*1 REED, AIRLINES, FRED v. AMERICAN Petitioner, INC., Respondent. No. 81-288.
Submitted Dec.
1981.
Decided Feb.
This case is certified from U.S. diversity a filed Montana, Missoula Division.Petitioner had alleged negligence upon the of American action based handling peti- subsequent Airlines, in the loss of Inc., luggage City. complaint,plaintiff tioner’s in New York that affirmatively corporation Reed that the defendant Defendant, Airlines, filed “found within Montana”. American complaint to reason motion dismiss for the personal lacked over United States District Court the defendant. The certification followed. following presents
Certification issues: “(1) American Airlines Was the defendant found Montana?
“(2) 4B(1) not, If subdivisions of Rule extend do lettered cases not arise out of to where claim does doing acts mentioned lettered subdivisions?” dispositive. We find issue to depends upon Resolution of the first issue the facts found therefore them forth in this record. We set detail. City Missoula,
Plaintiff to from Mon- traveled New York in- Plaintiff tana, 5,1978. via Northwest Airlines on December flights Nepal to continue to on British tended transfer Airways. During plaintiff lost transfer, professional containing $2,000 worth of case excess of Nepal ultimately equipment. arrived in camera The case damages empty. The but to be several weeks later was found plaintiff’s the basis of claim. this loss formed attendant for an charter flight, American Airlines Except infrequent does into or of Montana. It has no nor fly out property per- sonnel in Montana. It no taxes Montana. American pays Airlines does solicit business in in 19 by Montana Mon- listings tana directories, television broad- telephone advertising cast in Montana, and material to by furnishing agents travel American Airlines’ come Occasionally personnel Montana to instruct Montana travel The airlines has agents. a service enabling Montana residents call toll free, scheduling on American Airlines. flights Defendant’s business from originating through calls Montana direct American or Airlines travel through agencies Montana-based approx- $803,000 in $992,000 imated 1980 and from March to December of 1979. is a citizen of the State Montana. American is a
Airlines Delaware corporation domiciled in principally Texas. The conduct of which of defendant plaintiff complains in New occurred York. forth, the facts set
Under above we hold that American Airlines was within Montana” and that there is *3 District United States for the District Montana. of of a
Before activities can a create foreign corporation those physical within activities must be presence substantial, continuous, and as systematic isolated, opposed casual, or incidental. The a activities must comprise signifi cant of the component business, although the company’s as total percentage See, related to business be small. may e.g., O’Neal v. Hicks Brokerage (4th 1976), Cir. 537 F.2d Company Inc. (4th Laboratories, 1266; Cooper 1971), 444 Cir. Ratliff (4th Lee v. Walworth Valve Co. F.2d 745; 1973), Cir. 482 F.2d We must decide where the facts Airlines, American under here us, before fits within the framework A legal provided. in Ladd v. similar fact situation was presented strikingly (S.D.N.Y. 1978), KLM Dutch Airlines 456 Royal F.Supp.422. case, an action in Court in brought Federal plaintiff a and the was heard federal by judge Tennessee case district
37 The issue was to 28 U.S.C. 1407. pursuant New York State Defendant had jurisdiction. Tennessee court whether business in the Netherlands. its airline had principal place Ten- or out of within into fly any place It was not authorized business in Tennessee and not authorized to do nessee. It was airline had or bank ac- in that state. The no office no taxes paid not own or lease any property in Tennessee and did count free numbers However, the airline did maintain toll there. in six direc- within the state advertised major telephone to Ten- The airline materials promotional tories. supplied into Ten- nessee travel sent agents periodically personnel agents. those travel instructing nessee for purpose in Tennessee accounted for total business Travel agencies $323,304. these court found the facts, volume in On airline to be in Tennessee for purpose defendant present conferring personam jurisdiction. a similar case
Another was decided federal district judge Qantas (M.D. Gullett v. Ltd. Ten.1975), Airways, 490. In the Gullett case, the airline maintained toll F.Supp. free urban within the telephone listings major centers state; circulating it advertisements in national media placed state; forum travel in the forum supplied agents located materials; with it sent its employees promotional infrequently to the forum state for the travel agents; purposes servicing total in the was dollar volume of ticket sales state subject $91,529 maximum of for a twelve month airline period. no within the state nor maintained offices any owned property Under these District Court facts, Federal held airline within the state that the was present purposes conferring personam jurisdiction. North Dakota v. Newberger relies (Mont.1980), 1002. Suit in- St.Rep. stituted in the Missoula District against County had rock Univer- Court. Defendant concert promoted Dakota, because of illness of one of *4 sity per- of North but go failed to ahead with the concert. An action was formers, defen- Missoula, Montana, commenced in for the reason that in, at dant was concert engaged promoting subsequent University of since had Montana and defendant certain sought resulting promotion, plaintiff from that monies to in- purposes acquiring for stitute action in Missoula control proceeds. Newberger p. 1123, those court in at 613P.2d 1002said:
“Appellant purposely
privileges
avails himself of the
by conducting
of the
benefits
promoting
laws
this state
his business of
throughout
rock concerts in Montana and
appellant
promoted
Northwest. The record reveals that
prior
in
concerts Montana
one in Missoula at which the
proceeds
part
were attached. As
of his business transactions,
appellant
provided
also enters into contracts for services to be
in this
out of
state. It is
a similar and related contract that
respondent’s claim for relief or course of action arises... Fur-
appellant
possession
ther,
action,
at
time of this
was in
personal property
or
monies
in
state which were
rightfully belonged
respondent.
to have
It was for this
respondent
reason that
chose to file this action in Missoula.
appears,
appellant
“It
therefore, that
has ‘minimum con-
appellant
state;
tacts’ with this
in Montana,
was found
tran-
proceeds
sacts
business
had an
interest
in Mon-
tana which were attached, and
contracts
to be
services
satisfy
in Montana. The facts of this case
the re-
(c)
quirements
4B(l)(a),
(e),
of Rule
and M.R.Civ.P.”
Newberger
The record shows that the
main-
tained his
However,
business California.
as
indicated
Newberger
physical presence
facts
above,
described
had
Montana different from that found in the case
us.
before
Fur-
language Newberger
thermore, the
dictum
is
as the court
p.
said
1123,
“In event his counsel objection person. thereby without over his He any objection 12, waived under rule M.R.Civ.P.” concepts pro- There no contention that traditional “due cess” are offended here. The assertion of process requirements articulated in International Shoe Washington Co. v. State S.Ct. 154, U.S. L.Ed. are satisfied. *5 are so question activities is defendant’s The here whether they systematic constitute and substantial, continuous, hold physical presence within the State of Montana. We American the defendant, record under the facts this conferring purposes of for “found in Montana” jurisdiction Airlines, was personam States District the United holding We feel that such Court for the District of authority spirit comports of with the and with the trend 4B(1). Rule HARRISON, SHEA,
MR. SHEEHY and JUSTICES WEBER, concur. dissenting: DALY
MR. JUSTICE majority opinion. respectfully I from the dissent presently in American the effect Under law (AA) cannot be considered “found within” Montana Airlines subject personam jurisdic- the and therefore to cannot tion this State. emphasize special important, the instance,
It first to plaintiff facts The Montana to of this case. flew from New planned City York on Airlines. He transfer to Northwest Airways Nepal. British and continue to While at the New airport, alleges plaintiff AA came into York that somehow possession give case, of his camera refused to back him upon request, and him. The had not traveled insulted privity The AA; there was no of contract between them. plaintiffs way therefore, is relief, claim of in no related AA's contacts with this state. interpret here is how to the words “found within” issue part they pertinent 4B,
as are used in Rule M.R.Civ.P. The persons “All state of Montana Rule 4B reads: found within the jurisdiction subject are to the of the courts of this state.” applicable remaining 4B are of Rule lettered subdivisions plaintiffs they apply only of relief here when a claim since the nonresident defendant arises out the activities of personam has extended in forum state. this Court While to its constitutional over nonresident defendants 4B, Prentice limits of Rule under the lettered subdivisions Spahn we have Lumber Mont. never done under the But, so first sentence of Rule 4B. we have test. The effect applied “two-step” majority is to institute law exten- opinion change existing ding jurisdiction under “found within” to that allowable under law to a test. reducing one-step By expansion jurisdiction, majority both the ignored of the words within” importance test two-step we have used determining personam jurisdiction.
The well-established
4B
test for
Rule
two-step
interpreting
must,
that the court
as a
provides
first
look to whether
step,
the statute
for the exercise of
provides
under
facts of the
particular
case, and
the second
applying
step,
*6
court must determine whether it would offend due
process
State North Dakota v. Newberger
assert jurisdiction.
(1980),
Mont.,
The first here, then, is whether AA is question within” the State of and the second is question whether the assertion of offends due jurisdiction process-that is the “traditional fair notions of and substantial play justice”. International Shoe v. Washington (1945), 310, 316, 326 U.S. 66 154, 158, S.Ct. Millikin v. 95, 102, 90 L.Ed. Meyer quoting 457, 339, 343, 278, U.S. 61 S.Ct. 85 L.Ed. It is to note at this that the “minimum important con point tacts” test of International Shoe and its is used progeny only to determine whether due has been offended. has majority meshed test into one two-step step by looking to whether the traditional only notions “due pro- cess” are offended here. The effect by asserting jurisdiction its ruling is “found within” must be interpreted, instance, first in terms of the most liberal constructions allow- ed to the “minimum contacts” test. major the more liberal “minimum problem applying test, instance,
contacts” in the first is the fact that there is no connection between claim of relief and AA’s con- plaintiff’s tacts with this Plaintiff AA state. did not ticket to buy fly prior to the conversion AA no contact with and had bought a ticket from he If had in New York. his camera case apply possible may more liberal have been AA, (a) interpretation of Rule subdivision contacts” “minimum 4B(1),“transacting business”. acknowledged Newberger this Court though may even be asserted a nonresident
over
contacts
of the defendant’s
did not arise out
of action
cause
Nevertheless, both this Court and
with the forum state.
recognized
“[t]he
Supreme
that,
have
States
United
jurisdiction,
required
consistent
which to base
contacts
greater
process,
where
action
would be
with
brought upon
arising
these contacts with
claim not
from
con-
arise from the state’s
state, than where the action does
added.) May, supra,
(Emphasis
at
tacts.”
paragraph
1[1]
quoting
4.41-
Federal Practice
Moore’s
317-318,
The two Gullett v. relies (M.D. 1975), ways F.Supp. 417 Ladd v. 490, Ltd. Tenn. and (S.D.N.Y.1978), Royal F.Supp. 422, KLM Dutch 456 Airlines support AA its conclusionthat has sufficient contacts -with personam jurisdiction. support the assertion of in state to precedential highly questionable value of these cases relationship plaintiffs here. In Gullett the had a contractual Airways gave relief, rise to the claim of and with Qantas construing Ten court was a in Ladd the New York federal personam exercise for the nessee statute which any “[a]ny person inconsistent basis not over States.” TCA this State or the United with the Constitution of 42 20-235(f). relationship Here,
section is no there be- contractual parties, dealing statutory- tween the and we are not with language any way similar to statute, Tennessee’s Ten- being one-step typical a nessee give Only any guidance interpretation two cases for the within” as it is used in Rule 4B. McIntosh Heil v. Com- (D.Mont.1972), pany F.Supp.866, speaks directly to this point; Newberger, only speaks indirectly. and 613P.2d at 1005, corporation Heil,
In nonresident in Montana, advertised agents municipal sent into Montana bid on contracts, and products through Billings. distributed a distributor located corporation registered agent had no in Montana, owned property, importantly, no no office. maintained Most plaintiffs claim of relief out use arose of the of one of the cor- poration’s Wyoming, trucks in so there was no connection be- corporation’s tween claim relief contacts with question corporation Montana. The sole was whether the “found within” Montana. reasoning distinguished that “found within” must be transacting
from the test of minimum contacts and
business,
District Court Heil said:
People’s
Company,
“In
Tobacco
Ltd. v. American Tobacco
(1918),
Co.,
233,
U.S.
38 S.Ct.
L.Ed.
Supreme Court said that ‘to
found’
a cor-
within district
poration
present
must be
district
its officers and
agents carrying
corporation.
on the business of the
In United
Scophony Corp.
States
America,
333 U.S.
68 S.Ct.
Supreme
855,
“A is not within corporation found may or here whom unless has agents officers has been such character or unless its business be served it has subjected extent as to warrant that inference held that to the state. It generally the jurisdiction of itself arise merely such an inference cannot where corporation for the state and solicits its into ships products business an or into the sends officer state solicita- occasionally agent added.) 350 [Citations omitted.]” tion purposes. (Emphasis at 868-869. F.Supp. is the main argues controlling Newberger found
authority. defendant Newberger was within” this state. The defendant’s contacts with however, this state in were more Newberger, much substan- n tial tha of AA in this case. In the defen- those Newberger, dant was “found within” of the following Montana because activity:
“The record reveals that concerts appellant promoted at Montana to the prior one Missoula which proceeds transactions, As were attached. of his business part appellant also into contracts for enters services in this It is out of a similar and related contract that respon- dent’s claim for relief or course action arises. The basis of claim unrelated to or is, therefore, respondent’s totally Further, distinct from the activities of this state. appellant action, at the time of this was in possession appellant monies or this state were which personal property have . . .” 613 P.2d belonged rightfully respondent ac- 1005. Most nonresident defendant importantly, the time the action was tually present Missoula at commenced.
The acts of solicitation AA are less substantial clearly than those contacts the nonresident Newberger.
. the higher degree Given of “substantial” and “continuous activity for a systematic” necessary nonresident corpora- tion to be “found within” this state, seems that acts of mere solicitation are not sufficient. While International Shoe held that mere clearly solicitation would be enough satisfy “presence” or the purposes, one-step type test, is not we are what concerned with here. It was Shoe, itself, International that where the recognized claim of relief is not connected with the nonresident corporation’s in a forum state, the extent and activity quality of corporate must be Shoe, contacts International greater. 326 U.S. 317-318, 158-59; S.Ct. IT see also prior reference May, at 1137. greater Given this standard of mere solicita- within”, tion not does constitute “substantial” activity necessary to find in relief is personam jurisdiction where claim of no connected to I way solicitation forum state. would, therefore, dismiss this case on the that AA is' grounds to the in subject personam of the State of concurs in forego- JUSTICE HASWELL
MR. CHIEF ing dissent.