BENHAM v WOLTERMANN
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No. 82-134 I N THE SUPREME COURT O THE STATE O MONTANA F F ROBERT S. BENHAM a s r e c e i v e r of MANUFACTURERS and WHOLESALERS I N D E M N I T Y EXCHANGE, P l a i n t i f f and A p p e l l a n t , VS. AGNES WOLTERMANN, GARY G . W L E M N OTR A N OTR A N and RONALD LEE W L E M N , D e f e n d a n t s and Respondents. Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County o f Y e l l o w s t o n e IIonorable R o b e r t Wilson, J u d g e p r e s i d i n g . Counsel of Record: For Appellant: Hauf and F o r s y t h e , B i l l i n g s , Montana John Hollow, H e l e n a , Montana Sidney Delong a r g u e d , Denver, C o l o r a d o For Respondents: Thomas E . Boland a r g u e d , G r e a t F a l l s , Montana Submitted: Decided: September 8, 1982 PTovenber 3 , 1982 M r . J u s t i c e John Court. Appellant, Conway H a r r i s o n d e l i v e r e d Benham, filed i n and J u d i c i a l District a complaint t h e O p i n i o n of in the the Thirteenth f o r t h e County o f Y e l l o w s t o n e , o n May 2 9 , 1 9 8 1 , t o c o l l e c t on a judgment t a k e n a g a i n s t r e s p o n d e n t s , t h e Woltermanns, i n Colorado on O c t o b e r 21, 1980. The W o l t e r m a n n s l e t t h e C o l o r a d o j u d g m e n t be t a k e n a g a i n s t them by d e f a u l t . the complaint Court, on the was judgment filed in Montana t h e W o l t e r m a n n s moved f o r summary j u d g m e n t . District Court granted and the and held the jurisdiction over the i n C o l o r a d o was v o i d and no p e r s o n a l judgment District The Montana Woltermannls motion C o u r t had Colorado District Woltermanns the When entered c o u l d n o t be g i v e n f u l l f a i t h and c r e d i t i n t h e S t a t e of Montana. From t h e summary j udgment , Benham a p p e a l s . In 1974, the Woltermanns purchased a one-year insurance p o l i c y i s s u e d by M a n u f a c t u r e r s and W h o l e s a l e r s I n d e m n i t y Exchange ( M & W ) t h r o u g h t h e H a r r i s I n s u r a n c e Agency o f Columbus, M o n t a n a . M & W is a r e c i p r o c a l e t seq., s e c t i o n 10-13-101, interinsurance 33-5-101 i n t e r i n s u r a n c e exchange organized exchanges e t seq., c r e a t i n g an insurance subscribers, operate to are individually provide V i a a n exchange of insured and insurer and receive the by section of insurance known as through among an them- i n d e m n i t y , e a c h s u b s c r i b e r is b o t h a n of each A t t h e end o f excess Montana collectively reciprocal of E x c h a n g e premiums t a k e t h e form o f each subscriber. in Reciprocal fund whereby t h e p o l i c y h o l d e r s , selves. an recognized . ( 1973 ) An i n t e r i n s u r a n c e e x c h a n g e is a method of MCA. attorney-in-fact C o l o .Rev . S t a t . under the other subscribers. i n i t i a l d e p o s i t s made by each y e a r t h e s u b s c r i b e r s e i t h e r premiums paid over claims and expenses p a i d , or become c o n t i n g e n t l y l i a b l e f o r e x c e s s claims and expenses o v e r premiums p a i d . Thus, the subscribers can receive a r e t u r n i n a good y e a r b u t may h a v e t o p a y a d d i t i o n a l premiums i n a bad y e a r . In 1975, M & W1s claims and expenses exceeded the total amount o f premiums p a i d . T h u s , M and the receiver, Colorado against Benham, former & W was p l a c e d initiated into receivership lawsuits policyholders of M in the W in & S t a t e of order to c o l l e c t a n a s s e s s m e n t l e v i e d b y him. The a s s e s s m e n t a m o u n t s were e q u a l t o o n e y e a r ' s a n n u a l premium p a i d b y t h e p o l i c y h o l d e r s f o r e a c h p o l i c y i n f o r c e d u r i n g 1974 or 1975. as p o l i c y h o l d e r s The W o l t e r m a n n s , of M W, & were sued by Receiver Benham i n o n e s u c h a c t i o n e n t i t l e d , -R o b e r t --. S Benham,.- .-a s -----. of . - Manufacturers Whitson, and Jr. d -- - / b / a W h o l e s a l e r s I n d e m n - Exchange ity A u t o - a n d Used C a r , Parts - A-1 .-- a c t i o n was f i l e d i n t h e D i s t r i c t C o u r t , v. - Frank et al. - - This i n and f o r t h e C i t y and The W o l t e r m a n n s were s e w e d C o u n t y of D e n v e r , S t a t e of C o l o r a d o . w i t h a c o p y o f t h e summons and c o m p l a i n t by t h e S t i l l w a t e r C o u n t y s h e r i f f on J u n e 3 , 1 9 8 0 . Colorado action and d e f a u l t judgment The W o l t e r m a n n s d i d n o t a p p e a r i n t h e the Colorado Court District entered a a g a i n s t them o n O c t o b e r 1, 1 9 8 0 , i n t h e amount Benham t h e n f i l e d a c o m p l a i n t on t h e C o l o r a d o judgment i n t h e D i s t r i c t C o u r t of the Yellowstone, County o f moved for the Thirteenth J u d i c i a l District, summary S t a t e of judgment D i s t r i c t Court granted on the Montana. i n and for The W o l t e r m a n n s complaint . The Montana t h e m o t i o n f o r summary j u d g m e n t and h e l d t h e C o l o r a d o D i s t r i c t C o u r t had no p e r s o n a l j u r i s d i c t i o n o v e r t h e Woltermanns. In holding t h a t the judgment t a k e n by d e f a u l t in C o l o r a d o was v o i d , t h e c o u r t h e l d t h a t it c o u l d n o t be g i v e n f u l l f a i t h and credit i n t h e S t a t e of The i s s u e r a i s e d o n a p p e a l Court erred in granting the Benham a p p e a l s t h e is w h e t h e r D i s t r i c t C o u r t ' s summary j u d g m e n t Montana. t h e Montana D i s t r i c t . Woltermanns' motion for summary j u d g m e n t , and i n f i n d i n g t h a t t h e C o l o r a d o D i s t r i c t C o u r t d i d n o t h a v e j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s when judgment was e n t e r e d a g a i n s t them by d e f a u l t . Benham claims C o l o r a d o h a s via section 13-1-124, jurisdiction Colo.Rev.Stat., of t h e Woltermanns which provides: " -- u r i s d i c t i-- - c o u r t s . J o n of (1) E n g a g i n g i n a n y a c t e n u m e r a t e d i n t h i s s e c t i o n by a n y p e r s o n , w h e t h e r o r n o t a r e s i d e n t o f t h e s t a t e of C o l o r a d o , e i t h e r i n p e r s o n o r b y a n a g e n t subm i t s such p e r s o n , and, i f a n a t u r a l person h i s p e r s o n a l r e p r e s e n t a t i v e to t h e j u r i s d i c t i o n of t h e c o u r t s of t h i s s t a t e c o n c e r n i n g any cause o f a c t i o n a r i s i n g from: "(a) t h e t r a n s a c t i o n of this state; any b u s i n e s s w i t h i n "(d) c o n t r a c t i n g to i n s u r e any p e r s o n , property, o r r i s k residing o r located within t h i s s t a t e a t t h e t i m e of c o n t r a c t i n g . " Benham a r g u e s C o l o r a d o had j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s b e c a u s e as s u b s c r i b e r s t o t h e i n s u r a n c e e x c h a n g e t h e W o l t e r m a n n s both transacted insurance appointed attorney-in-fact t h e exchange of business , in Colorado through their and i n s u r e d r i s k s i n C o l o r a d o t h r o u g h indemnity. However, t h e C o l o r a d o long-arm stat- u t e c a n n o t be u t i l i z e d t o o b t a i n p e r s o n a l j u r i s d i c t i o n w h e r e it would deny one's Outfitters, P.2d 783, Inc. the right v. to due process S u p e r i o r Court of law. In (1968)r 167 Colo. C o l o r a d o Supreme C o u r t h e l d : Safari 456, 448 "By e n a c t i n g the l a t t e r s t a t u t e s , o u r l e g i s l a t u r e i n t e n d e d to extend t h e j u r i s d i c t i o n of our courts p r o c e s s c l a u s e of States Supreme jurisdiction o f Washington to t h e f u l l e s t e x t e n t p e r m i t t e d t h e United S t a t e s C o n s t i t u t i o n . " Court has s e v e r a l times. addressed the question by t h e due The U n i t e d of personal I n I n t e r n a t i o n a l Shoe C o . v . ( 1 9 4 5 ) r 326 U.S. 310, 66 S.Ct. 1 5 4 , 9 0 L.Ed. t h e Supreme C o u r t s t a t e d : ". . . due process requires only t h a t in order t o s u b j e c t a d e f e n d a n t to a j u d g m e n t - -r i n pe sonam, i f he be n o t p r e s e n t w i t h i n t h e territ o r y o f t h e f o r u m , h e h a v e c e r t a i n minimum c o n t a c t s w i t h it s u c h t h a t t h e m a i n t e n a n c e of t h e s u i t does not offend ' t r a d i t i o n a l notions 3 26 o f f a i r p l a y and s u b s t a n t i a l j u s t i c e . I " U.S. a t 3 1 6 , 66 S . C t . a t 1 5 8 . The Supreme C o u r t f u r t h e r s t a t e d : " W h e t h e r d u e p r o c e s s is s a t i s f i e d m u s t depend r a t h e r upon t h e q u a l i t y and n a t u r e of t h e a c t i v i t y i n r e l a t i o n t o t h e f a i r and o r d e r l y a d m i n i s t r a t i o n o f t h e laws w h i c h it was t h e p u r p o s e o f t h e d u e p r o c e s s c l a u s e to i n s u r e . " 326 U.S. a t 3 1 9 , 66 S . C t . a t 1 6 0 . State 95, The determination of whether contacts t o warrant personal of each i n d i v i d u a l case. -- - - . 607 -. P.2d there are s u f f i c i e n t minimum j u r i s d i c t i o n h i n g e s upon t h e I n May v . Figgins (1980), - 1132, 37 St.Rep. 493, t h i s d e v e l o p m e n t and a p p l i c a t i o n o f Court traced However , t h e f a c t s of May, helpful the I n -May, supra, the t h e minimum c o n t a c t s r u l e i n t h e b o r a t e on t h e r u l e h e r e . determining Mont. W e do n o t f i n d it n e c e s s a r y to ela- U n i t e d S t a t e s Supreme C o u r t . in - .. facts outcome F i g g i n s was a of road the s u p r a , are present case. c o n t r a c t o r who d i d r o a d P u r s u a n t to a c o l l e c t i v e b a r g a i n i n g c o m p l i a n c e work i n M o n t a n a . a g r e e m e n t w i t h t h e t e a m s t e r ' s u n i o n , F i g g i n s was r e q u i r e d to make c o n t r i b u t i o n s t o t h e T e a m s t e r s P e n s i o n T r u s t Fund a t t h e d e p o s i t o r y bank i n Denver, Figgins s e n t t h i r t y - f i v e checks Colorado. t o t h e t r u s t account i n Denver, Colorado. administrator of the trust brought an A f t e r an a u d i t , action in the Colorado c o l l e c t d e l i n q u e n t e m p l o y e r c o n t r i b u t i o n s from F i g g i n s . to Figgins was s e r v e d w i t h a summons i n Montana, b u t he d i d n o t d e f e n d t h e lawsuit and plaintiff judgment then filed was a taken against complaint on him the by d e f a u l t . judgment The i n Montana. F i g g i n s moved f o r summary j u d g m e n t c l a i m i n g C o l o r a d o had n o p e r s o n a l j u r i s d i c t i o n b u t t h e Montana D i s t r i c t C o u r t d e n i e d summary judgment and reversed the insufficient dated by although the found for d e c i s i o n of showing of United Figgins had the plaintiff. the the On appeal lower c o u r t b e c a u s e this Court t h e r e was a n r e q u i s i t e minimum c o n t a c t s as man- States Supreme s e n t checks Court. This Court held t o a Colorado t r u s t account, t h e r e w a s no a c t b y w h i c h t h e d e f e n d a n t p u r p o s e l y a v a i l e d h i m s e l f o f t h e p r i v i l e g e of c o n d u c t i n g a c t i v i t i e s w i t h i n t h e f o r u m s t a t e , thus invoking the benefits requirement w a s defined Hanson v . and protections by t h e United D e n k l a ( 1 9 5 8 ) , 357 U.S. 235, of States 78 S.Ct. i t s laws. This Supreme C o u r t in 1 2 2 8 , 2 L.Ed.2d 1283. I n t h e p r e s e n t case we f i n d a similar f a c t u a l s i t u a t i o n . The W o l t e r m a n n s p u r c h a s e d a n i n s u r a n c e p o l i c y from a n i n s u r a n c e a g e n t i n Columbus, Montana. company t h a t i s s u e d contact with the They d i d n o t e v e n know t h e name of the policy. S t a t e of The W o l t e r m a n n s s i m p l y had n o Colorado. This type of insurance "company" is n o t w h a t was c o n t e m p l a t e d when t h e long-arm statutes T h e s e s t a t u t e s were i n t e n d e d t o remedy t h e t y p e of were d r a f t e d . situation the arose that ( 1 9 5 7 ) , 3 5 5 U.S. in v. MaGee 2 2 0 , 78 S . C t . International 1 9 9 , 2 L.Ed.2d Life 223. Ins. Co. I n Magee, a b e n e f i c i a r y o f a l i f e i n s u r a n c e p o l i c y p u r c h a s e d by t h e d e c e d e n t f r o m a n A r i z o n a company, b r o u g h t s u i t in California to enforce The o n l y c o n n e c t i o n t h e i n s u r a n c e com- t h e terms o f t h e p o l i c y . C a l i f o r n i a was t h a t it had m a i l e d a p a n y had w i t h t h e S t a t e of r e i n s u r a n c e c e r t i f i c a t e t o t h e d e c e d e n t i n C a l i f o r n i a and l a t e r delivered the insurance contract there. When t h e T e x a s c o u r t s r e f u s e d t o g i v e f u l l f a i t h and c r e d i t t o a judgment t h e b e n e f i c i a r y obtained i n C a l i f o r n i a on t h e g r o u n d s t h a t C a l i f o r n i a had no personal j u r i s d i c t i o n over the i n s u r a n c e company, the United S t a t e s Supreme C o u r t r e v e r s e d h o l d i n g t h e r e was p e r s o n a l juris- d i c t i o n i n C a l i f o r n i a b a s e d o n t h e minimum c o n t a c t s r a t i o n a l e of I n t e r n a t i o n a l - oe, s u p r a . - Sh - The C o u r t s t a t e d : " I t c a n n o t be d e n i e d t h a t C a l i f o r n i a h a s a m a n i f e s t i n t e r e s t i n p r o v i d i n g e f f e c t i v e means of r e d r e s s f o r i t s r e s i d e n t s when t h e i r T h e s e resii n s u r e r s r e f u s e t o p a y claims. d e n t s would be a t a s e v e r e d i s a d v a n t a g e i f t h e y were f o r c e d t o f o l l o w a n i n s u r a n c e comp a n y t o a d i s t a n t S t a t e i n o r d e r t o h o l d it l e g a l l y accountable. When claims were small o r moderate i n d i v i d u a l s could not a f f o r d t h e c o s t o f b r i n g i n g a n a c t i o n i n a f o r e i g n forum - t h u s i n e f f e c t making t h e company j u d g m e n t 355 U.S. a t 223, 7 8 S . C t . a t 201. proof ." Obviously, t h i s is n o t t h e same t y p e o f s i t u a t i o n t h a t c o n f r o n t s u s i n t h e p r e s e n t case. Further, the record does p o s e l y a v a i l e d t h e m s e l v e s of ties in the State of not i n d i c a t e t h e Woltermanns pur- t h e p r i v i l e g e of c o n d u c t i n g act i v i - Colorado. As was W o l t e r m a n n s d i d n o t e v e n know t h e name o f t h a t issued the policy. stated above, the t h e i n s u r a n c e company T h u s , we f i n d t h e r e w a s n o t t h e r e q u i r e d minimum c o n t a c t w i t h t h e S t a t e of C o l o r a d o n e c e s s a r y to g i v e t h a t s t a t e p e r s o n a l j u r i s d i c t i o n o f t h e W o l t e r m a n n s , n o r is t h e r e a n y showing that the Woltermanns purposely Colorado's j u r i s d i c t i o n . Judgment is a£ f irmed . W e concur: Chief ~ u s ' t i c e cveeq Justices H o n o r a b l e L. C. G u l b r a n d s o n , D i s t r i c t Judge, s i t t i n g i n p l a c e o f M r . J u s t i c e J o h n C. Sheehy availed themselves to Mr. Justice Frank B. Morrison, Jr., dissenting: I respectfully dissent. The majority correctly notes that Colorado's "longarm" statute provides for jurisdiction where persons have contracted to insure any person, property, or risk located within the State of Colorado. There can be little question that the defendants, Woltermann, contracted to insure other members of the exchange who resided in Colorado, and thereby fall within the ambent of Colorado's "long-arm" statute. The majority apparently feels that Colorado's "longarm" statute offends due process notions articulated in International Shoe Co. v. State of Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. However, since the Woltermanns contracted to insure people and risks in the State of Colorado, they did business within the State of Colorado and no violence is done to due process concepts. As the majority opinion points out, Woltermanns dealt through an insurance agency in Columbus, Montana. It is true that Woltermanns may not have fully understood the ramifications of their insurance contract. excuse. This is no Under such circumstances, Woltermanns' remedy would be against their agent. The agent did, in fact, bind the Woltermanns to an insurance contract insuring risks and persons in the State of Colorado thereby subjecting Woltermanns to the jurisdiction of Colorado courts. In my opinion, the majority here denies full faith and credit to a valid judgment of a / k D i s t r i c t Judge, s i t t i n g in place o f Mr. ustice John C. Sheehy
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