Tiffany Records, Inc. v. M. B. Krupp Distributors, Inc.

• Decision Date: 03 October 1969
• Citation: 81 Cal.Rptr. 320,276 Cal.App.2d 610
• Parties: TIFFANY RECORDS, INC., Plaintiff M. B. KRUPP DISTRIBUTORS, INC. et al., v. M. B KRUPP DISTRIBUTORS, INC. et al., Defendants and Respondents. Civ. 33372.
• Court: California Court of Appeals Court of Appeals

Page 320

81 Cal.Rptr. 320

276 Cal.App.2d 610

TIFFANY RECORDS, INC., Plaintiff M. B. KRUPP DISTRIBUTORS, INC. et al., v. M. B KRUPP DISTRIBUTORS, INC. et al., Defendants and Respondents.

Civ. 33372.

Court of Appeal, Second District, Division 4, California.

Oct. 3, 1969.

Hearing Denied Nov. 26, 1969.

Schurmer & Bullis, Beverly Hills, for plaintiff and appellant.

Pacht, Ross, Warne, Bernhard & Sears, Los Angeles, for defendants and respondents M. B. Krupp Distributors, Inc., and Roberts Record Distribution Co.

Altman & Schwartz, Reseda, for defendant and respondent Portem Distributing, Inc.

Mitchell, Silberberg & Knupp, Los Angeles, for defendant and respondent Music Distributors, Inc. (Seattle, Washington).

Nagel, Regan & Davidson, Santa Ana, for defendant and respondent Astor Records, Inc.

Pollock, Pollock, Fay & Baum, Los Angeles, for defendant and Respondent Marshall Enterprises, Inc.

Greenberg, Shafton & Bernhard, Los Angeles, for defendant and respondent A. & L. Record Distributors.

Diamond, Tilem & Colden, Los Angeles, for defendants and respondents Allstate Record Distributing Co. and John O'Brien Distributing, Inc.

Gordon, Weinberg & Gordon, Los Angeles, for defendant and respondent Cosnat Distributing Corp.

Wyman, Bautzer, Finell, Rothman & Kuchel, Beverly Hills, for defendant and respondent Music Distributors, Inc. (Chicago, Illinois).

Fulop, Rolston & Burns, Beverly Hills, for defendant and respondent Associated Record Distributors.

DUNN, Associate Justice.

Appellant, a California corporation, and its predecessors in interest were engaged in the business of selling phonograph records at wholesale. Appellant instituted an action for money allegedly due under open book accounts, mutual accounts and because of unjust enrichment and damages for an alleged conspiracy and for breach of contract; appellant also sought an accounting. Named as defendants were thirty-one corporations and one individual, John Powell, a resident of California who was employed by appellant from 1960 to 1964. Appellant alleged that all of the corporate defendants were engaged in the business of distributing phonograph records, and that on various occasions between February 1959 and February 1965 each of these defendants purchased from appellant large quantities of phonograph records. It is alleged that money is due appellant from each defendant on account of such purchases.

Appellant also alleged that defendant Powell, while employed by appellant, conspired with all of the corporate defendants to injure appellant in its business. Such conspiracy, according to the complaint, took the form of over-allowances on freight; special credits for returned merchandise which was not, in fact, returned; over-allowances for advertising and radio promotion; excess discounts given by Powell and taken by all other defendants; excesses of free goods shipped to and received by the corporate defendants; differences and excesses allowed for returned merchandise credits; unearned discounts; and delivery of goods to all corporate defendants with no charge therefor. Powell allegedly had no authority to enter into such transactions. Appellant learned of defendants' alleged conduct in approximately April, 1965 by investigation and review of records relating to transactions between appellant and each of the corporate defendants.

In June, 1967, appellant filed its amended complaint containing 146 causes of action and consuming 128 pages. On July 17, 1967, the court issued an order permitting service of process to be made upon 25 of the foreign corporate defendants by personal delivery of such to the Secretary of State pursuant to Corp.Code, § 6501. Defendant Powell has not been served.

Of the 25 corporate defendants served, 12 (respondents herein) filed motions to quash service for lack of jurisdiction (Code Civ.Proc. § 416.1). Affidavits filed by respondents in support of their respective motions contain the following declarations in common: none of the respondents has ever had any office, place of business, directory listing, warehouse or inventory of any kind in California, nor does any respondent own real or personal property in California; none of the respondents has any employees, salesmen, agents, distributors or representatives in California; with the exception of isolated sales by a few of the respondents before the commencement of the instant action, none of the respondents has ever solicited the sale of, or sold, phonograph records in California; respondents ordered phonograph records only when solicited in person or by telephone call from appellant or by sending orders to appellant from respondents' respective home offices; there were no oral or written distribution agreements between appellant and any respondent; all of the phonograph records which respondents purchased from appellant were shipped from California to respondents at their respective home offices and distributed by respondents outside California; at no time did any of the respondents come to California in connection with the purchases; none of the respondents purchased any phonograph records from appellant after February, 1965; in affidavits filed by six ¹ of the respondents they deny the existence of a conspiracy, and some respondents state they have never met Powell. ²

Hearings on the motions to quash were had and in February, 1968 an order was entered granting each of the motions. This appeal is taken from such order. The sole issue presented is whether respondents are subject to personal jurisdiction in California.

Code of Civ.Proc. § 411, provides in pertinent part: 'The summons must be served by delivering a copy thereof as follows: * * * 2. If the suit is against a foreign corporation * * * doing business in this State; in the manner provided by Sections 6500 to 6504, inclusive, of the Corporations Code.' In order to be subject to personal jurisdiction under the foregoing provision, a foreign corporation must be 'doing business' in the sense that it has certain minimum contacts with this state so that the maintenance of the action does not offend traditional notions of fair play and substantial justice. Whatever limitation the term 'doing business' imposes is equivalent to the due process clause. Cosper v. Smith & Wesson Arms Co., 53 Cal.2d 77, 82, 346 P.2d 409 (1959), cert. denied, 362 U.S. 927, 80 S.Ct. 755, 4 L.Ed.2d 746 (1960); Henry R. Jahn & Son v. Superior Court, 49 Cal.2d 855, 858, 323 P.2d 437 (1958).

Whether a foreign corporation has the requisite minimum contacts depends upon the facts involved in the particular case Space Chemicals, Inc. v. Sprayon Products, Inc., 241 Cal.App.2d 680, 685, 50 Cal.Rptr. 746 (1966); Estwing Mfg. Co. v. Superior Court, 128 Cal.App.2d 259, 261, 275 P.2d 146 (1954). '(T)he analysis is concerned with weighing the various relevant 'contacts' by the foreign corporation within the state attempting to exercise jurisdiction. * * * But the analysis of the activities of a foreign corporation should not be considered merely quantitatively, but in terms of their 'quality and nature,' and their connection with the obligations sued upon.' Empire Steel Corp. of Texas, Inc. v. Superior Court, 56 Cal.2d 823, 831--32, 17 Cal.Rptr. 150, 155, 366 P.2d 502, 507 (1961).

The 146 causes of action in this case are based upon respondents' purchases of phonograph records from appellant, and respondents' alleged participation in a conspiracy with Powell.

Purchases. On various occasions between February, 1959 and February, 1965 the respondents purchased phonograph records from appellant in the following manner: Respondents, at their respective home offices, placed orders when solicited in person or telephone call from appellant or by writing to appellant in California. The records were shipped from California to respondents and distributed by them in the areas of their respective home offices. At no time did any respondent come to California in connection with the purchases. A few of the respondents made isolated sales of records in California, but the records so sold were not purchased from appellant. There were, in essence, no more than purchases of goods from a California seller by foreign purchasers whose only contact with California was that orders for records were accepted by appellant in California and the records were shipped from California.

Jurisdiction over the parties is necessary to the validity of the judgments In personam (Code Civ.Proc. § 1917) sought here by appellant. Some of the rules governing our review are here pertinent. Appellant has the burden of proof that each respondent was 'doing business' in California in the sense required to make it amenable to process and subject to jurisdiction. Brown v. Birchfield Boiler, Inc., 226 Cal.App.2d 487, 488, 38 Cal.Rptr. 92 (1964); Yeck Mfg. Corp. v. Superior Court, 202 Cal.App.2d 645, 649, 21 Cal.Rptr. 51 (1962) (disapproved on other grounds in Buckeye Boiler Co. v. Superior Court, 71 Cal.2d ---, 71 A.C. 933 at 943, 80 Cal.Rptr. 113, 458 P.2d 57 (1969).) Furthermore, wherever affidavits filed in support of the motions to quash are in conflict with those opposing it we must deem the trial court resolved such conflicts against appellant and in support of its order. Detsch & Co. v. Calbar, Inc., 228 Cal.App.2d 556, 562--563, 39 Cal.Rptr. 626 (1964).

At the outset we observe that no affidavit states facts disclosing existence of a conspiracy between respondents; the most that appears is the claim each respondent conspired with Powell, not with each other and Powell. A single California plaintiff has made claim against twenty-five foreign corporations but, so far as appears, these claims are unrelated, and the claims against any one corporation are independent of other claims, there being no conspiracy between them shown. Each made purchases from appellant independent of the purchases by others. Over the time periods involved, purtchases by the individual respondents...