Trinity Steel Co. v. Modern Gas Sales & Service Co., 7645

• Decision Date: 29 June 1965
• Docket Number: No. 7645,7645
• Citation: 392 S.W.2d 861
• Court: Texas Court of Appeals
• Parties: TRINITY STEEL COMPANY, Inc., Appellant, v. MODERN GAS SALES & SERVICE CO., Inc., Appellee.

Page 861

392 S.W.2d 861

TRINITY STEEL COMPANY, Inc., Appellant, v. MODERN GAS SALES & SERVICE CO., Inc., Appellee.

No. 7645.

Court of Civil Appeals of Texas, Texarkana.

June 29, 1965.

Rehearing Denied July 20, 1965.

Larry M. Lesh, Locke, Purnell, Boren, Laney & Neely, Dallas, for appellant.

James E. Coleman, Jr., Carrington, Johnson & Stephens, Dallas, for appellee.

FANNING, Justice.

Appellant, Trinity Steel Company, Inc., a Texas Corporation, with its principal office and place of business in Dallas, Dallas County, Texas, filed suit in a District Court of Dallas County, Texas, on a sworn account, against appellee, Modern Gas Sales & Service Co., Inc., a foreign corporation, with its principal office and place of business in Lakewood, Ocean County, New Jersey, for $15,000, the purchase price of a propane transport trailer, purchased by appellee from appellant. Appellant served process on appellee by serving the Secretary of State of Texas, pursuant to Art. 2031b, Vernon's Ann.Tex.Civ.At. Appellee, pursuant to Rule 120a, Texas Rules of Civil Procedure, filed its special appearance objecting to the trial court's in personam jurisdiction over appellee on the ground that appellee was not amenable to process issued by a Texas court. The trial court, after hearing the evidence adduced and the stipulations made, sustained appellee's special appearance, discharged appellee from the cause, and decreed that appellant take nothing by its action. Appellant has appealed.

Appellant on appeal presents a single point wherein it contends that the trial court erred in sustaining appellee's special appearance because appellee was amenable to process issued by Texas courts under art. 2031b, V.A.T.C.S. Appellee by its single counter point contends that the trial court properly sustained appellee's motion to the jurisdiction in that appellee was not amenable to service of process under Art. 2031b, V.A.T.C.S., because it had not had the 'minimum contact' with the forum State of Texas so as to satisfy the due process requirements of the 14th amendment to the United States Constitution.

For a comprehensive analysis of Art. 2031b, V.A.T.C.S., and Rule 120a, T.R.C.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, (Feb. 1965).

From the evolution of service on non-resident defendants in in personam actions from Pennoyer v. Neff, (1877), 95 U.S. 714, 5 Otto 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 it is essential in each case that there be some act by which the defendant purposefully avails (himself) of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws, and that he have certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice, and furthermore consideration must be given to the quality, nature and extent of the activity in the forum state, the relative convenience of the parties and the basic equities of the parties.

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 an interpretation is too broad. In Denckla it was pointed out that McGee involved an insurance contract, and that the business of insurance, like that of control of motor vehicle traffic on the highways and the selling of securities, is something that falls within the permissible scope of regulation under the state's police power. The defendant in Denckla was a corporate Delaware trustee who was being sued in Florida. The defendant's contacts with Florida consisted of correspondence which primarily involved remitting trust income to the donor who had moved to Florida after setting up the trust, and in making changes in instruments at the request of the donor in Florida. The Supreme Court held that there were not sufficient contacts for the Florida court to obtain jurisdiction over the nonresident trustee by out-of-state service. The Court stated:

"The unilateral activity of those who claim some relationship with a nonresident cannot satisfy the requirement of contact with the forum State. The application of that 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 * * *'

'The Supreme Court also issued general words of caution:

"It is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. See Vanderbilt v. Vanderbilt, 354 U.S. 416, 418, 77 S.Ct. 1360, 1 L.Ed.2d 1456, 1459. Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has the 'minimal contacts' with that State that are a prerequisite to its exercise of power over him.'

'In summation, there are limits upon the power of a state to bring a nonresident defendant-individual or corporateinto the courts of that state on the basis of out-of-state service. 'Doing business' is still the test for state regulation, but the limits on jurisdiction for the purpose of suing a nonresident are greatly nelarged. These limits are determined by the 'minimum contacts' test, and the contacts cannot be merely fortuitous, but must be purposefully made by the defendant. Further, the litigation must grow out of these contacts, and notice must be properly given to defendant.'

In McKanna v. Edgar, Tex.Sup.Ct., 388 S.W.2d 927, (1965) it was stated in part as follows:

'Some time before this proceeding was instituted, Eileen Ann McKanna, a resident of California, executed and delivered a note to Joe Edgar, Jr., of Austin, Texas. The note was payable in Austin. McKanna did not pay the note when due, and Edgar brought suit. Edgar had a problem in obtaining personal service of process because McKanna lived in California. There is a Texas statute which provides for substituted service upon corporations and individuals doing business in Texas, Article 2031b. Edgar served, or attempted to serve, McKanna by serving the Secretary of State of the State of Texas under that statute. The Secretary of State in turn forwarded the citation to McKanna. McKanna did not appear in the Texas court in person or by attorney. Article 2249a. Based on that service Edgar obtained a judgment by...