Case Name: PARISH v. MERTES
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1978-06-20
Citations: 84 Mich. App. 336
Docket Number: Docket No. 77-1588
Parties: PARISH v MERTES
Judges: Before: M. J. Kelly, P. J., and T. M. Burns and R. M. Maher, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 84
Pages: 336–347

Head Matter:
PARISH v MERTES
Docket No. 77-1588.
Submitted February 9, 1978, at Detroit.
Decided June 20, 1978.
Multiple long-distance telephone calls between the office of Arthur Mertes in Illinois and the home of Mary J. Parish in Michigan resulted in a loan agreement, dictated in Michigan, typed in Illinois and signed by Arthur and Kathleen Mertes in Illinois. The note was made payable in Detroit. Mrs. Parish sued Arthur and Kathleen Mertes and the Wayne Circuit Court, Thomas Roumell, J., granted a summary judgment to plaintiff. Defendants appeal raising several issues. Held:
1. Michigan courts, under the long-arm statute, may obtain limited personal jurisdiction over nonresident defendants who undertake actions over which they can expect the Michigan courts to assert jurisdiction; use of the telephone to negotiate a loan with Michigan residents, which loan is payable in Michigan, constitutes such actions.
2. A loan agreement is not invalid for lack of consideration, as being a sham transaction or for false representations where it was made to allow the maker’s employer to stay in business, it was to be repaid from one of the employer’s accounts receivable, it was agreed that the maker would not be liable on the note but would turn over the proceeds from the account receivable when it was received, and payment of the account was received by the employer and was given to the maker, who retained possession of it.
Affirmed.
M. J. Kelly, P. J., concurred in the result reached by the majority for the reason that the note was payable in Michigan, but would hold that the negotiation of the loan agreement by long-distance phone calls with a Michigan resident, by itself, is insufficient to grant Michigan courts jurisdiction of nonresidents upder the long-arm statute.
References for Points in Headnotes
[1, 2, 4] 20 Am Jur 2d, Courts, §§ 123, 172 et seq.
[3] 17 Am Jur 2d, Contracts, §§ 4, 104, 105, 397.
Opinion of the Court
1. Courts — Constitutional Law — Statutes—Jurisdiction Over Nonresidents.
State court jurisdiction can be constitutionally asserted over a nonresident defendant under a long-arm statute in situations where the defendant undertook an action such that he can expect the courts of another state to assert jurisdiction (US Const, Am XIV, MCL 600.705[1]; MSA 27A.705[1]).
2. Courts — Jurisdiction Over Nonresidents — Promissory Notes.
Michigan courts may properly assert jurisdiction over a nonresident maker of a loan agreement and promissory note where the note is payable in Michigan and several long-distance telephone calls between the Michigan payee and the nonresident debtor or his agent were made to negotiate the loan agreement.
3. Contracts — Loan Agreements — Promissory Notes — Defenses— Lack of Consideration — Sham Transaction — False Representation.
A loan agreement is not invalid for lack of consideration, as a sham transaction or for false representations where it was made to allow the maker’s employer to stay in business, it was to be repaid from one of the employer’s accounts receivable, it was agreed that the maker would not be liable on the note but would turn over the proceeds from the account receivable when it was paid, and payment of the account was received by the employer and was given to the maker, who retained possession of it.
Concurrence in Part, Dissent in Part by M. J. Kelly, P. J.
4. Courts — Jurisdiction—Jurisdiction Over Nonresidents.
To gain personal jurisdiction over a nonresident party, the party must be involved in some purposeful activity within the state, and mere use of the telephone from outside the state for consummating a contract cannot be considered as purposefully availing one’s self of the privilege of conducting activities within the forum state.
Ronald F. Parish, for plaintiff.
Gottlieb & Goren, P. C., for defendants.
Before: M. J. Kelly, P. J., and T. M. Burns and R. M. Maher, JJ.

Opinion:
Per Curiam.
Plaintiff sued upon a 30-day promissory note dated December 19, 1974, in the face amount of $5,924.44 at 8% interest. Defendants filed a special appearance and made a motion for accelerated judgment claiming lack of jurisdiction. Defendants were Illinois residents and were served in that state. After reviewing affidavits provided by the parties, the trial judge, on June 26, 1975, denied the motion for accelerated judgment and, on April 15, 1977, granted plaintiff's motion for summary judgment.
The loan in question was for an Illinois corporation, Controelectric, Inc. Defendants, in their original affidavit, stated that the note was negotiated, drafted, executed and witnessed in Illinois; that the money was delivered in Illinois; and that defendants never came to Michigan in connection with the transaction. Defendants also averred that it was understood by the parties that the transaction was intended to be a capital contribution, that the defendants agreed to be "straw parties" in order to conceal it and that all agreed defendants were not personally liable.
Plaintiff responded in her affidavit that multiple long-distance calls were made between defendant Arthur Mertes' office and plaintiff's home during which an oral contract was reached between the parties; that the agreement was dictated by plaintiff in Michigan to her husband, which he typed in Illinois; that the loan agreement and note were signed in Michigan by the plaintiff and in Illinois by the defendants; that the check was drawn on a Michigan bank, payment was due at plaintiff's home in Detroit and plaintiff had the option of demanding collateral held in Illinois.
Defendants answered with a final affidavit claiming: defendants are residents of Illinois and were served there; the check referred to in plaintiffs affidavit was made out to plaintiffs husband and was cashed by him; from the proceeds, plaintiffs husband obtained four cashier's checks which were made out to creditors of Controelectric; the defendants received no monies from the check sent by plaintiff; plaintiffs husband typed the papers in Illinois and defendants had no knowledge that plaintiff signed the loan agreement; and, finally, defendants had no direct telephone conversations with plaintiff involving this alleged transaction.
Plaintiff claims jurisdiction over defendants on the basis of MCL 600.705(1); MSA 27A.705(1).
"Sec. 705. The existence of any of the following relationships between an individual or his agent and the state shall constitute a sufficient basis of jurisdiction to enable a court of record of this state to exercise limited personal jurisdiction over the individual and to enable the court to render personal judgments against the individual or his representative arising out of the act which creates any of the following relationships:
"(1) The transaction of any business within the state."
The statute has been construed as extending the state's jurisdiction to the farthest limits permitted by due process. Sifers v Horen, 385 Mich 195; 188 NW2d 623 (1971). Due process requires that a defendant have certain minimal contacts with the state so that the suit does not offend the traditional notions of fair play. International Shoe Co v Washington, 326 US 310; 66 S Ct 154; 90 L Ed 95 (1945), Keefer v May, 46 Mich App 566; 208 NW2d 539 (1973).
A single transaction may be sufficient to meet the "minimum contacts" test of International Shoe. Shepler v Korkut, 33 Mich App 411; 190 NW2d 281 (1971). The word "any" in MCL 600.705(1) means, according to the Supreme Court in Sifers v Horen, supra, just what it says. It includes each and every. It comprehends the slightest. 385 Mich at 199, n 2.
In McGee v International Life Ins Co, 355 US 220; 78 S Ct 199; 2 L Ed 2d 223 (1957), the Supreme Court approved the previous International Shoe jurisdictional test and explained the expansion of the permissible scope of state jurisdiction by calling attention to thé fundamental transformation of our national economy over the years and the expansion of modern transportation and communication, thus making it much less burdensome for the nonresident defendant to resist a plaintiff's claim. See also Woods v Edgewater Amusement Park, 381 Mich 559; 165 NW2d 12 (1969).
Further elucidation of the minimum contacts— fair play standard of International Shoe is found in Gray v American Radiator & Standard Sanitary Corp, 22 Ill 2d 432, 440-441; 176 NE2d 761 (1961).
"[T]he trend in defining due process of law is away from the emphasis on territorial limitations and toward emphasis on providing adequate notice and opportunity to be heard".
Gray, then, amplifies the fair play standard of the International Shoe test. The standard in Gray is essentially based upon the expectations of the parties. When a defendant undertakes an action such that she or he can expect the courts of another state to assert jurisdiction, that jurisdiction can be constitutionally asserted. See, Commentary: Long-Arm and Quasi in Rem Jurisdiction and the Fundamental Test of Fairness, 69 Mich L Rev 300, 313 (1970). The standards of Interna tional Shoe, McGee and Gray must be viewed each with reference to the other. The expectation standard of Gray evolves naturally from the minimum contacts standard of International Shoe.
We do not merely count contacts. Contacts are not to be measured quantitatively; they must be measured qualitatively. Hadad v Lewis, 382 F Supp 1365 (ED Mich, 1974). In so examining the nonresident defendants' contacts with the state of Michigan, we find a sufficient basis on which jurisdiction can be asserted over the defendants, mindful that there need be but a single act to find sufficient minimal contacts. Crane v Rothring, 27 Mich App 189; 183 NW2d 434 (1970), Kiefer v May, supra.
Plaintiffs affidavit cites several phone calls between her home in Michigan and defendants' office in Illinois. Plaintiff claims she spoke to Arthur Mertes, but he denies it. Nevertheless it is clear that the phone calls were made and dealt with the loan agreement and promissory note and that plaintiffs husband, in Illinois with the defendants, was acting as an intermediary between plaintiff and defendants. The telephone was the means of communication between the parties. That defendant Arthur Mertes denies he was a party to such conversations is secondary to the fact that they were made, that they were relayed through an intermediary from the Michigan plaintiff to Illinois defendants and that they concerned the loan transaction. Defendants' attempt to escape jurisdiction by denying they put telephone to ear, given the facts and circumstances of 'this case, is simplistic. It is an affront to the Supreme Court's language in McGee v International Life Ins Co, supra, regarding the expansion of modern means of communication.
Furthermore, the loan agreement and the promissory note state that the place of payment was at plaintiffs home in Detroit, Michigan. Together with the telephone calls, this contact, looked at qualitatively if not quantitatively, is sufficient to confer jurisdiction over defendants on Michigan courts. Defendants signed the agreement and the promissory note knowing the place of payment was Michigan. They should reasonably have expected that they would be subject to jurisdiction in Michigan as long as adequate notice and the opportunity to be heard were provided. See Gray v American Radiator & Standard Sanitary Corp, supra. Defendants should not have been startled that a Michigan court saw fit to assert jurisdiction over them. Fair play permits this state's courts to assert such jurisdiction.
We find defendants' two remaining claims of error to be without merit. Contrary to defendants' contention, the trial court did not grant summary judgment based solely on defendants' depositions. The court explicitly stated it reviewed the files and the records, including the pleadings and the evidence, in addition to defendants' depositions. This is what is mandated by GCR 1963, 117.3. The mandate was fulfilled.
Nor did the trial court err in finding there were no errors of material fact. Defendants raised several defenses in their answer and affirmative defenses, including lack of consideration, sham transaction, and false representations.
Defendants claim that the transaction was really a capital contribution by plaintiff's husband, a shareholder of Controelectric, that was disguised to appear to be a loan by the use of the defendants as straw parties. The loan amount was that needed to allow Controelectric to stay in business. The loan was to be repaid from an account receivable from Anheuser-Busch. Anheuser-Busch did send a check to Controelectric which was turned over to defendant Arthur Mertes. That check was still in his possession. At the time of the transaction, it was understood that the defendants would not be liable on the note, but that they would turn over the check from Anheuser-Busch when it came in.
Defendants cannot claim that there was no consideration. As an employee of Controelectric, the corporation for which the loan was intended, Arthur Mertes benefited by continuing to draw his salary. Mertes was also interested in investing in the corporation once the books showed a favorable outlook.
Nor was there a fraud or sham transaction. Neither defendant was being defrauded. They read, understood, and agreed to a loan agreement and a promissory note. They knew what the transaction entailed.
Finally, defendants cannot complain about false representations. While it is true they were told they would not be held liable on the note if they turned over the check from Anheuser-Busch, the account receivable was never turned over to plaintiff. Defendants did not fulfill their part of the bargain and their failure prohibits them from complaining now.
Affirmed.