*1 § 2.702, right prior to the seller’s of and where all tor is subordinate lienholders satisfied, Furthermore, fully have been if the Court seller’s claim reclamation. priority against will be afforded right status as power deny its to the seller’s utilizes buyer’s general the unsecured reclamation, creditors. adequately protect it must of Furthermore, hold we that such a seller’s by granting interest the seller’s the seller’s priority proceeds will extend that are priority expense as an administrative goods. traceable to the We therefore re- securing the claim a lien. 11 U.S.C. holding the District verse Court’s as to this § 546(c)(2). Thus, post-Samuels, new the remand, point. however, last We for a bankruptcy right code deals with seller’s finding factual to whether O’Sullivan perfected equivalent of reclamation as to a diligently right exercised its of reclamation. security interest under Article Nine.19 See finding That is essential to a determination § Finally, Report 363. the House U.S.C. However, of this case.21 the District Court Congress intended to extend indicates clearly granting correct in Westside right proceeds: reclamation to the of priority to interpleaded first the fund. however, right pow- to the is PART, AFFIRMED IN IN REVERSED deny the reclamation and er of PART AND REMANDED. protect by granting pri- the seller him a ority expense as an administrative arising the his claim out sale of of goods. 372, Report, supra, at U.S.Code

House 1978, (em- Cong. p. & Admin.News 6328. Roger HANDLEY, L. Plaintiff-Appellee, § added). Hence, 546(c) phasis we see that reclaiming was intended to allow the seller priority against proceeds claim20 INDIANA & MICHIGAN ELECTRIC goods from the sale of the when Court CO., Defendant-Appellant. goods chooses not to return the them- No. 82-5694. Clearly “preferen- selves. constitutes United States Court Appeals, of against buyer’s general

tial treatment Sixth Circuit. unsecured creditors.” Texas UCC See § 2.702 comment 3. 8, Dec. 1983. April Decided 1984. Conclusion Rehearing Rehearing and En Banc foregoing, all the On the basis of Denied June 1984. goods has

we hold that where a seller diligently right asserted its of reclamation requirements otherwise met structure, Lazadis, (mere bankruptcy supra, Under the 21. See note 16 fact that a most inter- 19. right party have a to rescind under ven- property except ests in the debtor’s are cut off— interests, dor’s lien is not tantamount to election to exer- security judgment perfected liens right). cise that order for O'Sullivan to re- against, which have been levied certain reclamation, right priority tain a under its nondischargeable By providing debts. diligently right. must have exercised that trustee’s interest subordinate to the seller’s is unclear whether O'Sullivan record could have reclamation, right bankruptcy the new code goods. demand on TEMI for return made right a sense elevated the has in of reclamation clearly While the letter Westside states that it it, level of these other to the interests because 2.702, pursuant telegrams § is a demand too, filing is not cut short bank- payment only. to TEMI made demand for On petition. ruptcy remand the District Court should determine whether O'Sullivan could have made such a By providing grant that the trustee must no, demand on TEMI. If the answer is then the priority expense, as an administrative he seller Court must determine whether District Westside granting effect the seller the to be is in fiduciary stood as a of TEMI when O’Sullivan paid from whatever assets remain. See 11 first it, supra made demand on n. so that demand U.S.C. 507. on Westside constituted demand on TEMI. *2 “pilot daily log house sheet” showed barge Handley on which was in-

jured picked up had Virginia. been in West Virginia Handley While still West waters in trying pull “barge hurt his back barge wire” aboard a with the assistance of *3 (I M) one other seaman. The defendant & corporation principal is an Indiana with its place Virginia. of business West Act, brought action was under the Jones 46 (1976)1 general U.S.C. 688 and the mari- law; subject jurisdiction time matter is ad- mitted. The district court found that it had personal jurisdiction over I & M and award- damages Handley following ed a non- jury appeal trial. On the defendant ac- 52(a), Fed.R.Civ.P., knowledges that Rule any controls review of the merits of the solely case and it seeks reversal on its personal district court lacked Pinney, argued, Graydon, B. Head John Ohio, Cincinnati, Ritchey, John R.S. I.

& Adams, Brooking & Stepner, Brooking, A. Ky., defendant-appellant. Covington, for This court has dealt with the issue Lawrence, argued, Coving- Meredith L. personal jurisdiction nonresident of over ton, Ky., plaintiff-appellee. for cases, defendants a number of almost however, exclusively, subject LIVELY, when matter Judge, Before Chief KRUPAN- jurisdiction diversity has been based on of SKY, PHILLIPS, Judge, and Senior Circuit leading citizenship. Our case of this varie Judge. Circuit ty is Southern Machine Co. v. Mohasco LIVELY, Judge. Chief Industries, Inc., 401 F.2d 374 (6th Cir. 1968), long question appeal involved the Tennessee this is whether Poyner v. Erma arm statute. See also personal jurisdiction the district court had GMBH, (6th Cir.1980) defendant Werke corporate 618 F.2d 1186 over a nonresident statute); v. (the long Welsh process pursuant arm which was served with Cir.1980), Gibbs, cert. (6th long arm 631 F.2d 436 plain- the statute. The denied, sought 450 U.S. 101 S.Ct. (Handley) is a seaman who dam- tiff (1981) (the injuries Ohio arm stat ages personal suffered while L.Ed.2d and Nationwide Motorist Ass’n ute); working barges. the defendant’s on one of of Freeman, (6th Virginia. Michigan F.2d 699 Handley of West is a resident may provides: seaman maintain an action for The Jones Act such right by jury, damages at law with the of trial inju- Any personal who shall suffer seaman the United employment may, action all statutes of ry at and in such in the course of his election, damages regulating right conferring an action for or the his maintain States law, by jury, right railway and in with the of trial case of em- for death the action of the United States such action all statutes applicable. ployees Jurisdiction in be shall extending modifying or the common-law be under the court of shall such actions injury remedy personal to rail- in cases of or employer re- the defendant district in which way employees apply; case shall and in principal is locat- his office sides or in which any any seaman as a result of such death of ed. personal representative (1) statute). Cir.1969)(the summons, for service of Michigan arm or cases, plaintiffs notice, of an In all of these whether or order in lieu of summons con- breach of upon tort or party claim was based on not an inhabitant of or jurisdiction tract, decision of the state, (2) found within or for service the nonresi- whether question turned on upon notice to him appear “minimum sufficient dent defendant had respond or defend an action reason satisfy state to forum contacts” garnishment of the attachment or or sim- re- Fourteenth Amendment property ilar his seizure of located within limitations on quirements. The territorial state, service in either case be require courts state made under the circumstances diversity cases. When determination in prescribed in manner the statute or rule. of a federal district of the forum state a nonresident court over B. action whose challenged in an *4 In Southern Machine Co. Mohasco on is based a federal jurisdiction matter Industries, Inc., supra, this court noted inquiry must statute, be made. a different ‘long may that “a arm in statute’ be used a system of a courts a part of national As question action.” federal 401 F.2d at 376 considering district court a case federal However, explore n. 2. the court did not law is subject under federal not that arises question the of whether the same limits on limita- precisely to the same personal jurisdiction apply as when diversi diversity its reach tions which restrict clear, however, 4, ty citizenship of is the of It is that Rule basis cases. Fed.R.Civ.P., personal jurisdiction jurisdiction. question affects matter was ad This by placing lim- Chrysler Corp. of district courts territorial dressed in v. Fedders process. (6th Cir.), on their Corp., its 643 F.2d 1229 cert. de nied, 893, 388, 454 U.S. 102 S.Ct. 70 creating a a When federal statute (1981), the de L.Ed.2d 207 where one of process provi contains no substantive corporation. an alien fendants was After in a sions service of district court plaintiff holding that the had not estab action over a nonresident defendant who is Michigan lished sufficient contacts with to governed by in the is not found forum state support jurisdiction personal over the non state, applicable of the or rule that statute pursuant Michigan’s resident defendant to 4(e), under Rule Fed.R.Civ.P.: statute, 1236-37, arm id. the court (e) Upon Party Summons: Service Chrysler’s argument considered the Found Not Inhabitant of or Within personal jurisdiction theory a had on of State. a statute the United Whenever of contacts.”2 this the “aggregate Under States or an court thereunder order of court, ory, by the as stated summons, provides for or of service of a jurisdiction a foreign corporation over be- notice, a or of an in lieu of sum- order ing may on a federal of action sued cause upon a party mons not inhabitant corporation’s be on the founded contacts or found within the state a whole the United States as held, may district court is service be opposed its the forum contacts with made under the in the circumstances and state. This “national contacts” or prescribed by manner or- the statute or concept der, or, “aggregate contacts” is based on if provision there is no therein jurisdiction- service, proposition that prescribing the manner in a power binding judgment al to render manner stated rule. Whenever questions statute or federal must be examined rule court of the state light which the district court of the due clause provides is held Note, Though aggregate incorporated approach outside the forum state. See contacts frequently applied Corporations Aggregate and Contacts: corporations, most Alien A "alien” Standard, States, incorporated Genuinely those outside the Federal Jurisdictional 95 United 470, (1981). applied "foreign” corporations, is also 475-76 Harv.L.Rev. those

1269 rather amendment, Fifth than Fourteenth Amend- fourteenth but the fifth ment. amendment. (footnote DeJames, at 1237-38

Id. citation omit- (Gibbons, J., 654 F.2d at 292 ted). The court dissenting). concluded that it was not In determining fairness under required adopt to determine Amendment, whether the Fifth Judge Gibbons ar- “aggregate gued, contacts” rationale since contacts, the defendant’s national not Chrysler had failed to establish sufficient particular those with the location where the approach. even arose, contacts under that should be considered. Id. The issue is one which has divided The Fifth Circuit has wrestled with this courts and has concerned commentators. issue and has decisions of vintage recent Carriers, Magnificence DeJames v. which reach irreconcilable results. In Ter Inc., (3d Cir.1981), majori- 654 F.2d 280 ry International, Inc., v. Raymond ty found that over an 398, (5th Cir.1981), F.2d 402-03 cert. de corporation alien sued in the district court nied, 456 U.S. 102 S.Ct. Jersey provi- New limited (1982), L.Ed.2d 443 Lapeyrouse v. Tex Jersey long sions of the New arm statute. aco, Inc., (5th Cir.1982), F.2d action, by longshoreman the court held that the sole test of injuries, admiralty was based on the court’s jurisdiction in question federal cases is one acknowledged The court constitutionality. reasoning Under this Jersey the New statute was intended to a state arm merely prescribes statute permitted extend to the limits the manner in which a nonresident be *5 by process requirements the due question case; served in a federal the fact recognized It anomaly Constitution. “[t]he that a state statute assert being by federal court limited prescribing as well as the manner of ser- requirements of the fourteenth amendment vice is “irrelevant.” Terry, 658 F.2d at case,” nondiversity in a but concluded that hand, 402. theOn other in Burstein v. Congress by intended this result its failure (5th California, State Bar 693 F.2d 511 authorize nationwide service of Cir.1982), Marine, and DeMelo v. Toche admiralty eases. Id. at 284. Inc., (5th Cir.1983), 711 F.2d 1260 the court 4(e) language concluded from the of Rule majority The DeJames concluded that that where a federal statute contains no of a district court provision process, personal for service of over a nonresident defendant served under jurisdiction over a nonresident defendant in long a state arm statute is to the question by federal case is limited same limitations as that of a state court “circumstances” as well as the “manner” Gibbons, using Judge the same statute. prescribed for service of in the dissent, argued majority’s Four- applicable Applying state statute or rule. analysis improper. teenth Amendment reasoning this a federal court will maintain personal jurisdic- a court When asserts personal jurisdiction over a nonresident de- foreign tion over a defendant on the ba- only plaintiff fendant if the establishes that claim, sis of a state law it must ensure one or more of the relating conditions unduly forum state does not contacts forum state set forth in encroach on a sister state’s interests. the state arm statute have been satis- court, federal, adjudi- aWhen state or fied. Thus it is the state’s standard of claim, cates a federal the federalism is- amenability which controls where the relevance, sue is of no for the court bring state’s arm statute is utilized to parties’ rights determines the and liabili- an out-of-state defendant before federal uniform, ties under national law. No court, though pro- the action is based on a state intrudes on another’s interests. vision of federal substantive law. only relevant interest is the national applicable earlier, one. Thus the by constitutional As noted the issue raised process provision appeal should not be the has attracted the interest of com- 1270 rectly by agent, or as to a claim have been commentators Some

mentators. arising person’s: from the interpretation by a number critical of the 4(e) provi- adopts state Rule courts that Transacting any in this 1. business amenability to service of on sions Commonwealth; relating manner of to the as those as well Contracting supply services or 2. See, D. e.g., A. Mehren & von service. Commonwealth; goods in this Adjudicate: A Troutman, Jurisdiction injury by Causing tortious an act 3. Analysis, 79 Harv.L.Rev. Suggested Commonwealth; in this or omission (“... (1966) in enforcement 1123 n. 6 injury in this Causing tortious law, there is federal arising under claims act or by an omission Commonwealth refuse to federal court to for a little reason regular- if he outside this Commonwealth the courts of merely because proceed business, engages in or ly or solicits does claim sitting would not it is state which conduct, persistent course any other Corporations Alien Note, jurisdiction.”); from revenue derives substantial Genuinely A Aggregate Contacts: ren- or services goods used or consumed Standard, Federal Jurisdictional Commonwealth, provided in this dered (1981) (“The most ob- Harv.L.Rev. occurring in this that the tortious long-arm statutes on impact of state vious doing or out of the Commonwealth arises limit the full en- jurisdiction is to federal persistent soliciting or a of business law.”). On the other of federal forcement of sub- or derivation course of conduct Marine, Inc., hand, in DeMelo v. Toche the Common- within stantial revenue support for found F.2d at the court wealth____ amenability is controlled its conclusion that 454.210(b) it clear makes long arm statutes KRS provisions of state (a) federal circumstances set forth subsection respected treatises in two Miller, Fed- exclusive: Wright & A. are courts. See 4 C. and Procedure eral Practice (b) person jurisdiction over When Moore, (1969 2 J. J. Supp.1982); & 312-13 section, only a solely upon this based Moore’s Thompson, Lucas, H. Fink & C. enumerated arising from acts *6 4.32[1],

Federal Practice fill 1[3] against him. may asserted 4.41— this section be (1982). attempted prove that Handley to causing the arose from I & M’s his claim II. Kentucky, in injury by an act or omission A. in recited KRS 454.- the circumstance provi- Act does not contain 210(2)(a)3. barge The Jones He testified that the wire I M was process, and & sion for service of pulling out of the river when which he was Kentucky long arm pursuant to the served injured might have fallen over he himself in this case However, The manner of service statute. Kentucky in waters. board jn plaintiff followed the issue. The Kentucky” is not proof of this “act or omission of the arm stat- provisions best, to” “how and did not estab speculative was Kentucky secretary of state of and the by preponderance ute of the lish this fact copy complaint of the to promptly sent a rules on a chal When a court evidence. Ken- portion of the hearing the defendant. The after lenge personal jurisdiction setting forth the tucky long arm statute evidence, considering a mo opposed nonresident affidavit, under which a plain circumstances supported by an tion Kentucky forth may served are set be demonstrate the exist tiff’s is to burden 454.210(2). (KRS) jurisdiction by Revised Statutes supporting of facts ence v. relating to claims for tortious provisions Welsh of the evidence. preponderance 454.210(2)(a)l-4: Gibbs, injuries are found KRS conten 439. There is no 631 F.2d at of con Handley’s claim arose out tion that (2)(a) may exercise A court in Ken- tracting supply goods or services di- person who acts jurisdiction over tucky I & M and is clear that did not actions in federal courts. When a federal Kentucky by an hearing cause act or deciding and a federal Handley somewhere else. omission was question problems case there are no Virginia. injured in West Thus neither “coequal sovereigns.” That is a Four- (2)(a)4 (2)(a)2 applies. subsection nor teenth Amendment concern which is not present in actions founded on federal*sub- appears to The district court have relied Thus, stantive law. in our due 454.210(a)(2)l finding on KRS analysis present light case in the ruling In oral on the de- Kentucky arm statute we bewill dismiss, fendant’s motion made after all only concerned with whether the district in, proof the district judge was said: jurisdiction unfairly assertion of I evidence shows oper- think the I requirement burdened & M with company ations of this are more or less litigating in an inconvenient forum. up continuous and down the river and talking about ... a we’re failure to take III. practices certain action on and certain people the crew and go the boats do A. the river up through Kentucky and down Kentucky long arm statute is Kentucky byor and I think suffi- that’s permitted intended to reach to the by limit cient. the Constitution. Poyner v. Erma Werke GMBH, Thus,

B. 618 F.2d at 1192. we should “arising transacting any construe from ... agree We with the district court business” in favor of I M’s require that & activities satisfied the unless to do so would violate I & M’s Kentucky long ments of the arm statute process. constitutional to due regarding the circumstances under which a nonresident defendant be served with . The evidence discloses that I & M’s process. reaching this conclusion we barges up moved and down the River Ohio agreement Judge note our Gibbons doing and in so traversed waters. analysis that a Fifth Amendment of due They stopped from time to time at various process is different one from undertaken Virginia, Ohio, ports in West under the Fourteenth Amendment. This is Illinois, they took on fuel and stores at implicit in Supreme Court’s treatment Kentucky landings. There was evidence analysis of the Fourteenth Amendment wires, cables, barge like the one Woodson, Volkswagen World-Wide 444 Handley pulling injured, aboard when U.S. 62 L.Ed.2d 490 S.Ct. routinely permitted were to fall over the (cid:127) (1980). Justice White described two dis barges. sides of The district court stated performed tinct but related functions finding liability its as follows: *7 the Fourteenth process Amendment due re ISo would have to find and I will so quirement of minimum contacts between find that the fact that these cables were the nonresident defendant and the forum frequent- allowed to fall over the sides so state: ly go and that men had to on the decks in protects It against defendant the bur- dangerous the dark in pull conditions to of litigating dens in a distant or incon- up company ample them and that the had venient forum. And its acts to ensure negligence notice of this constitutes on States, courts, through their do part company. of the For some rea- beyond not reach out imposed the limits company son that I don’t understand the by on them their coequal status as sover- frequency asserts of the occurrence eigns system. in a federal as a defense. The fact that these cables 291-92, Id. at 100 S.Ct. at easily, 564-65. fall over the side so means to the Obvi- ously the second of something certainly these court that applies functions could be in only to actions state courts diversity negligence, done it. It constitutes about in the courts of that A fed- when it’s over creates actions state. and the cable corpo- compel eral court should be able to of unseaworthiness. condition rate which has availed itself of defendant Handley’s concluded court The district privilege transacting business which injury arose from condition oc- forum state to submit to its I frequently barges on & M’s as curred brought pursuant cases to federal law. To Kentucky they waters. The fact traversed hold otherwise would be to diminish the injury occurred in another state legislation having effectiveness of national fortuitous; happened it could have scope. sought I & M could have a transfer continuing Kentucky as well because of a of this action to a district court in West unseaworthy condition. Virginia grounds of on non conven- forum (1976), iens, 28 U.S.C. would B. rigorous imposed upon a less have burden analysis In the final our task is to sought grounds it. dismissal Instead determine whether the district court’s exer personal jurisdiction, and of lack of we jurisdiction in cise of this case offended that the district court this conclude decided play “traditional notions of fair and sub correctly. issue justice.” stantial International Shoe Co. 310, 316, Washington, v. 326 U.S. 66 S.Ct. judgment of the district court is (1945), 154, 158, quoting 90 L.Ed. 95 Millik affirmed. 457, 463, 339, Meyer,

en v. 311 U.S. 61 S.Ct. KRUPANSKY, Judge, dissenting. Circuit 342, (1940). 85 L.Ed. 278 If “minimum exist, assuming proper contacts” notice of majority’s interpretation Because the defendant, given the suit is 4(e) Federal Rule of Civil Procedure effec- one, present like is satisfied. a case role, tively by obviates the mandated rule sitting where a federal court is a federal 4(e), long-arm state stat- question case, purpose of minimum con case, respectfully ute in I must dissent. protect “against tacts is to the defendant that, majority recognizes “[i]t litigating the burdens of in a distant or 4, Fed.R.Civ.P., clear ... that Rule affects inconvenient forum.” World-Wide Volks personal jurisdiction of district courts Woodson, wagen Corp. U.S. placing process” territorial limits on their 559, 564, 100 S.Ct. 62 L.Ed.2d 490 where, here, Congress neglected has (1980). The increase commercial trans promulgate statutory provisions for service actions which touch two or more states has federally concomitant with cre- caused a in the relaxation role of the Due rights. consequence ated As a substantive guarantor against Process Clause as a in Congressional inaction in this Jones Act 292-93, litigation. convenient Id. at 4(e) cause, rule directs that the federal Nevertheless, S.Ct. at 564-65. a defend be referenced ant’s connection with the forum state appropriate relevant forum state stat- reasonably should be such that “he should face, 4(e) sup- utes. On its rule offers no anticipate being haled into court there.” port majority’s for the conclusion that “... Id. at 100 S.Ct. at 567. considering federal a case district Handley’s claim We conclude that that arises federal is not under law arose, indirectly precisely at least from I & M’s limita- the same due transacting and that tions in diversity business which restrict its reach *8 by permitting ignores is not offended cases”. majority the direct sitting 4(e) Kentucky specifically district court to exer command of rule cise over I & M in this federal court mandates that the limit ser- corporation case. Where a nonresident vice of its to the “circumstances” prescribed by carries on substantial and more or less and “manner” the forum long-arm by inappropriately continuous business within state it should state’s statute reasonably expect required framing ap- to be to defend the confronted issue here on district whether the peal as “... unfairly burdened jurisdiction

assertion litigating in requirement of

I M & with the case at inconvenient forum”. long-arm stat-

bar, relevant on non-resi-

ute limits service the non-resi- arising from to claims

dents within its of business

dent’s transaction

geographic boundaries. the as- the record evidences

Here from the accrued out

serted cause of action non-Kentucky negligence state de-

cf proximately caused

fendant which plain- to a

outside of the state never had

tiff was not and been a who

resident of that state. case,

Accordingly, from facts of this apparent pursuant invoked not have been

could long-arm I

Kentucky’s statute. would judgment vacate the of the court

therefore the case for dismissal

below and remand

for lack of GASKIN, INC., AND

TAYLOR

Plaintiff-Appellee, INDUSTRIES,

CHRIS-CRAFT

Defendant-Appellant.

No. 80-1387. Appeals,

United States Court of

Sixth Circuit.

Argued Sept. 1983. April

Decided