process was effected upon defendant-appellee under Art. 2031b, Vernon's Tex.Rev.Civ.Stat.Ann. Defendant-appellee, pursuant to Rule 120a, Tex.R.Civ.P., filed his special appearance objecting to the trial court's in personam jurisdiction on the ground that he was not amenable to the process issued by the Texas court. The trial court, after hearing the evidence adduced, sustained appellee's special appearance, and dismissed plaintiff-appellant's suit for want of personal jurisdiction over defendant-appellee. Plaintiff-appellant has appealed.

The trial court filed findings of fact and conclusions of law, to-wit:

'FINDINGS OF FACT

'1. Plaintiff, a Texas corporation, sued defendant, an individual who resides in the State of California for actual and exemplary damages for breach of a distributor-dealer contract. Plaintiff does not attempt to recite in such pleadings what the breach consisted of and sues for a lump sum representing actual and exemplary damages. Service was made upon the defendant under Article 2031(b) TRCS and defendant made a special appearance and challenged the jurisdiction of the Court.

2. In August of 1964 the defendant received a solicitation from L . L. Brown, an employee of plaintiff, from a California telephone location, in the interest of getting defendant to accept a dealership relationship with plaintiff, covering its products and in response to such solicitation the defendant signed plaintiff's distributorship-dealer contract of August 24, 1964 in California, such contract, together with Exhibits, being Plaintiff's Exhibits 1, 2 and 3.

3. Such distributor-dealer contract was accepted by Mr. Don R. Manthey in Houston Harris County, Texas, in keeping with the provisions of the contract.

4. The contract authorizes the defendant to serve as dealer within the prescribed limits of California for plaintiff's product, a liquid plastic material applied to plate glass surfaces. The contract further provides for the purchase of delineated materials to the extent of $5,952.00, which sum was deposited with L. L. Brown at the time the distributor-ship-dealer contract was executed.

5. Additionally, the contract provides for the defendant to purchase a certain gallonage of plaintiff's plastic material during each succeeding twelve months period, beginning six months after date of execution and for such gallonage to increase for successive periods. The contract does not provide where payment for such material is to be made or where such material is to be shipped.

6. Plaintiff made shipments in keeping with the terms of the contract from Houston, FOB that point, and on subsequent dates the plaintiff made material shipments, FOB Houston, Texas, to defendant, in response to orders.

7. In keeping with contractual provisions plaintiff printed and published pertinent bulletin service material and mailed them to defendant and correspondence was exchanged between an employee of plaintiff and defendant, advising, among other things, some of the problems and techniques applicable to effect marketing of plaintiff's product.

8. The contract provides that plaintiff will keep defendant informed through a dealer bulletin service and that national advertising shall be made by plaintiff of the product to be distributed by defendant and plaintiff conducted a direct mail campaign from Houston in connection with the marketing of its product in California, such activity being designed to redound to the benefit of plaintiff and defendant through encouragement of product acceptance.

9. All marketable material and advertising and promotional media were dispatched FOB Houston and all activities on the part of defendant in the interest of marketing through dealerships of plaintiff's product occurred in California and the defendant was never resided in Texas, has not been in Texas at any time material to any of the inquiries involved in this litigation, maintains no office or agent in Texas, and has never conducted any business undertaking in Texas incident to plaintiff's business, beyond the extent set forth above.

'CONCLUSIONS OF LAW

'1. Defendant did not purposefully do any act or consummate a transaction in the State of Texas, the acceptance of the contract in Texas, the shipments and mailings from Texas being insufficient to satisfy such requirements and therefore 'minimal contact' was wanting.

2. Plaintiff failed to show by pleading and evidence that plaintiff's cause of action for breach of contract arose out of any act or consummated transaction in the State of Texas, if it be considered that there was such an act.

3. The assumption of jurisdiction by the Court in which this cause pends under the attending facts aforesaid, would offend traditional notions of fair play and substantial justice, after considering the quality, nature and extent of the defendant's activity as same relates to Texas and the relative convenience of the parties, the benefits and protection of the laws of Texas afforded the parties and the basic equities of the situation.

4. Therefore this suit cannot be said to be one to enforce an obligation that arose from a privilege the defendant exercised in Texas.

5. If Section 4, Article 2031(b) is to receive a literal interpretation and therefore a part of the overall contractual obligation is performable in Texas, which is true here, will vest jurisdiction over the defendant, such provision violates the due process clause of the 14th Amendment and is unconstitutional .'

The trial court also filed additional findings of fact and conclusions of law shown below. ¹

Appellant on appeal contends that the trial court erred in failing to specifically find that appellee's activities were of the nature and kind contemplated by Article 2031b, §§ 3 and 4, Texas.Rev.Civ.Stat.Ann. Appellee by his first counterpoint contends that Art. 2031b, Tex.Rev.Civ.Stat.Ann., does not authorize service on the appellee because it was intended to apply only to the fullest permissible reach under the United States Constitution and its application under the facts in this case would violate the due process clause of the 14th Amendment to the U.S. Constitution, and that therefore the trial court did not err in holding that Art. 2031b, was inapplicable to confer in personam jurisdiction over appellee. By his second counterpoint appellee contends that the trial court did not err in holding Art. 2031b, Tex.Rev.Civ.Stat.Ann., unconstitutional when applied to the facts of the case at bar.

For a comprehensive analysis of Art. 2031b, Tex.Rev.Civ.Stat.Ann., and Rule 120--a, Tex.R.Civ.P., see Thode, In Personam Jurisdiction; Art. 2031b, the Texas 'Long Arm' Jurisdiction Statute; and the Appearance to Challenge Jurisdiction in Texas and Elsewhere, 42 Texas Law Review 279, 303--310 (1964). Also in this connection see Wilson, In Personam Jurisdiction over Non-residents; An Invitation and a Proposal, 9 Baylor Law Review 363 (1957); Counts, More on Rule 120a, 28 Texas Bar Journal, 95, 96 (February 1965).

From the evolution of the decisions of the U.S. Supreme Court with respect to service on non-resident defendants in In personam actions from Pennoyer v. Neff, (1877), 5 Otto 714, 95 U.S. 714, 24 L.Ed. 565, through International Shoe Co. v. State of Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; McGee v. International Life Ins. Co. (1957), 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; and Hanson v. Denckla (1958), 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283, we think it can be said that it is now the law that there are three basic factors which should coincide if jurisdiction over a non-resident defendant is to be entertained, to-wit: (1) The non-resident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state; (2) the cause of action must arise from, or be connected with, such act or transaction; and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation. In this connection see O'Brien v. Lanpar Co., 399 S.W.2d 340 (Tex.1966).

The factors to be considered in determining whether or not there have been minimum contacts with the forum are stated in Hearne v. Dow-Badische Chemical Company, 224 F.Supp. 90 (S.D.Tex.1963) as follows:

'(1) The nature and character of the business;

(2) The number and type of activities within the forum;

(3) Whether such activities give rise to the cause of action;

(4) Whether the forum has some special interest in granting relief; and

(5) The relative convenience of the parties.'

We quote from Professor Thode's article, supra, 42 Tex.Law Review p. 301--2--3, in part as follows:

'The McGee decision was thought by some writers to establish the proposition that suit based on any business contact with the state of the forum would be sufficient to support personal jurisdiction over a non-resident defendant, assuming proper out-of-state notice. The 1958 decision of the Supreme Court of the United States in Hanson v. Denckla demonstrates that such...