Mabry v. Fuller-Shuwayer Co., Ltd.

273 S.E.2d 509 (1981)

William J. MABRY, Jr. v. FULLER-SHUWAYER CO., LTD.

No. 8026SC508.

Court of Appeals of North Carolina.

January 6, 1981.

*511 Perry, Patrick, Farmer & Michaux by Roy H. Michaux, Jr., Charlotte, for defendant-appellant.

Ronald Williams, Charlotte, for plaintiff-appellee.

CLARK, Judge.

The sole issue before this Court is whether the courts of this State may properly exercise jurisdiction over the defendant. Two considerations determine whether a state court's exercise of in personam jurisdiction over a foreign defendant is proper: (1) whether the legislature has granted to the courts the statutory authority to exercise its jurisdiction over the defendant under the circumstances, and (2) whether under the facts and circumstances of the case the exercise of jurisdiction comports with the due process limitations imposed on the states by the Fourteenth Amendment. Dillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977).

The first of these considerations is easily met. G.S. 1-75.4(1)(d) grants jurisdiction over any defendant who, at the time of service of process upon him, "[i]s engaged in substantial activity within this State..." G.S. 55-145(a)(2) grants jurisdiction over foreign corporations not transacting business in this State on any cause of action arising "[o]ut of any business solicited in this State ... if the corporation has repeatedly so solicited business ...."

Rather than argue the applicability of these statutes, defendant concedes that these statutes

"reflect a legislative intent to extend jurisdiction of the North Carolina courts to the fullest extent permissible under the due process clause of the United States Constitution, Pope v. Pope, 38 N.C.App. 328, 248 S.E.2d 260 (1978); Dillon v. Numismatic Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977). Therefore, the North Carolina courts have greatly simplified the first step in the test by interpreting section 1-75.4(1)(d) to apply to any defendant who meets the `minimum contacts' requirement of International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), which is the yard stick used by the courts in determining step two of the testthe constitutionality of the statute as applied. Fieldcrest Mills, Inc. v. Mohasco Corporation, 442 F. Supp. 424 (D.C.N.C.1977)."

We agree with defendant that the intent of the legislature was to assert personal jurisdiction to the fullest extent allowed by due process. See Stephenson v. Jordan Volkswagen, Inc., 428 F. Supp. 195 (W.D.N.C. 1977); Sparrow v. Goodman, 376 F. Supp. 1268 (W.D.N.C.1974); Forman & Zuckerman v. Schupak, 31 N.C.App. 62, 228 S.E.2d 503 (1976), appeal dismissed, 434 U.S. 804, 98 S. Ct. 32, 54 L. Ed. 2d 61 (1977); Bank v. Funding Corp., 30 N.C.App. 172, 226 S.E.2d 527 (1976); Trust Co. v. McDaniel, 18 N.C. App. 644, 197 S.E.2d 556 (1973). The only meaningful consideration, then, is whether the acts of defendant in North Carolina constituted sufficient minimum contacts with the State to subject it to the in personam jurisdiction of our courts.

*512 In this second consideration, we must be guided by a trilogy of cases in which the United States Supreme Court has defined the due process limitations on the States' exercise of in personam jurisdiction. In International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95, 161 A.L.R. 1057 (1945), the high court laid down the rule that before a state court may subject a non-resident defendant to a judgment in personam, "certain minimum contacts" with the forum state must be established in order that maintenance of the suit not "offend traditional notions of fair play and substantial justice." In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957), the Court upheld California's exercise of in personam jurisdiction over a foreign insurance company, finding minimum contacts on the basis of a single contract of insurance which was delivered to insured in California, it appearing that insured mailed premiums to defendant from California and that insured was a California resident when he died. This very liberal recognition of extended personal jurisdiction was limited the following year by the U. S. Supreme Court's holding in Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 reh. denied, 358 U.S. 858, 79 S. Ct. 10, 3 L. Ed. 2d 92 (1958), in which the Court explained that the minimum contacts must properly be contacts brought about by the defendant:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. [I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."

Id. at 253-54, 78 S. Ct. at 1239-40, 2 L. Ed. 2d at 1298.

Our own Supreme Court in recognizing and following the rules of the above three cases has stated:

"Whether the type of activity conducted within the State is adequate to satisfy the requirements depends upon the facts of the particular case. (Citations omitted.) It seems, according to the most recent decisions of the United States Supreme Court, that the question cannot be answered by applying a mechanical formula or rule of thumb, but by ascertaining what is fair and reasonable and just in the circumstances..."

Farmer v. Ferris, 260 N.C. 619, 625, 133 S.E.2d 492, 497 (1963), quoted in Dillon v. Numismatic Funding Corp., 291 N.C. at 679, 231 S.E.2d at 632.

In the instant case, plaintiff is a resident of North Carolina, requiring less extensive contacts than would be necessary if plaintiff were a stranger to the forum state, Lee v. Walworth Valve Co., 482 F.2d 297 (4th Cir. 1973); and there is no hint of forum shopping, Dillon v. Numismatic Funding Corp., 291 N.C. at 679, 231 S.E.2d at 632. We note too that "[w]hen claims are ... moderate, individual claimants frequently cannot afford the cost of bringing an action in a foreign forum"; thus by denying plaintiff access to our courts, we might well be placing defendant beyond the reach of the plaintiff. Byham v. National Cibo House, 265 N.C. 50, 57, 143 S.E.2d 225, 231-32, 23 A.L.R.3d 537, 546 (1965).

We hold that in this case, there were sufficient contacts between the defendant and the State of North Carolina, all of which were initiated by the defendant through its agent, to satisfy the traditional due process requirements of fair play and substantial justice. Our holding is based on the following circumstances:

1) Defendant's agent at least twice solicited applications for employment by advertising in a newspaper of wide circulation in this State.

2) Defendant's agent's employees on two different occasions came into the State to conduct their recruitments, at which time they availed themselves of the use of state roads and/or air facilities owned and operated by the State or municipalities therein.

3) On both trips into the State, defendant's agent's employees rented and occupied *513 rooms in hotels licensed by and regulated by the State.

4) Defendant's agents carried on long distance telephone conversations with an indeterminate number of residents.

5) Defendant's agents met with and interviewed as many as 62 North Carolina residents while in Charlotte.

6) Defendant's agents apparently sent through the mails approximately 28 letters containing "conditional offers of employment" which North Carolina residents received at their homes. (This was definitely the procedure followed for the 20 of the 28 who were offered employment in 1975; the employee who conducted the 1978 interviews indicates in his affidavit that a "conditional offer" was made to eight residents by telephone. We note, however, that the record contains a letter signed by this employee which was sent to plaintiff at his home in Concord.)

7) Defendant's agents employed at least 19 of these 28 North Carolina residents.

8) Those residents employed were flown from North Carolina to New York at the employer's expense to sign employment contracts before leaving for Saudi Arabia.

We find persuasive the fact that the contract upon which this action for breach is based, while not finally consummated in this State, arose out of solicitations and was substantially negotiated here. "[S]o far as... obligations arise out of or are connected with the activities [of a foreign corporation] within the [forum] state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue." International Shoe Co. v. Washington, 326 U.S. at 319, 66 S. Ct. at 160, 90 L. Ed. at 104, 161 A.L.R. at 1063.

The order of 7 February 1980 is

Affirmed.

HEDRICK and WHICHARD, JJ., concur.