Case Title: McGowan Grain, Inc. v. Sanburg

Citation: 225 Neb. 129, 403 N.W.2d 340

Docket Number: 

State: nebraska

Court: Nebraska Supreme Court

Date: 1987-04-03T00:00:00Z

Document:
403 N.W.2d 340 (1987) 225 Neb. 129 McGOWAN GRAIN, INC., a Nebraska Corporation, Appellant, v. Ronald D. SANBURG and Darrell Strickler, Appellees. No. 85-597. Supreme Court of Nebraska. April 3, 1987. *342 Robert C. McGowan, Jr., Omaha, for appellant. James T. Blazek and Martin Cahill, Omaha, for appellees. KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ. SHANAHAN, Justice. McGowan Grain, Inc., sued Ronald D. Sanburg (Ron Sanburg) and Darrell Strickler in a contract action brought in the district court for Douglas County. After sustaining special appearances by Ron Sanburg and Strickler, the district court dismissed McGowan's action. We reverse and remand these proceedings. At the hearing on the special appearances, affidavits provided the background and factual basis on which the court determined there was no personal jurisdiction over Ron Sanburg and Strickler. In 1981, the Nebraska Grain & Feed Dealers Association published a "grain & feed directory & buyers guide." At page 105 of that publication there appeared the advertisement of the Sanburg Co., Inc., "Truck Grain Merchants of the Midwest," informing readers that Sanburg Co. had a toll-free line for customers in states bordering Kansas. The advertisement also stated that Sanburg Co. had an office at McCool Junction, Nebraska. Among the names appearing in the advertisement was "Ron Sanburg." In 1982, substantially the same advertisement appeared in the directory, with the exception of the addition of Darrell Strickler's name and information that Sanburg Co. had a "National WATS" line in addition to a "Kansas WATS" and a toll-free number for "bordering states." That advertisement again appeared in the grain directory in 1983 and 1984. It appears that Sanburg Co. is a Kansas corporation and had its office at Overland Park and, later, Lenexa, in the State of Kansas. McGowan, a Nebraska corporation, was a member of the Nebraska Grain & Feed Dealers Association and operated a commercial grain elevator in Louisville, Nebraska. Sometimes McGowan's representatives placed telephone calls to Sanburg Co. about prospects of a grain sale. On other occasions, Sanburg Co. telephoned McGowan *343 and inquired whether McGowan was interested in selling grain. Regardless of the source of telephone calls about grain sales, if McGowan had available grain Sanburg Co. mailed duplicate original contracts to McGowan. Pursuant to the established practice between Sanburg Co. and McGowan, one of the mailed duplicate contracts, which had been signed by Sanburg Co., was retained by McGowan, while the other duplicate, which was unsigned by Sanburg Co., was signed by McGowan and mailed to Sanburg Co.'s office in Kansas. Every delivery of contracted grain took place at McGowan's elevator, where the grain was loaded on Sanburg Co.'s trucks. Between July 18, 1983, and May 21, 1984, McGowan had 29 separate written contracts for sale of grain to Sanburg Co. Of these 29 contracts, Ron Sanburg, a Kansas resident for approximately 14 years before the McGowan contracts, negotiated and signed 9 contracts on behalf of Sanburg Co. for purchase of 57,582 bushels of McGowan's grain, including 3 contracts during February and March 1984. In September 1983, and during March, April, and May of 1984, Darrell Strickler, who was a Kansas resident employed by Sanburg Co. as a "merchandiser," negotiated and signed four contracts regarding Sanburg Co.'s purchase of 54,000 bushels of grain from McGowan. The last contract obtained by Sanburg Co. through Strickler was dated May 21, 1984, and involved 20,000 bushels of McGowan corn at a price of $3.40 per bushel. All contracted grain was delivered to Sanburg Co. Throughout Sanburg Co.'s transactions with McGowan, Sanburg Co. did not have a Nebraska grain dealer's license, and neither Ron Sanburg nor Strickler, as employees of Sanburg Co., was licensed by the State of Nebraska as required by Neb.Rev. Stat. § 88-518 (Supp.1983), which in part provided: Cf. Neb.Rev.Stat. §§ 75-901 to 75-909 (Reissue 1986) ("Grain Buyer Act"). The records of the Nebraska Public Service Commission, which issues licenses to grain buyers and agents or employees of grain buyers, contained verified documents reflecting that Ronald D. Sanburg (Ron Sanburg) is the president of Sanburg Co. (In his affidavit, Ron Sanburg acknowledged his presidency of Sanburg Co. from September 1980 to September 13, 1984.) The Public Service Commission records also reflect that the only other officer for Sanburg Co. is Nancy Sanburg, secretary of the corporation. According to the return of summons by the Kansas sheriff, Nancy Sanburg is the wife of Ron Sanburg. In September 1984, Sanburg Co. was "put into bankruptcy ... in the United States Bankruptcy Court for the District of Kansas." Because Sanburg Co. failed to pay for the McGowan corn purchased and delivered on May 21, 1984, McGowan, on November 30, 1984, filed suit against Ronald D. Sanburg and Strickler in the district court for Douglas County, alleging the May 21 contract with Sanburg Co.; agency or employment of Ron Sanburg and Strickler in relation to Sanburg Co.; nonpayment for the purchased and delivered corn; nonexistence of a license for Sanburg Co., Ron Sanburg, and Strickler; and liability of Ron Sanburg and Strickler on account of § 88-518. Nebraska's "long-arm statute," Neb.Rev. Stat. § 25-536 (Reissue 1985), states: A summons issued from the Nebraska court was served on Ron Sanburg and on Strickler in Kansas. Ron Sanburg and Strickler, neither of whom had ever been present in Nebraska regarding any McGowan contract, each filed separate special appearances, alleging: "Defendant has had no contact with [Nebraska] and does not maintain any relation with this State sufficient to afford a basis for the exercise of personal jurisdiction consistent with the Constitution of the United States." After a hearing on the special appearances, the court concluded there was Thereafter, the district court dismissed McGowan's action. The only question is whether a Nebraska court has acquired personal jurisdiction concerning Ron Sanburg and Strickler. As the U.S. Supreme Court expressed in Internat. Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945): 326 U.S. at 316, 66 S. Ct. at 158. 326 U.S. at 319, 66 S. Ct. at 159. Consequently, our inquiry is whether Ron Sanburg and Strickler had sufficient *345 "minimum contacts" with the State of Nebraska to subject those nonresidents to the jurisdiction of a Nebraska court consistent with the U.S. Constitution. See York v. York, 219 Neb. 883, 367 N.W.2d 133 (1985). Ron Sanburg and Strickler suggest that the "fiduciary shield doctrine" is applicable in the present case and prevents personal jurisdiction over them in Nebraska. The fiduciary shield doctrine may be stated: Personal jurisdiction over a corporate agent or employee cannot be based on jurisdiction over the corporation for which the fiduciary acts, when the individual's activity in the state of the forum is conducted solely as the agent or employee of the corporation. See Marine Midland Bank, N.A. v. Miller, 664 F.2d 899 (2d Cir.1981). See, also, Columbia Briargate Co. v. First Nat. Bank, 713 F.2d 1052 (4th Cir.1983), cert. denied 465 U.S. 1007, 104 S. Ct. 1001, 79 L. Ed. 2d 233 (1984). Although we have not expressly adopted the fiduciary shield doctrine, this court has recognized the general rule that an agent, acting for a disclosed principal, is not ordinarily liable for the principal's contract. See, State Securities Co. v. Svoboda, 172 Neb. 526, 110 N.W.2d 109 (1961); Bury v. Action Enterprises, Inc., 197 Neb. 38, 246 N.W.2d 724 (1976); Koperski v. Husker Dodge, Inc., 208 Neb. 29, 302 N.W.2d 655 (1981). For reasons expressed later in this opinion, we find that the fiduciary shield doctrine is irrelevant to the question concerning personal jurisdiction over Ron Sanburg and Strickler. We do not have before us and, therefore, make no determination regarding the issue of substantive law, whether one may be held liable in damages as the result of § 88-518. In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957), the U.S. Supreme Court examined a situation where a Texas insurance company had mailed a reinsurance certificate to its insured, a California resident, who paid all premiums by mail. The insurance company did not have an office or agent in California and had "never solicited or done any insurance business in California apart from the policy involved here." 355 U.S. at 222, 78 S. Ct. at 200. The insurance company was not served with process in California, but was served by registered mail at its principal place of business in Texas. In holding that personal jurisdiction over the insurance company did not amount to a denial of due process, the Court stated: 355 U.S. at 222-223, 78 S. Ct. at 200-01. More recently, in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980), *346 service under the Oklahoma long-arm statute raised a question of due process in a products liability case, where a New York resident, who had purchased an Audi in New York, was en route to Arizona in that automobile, when the Audi was struck from the rear and ignited, causing severe burns to one of the plaintiffs. Suit was filed in Oklahoma and included as defendants the Audi's retailer and wholesaler, both of which were New York corporations and neither of which did any business in Oklahoma. In ruling that there were insufficient "contacts, ties, or relations" to sustain personal jurisdiction in Oklahoma concerning the retailer and wholesaler, the U.S. Supreme Court expressed: 444 U.S. at 291-92, 100 S. Ct. at 564. 444 U.S. at 295, 100 S. Ct. at 566. 444 U.S. at 297, 100 S. Ct. at 567. Later, as expressed by the U.S. Supreme Court in Insurance Corp. v. Compagnie des Bauxites, 456 U.S. 694, 703 n. 10, 102 S. Ct. 2099 [, 2104 n. 10], 72 L. Ed. 2d 492 (1982): The restriction on state sovereign power described in World-Wide Volkswagen Corp., however, must be seen as ultimately a function of the individual liberty interest preserved by the Due Process Clause. That Clause is the only source of the personal jurisdiction requirement and the Clause itself makes no mention of federalism concerns. Due process and personal jurisdiction pursuant to a long-arm statute were examined in Burger King Corp. v. Rudzewicz, *347 471 U.S. 462, 471-74, 105 S. Ct. 2174, 2181-83, 85 L. Ed. 2d 528 (1985), where the U.S. Supreme Court stated: Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984), mentioned in Burger King Corp. v. Rudzewicz, supra, involved an action for libel. Jones, who lived and worked in California, brought suit in a California court, claiming that an article written by South, Calder's codefendant, and edited by Calder, was libelous. Calder and South, Florida residents, were employees of the National Enquirer, Inc., a Florida corporation. South traveled frequently to California on business but, in writing the questioned article, relied on telephonic information from California sources. Aside from his frequent trips and phone calls, South had no relevant contacts with California. Calder had been to California only twiceonce on a pleasure trip, before publication of the subject article, and once after publication to testify in a matter unrelated to the questioned article. Calder had no other relevant contacts with California. As president and editor of the Enquirer, Calder oversaw "`about every function of the Enquirer.'" 465 U.S. at 786, 104 S. Ct. at 1485. Recognizing that the California court had personal jurisdiction over *348 Calder and South, the U.S. Supreme Court observed and stated: 465 U.S. at 789-90, 104 S. Ct. at 1486-87. Cf. Asahi Metal Industry Co. v. Superior Court, ___ U.S. ___, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987), where the U.S. Supreme Court considered a Taiwanese tire manufacturer's claim for indemnification from a Japanese corporation whose tire valve assembly was incorporated into a motorcycle tire which exploded, causing injury to the motorcycle's operator and death to a passenger on the motorcycle. The product liability claim was settled, leaving the issue of indemnification sought by the Taiwanese corporation. In finding that the Japanese corporation's contacts were insufficient to sustain a California court's personal jurisdiction over that corporation, the Supreme Court noted in Asahi at ___, 107 S. Ct. at 1033-35, 94 L.Ed.2d at 105-07: Because the plaintiff is not a California resident, California's legitimate interests *349 in the dispute have considerably diminished.... Applying the principles enunciated by the U.S. Supreme Court regarding due process and personal jurisdiction over a nonresident, we find that both Ron Sanburg and Strickler have sufficient contacts, ties, or relations with the State of Nebraska which are adequate bases for personal jurisdiction exercised by a Nebraska court. No one disputes that Sanburg Co. has carried on protracted business in Nebraska by substantial and numerous purchases of grain from a Nebraska resident, McGowan. The State of Nebraska clearly considers grain transactions within its borders to be matters of public interest and concern. See, Grain Buyer Act, §§ 75-901 to 75-909; Nebraska Public Grain Warehouse Act, Neb.Rev.Stat. §§ 88-502 to 88-517 (Cum.Supp.1986). As a more fundamental interest, the State of Nebraska has seen fit to enact a specific code pertaining to sales of personal property within this state, see Neb.U.C.C. §§ 2-101 to 2-725 (Reissue 1980), especially statutory provisions for the passage of title from seller to buyer. See § 2-401. It is inescapable that sales of grain within Nebraska's borders are a matter of substantive policy of this state and, in the event of a dispute concerning any such sale, a matter for efficient judicial resolution in a Nebraska court. Thus, Nebraska "has a `manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528 (1985). Sanburg Co., in advertising in a Nebraska publication, sought to serve the Nebraska market and very pointedly solicited business from Nebraska residents. Both Ron Sanburg and Strickler signed contracts which Sanburg Co. mailed to McGowan in Nebraska. Pursuant to those contracts, Sanburg Co.'s trucks were obviously dispatched into Nebraska, with the McGowan elevator as their destination, to obtain delivery of McGowan's grain. At the elevator, as the grain was loaded into Sanburg Co.'s trucks, truckload after truckload, title for the contracted corn passed from McGowan to Sanburg Co. See, § 2-401; Huskinson v. Vanderheiden, 197 Neb. 739, 251 N.W.2d 144 (1977) (in the absence of a contractual provision, title of goods sold passed on seller's delivery to buyer). Such deliveries to McGowan were products of commercial transactions having substantial business effects in Nebraska and were consequences of intentional acts directed at Nebraska residents. Generally, and in the absence of restriction by statute, articles of incorporation, or corporate bylaws, the president of a corporation, by the very nature of that office, is the head of the corporation, its general agent, chief executive officer, and general manager of corporate affairs. See, Roe v. Bank of Versailles, 167 Mo. 406, 67 S.W. 303 (1902); Burlington Industries v. Foil, 284 N.C. 740, 202 S.E.2d 591 (1974); Axelrod v. Premier Photo Service, 154 W.Va. 137, 173 S.E.2d 383 (1970). Ron Sanburg, as president of Sanburg Co., and, therefore, that corporation's general manager, controlled the day-to-day activities of Sanburg Co. and ostensibly guided corporate activities into Nebraska, such as the advertisements in the grain dealers' directory and dispatch of trucks to haul McGowan's grain delivered pursuant to contracts with Sanburg Co. Both Ron Sanburg and Strickler negotiated and signed several contracts for Sanburg Co.'s acquisition of McGowan's grain in Nebraska over an appreciable period. The intentional actions of Ron Sanburg and Strickler were expressly aimed at Nebraska, that is, contracts with a Nebraska resident. If personal jurisdiction has been upheld concerning nonresident primary participants whose intentional actions allegedly took the *350 good name of a resident of the forum state, see Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984), then nonresident primary participants, whose intentional and directed actions allegedly caused a resident of the forum state to part with ownership of tangible property, are subject to personal jurisdiction in the forum of the resident's state, which is precisely the case before us. Both Ron Sanburg and Strickler controlled some marketing activity of Sanburg Co. when they obtained contracts from a Nebraska resident. Thus, both Ron Sanburg and Strickler had direct, deliberate, and purposeful contact with Nebraska. Moreover, unless we succumb to naivete and accept the very unlikely premise that Ron Sanburg and Strickler gratuitously rendered services for Sanburg Co., both Ron Sanburg and Strickler received a benefit from their employment and the McGowan contracts, namely, their compensation, whether a salary, commission, or wages, paid by Sanburg Co. In the realities of this case, both Ron Sanburg and Strickler acted in their own interests by carrying out their employment activities aimed into Nebraska at McGowan. At least in part, the compensation paid to Ron Sanburg and Strickler was derived from their conduct of Sanburg Co.'s business in Nebraska. See Chancellor v. Lawrence, 501 F. Supp. 997, 1005 (N.D.Ill.1980) ("sheer fiction" to assume that nonresident employees of nonresident corporation derived no benefit from their activities in the forum state, when such employees received a salary from their corporate employer). Both Ron Sanburg and Strickler "purposefully" availed themselves of the privilege of conducting business activities within Nebraska. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980). Also, we find it is not so burdensome for Ron Sanburg and Strickler, Kansas residents, to defend an action in Nebraska, where business activity took place. Evidence bearing upon delivery of the contracted corn and other evidence concerning McGowan's claim against Ron Sanburg and Strickler undoubtedly is readily and efficiently available from sources in Nebraska. McGowan would suffer a costly and unnecessary disadvantage, if required to secure such evidence in Nebraska for presentation in Kansas. It is, therefore, reasonable and fair to require Ron Sanburg and Strickler to defend the action in Nebraska, which has an available forum for the litigation. See McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957). In disposing of the contention that the fiduciary shield doctrine precludes personal jurisdiction, we believe that, while such doctrine may have a bearing on substantive liability in some jurisdictions, we must agree with the statement: "Ignoring any notion that acting in a corporate capacity somehow provides the defendant with a jurisdictional shield eliminates unfairness to the plaintiff and permits a systematic application of jurisdictional principles as they are applied in other contexts." Sponsler, Jurisdiction Over the Corporate Agent: The Fiduciary Shield, 35 Wash. & Lee L.Rev. 349, 365 (1978). We neither state nor imply that an employee of a corporation may be subjected to personal jurisdiction in any state where the corporate employer does business. However, if a defendant's contacts satisfy the standards imposed by the forum state's long-arm statute and the requirements of due process, the fiduciary shield doctrine does not prevent personal jurisdiction. Rather than misplaced emphasis on the fiduciary shield doctrine as a bar to personal jurisdiction, "the primary focus should be on the defendant's activities without regard to the role in which these activities were entered into. If such activities satisfy minimum contacts analysis, personal jurisdiction should be obtained." Note, The Fiduciary Shield Doctrine: A Rule of Statutory Construction or a Constitutional Principle?, 9 J. of Corp.L. 901, 925 (1984). See, also, Columbia Briargate Co. v. First Nat. Bank, 713 F.2d 1052 (4th Cir.1983), cert. denied 465 U.S. 1007, 104 S. Ct. 1001, 79 L. Ed. 2d 233 (1984). *351 Any thought that the fiduciary shield doctrine is a principle pertinent to personal jurisdiction received a constitutional coup de grace administered by the U.S. Supreme Court in Calder v. Jones, 465 U.S. 783, 790, 104 S. Ct. 1482, 1487, 79 L. Ed. 2d 804 (1984), when the Court stated: "Petitioners are correct that their contacts with California are not to be judged according to their employer's activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction. Each defendant's contacts with the forum State must be assessed individually." A defendant's conduct or activities in relation to the forum state and its residents, not the defendant's role in or relationship with a corporate employer during occurrence of such conduct or activities, supply the bases for determining whether minimum contacts exist in reference to the forum state. The "fiduciary shield" doctrine is not a constitutional principle precluding personal jurisdiction over a nonresident officer, agent, or employee of a corporation. If a nonresident, as a corporate officer, agent, or employee, has contacts which satisfy standards imposed by a forum state's long-arm statute and the requirements of due process, personal jurisdiction over such nonresident may be obtained in the forum state. Consequently, we hold that Ron Sanburg and Strickler have sufficient contacts with the State of Nebraska to justify personal jurisdiction over them in a Nebraska court. We, therefore, reverse the judgment of the district court and remand this matter to the district court for further proceedings. REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.