### No. 14958 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980

ROBERT 

### MAY,' Deputy Administrator, Western Conference of Teamsters Pension Trust Fund, Plaintiff, Respondent and Cross-Appellant,

WILLIE FIGGINS, individually and d/b/a FIGGINS & 

### SONS, Defendants, Appellants and Cross-Respondents.

1 from: District Court of the Eighteenth Judicial District, County of Gallatin, Honorable W. 

### W. Lessley, Judge presiding. Counsel of Record: For Appellant: 

### Berg, Morgan, Coil & 

### Stokes, Bozeman,Montana Michael C. Morgan argued, Bozeman, Montana For -Respondents: 

### Bolinger, Higgins and Andes, Bozeman, Montana Gerry M. 

### Higgins argued, Bozeman,Montana

Submitted: February 25, 

### 1980 Decided: 

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### Mr. Justice Gene B. Daly delivered the Opinion of the Court.

Plaintiff sued a state District Court in Montana to enforce a Colorado default judgment against defendant. Defendantmoved for summary judgment based on Colorado's lack of personal jurisdiction over the defendant in the Colorado action. Summary judgmentwas denied. After trial, the Court, sittingwithout a jury, found for plaintiff. Defendant appeals from that judgment. The material facts are undisputed. Defendant Willie Figgins is a Montana road contractor who does most of his work in the GallatinValley. Including familymembers, Figgins has only seven employees at any one time. He does

no road contracting in Colorado, does not advertise or solicit business in Colorado, and does not have a Colorado bank account. On December 17, 1971,Willie Figgins signed a "Collective Bargaining ComplianceAgreement" which was also signed by representativesof the Montana Joint Council of Teamsters No. 23, 

### which has no connection with the State of Colorado. The compliance agreementwas accepted by the Montana A.G.C. Teamsters Trust Fund and by the trustees of the Western Conference of Teamsters Pension Trust Fund at Seattle, Washington. Under this agreement, Figgins agreed to be bound by the articles of trust contained in the pension trust fund. He agreed "tobe bound by, become a party thereto, comply with and execute all formsnecessary to be bound to the various Articles of Trust contained in the health and welfare plan and pension plan or any other trust established under the terms and conditions of said extent agreement." The Western

### Conference of Teamsters Pension Trust Fund is one of the trusts so established. The administrative office of the Western Conference of Teamsters Pension Trust Fund is in Seattle, Washington, the situs of the trust is the State of Washington, and the articles of the trust state that

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. . all questionspertaining to its validity, construction,and administration shall be determined in accordance with the laws of that State." The trust provides that "Employer Contributions shall be paid to the depository bank designated by the Administrator of the Trust Fund for the particular PensionAgreement," and that "TheCounty in which the particular Employer Contribution ispayable shall be a proper county in which to institute legal proceedings to collect delinquent Employer Contributions." Neither the collective bargaining compliance agreement

nor the trust agreement specifywhere the contributions are to be made. In the compliance agreement, however, defendant also agreed to execute all necessary forms,one of which is the employer'smonthly report which designates the United Bank of Denver in Denver,Colorado as the depository bank. Willie Figgins' bookkeeper sent thirty-five (35)

### checks,approximately one per month, to Colorado following the Trust Administrator's instructions, beginning on March 10, 1972. The checks were defendant's only contact with the State of Colorado. Figgins was later audited by a Seattle,Washington firm for the trust. Plaintiff-respondent, RobertMay, Deputy Administrator of the trust, brought an action in Colorado to collect delinquent employer contributions from Figgins. A

summonswas served on Figgins in Montana, but he did not defend the Colorado lawsuit,and plaintiff took a defaultjudgment inColorado. Plaintiff brought suit

### inthe Montana DistrictCourt toenforce the Colorado judgment. Figgins moved for summary judgment on the basis of Colorado's lack of personal jurisdiction over him inthe Colorado suit, but theMontana DistrictCourt denied summary judgment and found forplaintiff. Defendant appeals from that judgment. The following issueshave been presented to this Court for review: 1. Did the defendant's actof sending thirty-five checks to the plaintiff's trust account ina Colorado bank establish sufficient "minimum contacts" togive the Colorado court 

### - inpersonam jurisdiction over the nonresident Montana defendant? 2. Did theMontana defendant knowingly consent to Colorado jurisdiction? On cross-appeal plaintiff presents the following issue: Did the trialcourt abuse its discretion by limiting plaintiff's attorney's fees to $1200? "As a result of the decisions of the Supreme Court expanding the limitsof due process to permit the assertion of jurisdiction over nonresidentswhere there has been onlyminimal contacts with the forum state, stateshave responded by enacting long-arm statutes and court rules enlarging the scope of permissible jurisdiction in the statecourts." 2 Moore's Federal Practice 714.41-1 [3] at4-437. "Under these statelong-arm statutes, the determination of whether the court has inpersonam jurisdiction isa two-step process. The court firstmust look tothe state statute todetermine whether the statuteprovides for the exerciseof jurisdiction under the particular facts of the case, and second, the courtmust determine whether it would offend due process to assert jurisdiction." 2 Moore's Federal Practice 114.41-1111 at4-421. The Montana Supreme Court has followed the two-step approach inHaker v. Southwestern Ry. Co. (1978), 

### -Mont.

## , 578 P.2d 724, 729, 35 St.Rep. 523, and it is the proper frame of analysis inwhich toconsider this case. A Colorado statutegrants jurisdiction over nonresidents if the cause of action arises from 

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. .the transaction of any business within this state." Colo. Rev. Stat. § 13-1-124. The Colorado Supreme Court has interpreted the statutetomean thatColorado has 

### - inpersonam jurisdiction

over any nonresident who 

### meets the "minimum contacts" test of International Shoe Co. v. State of Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. "By enacting the 

### latter statutes, our legislature intended toextend the jurisdiction of our courts tothe fullest extent permitted by the due process clause of the fourteenth amendment of the United StatesConstitution." Safari Outfitters, Inc. 

### v. Superior Court (1968), 167 Colo. 456, 448 P.2d 783, 784. Accordingly, the only question tobe decided iswhether or not the Montana defendant's right todue process was violated by Colorado's assertion of jurisdiction in this case. The leading case addressing the question of when a statemay exercise jurisdiction over the person of a nonresident defendant 

### isInternational Shoe Co. v. Stateof Washington, supra. The Stateof Washington brought suit to

recover unpaid contributions tothe stateunemployment compensation fund from a foreign corporation which had no office inWashington and made no contracts there, but which employed salesmen within the state to solicitorders. The defendant corporationmaintained that the activities of its salesmen did not render it "present" within the state for purposes of personal jurisdiction consistent with due process. In rejecting these contentions, the Supreme Court announced:

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. .due process requires only that inorder to subject a defendant toa judgment inpersonam, if he be not present within the territory of the forum, he have certainminimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316. The Supreme Court elaborated on the requirements of the "minimum contacts" test: "Whether due process is satisfiedmust depend rather upon the quality and nature of the activity inrelation tothe fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment inpersonam against an individual or corporate defendant with which the statehas no contacts, ties, or relations

"But to the extent that a corporation exercises the privilege of conducting activitieswithin a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise toobligations; and, so faras those obligations arise outof or areconnected with the activitieswithin the state, a procedure which requires the corporation torespond toa suitbrought to enforce them can, inmost instances, hardly be said to be undue." International Shoe, 326 U.S. at 319. (Citationsomitted.) Applying these standards to the facts in International Shoe, the Supreme Court held: "Itis evident that these operations establish sufficient contacts or tieswith the stateof the forum tomake it reasonable and just according to our traditional conception of fair play and substantial justice topermit the state toenforce the obligationswhich appellanthas incurred there." 326 U.S. at320. McGee v. International Life Ins. Co. (1957), 355 U.S. 220, 78 S.Ct. 199, 2L.Ed.2d 223, represents the farthest extension thus far of jurisdiction over a nonresident under the International Shoe doctrine. 2Moore's Federal Practice 114.25[4] at4-253 and g4.41-l[l] at4-413. In McGee the beneficiary under a lifeinsurance policy brought suit in

### California against a nonresident insurance corporation. The foreign corporationwas served by registered mail pursuant to California statutes. The policy upon which the suit was based had been purchased by the decedent from an Arizona company which was subsequently, absored by defendant, a Texas corporation. Defendant's only connection with Californiawas that ithad mailed a reinsurance certificate to the decedent in California offering to insure him under the terms of the originalpolicy and later delivered the insurance contract there. Also, the insured had sent his premiums by mail to defendant in Texas. The plaintiff obtained a default judgment in a California state court against the nonresident insurance company and brought an action to enforce the judgment in Texas,where the Texas courts refused to give full faith and credit to the California decree

on the grounds that the California court had not secured jurisdiction over defendant consistent with due process. The Supreme Court reversed holding that the California judgment did not violate due process under the rationale of International Shoe. The Court said: "It is sufficient for purposes of due process that the suitwas based on a contract which had substantial connection with that State

# . . . The contractwas delivered in California, the premiums were mailed from there and the insured was a resident of that state when he died. It cannotbe denied that California has a manifest interest in providing effectivemeans of redress for its residentswhen their insurers refuse to pay claims. These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant State in order to hold it legally accountable. When claims were small or moderate individual claimants frequently could not afford the cost of bringing an action in a foreign forum--thus in effectmaking the company judgmentproof. Often the crucial witnesses--as here on the company's defense of suicide--will be found in the insured's locality." McGee. 355 

### U.S. at 223.Thus, - inpersonam jurisdiction was upheld inMcGee where the only contact the nonresident had with the forum statewas the insurance contract sued upon, and where no evidence was presented that any agent or representative of the defendant

was ever inthe Stateof California. "However, where defendant's contacts with the state arenot sufficient to satisfy traditional notions of fairplay and substantial justice, - in personam jurisdiction may not be secured over him through long-arm service." 2 Moore's Federal Practice 114.41-1[1] at 4-414, citing Hanson v. Denckla (1958), 357 U.S. 235, 78 S.Ct. 1228, 2L.Ed.2d 1283. Hanson, decided a year after McGee, represents a limitation to the Supreme Court's earlier holdings inInternational Shoe and McGee. In Hanson, the United StatesSupreme Court denied a Florida court's assertion of jurisdiction over a Delaware trust and stated: 

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. .it isessential ineach case that there be some actby which the defendant purposefully avails itself of the privilege of conducting activitieswithin the forum State, thus invoking the benefits and protection of its laws." 357 U.S. at 253. In Hanson a resident of Pennsylvania created a trust, naming a Delaware trust company as trustee. The settlor retained a lifeestateand reserved a power of appointment over the remainder. She subsequently became a resident of Florida, where she executed an inter vivos power of appointment over a portion of the remainder and made out a willappointing the balance of the trust corpus toher executrix. When the settlor died inFlorida, the question arose astowhether the assets appointed inter vivos should have passed under decedent's will, since the intervivos appointment would have been invalid under Floridalaw as an attempted testamentary disposition. A declaratory judgment actionwas brought inFlorida toresolve this issue. The Delaware trustcompany was given notice asrequired by the Florida statutesdealing with constructive service. The Supreme Court reversed the Florida court's adjudication of thematter, holding thatunder Florida 

### lawthe Delaware trustcompany was an indispensable party over which the Florida courtshad not obtained - inpersonam jurisdiction. The Supreme Court concluded therewere insufficient contacts linking the trust company to the forum state. The majority opinion inHanson stated: "In McGee the Court noted the trend of expanding personal jurisdiction over nonresidents 

# . . . - - But it isa mistake toassume that this trend heralds the eventual demise of allrestrictions on the personal jurisdiction of statecourts. 

# . . Those restrictions are more than a guarantee of immunity from inconvenient ordistant litigation. They area consequence of territorial limitations on the power of the respective States. However minimal the burden of defending ina foreign tribunal, a defendantmay not be called upon to do so unless he has had the 'minimal contacts' with that Statethat area prerequisite to its exercise of power over him. 

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# . "We failto find such contacts inthe circumstances of thiscase. The defendant trustcompany has no office inFlorida, and transacts no business there. None of the trust assetshas ever been held or administered inFlorida, and the 

### record discloses no solicitationof business inthat State either inperson orby mail. 

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# . "The cause of action inthiscase isnot one that arisesoutof an 

### act done or transaction consummated inthe forum State. In thatrespect, it differs from McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, and the cases there cited 

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# . . "In contrast, this action involves the validity of an agreement thatwas enteredwithout any connection with the forum State. The agreement was executed inDelaware by a trust company incorporated in that State and a settlordomiciled in Pennsylvania. The firstrelationship Florida had tothe agreement 

### was years laterwhen thesettlor became domiciled there, and the trustee remitted the trust income toher inthat State. From Florida Mrs. Donner carried on several bits of trust administration thatmay be compared to themailing of premiums inNcGee. But the record disclosesno instance inwhich the trustee performed any acts inFlorida that bear the same 

### relationship to the agreement asthe solicitation in McGee. Consequently, this suitcannot be said to be one toenforce an obligation that arose from a privilege the defendant exercised inFlorida. 

# .. "The execution inFlorida of the powers of appointment under which the beneficiaries and appointees claim does not give Florida a substantial connection with the contract on which this suitisbased 

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# .. The unilateral activityof those who claim some relationshipwith a nonresident defendant cannot satisfy the requirement of contact with the forum State. The applicationof that rule

### willvary with the quality and nature of the defendant's activity, but it isessential ineach case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activitieswithin the forum State, thus invoking the benefits and protections of its laws. International Shoe Co. v. Stateof Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 159, 90 L.Ed. 95." 357 U.S. at250-253. Defendant advocates that Hanson isdispositive of this appeal, apparently on the grounds that all of his initial contacts concerning the Western Conference of Teamsters Pension Trust Fund were not with Colorado, but 

### were either with Montana orwith the Stateof Washington, the situsof the trust. It is true that allof the initial contacts concerning the trust established inHanson were either inPennsylvania, where the settlorresided atthe 

### time the trust

was created, or inDelaware, the situsof the trust, rather than inFlorida, where the settlorresided atthe 

### time she exercised her power of appointment and atthe time of her death. That fact, however, was not dispositive inHanson, where the United States Supreme Court held that the Florida court had no personal jurisdiction over the trustee and no jurisdiction over the trustbased on a finding that there



### were no "minimum contacts" between the Delaware trustee andthe forum stateof Florida, either initiallyor atany subsequent time. Nevertheless, Hanson has a bearing on the outcome of this appeal. In both cases, the nonresident defendant (WillieFiggins in this case, the Delaware trustee in Hanson) has no office inthe forum state (Colorado inthis case, Florida inHanson), has no assets there, transacts no business there, and has not solicited business in the forum state. It is true that the cause of action in the present appeal arisesout of Willie Figgins' failure tomake 

### employer contributions to the Colorado bank, while inHanson the Court stated that thecause.ofaction was not one that

arose out of an actdone or a transaction consummated inthe forum state, since the Delaware trustwas not established in Florida and had no connection with Florida, despite the unilateral activity of the settlor inFlorida and the trustee's remittance of trust income toher inthat state. "The contacts required upon which tobase jurisdiction, consistent with due process, would be greater where the action 

### isbrought upon a claimnot arising from these contactswith the state, than where the action does arise from the state contacts." 2Moore's Federal Practice 114.41-1[1] at4-414. See International Shoe, supra, and Perkins v. Benguet Consolidated Mining Co. (1952), 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485. Still, defendant's act of sending checks toColorado can be compared with the activity of the Hanson trustee inremitting trust income to the settlor in Florida, and itmust be remembered that inHanson the Court held that there was no act by which the defendant trustee "purposely avails itself of the privilege of conducting activitieswithin the forum state, thus invoking the benefitsand protections of its laws." 357 U.S. at253.

### Applying the rules enunciated in International Shoe, McGee and Hanson to the present case, it does not appear that defendant Willie Figginshad sufficient "minimum contacts" to subject him to the jurisdiction of the Colorado court. Itwould be unfair to this defendant and unreasonable to require him to defend in Colorado where his only contactwith that forumwas to mail thirty-five checks to a Denver Bank. Willie Figgins has no offices in Colorado, does no contracting work in Colorado, solicits no business there, and does not have a Colorado bank account. By his act of merely sending checks to plaintiff's bank in Colorado, he has not purposefully availed himself of the privilege of conducting business within that forum,and he has not thereby invoked the benefits and protections of its laws. Consequently, there is no rationale to justify subjecting him to Colorado

### 's jurisdiction. In support of this conclusion are holdings from the courts of other states which state that merely making payments in a state does not establish the requisiteminimum contacts to satisfy due process. U-Anchor Advertising, Inc.

v. Burt (Tex. 1977), 553 S.W.2d 760, 763, cert. denied 434 U.S. 1063; Freedom Finance Co. v. Berry (N.J.Super. 1972), 62N.J. 256, 290A.2d 298, affVd/300A.2d 341; "Automatic" Sprinkler Corp. v. Seneca Foods Corp. (1972), 361 Mass. 441, 280 N.E.2d 423. Compare Tucker v. Vista Financial Corp. (1977), Colo. 

## , 560 P.2d 453,holding that California could properly exercise jurisdiction over a resident of Colorado whose sole contact with Californiawas that in Colorado she co-signed a promissory note payable in California to a California bank and authorized funds to be disbursed in California.

### The Montana contractor did not knowingly consent to Colorado - 

### in personam jurisdiction. In the collective bargaining compliance agreementwhich he signed with the Western Conference of Teamsters, located in Seattle, Washington, defendant agreed to be bound by the articles of trust contained in the pension trust fund. One provision of the articles of trust stated that the county in which the employer contribution is payable as designated by the Administrator of the trust fund "shall be a proper county in which to institute legal proceedings to collect delinquent Employer Contributions." Neither the collective bargaining compliance agreement nor the articles of trust specified where the employer contributions were to be paid. They were paid to the Colorado bank by defendantupon receipt of subsequent instructions from the TrustAdministrator. In the collective bargaining compliance agreement, however, defendant also agreed to execute all necessary forms,one of which is the employer's monthly reportwhich designates the depository bank. The general rule is that "parties to a contractmay agree in advance to submit to the jurisdiction of a given court

# . .

# ." National Equipment Rental v. Szukhent (1964), 375 U.S. 311, 316, 84 S.Ct. 411, 11 L.Ed.2d 354. 

### In this case,however, the courts of Colorado could not exercise - 

### in personam jurisdiction over the defendant consistent with due process, so that any purported consent to Colorado's jurisdiction would amount to a waiver of the constitutional right to due process and would have to be evaluated in that light and by the tests applicable to a waiver of constitutional rights. The defendant contractor in this case could not have known that the agreement which he signed would subject

### him to the jurisdiction of Colorado courtsbecause there was nothing in the collectivebargaining compliance agreement or in the articles of trust that specified the jurisdiction as to which he waived his constitutional due process rights. Hence, there was no clear waiver of his due process rights

as required by Fuentesv. Shevin (1972), 407 

### U.S. 67, 95, 

### 92 S.Ct. 1983, 32 L.Ed.2d 556. Compare Clinic Masters v. District Court (1976), Colo. I 

### 556 P.2d 473. As stated in Telephonic, Inc. v. Rosenblum (1975), 88 N.M. 532, 543 P.2d 825, 830: "An agreement to waive this constitutional right must be deliberately and understandinglymade, and language relied upon to constitute such a waiver must clearly,unequivocally and unambiguously express a waiver of this right." To accept the respondent's argument that the defendant here contractually consented to be sued in Coloradowould be to give the respondent carte blanche to use contracts of adhesion to establish a right to sue defendantswherever would be most convenient to respondents,and least convenient to defendants. The contractual provisions purporting to waive - 

### in personam jurisdiction are unreasonable and unenforceable. Furthermore, defendantdid notwaive his rights as to Colorado jurisdiction. The Compliance Agreement, which Willie Figgins signed, and Trust Agreement, to which he was bound, do not state specifically the county and state where legalproceedings are to be instituted. By subsequently receiving a notice to send payments to Colorado and by accommodating the TrustAdministrator by mailing payments to Colorado, defendantdid not deliberately,understandingly, clearly, unequivocally, and unambiguously consent to the jurisdiction of the State of Colorado.

### The judgment of the District Court is reversed and the

cause is dismissed. The matter is remanded to the District Court so thatproceedingsmay be had to determine costs and reasonable attorney fees for the services of defendant's attorneys and assessment of the same against plaintiff.

I

I 

### Justice I



### We concur: 

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# wa4. Chief Justice



# %A: Justices