Wilkinson v. Mercantile Nat. Bank at Dallas, 57666

• Decision Date: 13 July 1988
• Docket Number: No. 57666,57666
• Citation: 529 So.2d 616
• Parties: Charles H. WILKINSON, Jr., et al. v. MERCANTILE NATIONAL BANK AT DALLAS (Now MBank Dallas, N.A.).
• Court: Mississippi Supreme Court

Page 616

529 So.2d 616

Charles H. WILKINSON, Jr., et al. v. MERCANTILE NATIONAL BANK AT DALLAS (Now MBank Dallas N.A.).

No. 57666.

Supreme Court of Mississippi.

July 13, 1988.

Glenn Gates Taylor, Harry E. Neblett, Jr., Copeland, Cook, Taylor & Bush, Jackson, for appellants.

Si M. Bondurant, Jr., William C. Brabec, Gerald, Brand, Watters, Cox & Hemleben, Jackson, Alan S. Gover, Oscar R. Cantu, Melanie Gray, Weil, Gotshal & Manges, Houston, Tex., for appellee.

Before HAWKINS, P.J., and PRATHER and ANDERSON, JJ.

HAWKINS, Presiding Justice, for the Court:

Charles H. Wilkinson and others have appealed from a decree of the chancery court of Marion County dismissing their complaint against the defendant Mercantile National Bank at Dallas, a banking corporation with principal offices in Dallas, Texas, because the court found it did not have jurisdiction. For this error, we reverse and remand for trial on the merits.

FACTS

Mercantile National Bank at Dallas (MBank) is a national banking association organized under the laws of the United States of America, with its principal place of business in Dallas, Texas. MBank is not registered to do business in Mississippi. MBank has no offices, telephones or agents in Mississippi, and owns no property in this state.

Charles Wilkinson and over 100 other appellants are, for the most part, residents of Mississippi, though residents of many other states are numbered among the appellants. ¹ The appellants own interests in the gas and wells in the East Morgantown Field in Marion County, Mississippi. Appellants eventually sold gas to Tennessee Gas Pipeline Company. Tomlinson Interests, Inc., was a corporation organized under the laws of Texas and was owned, directly or indirectly, by Prentis B. Tomlinson, Jr., a resident of Houston, Texas. Tomlinson is qualified to do business in Mississippi. Tomlinson owned a working interest in gas wells in the East Morgantown Field.

MBank, leading a consortium of banks, loaned $108,000,000 to Tomlinson to finance Tomlinson's development and operation of the gas field in Mississippi. Tomlinson executed a deed of trust and security agreement to MBank covering Tomlinson's interest in certain wells as well as Tomlinson's production from these wells in the East Morgantown Field. Tomlinson granted to MBank a security interest in Tomlinson's share of the field and granted MBank the right to an assignment of Tomlinson's share of production from the field. The negotiation for and execution of the loan occurred in Texas. MBank alleged that it never exercised its right of assignment and never received any of the production from the East Morgantown Field.

Tomlinson and other owners of interests in the wells sold gas to Transcontinental Gas Pipeline Company. Transcontinental began purchasing gas from Tomlinson and others prior to the time that Tennessee Gas was able to hook up to the wells and begin purchasing gas from Wilkinson and the other appellants. Tomlinson sold a large quantity of gas prior to Wilkinson being able to sell any gas. Wilkinson and other plaintiffs (now appellants) filed suit against the interest owners who were selling gas to Transcontinental, alleging that pursuant to operating agreements and a Gas Balancing Agreement, defendants were classified as over-produced. Therefore, appellants were entitled to be brought into balance.

The suit, filed on August 2, 1984, sought a declaratory judgment against all defendants, including MBank, that Wilkinson and the other appellants were under-produced and entitled to all gas remaining in the ground until they were brought back into balance with the defendants. If the pool of gas became depleted before the appellants produced and sold enough gas to be brought back into balance, then the appellants sought a judgment requiring Transcontinental to pay back in-kind the amount of gas over-produced. In the event in-kind recovery could not be had, the appellants asked for a money judgment against all defendants (except MBank) to achieve cash balancing. Appellants alleged MBank received monies paid by Transcontinental to Tomlinson. Appellants requested that MBank be required to disgorge all monies attributable to over-production from the pool in order to provide a fund for any cash balancing. Appellants also prayed for a judgment against MBank in the amount of all money received from over-production of the pool in the event they were unable to recover their share of gas prior to the pool's depletion.

Appellants' amended complaint alleged that MBank had refused to recognize the appellants' interest in the over-produced gas and in monies received by MBank attributable to over-production, and accused MBank of wilfully converting to its own use and wrongfully appropriating money MBank knew did not belong to it or to the other defendants but which belonged to the plaintiffs.

MBank specially appeared and filed a motion to dismiss for lack of jurisdiction. The chancellor sustained its motion, dismissing MBank as a party defendant to the suit. Wilkinson appeals, arguing that the Marion County Chancery Court possesses jurisdiction because MBank has entered a contract with a resident of Mississippi to be performed in whole or in part in this state, because MBank has committed a tort in whole or in part in this state against a Mississippi resident, because MBank is doing business in Mississippi, and because MBank's contacts with Mississippi are sufficient to meet the constitutional limitations placed on state power to subject non-residents to the in personam jurisdiction of its courts.

LAW

A state court enjoys jurisdiction over a non-resident defendant to the extent permitted by the state's long-arm statute and the 14th amendment's due process clause. Brown v. Flowers Industries, Inc., 688 F.2d 328 (5th Cir.1982).

I.

Whether the defendant is amenable to service under the long-arm statute is an issue controlled by state law.

The long-arm statute provides:

Any non-resident person, ... or any foreign ... corporation not qualified under the Constitution and laws of this state as to doing business herein, who shall make a contract with a resident of this state to be performed in whole or in part by any party in this state, or who shall commit a tort in whole or in part in this state against a resident or non-resident, or who shall do any business or perform any character of work or service in this state, shall ... be deemed to be doing business in Mississippi.

Miss.Code Ann. Sec. 13-3-57 (Supp.1987).

Miss.Code Ann. Sec. 81-5-41 provides that a national banking association not organized under the laws of Mississippi and having no place of business within Mississippi, but which invests funds in Mississippi "may sue or be sued within this state in relation to such ... deeds of trust on real properties, securities, or debts," and service of process may be had on an agent appointed within the state or upon the Secretary of State if no agent has been appointed; venue "shall be in the county of the residences of the plaintiffs ... except where land is involved, in which case, venue shall be in the county in which the land ... is located." Miss.Code Ann. Sec. 81-5-41(5) (Supp.1987). Section 81-4-41(5) may be viewed as a long-arm statute itself or as extending the doing business provision of Sec. 13-3-57 to include the activity described in Sec. 81-5-41. The suit against MBank relates to its deeds of trust on real property and MBank has invested funds in Mississippi; therefore, MBank may be sued within this state in the present cause of action.

Riley v. Communications Consultants, Inc., 385 F.Supp. 296 (N.D.Miss.1974), does not conflict with Miss.Code Ann. Sec. 81-5-41 because the loan in Riley was not secured and the wrongful death action did not arise out of the activity of making the loan.

Appellants alleged in their complaint that MBank committed the tort of conversion and assign as error the trial court's failure to base jurisdiction on the tort provision of the long-arm statute. For purposes of MBank's Motion to Dismiss, appellants' allegation of tort is assumed to be true. MBank argued that no part of the tort was committed "in this state" since all exchanges of money in which it was involved occurred in Texas. This argument rests on disappearing ground after Smith v. Temco, 252 So.2d 212 (Miss.1971), which divided a tort into its four elements and held that if the damage occurs in this state, then the tort at least in part is committed in this state. Smith, 252 So.2d at 216. Since appellants alleged injury to their property interests in the East Morgantown Field, MBank must be treated, for purposes of jurisdiction, as having committed a tort in part in...