Title: WB DUNAVANT AND COMPANY v. Perkins
Citation: 498 S.W.2d 905
Docket Number: N/A
State: Tennessee
Issuer: Tennessee Supreme Court
Date: September 4, 1973

498 S.W.2d 905 (1973) W.B. DUNAVANT AND COMPANY, Appellant-Plaintiff, v. Rance PERKINS, Appellee-Defendant. Supreme Court of Tennessee. September 4, 1973. *906 Armstrong, Allen, Braden, Goodman, McBride &amp; Prewitt, Memphis, for appellant. Earl P. Davis, Davis &amp; Davis, Memphis, for appellee. DYER, Chief Justice. This case comes on direct appeal from the judgment of the Circuit Court of Shelby County, dismissing the complaint because of lack of jurisdiction over the person of the defendant, insufficiency of process, and insufficiency of service of process. Appellant's sole assignment of error is that the trial court should have found the defendant amenable to service of process and to the jurisdiction of the trial court under T.C.A. § 20-235, the Long-Arm Statute. Appellant filed an action for breach of contract for failure of appellee to deliver thirty-two acres of cotton production from appellee's farm in Catron, Missouri, to appellant in Memphis, Tennessee. The complaint alleged that appellant was a Tennessee corporation with its principal place of business in Memphis, Tennessee. It further alleged that appellee appointed the National Farmers Organization of Corning, Iowa, as appellee's agent to sell appellee's cotton production and such an agreement to sell the cotton was made with the appellant. Finally, appellant alleged that due to appellee's failure to deliver the cotton production, appellant sustained a loss of Two Thousand Four Hundred and Five Dollars ($2,405.00). The appellee filed a motion to dismiss on the following grounds: The court lacked jurisdiction over the subject matter of the case; the complaint failed to state a claim for relief; the court lacked jurisdiction over the person of the appellee; insufficiency of process; and insufficiency of service of process. The trial judge sustained the motion to dismiss on the last three grounds above. Additionally, the appellant filed an affidavit of a partner of the appellant-company stating in substance that the appellant had accepted offers of sale by the National Farmers Organization on behalf of the appellee as well as several other farmers and that the oral contracts were accepted in Memphis. Attached to the affidavit and marked Exhibit 1, was a document entitled "Bill of Sale" which constituted the agreement between the appellee, Mr. Perkins, and the National Farmers Organization governing their legal relationship. From the record it is evident that the appellee, Mr. Perkins, as a cotton grower, and the appellant, W.B. Dunavant and Company, as a cotton buyer, each entered into separate agreements with the National *907 Farmers Organization regarding Mr. Perkins' cotton production. The issue in this case is simply whether Mr. Perkins, a Missouri resident, is subject to the jurisdiction of Tennessee courts by virtue of the legal arrangements he made with the National Farmers Organization and by virtue of the actions of the National Farmers Organization pursuant to those arrangements. The appellant contends that the National Farmers Organization was a marketing agent for Mr. Perkins, and, as his agent, the NFO entered into a contract with the appellant, the contract being consummated in Tennessee and requiring the delivery of warehouse receipts in Tennessee and payment by the appellant in Tennessee. This, the appellant argues, is sufficient contact with this jurisdiction to satisfy the due process clause of the Fourteenth Amendment to the United States Constitution and the requirements of T.C.A. 20-235(a) and (e). Appellee's response directs itself to the absence of a specific allegation in the complaint that the place of contracting between the appellant and National Farmers Organization was in Tennessee, and denies that National Farmers Organization was appellee's agent. Furthermore, it is argued that any other transactions by the National Farmers Organization and the appellant regarding other cotton farmers is immaterial to this cause of action. T.C.A. § 20-235 provides, in pertinent part, as follows: The above statute was carefully considered and determined to be constitutional in the case of Darby v. Superior Supply Co., 224 Tenn. 540, 458 S.W.2d 423 (1970). Therefore, it is necessary here only to decide whether its provisions apply to these facts and whether there would be a denial of due process of the law to hold Mr. Perkins to be within the jurisdiction of the courts of this State. Particular reference has been made to the last paragraph of T.C.A. § 20-235, providing that a person It has frequently been held that activities, even if limited in time and scope, by a representative of a corporation may bring the corporation within the State's jurisdiction. However, in Darby, it was noted that the *908 United States Supreme Court had said in Olberding v. Illinois Central Railroad Co., 346 U.S. 338, 74 S. Ct. 83, 98 L. Ed. 39 (1953), that In this case Mr. Perkins and the National Farmers Organization entered into an agreement captioned and providing, in material part, as follows: The above agreement is, at best, somewhat ambiguous, but it cannot accurately be termed an agency or representation agreement as the appellant suggests. Although the second paragraph appears to indicate that NFO will be making a future sale on behalf of Mr. Perkins, the fact that "NFO" has been listed as the buyer as well as the seller makes that sentence meaningless. Furthermore, the caption "Bill of Sale" and the provision that a breach will make Mr. Perkins liable to NFO rather than any other party are convincing evidence that the agreement was for a sale not to create an agency arrangement. Mr. Perkins has, likewise, not submitted himself to the jurisdiction of Tennessee courts by his personal actions. His activities were only with NFO and the record will not support jurisdiction under T.C.A. § 20-235, alleging the "transaction of any business within the state" (paragraph (a)) or entering "into a contract ... for materials to be furnished in this state" (paragraph (e)). NFO may well be within the jurisdiction of the courts because of its actions, but Mr. Perkins' sale to NFO was not within Tennessee or, on the record, was it activity that could be reasonably expected to bring him within Tennessee's jurisdiction. Mr. Perkins could have anticipated a future transfer of the cotton by NFO to another party, but he cannot reasonably be deemed to have assumed that the future sale by his non-resident vendee would make him subject to the jurisdiction where the remote vendee was located. Comment, 33 Tenn.L.Rev. 371, 394. Otherwise, NFO sales could make Mr. Perkins subject to jurisdictions across the country. Lawson v. U-Haul Company, 336 F. Supp. 186 (E.D.Tenn. 1971); Beale v. Caldwell, 322 F. Supp. 1151 (E.D.Tenn. *909 1970). There was not a "purposeful availing of the privilege of conducting activities in Tennessee," nor "an invocation of the benefits and protection of its laws." Darby v. Superior Supply Co., supra. These facts must also be tested by the due process clause of the Fourteenth Amendment to the United States Constitution because under paragraph (f), the courts of this state have jurisdiction to the full extent constitutionally permitted. These limits have been described in leading cases including Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1878); International Shoe Company v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945); McGee v. International Life Insurance Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957); Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958). Three criteria for determining the outer limits of the due process clause were set out in Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir.1968): Because of the limited nature of Mr. Perkins' activity and for the reasons set out earlier, it must be concluded that Mr. Perkins is not within the outer limits of this state's jurisdiction. The judgment of the lower court is affirmed. CHATTIN, HUMPHREYS and McCANLESS, JJ., and WILSON, Special Judge, concur.