Thornton v. Interstate Securities Co.
| Decision Date | 14 June 1983 |
| Docket Number | No. 4972-III-8,4972-III-8 |
| Citation | 666 P.2d 370,35 Wn.App. 19 |
| Court | Washington Court of Appeals |
| Parties | Perry THORNTON, Respondent, v. INTERSTATE SECURITIES COMPANY, a corporation organized under the laws of the State of Delaware, and Interstate Securities Company, a corporation organized under the laws of the State of Kansas, Appellants. |
Thomas A. Dietzen, Donald D. Bundy, Weeks, Dietzen & Skala, Yakima, for appellants.
Kevin S. Kirkevold, Dobbs, Moore & Kirkevold, Yakima, for respondent.
"Interstate Securities Companies", with no further identification, appeal a trial court decision upholding an oral contract. Interstate Securities Companies (ISC) contend the trial court erred in (1) finding in personam jurisdiction over Interstate Securities Company Kansas (ISCK); (2) finding ISCK, a wholly owned subsidiary of ISC Financial Corporation (ISCFC), is a successor corporation to Interstate Securities Company, Delaware (ISCD), also a wholly owned subsidiary of ISCFC; (3) finding Mr. Thornton formed an oral contract with ISCD in addition to a written contract, and (4) rejecting ISCK's tender of the defense of impossibility. We affirm.
ISCD, involved in the consumer finance business, became interested in acquiring Surety Finance Company and its subsidiary, Cascade Industrial Loan Company (Surety), in Yakima, Washington. Mr. Ed Newcomer, executive vice-president and chief operating officer for ISCD, and Mr. Giambalvo, a field supervisor for "Interstate Securities Company", 1 went to Yakima in January 1974 to review the business and meet Mr. Perry Thornton. Mr. Thornton, Mr. Junker (a director of Surety), Ms. Soden (office manager for Surety), and Mr. Giambalvo all testified the primary asset which ISCD sought was Mr. Thornton. Because of his numerous contacts in the industry, his position as vice-president and then president of the Washington State Consumer Finance Association, his dealings since 1956 with Washington State's Division of Banking, Department of General Administration, his knowledge of state laws regulating small loan companies, and his experience in the field since 1946, Mr. Thornton was a valuable tool to assist ISCD's expansion into the northwest states. All of the above, except Mr. Giambalvo, testified they understood ISCD was not interested in the purchase unless Mr. Thornton agreed to work for ISC. This also was reflected in Surety's corporate minutes. Mr. Giambalvo testified it was "a foregone conclusion" to Mr. Newcomer that Mr. Thornton would remain in Yakima because Mr. Thornton was a very important part of ISCD's expansion efforts. Mr. Newcomer, on the other hand, testified the primary asset was the loan company; while it was consistent with his philosophy to retain key personnel, Mr. Thornton was only one aspect of the purchase. Mr. Thornton testified he did not wish to work for a large corporation and relented only upon the condition he be allowed to remain in Yakima. Mr. Junker, Ms. Soden, Mrs. Thornton and Mr. Giambalvo all indicated they understood this was of great importance to Mr. Thornton.
When agreement had been reached on Mr. Thornton's employment contract and the purchase of the company, Mr. Thornton and Mr. Junker traveled to Kansas City, Missouri, to meet with Mr. Newcomer and Mr. Giambalvo. Mr. Thornton rejected the employment contract because it did not include the agreed retirement benefits ($10,000 per annum from age 65 to age 69). A new contract was drawn; Mr. Thornton again rejected it because it had no provision for permanent residence in Yakima.
Testimony as to what happened next diverges. Mr. Thornton testified Mr. Newcomer stated he did not want to have the contract redone again, so they would agree verbally on the term; his word was good and, besides, there were two other witnesses. Mr. Junker testified Mr. Newcomer assured Mr. Thornton he would remain in Yakima "and his word was as good as this being in writing and there would be no reason for him to ever take him out of Yakima." Mr. Giambalvo testified Mr. Newcomer told Mr. Thornton, "you can trust me, we're not planning on moving you anywhere." Mr. Newcomer did not remember making such a promise and explained he would never orally promise not to relocate an individual. Mr. Thornton then signed the employment contract without the requested provision.
Three years later, Mr. Thornton received a letter from Paul Hamilton, Jr., president of Interstate Securities Company, stating ISCD and ISCFC had decided to sell substantially all of ISCD's assets to Beneficial Corporation. The letter was under a letterhead which stated:
INTERSTATE SECURITIES COMPANY
3430 Broadway, Kansas City, MO 64141 PHONE: (816) 753-5400
A subsidiary of ISC Financial Corporation.
When Beneficial Corporation did not hire him, Mr. Thornton contacted Mr. G.W. Richter, personnel director for ISCFC. Mr. Richter attempted to find Mr. Thornton a position in Old Security Life Insurance Company, a wholly owned subsidiary of ISCD. The job did not eventuate because Old Security went into receivership.
When ISCFC sold ISCD's assets to Beneficial Corporation, ISCK was formed by ISCFC to liquidate the receivables which Beneficial did not accept. ISCK's letterhead read:
Interstate Securities Company
P.O. Box 12410, Shawnee Mission, Kansas 66212
Mr. Charles Waeckerle, one of those in charge of liquidating receivables, was transferred to ISCK in March of 1977. Prior to his assignment to ISCK, Mr. Waeckerle served a "dual role" as head of the securities department for ISCFC and as an operations supervisor for ISCD. Mr. Waeckerle stated that, except for the office staff, all personnel of ISCK were from ISCFC or ISCD. He was not sure who came from what company because employees of the three companies were all "interrelated" and "intertwined"--"We were all one big family." He knew his pay came from ISCFC and knew Mr. Thornton was paid out of "the home office" because Mr. Waeckerle signed all checks for ISCK. Mr. Waeckerle indicated he used Mr. Thornton to collect accounts in Washington State and reimbursed his collection expenses.
On April 4, 1978, Mr. Thornton received a letter from an attorney employed by Interstate Securities Company indicating he was to present himself at the "offices of Interstate Securities Company, 9590 Quivera Road, Lenexa [sic], Kansas", to be assigned new duties for the remainder of his contract. The letter then stated: "I am enclosing the check of Interstate in the amount of $865.79, representing your salary for the period ending March 31, 1978." The check was drawn on a Kansas City, Missouri, bank, as were all other paychecks received by Mr. Thornton, and the yearly gross followed sequentially from the gross earnings of the previous pay period. The paycheck also did not indicate whether it was from ISCFC, ISCD or ISCK.
When Mr. Thornton refused to relocate to Kansas, he was terminated. This suit followed. After extensive analysis concerning whether jurisdiction had been proved, whether ISCK could be held liable as a successor corporation to ISCD, whether an oral contract was proved and whether the defense of impossibility applied, the court ruled in Mr. Thornton's favor. Interstate Securities Companies appeal.
Appellants first contend the trial court erred in finding jurisdiction over ISCK as a successor corporation to ISCD. The trial court did not believe ISCK had sufficient contacts with Washington to establish in personam jurisdiction, but found jurisdiction over ISCK as a successor corporation to ISCD. We hold ISCK had sufficient contacts to establish jurisdiction.
To subject a corporation to judgment in personam, there must be sufficient contact with the state so that it is fair and reasonable to require the corporation "to defend the particular suit which is brought there." International Shoe Co. v. Washington, 326 U.S. 310, 317, 66 S.Ct. 154, 158, 90 L.Ed. 95, 161 A.L.R. 1057 (1945). The corporation's conduct and connection with the forum state must be such that it "should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). While the limits on state jurisdiction have been relaxed in modern commercial transactions touching more than one state, each state must, out of respect for the sovereignty of its sister states, limit its authority to those controversies actually having an impact therein. World-Wide Volkswagen Corp. v. Woodson, supra at 293, 100 S.Ct. at 565. The corporation must purposefully avail itself of the privilege of conducting an activity here. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958).
In Lewis v. Curry College, 89 Wash.2d 565, 568, 573 P.2d 1312 (1978), the court stated:
(1) The nonresident 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.
ISCK has independently developed minimum contacts with the State of Washington. It is true it has not carried on the business of its predecessor. It has availed itself, however, of the knowledge and services of Mr. Thornton to collect accounts receivable here. It has thus carried on activity which touched the matter in issue--use of Mr. Thornton's services under the employment contract with ISCD. The cause of action arises...
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