Williams v. Connolly

• Decision Date: 24 March 1964
• Docket Number: No. 3-62-Civ. 275.,3-62-Civ. 275.
• Citation: 227 F. Supp. 539
• Parties: Porter WILLIAMS, Plaintiff, v. James CONNOLLY, individually and doing business as Blackhawk Motel, Northern States Power Company, a Minnesota corporation, Skelly Oil Company, a Delaware Corporation, Stewart-Warner Corporation, a Virginia Corporation, and Bastian-Morely Company, an Indiana corporation, Defendants.
• Court: U.S. District Court — District of Minnesota

227 F. Supp. 539

Porter WILLIAMS, Plaintiff, v. James CONNOLLY, individually and doing business as Blackhawk Motel, Northern States Power Company, a Minnesota corporation, Skelly Oil Company, a Delaware Corporation, Stewart-Warner Corporation, a Virginia Corporation, and Bastian-Morely Company, an Indiana corporation, Defendants.

No. 3-62-Civ. 275.

United States District Court D. Minnesota, Third Division.

March 24, 1964.

John B. McCarthy, Minneapolis, Minn., for plaintiff.

W. Scott Herzog, Hopkins, Minn., for defendant Bastian-Morely Co.

LARSON, District Judge.

This action arises out of an explosion in a room in the Blackhawk Motel, Newport, Minnesota, on March 16, 1962, in which the plaintiff, a California resident, was allegedly injured. An action was brought against the motel owner James Connolly, the Northern States Power Company, Skelly Oil Company, Stewart-Warner Corporation, and the Bastian-Morely Company.

Bastian-Morely was served under the Minnesota "One Act" statute, M.S. 303.13, subd. 1(3),¹ and here moves to quash the service of the summons and complaint. Determination as to whether a Federal Court has jurisdiction over the person of a foreign corporation in a diversity action raises two questions. "First, whether the local statute as construed by the courts of the pertinent state would subject the foreign corporation to local jurisdiction under the circumstances there present; secondly, if the forum attempted to assert jurisdiction would this action comport with the relevant clauses of the federal constitution. * * * While the latter question is to be decided in accordance with federal precedents, evaluation of the scope of the local statute is a matter of state law and on this issue we sit as if we were a state court." Waltham Precision Instrument Co. v. McDonnell Aircraft Corp., 310 F.2d 20, 22-23 (1st Cir. 1962).

In view of the disposition of this motion, it may not be strictly necessary to discuss the first question; however, the briefs and oral argument indicated a great deal of uncertainty as to what law applied on what question, so the issue of whether the Minnesota Court would take jurisdiction over this matter under M. S. 303.13, subd. 1(3) will be dealt with.²

I. M.S. 303.13, subd. 1(3) applies to both torts and contracts; however, jurisdiction under the tort provision requires a tort committed against a "Minnesota resident" and since the instant plaintiff is admittedly a California resident, the parties here have not argued the applicability of the tort portion, concentrating instead on the contract portion. See Bard v. Bemidji Bottle Gas Co., 23 F.R.D. 299, 301, 302 (D.Minn. 1958). The contract question will be decided, then, without a determination of whether the instant plaintiff could maintain an action in tort under the statute.

In order for a Minnesota Court to obtain jurisdiction over a foreign corporation, the statute requires that the foreign corporation make a contract with a Minnesota resident to be performed in whole or in part in Minnesota. Under such a circumstance service can be obtained over the foreign corporation "in any actions or proceedings against the foreign corporation arising from or growing out of such contract." It is plaintiff's theory that the complaint states a cause of action based on breaches of warranty and that the warranties extend to the plaintiff. The warranty actions would be viewed as arising from or growing out of the contract. His position is heavily dependent on Judge Nordbye's interpretation of the One Act statute in Ewing v. Lockheed Aircraft Corp., 202 F.Supp. 216 (D.Minn.1962). A Northwest Airlines plane manufactured and assembled by Lockheed and using General Motors engines had crashed and Ewing, a South Dakota resident, sued the three parties for damages arising from the crash, asserting jurisdiction under the contract portion of the statute. Judge Nordbye ruled that jurisdiction under the contract portion of the statute should not be limited to resident plaintiffs and said:

"Any warranty as to fitness for commercial travel, express or implied, growing out of that contract would inure to the benefit of those who were expected to be carried on the plane for purposes for which it was intended. In other words, the passengers on the plane would stand in privity with Northwest in so far as these warranties are concerned. * * * The decedent herein was therefore embraced within the ambit of such contract warranties. This proceeding fairly comes within the purview of the statute in so far as it arises from and grows out of the contract between Lockheed and Northwest, a Minnesota resident." (202 F.Supp. at 219).

Assuming a contract between Bastian-Morely and a Minnesota resident, Ewing provides an analysis for application of the statute to the instant facts. Accord Hinton v. Republic Aviation Corp., 180 F.Supp. 31 (S.D.N.Y.1959). The analogy between a defective engine and a passenger in an airplane, on the one hand, and a defective heater and a guest in a motel, on the other, is a persuasive one. Putting aside the privity question for the moment, the movement in warranty law seems to be toward extending the protection of the warranty to those who may reasonably be expected to be endangered if the object sold is defective. Prosser, Torts 501 (2nd ed. 1955). A warranty as a vehicle of social policy impressed by law should be extended with reference to the underlying social policy. "The interest in consumer protection calls for warranties by the maker that do run with the goods, to reach all who are likely to be hurt by the use of the unfit commodity for a purpose ordinarily to be expected." 2 Harper and James, The Law of Torts § 28.16 (1956). (Emphasis authors'.)

The Ewing approach, then, is sound, and under the analysis indicated above, it is an interpretation of Minnesota law. This Court feels that it is consistent with the law which would be applied by the Minnesota Courts. It reaches this conclusion because of the general approach the Minnesota Supreme Court has taken to the One Act statute and because it appears that the privity requirement is on the wane in this State.

In construing the language of the One Act statute with reference to particular fact situations and in applying Federal constitutional law, the Minnesota Supreme Court has indicated that it will assert its maximum jurisdiction. See Note, 42 Minn.L.Rev. 909, 914, n. 29 (1958). Paulos v. Best Securities, Inc., 260 Minn. 283, 109 N.W.2d 576 (1961) was an action arising out of a Minnesota resident's purchase by mail of securities from a New York corporation. None of the individual defendants nor agents or officers of the corporate defendant were ever in Minnesota; all communications among the parties were by telephone or mail. The transactions consisted of the Minnesota resident-plaintiff mailing checks from St. Paul to New York and the New York corporation-defendant mailing shares of stock to the plaintiff although some shares were retained in New York by the defendants. The Minnesota Court held this within the purview of the statute, saying:

"The One Act statute provides that a foreign corporation shall be deemed as `doing business' here if it enters into a contract with a resident, which contract is to be performed in whole or in part within the state. Obviously, the acts of Best Securities in promoting and consummating a series of stock sales to plaintiff in Minnesota, through repeated long distance telephone and mail communications, would fall within this definition. Certainly plaintiff's payment for such shares and their ultimate delivery to him were acts, some part of which at least were to be performed in Minnesota." (109 N.W.2d at 582).

See Dahlberg Co. v. Western Hearing Aid Center, 259 Minn. 330, 107 N.W.2d 381, 384 (1961). The broad applications of the due process clause of the Federal constitution characteristic of the Minnesota Court, e. g., Ehlers v. United States Heating and Cooling Mfg. Corp., Minn., 124 N.W.2d 824 (1963); Schilling v. Roux Dist. Co., 240 Minn. 71, 59 N.W. 2d 907, 915 (1953), will inevitably be reflected in the approach taken to application of the statute to varied fact situations.

The remaining question in this part of the discussion is whether the Minnesota Courts would consider the instant transaction outside the scope of the One Act statute because the plaintiff is not in privity of contract with the defendant. Minnesota has long discarded the requirement of privity in tort cases but has not yet done so in the contract area. Beck v. Spindler, 256 Minn. 543, 99 N.W. 2d 670 (1959). Of course, the instant plaintiff is not a subvendee and the approach of the Ewing case would be equally applicable here; however, Chief Justice Knutson's important opinion in Beck should indicate to all that privity in warranty cases is no longer looked upon with favor in this State.³

II. Once it is decided that the State courts would take jurisdiction over the person of the defendant corporation, it is necessary to consider whether such jurisdiction would violate the due process clause of the Fourteenth Amendment to the United States Constitution. As it applies to this case the due process clause guarantees that no person shall be deprived of property without the process of law which is due him.

The leading case interpreting the due process clause with reference to State assertions of jurisdiction over foreign corporations is International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). International Shoe held that the demands of the due process clause are met when the corporation has "such contacts * * * with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there." (326 U.S. at 317, 66 S.Ct. at 158, 90 L.Ed. 95). The Court went on to say:

"It is evident that the criteria by which we mark the

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