Youngblood v. Citrus Associates of New York Cotton Exchange, Inc.

• Decision Date: 17 April 1973
• Docket Number: No. 72--440,72--440
• Citation: 276 So.2d 505
• Court: Florida District Court of Appeals
• Parties: Elmer G. YOUNGBLOOD et al., Appellants, v. CITRUS ASSOCIATES OF the NEW YORK COTTON EXCHANGE, INC., et al., Appellees.

Page 505

276 So.2d 505

Elmer G. YOUNGBLOOD et al., Appellants, v. CITRUS ASSOCIATES OF the NEW YORK COTTON EXCHANGE, INC., et al., Appellees.

No. 72--440.

District Court of Appeal of Florida, Fourth District.

April 17, 1973.

Rehearing Denied May 14, 1973.

Stephen P. Kanar, of Fishback, Davis Dominick & Simonet, Orlando, for appellants.

Alton G. Pitts and Jon M. Wilson, of Pitts, Eubanks, Ross & Rumberger, Orlando, and Maurice Mound, of Rein, Mound & Cotton, New York City, New York, for appellees.

CROSS, Judge.

Appellants-plaintiffs, Elmer G. Youngblood, Leon Cohn, Robert W. Hansche, B. Walkinshaw and Keith Anderson enter this interlocutory appeal from an order of the trial court quashing service of process upon the appellee-defendant, Citrus Associates of the New York Cotton Exchange, Inc., a New York corporation. We affirm.

The plaintiffs instituted a class action against Citrus Associates of the New York Cotton Exchange, Inc. (Citrus Associates), alleging that plaintiffs were damaged by actions taken by the board of directors of Citrus Associates, which limited trading in frozen concentrated orange juice, thus depressing the price and enabling other investors to manipulate the market, all of which redounded to the detriment of the plaintiffs. Process was personally served in the State of Florida on Joe Marshburn, the first vice president of Citrus Associates, both individually and in an attempt to bind the corporation. Citrus Associates filed a motion to quash service of process, and plaintiffs instituted discovery proceedings limited to the question of jurisdiction in an attempt to establish that Citrus Associates is subject to service of process under the Florida 'long-arm' statutes.

The facts before the trial court were: Citrus Associates is an exchange which deals solely with the trading of frozen concentrated orange juice futures. Citrus Associates' only business is to furnish facilities for the trading in these futures, and its directors, officers and members serve without compensation. Citrus Associates does not maintain any offices, bank accounts telephone listings, books of account or books of record in the State of Florida. Citrus Associates has no goods stored in this state. It neither owns nor leases any property; it pays no bills; it receives no money from Florida for its business operations and it has no officers, directors, employees, or agents who perform any function for it in the State of Florida. All meetings of its board of directors and its executive committee take place in the State of New York.

To become an associate member of the exchange, the applicant must submit a membership application accompanied by a recommendation of a present member. The prospective member is then investigated (investigations have occurred in Florida) and if approved, he is then accepted.

Orange juice futures are traded on the floor of the exchange only by Class A members of Citrus Associates. Generally speaking, trading is done in contracts for the delivery of frozen concentrated orange juice. A buyer purchases a contract which represents orange juice stored in Florida. Delivery under the contract is made to the buyer by delivery of a negotiable warehouse receipt. These warehouses are, as indicated above, located solely in Florida, and before a warehouse is approved by Citrus Associates, it is inspected by them. Before delivery of the warehouse receipt is made, the parties to the transaction must secure a certificate which shows that the juice (as inspected by the United States Department of Agriculture (USDA)) meets certain standards set by Citrus Associates. The USDA charges for the inspections which do occur in Florida, but Citrus Associates does not charge for the issuance of its certificate.

Frozen concentrated orange juice (FCOJ) committee and warehouse committee meetings have occasionally taken place in Florida. The function of both committees is to make recommendations to the executive committee and board of directors of Citrus Associates. Prior to making one of these recommendations, conversations were held by FCOJ committee members in Florida which resulted in the committee recommending a temporary suspension of trading in frozen concentrated orange juice futures and a price freeze. These recommendations were subsequently adopted by the board of directors in New York and are the basis for the lawsuit in this case.

The only other Florida activity on the part of Citrus Associates was a cocktail party held in Orlando, Florida, for one of its members.

After a hearing on the motion to quash service, the trial court determined that the above facts showed that the subject matter of the suit clearly arose in New York, and, further, that any exception to the requirement that the matter complained of must arise out of or be incidental to the activities of the foreign corporation conducted within this state did not exist in this case. Accordingly, the trial court entered its order quashing service of process. This interlocutory appeal followed.

In determining a question of jurisdiction which arises under the Florida 'long-arm' statutes, we must consider that the provisions for making foreign corporations subject to service of process and subject to the jurisdictions of the Florida courts is a matter within the legislative discretion of the state lawmaking body. Confederation of Canada Life Ins. Co. v. Vegay Arminan, 144 So.2d 805 (Fla.1962). Legislatures have, generally speaking, enacted three types of long-arm statutes: those which require more activities or contacts than are currently required by the United States Supreme Court, ¹ those which are co-extensive with the limits of the due process concept, ² and those which go beyond the due process limits and are hence unconstitutional.

The Florida 'long-arm' statutes are, generally speaking, of the first type; i.e., they require more activities or contacts to sustain service of process than are currently required by the decisions of the United States Supreme Court. Therefore, any analysis of the question of whether jurisdiction in personam has been acquired over a foreign corporation must necessarily start with an analysis of the statutes. ³

Appellants contend that service of process may be sustained under Florida Statute § 48.081 or § 48.182 (1971), F.S.A.

We deal first with appellants' contention that service is sustainable under Florida Statute § 48.081, F.S.A. In the case sub judice, service was made upon a vice president of the foreign corporation pursuant to Florida Statute § 48.081(1) (1971), F.S.A. Section 48.081(1) states, inter alia, that process against any private corporation, domestic or foreign, may be served on the vice president of the corporation. No requirement that the corporation be doing business in this state or that the cause of action arise from the corporation's activities in this state is found in this section.

Upon the absence of language to the above effect, appellants base their argument that process served according to the terms of Florida Statute § 48.081(1) (1971), F.S.A., confers in personam jurisdiction over a foreign corporation upon Florida courts provided that the corporation so served possesses minimum contacts with the State of Florida as defined by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and subsequent cases, ⁴ notwithstanding the fact that the corporation does not do business in the State of Florida, or that the cause of action did not arise out of any transaction or operation connected with or incidental to the corporation's business in the State of Florida. ⁵

To adopt appellants' interpretation or construction of Florida Statute § 48.081(1), F.S.A., would render the statute quite similr in effect to a California statute, ⁶ thus creating the same problems. For example, every case would automatically be turned into a constitutional problem of defining, according to the facts of each particular case, 'minimum contacts.' In addition, such a statute would probably be subject to constitutional infirmities as men of common intelligence would necessarily have to guess as to its meaning and differ as to its application. ⁷ This statute, under the circumstances of the instant case, cannot be applied alone, as to do so would be to violate a fundamental maxim of statutory construction, that statutes are to be construed to avoid a declaration of unconstitutionality or grave doubts on that score. Armstrong v. City of Edgewater, 157 So.2d 422 (Fla.1963). Therefore, we determine that the requirements of doing business and connexity as delineated in Florida Statute § 48.181 (1971), F.S.A., must be read in parti materia with Florida Statute § 48.081 (1971), F.S.A. Our determination is supported by other Florida cases which have resolved similar problems. See Gordon v. John Deere Co., 320 F.Supp. 293 (N.D.Fla.1970); Illinois Central Railroad Co. v. Simari, 191 So.2d 427 (Fla.1966); Zirin v. Charles Pfizer & Co., 128 So.2d 594 (Fla.1961); Eder Instrument Co. v. Allen, 253 So.2d 902 (Fla.App.1971); Kastan v. Kastan, 222 So.2d 55 (Fla.App.1969); Goffer v. Weston, 217 So.2d 896 (Fla.App.1969); Manus v. Manus, 193 So.2d 236 (Fla.App.1966); Amphicar Corporation of America v. Gregstad Distributing Corp., 138 So.2d 383 (Fla.App.1962). See also Bayitch, Conflict of Laws, Florida 1968--69, 24 U.Miami L.Rev. 434, 450--53 (1970). Contra, H. Bell & Associates, Inc. v. Keasbey & Mattison Co., 140 So.2d 125 (Fla.App.1962).

Under this construction, Florida Statute § 48.081, F.S.A. (with the exception of subsection 5) then merely provides an alternative method of service. Therefore, to serve a foreign corporation not qualified to do business in Florida but which is doing business ⁸ in Florida, where the cause of action arose out of the corporation's activities in Florida, service may be made either constructively upon the secretary of state, ⁹ or personally upon those persons...