United Accounts, Inc. v. Quackenbush

• Decision Date: 09 January 1989
• Docket Number: No. 880118,880118
• Citation: 434 N.W.2d 567
• Parties: UNITED ACCOUNTS, INC., Bismarck, North Dakota, Plaintiff and Appellee, v. Daniel QUACKENBUSH, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 567

434 N.W.2d 567

UNITED ACCOUNTS, INC., Bismarck, North Dakota, Plaintiff and Appellee, v. Daniel QUACKENBUSH, Defendant and Appellant.

Civ. No. 880118.

Supreme Court of North Dakota.

Jan. 9, 1989.

William C. Severin, Bismarck, for plaintiff and appellee.

Daniel Quackenbush, Lompoc, Cal., pro se.

ERICKSTAD, Chief Justice.

Daniel Quackenbush appeals from a district court judgment holding him liable to United Accounts, Inc. [United], for $2,554.28. We affirm in part, reverse in part, and remand for further proceedings.

On July 27, 1984, Quackenbush applied for Mastercard and Visa credit cards from First of Omaha Service Corporation. At that time, Quackenbush lived in Killdeer and had been employed with the Dunn County Sheriff's Department since April 15, 1982. Quackenbush remained employed with the Sheriff's Department and was a resident of Dunn County until January 6, 1987. The record reflects that purchases were made in North Dakota with both credit cards before Quackenbush ultimately moved to Lompoc, California.

In April 1987, First of Omaha Service Corporation assigned its claims against Quackenbush for unpaid credit card purchases to United, which brought this action to collect $625.79 allegedly owed on his Mastercard account and $1,228.57 allegedly owed on his Visa account, along with interest. An amended summons and complaint were served upon Quackenbush by certified mail on May 14, 1987 in Lompoc. Quackenbush responded by serving United with a notice of special appearance and a motion to dismiss, asserting that the district court lacked personal jurisdiction over him because he was a California resident.

On July 14, 1987, United served Quackenbush with a note of issue and certificate of readiness which stated that all pretrial motions had been disposed of, that the case was ready for trial as a bench trial, and that all pleadings of the filing attorney had been filed with the clerk of court. Quackenbush then filed with the court his notice of special appearance, the motion to dismiss, a certificate of nonreadiness, and other materials. Quackenbush asserted in the certificate of nonreadiness that his pretrial motion had not been disposed of, that the case was not ready for a bench trial because he wanted a jury trial, and that his response "is being made specially and not generally and defendant does not submit himself to the jurisdiction of this court, but only to preserve his rights on appeal if that becomes necessary." Quackenbush also argued to the court that the reason he had not filed an answer or counterclaim against United was because the court had not yet ruled on his motion to dismiss.

On August 17, 1987, the court denied Quackenbush's motion to dismiss. In its order, the court further stated:

"[B]ecause the Defendant is not represented by an attorney licensed to practice law within the State of North Dakota and may not have known of his obligation to file timely an Answer or other appropriate response to the Complaint, the Court in the exercise of its discretion and on its own Motion Orders as follows:

"1. The Defendant will be allowed 20 days from the date hereof within which to file an Answer asserting whatever defenses he may have to the allegations in the Complaint.

"2. The Defendant will not be permitted to file any counterclaim or a demand for jury trial, the time for exercise of both of those rights has long since passed."

Quackenbush filed an answer in which he again claimed the trial court had no personal jurisdiction over him. The answer also objected to the trial court's refusals to allow him to demand a jury trial and file a counterclaim against United. The answer did not address the merits of United's action against him. Quackenbush did not appear at the bench trial, which was held on February 12, 1988. The trial court concluded that it had jurisdiction over the parties to the action, finding "[t]hat the accounts which form the basis of this action were contracted for and incurred by the defendant or charged against his accounts with his permission in Dunn County, North Dakota, while he was a resident of Dunn County...." The court further found that "no payments or other credits have been made by the defendant against the accounts...." Judgment was entered against Quackenbush in the amount of $2,554.28. Quackenbush has appealed, asserting that the trial court lacked personal jurisdiction over him and that the trial court erred in refusing to allow him to file a demand for jury trial and a counterclaim.

PERSONAL JURISDICTION

Quackenbush asserts that the trial court lacked personal jurisdiction over him because he is not a North Dakota resident and was not "found within" North Dakota as required by Rule 4(b)(1), N.D.R.Civ.P. United asserts that the trial court properly exercised personal jurisdiction because Quackenbush, by using the credit cards in this state while he was a resident, was effectively transacting business in this state within the meaning of Rule 4(b)(2)(A), N.D.R.Civ.P. We agree with United.

Rule 4(b)(2)(A), provides:

"(2) Personal Jurisdiction Based Upon Contacts. A court of this state may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim for relief arising from the person's having such contact with this state that the exercise of personal jurisdiction over him does not offend against traditional notions of justice or fair play or the due process of law, under one or more of the following circumstances:

"(A) transacting any business in this state;"

Rule 4(b)(2), North Dakota's "long-arm" provision, is a codification of the principles announced in International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), in which the United States Supreme Court held that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " [Quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940) ]. Rule 4(b)(2) was "designed to permit the state courts to exercise personal jurisdiction to the fullest extent permitted by due process." Hebron Brick Co. v. Robinson Brick & Tile Co., 234 N.W.2d 250, 255 (N.D.1975) (footnote omitted).

In Hust v. Northern Log, Inc., 297 N.W.2d 429, 431 (N.D.1980), we noted that a two-fold inquiry is required to resolve a question of personal jurisdiction under this rule:

"First, it must be determined if the requirements of the applicable subparagraphs contained in Rule 4(b)(2), N.D.R.Civ.P., have been satisfied. Secondly, it is necessary to determine whether or not the nonresident party has had such contact with the forum State that the exercise of personal jurisdiction over the nonresident does not offend against the traditional notions of justice and fair play under the concept of due process of law."

Therefore, we first consider whether Quackenbush's use of the credit cards in the state while a resident can be considered "transacting any business in this state." The language of Rule 4(b) was adapted from the long-arm proposals contained in the Uniform Interstate and International Procedure Act, 13 U.L.A.Civ.Proc. and Rem.Laws Sec. 1.03, at p. 361-362 (1986). See Explanatory Note to Rule 4, N.D.R.Civ.P., North Dakota Court Rules at p. 18 The Louisiana Court of Appeals' decision in Sears, Roebuck & Co. v. Ballard, 517 So.2d 233 (La.Ct.App.1987), is instructive. In Ballard, the plaintiff brought a suit in Louisiana to recover $2,532.20 for the non-payment of the defendant's Sears charge account. The defendant applied for and was granted credit in December 1982 and made numerous purchases and payments to the account up until April 1985. The defendant had been a resident of Louisiana until August 1985 when he moved to Texas. The suit was filed in Louisiana in March 1986 and the plaintiff claimed personal jurisdiction over the defendant based upon the Louisiana long-arm statute which similarly permitted the court to exercise personal jurisdiction over a nonresident as to a cause of action arising from the nonresident "transacting any business in this state." Ballard, supra, 517 So.2d at 235. The trial court found the defendant's credit transactions insufficient to constitute transacting business in the state.

                (West 1988);  Hebron Brick Co. v. Robinson Brick & Tile Co., supra.   According to the Comment to the Uniform Act, the "transacting any business in this state" provision should be given an "expansive interpretation" by the courts.  13 U.L.A.Civ.Proc. and Rem.Laws, supra, at p. 362
                

The appellate court reversed, concluding that "transacting any business in this state" could encompass the defendant's use of the credit card under the circumstances presented "where numerous purchases were made over a three-year period in the state where the defendant resided." Ballard, supra. The court further concluded that the defendant's due process rights would not be violated because "[c]learly, the many credit purchases and payments made by the defendant established 'minimum contacts' with Louisiana, and he should reasonably have anticipated being haled into a Louisiana court in the event of an alleged default in payment." Ballard, supra, 517 So.2d at 236.

We find Ballard persuasive in this case. Although Quackenbush asserts that the credit card issuer was the only party actually transacting business in the state, and that he could not be found to be transacting business unless it was shown he used the credit cards for his business purposes, i.e., law enforcement, we believe this argument attempts to impose an unwarranted restriction on the meaning of "transacting any business in this state," contrary to the expansive interpretation intended by the provision's drafters. "Transacting...