Opinion ID: 1942966
Heading Depth: 1
Heading Rank: 2

Heading: Penthouse International, Ltd. (hereinafter Penthouse)

Text: Penthouse is a Delaware corporation with its principal place of business in New York. It is not registered to do business in New Hampshire and has not appointed an agent to receive service of process here. The indictment entered against Penthouse charges that it did purposely sell obscene material by the conduct of another for whom it is accountable, in that the defendant's conduct of publishing the said obscene material resulted in the said sale of this material within the State of New Hampshire.... A copy of this indictment and a notice to appear was served on the secretary of Penthouse's executive vice-president in New York. Additionally, substituted service was made on the New Hampshire Secretary of State pursuant to RSA ch. 300. On January 7, 1977, Penthouse filed a plea in abatement, moving that the case be dismissed for lack of criminal jurisdiction. After an evidentiary hearing, the plea was denied. Penthouse challenges the court's in personam jurisdiction as well as its territorial jurisdiction. We deal with these challenges seriatim.
[2] The requirement that a court possess in personam jurisdiction actually comprises two components: service of notice must be proper, and there must exist those `affiliating circumstances' without which the courts of a State may not enter a judgment imposing obligations on persons.... Hanson v. Denckla, 357 U.S. 235, 245-46 (1958) (footnotes omitted). Penthouse claims only that affiliating circumstances are lacking. This contention must be rejected. In the past, a court could render a binding judgment on a defendant only if the defendant were physically present in the jurisdiction. International Shoe Co. v. Washington, 326 U.S. 310 (1945); 1 C. Alexander, The Law of Arrests § 26d (1949); see State v. Keating, 108 N.H. 402, 236 A.2d 684 (1967) (by implication); 22 C.J.S. Criminal Law § 144 (1961). In the civil area this requirement was abolished by International Shoe supra, which substituted the requirement that if the defendant be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.' Id. at 316. We have adopted the rationale of that case without limitation. Roy v. North American Newspaper Alliance, 106 N.H. 92, 205 A.2d 844, 846 (1964). Penthouse urges that the minimum contacts test of International Shoe and its progeny applies to this case. However, we are unable to locate, and the parties have failed to cite, any case law applying this test to criminal proceedings. Nor are we convinced that the minimum contacts analysis could or should be applied to all criminal proceedings. Application of this standard to natural persons charged with criminal offenses might mean that a criminal judgment could be rendered against a natural person even if he were absent from the jurisdiction. Such result might render nugatory, for example, RSA ch. 612, our extradition statute. It might also raise serious constitutional questions. [3] Nonetheless, corporations do pose a special problem. A corporation is a jural person, but not a person in fact. It is an artificial creature, acting only through agents, Boston, Concord & Montreal R.R. v. State, 32 N.H. 215, 227 (1855), and therefore potentially present everywhere it does business. March v. Eastern R.R. Co., 40 N.H. 548, 578 (1860). For this reason, trying to pinpoint the State in which a corporation is physically present, for purposes of determining criminal jurisdiction, is like trying to handcuff a shadow. We find instructive the discussion in International Shoe supra of corporate presence. The Supreme Court therein stated: Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact,... it is clear that unlike an individual its presence without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. To say that the corporation is so far present there as to satisfy due process requirements, for purposes of ... the maintenance of suits against it in the courts of the state, is to beg the question to be decided. Id. at 316. It should also be remarked that because a corporation does not consist of any one body, it seemingly cannot be extradited. See RSA ch. 612. The Supreme Court in Shaffer v. Heitner, 433 U.S. 186, n.19 (1977), recently noted (in the context of civil jurisdiction) that: The differences between individuals and corporations may, of course, lead to the conclusion that a given set of circumstances establishes State jurisdiction over one type of defendant but not over the other. [4] We hold that Penthouse is sufficiently present in New Hampshire to be subject to prosecution for the alleged offense. At the hearing on its plea in abatement, Penthouse's own circulation manager testified that the defendant not only publishes Penthouse magazine but also is involved in its distribution. Curtis Circulation Company determines allotments for all of Penthouse's wholesalers throughout the nation, and then sends Penthouse shipping labels with the names and addresses of the wholesalers and the amount of copies that each is to receive. Penthouse then sends these shipping labels to its Iowa printer. The printer affixes the labels to bundles of the magazine, which are then trucked to the local wholesalers, such as Manchester News, Inc., for distribution. In addition, although Penthouse's circulation manager characterized Curtis Circulation Company as an independent contractor, he also described it as our representatives; [w]e deal with them on a day-to-day basis; [t]hey are our eyes and ears outside. As observed in Mulhern v. Holland America Cruises, 393 F. Supp. 1298, 1302 (D.N.H. 1975), with the liberalization of due process criteria, the jurisdictional distinction between agents and independent contractors has begun to fade. See Curtis Publishing Co. v. Golino, 383 F.2d 586, 591 (5th Cir. 1967) (By a proper degree of care, the publisher could eliminate nearly all physical contacts, other than circulation and correspondence, with all but one state.); Commonwealth v. Beneficial Finance Co., 360 Mass. 188, 227, 275 N.E.2d 33, 57 (1971) (it is inconsistent with the inherent power of a court to prosecute criminal offenders to insulate the corporation from liability on the basis of the manner in which the corporation generally runs its affairs.). That Penthouse maintains no office in New Hampshire is not dispositive. See Curtis Publishing Co. v. Golino supra ; David v. National Lampoon, Inc., 432 F. Supp. 1097 (D.S.C. 1977); Commonwealth v. Beneficial Finance Co., 360 Mass. 188, 275 N.E.2d 33 (1971); Roy v. North American Newspaper Alliance, 106 N.H. 92, 95-96, 205 A.2d 844, 846-847 (1964). Penthouse is charged with having (vicariously) committed the offense of purposely selling obscene materials in this State. Its alleged commission of acts constituting an offense within this State is a compelling circumstance of affiliation with New Hampshire. See Commonwealth v. Beneficial Finance, 360 Mass. at 227-28, n.8, 275 N.E.2d at 56-57, n.8 (1971).
[5, 6] Penthouse takes exception not only with New Hampshire's exercise of jurisdiction over the person, but also with its exercise of jurisdiction over the offense (territorial jurisdiction). For a court to adjudicate a dispute, criminal or civil, it needs both in personam and territorial jurisdiction. 21 Am. Jur. 2d Criminal Law § 378 (1965); 22 C.J.S. Criminal Law § 108 (1961). We hold that the trial court does have territorial jurisdiction, under RSA 625:4. Defendant's first challenge to the court's territorial jurisdiction focuses on the following provisions of RSA 625:4: I. Except as otherwise provided in this section, a person may be convicted under the laws of this state for any offense committed by his own conduct or by the conduct of another for which he is legally accountable if: (a) either conduct which is an element of the offense or the result which is such an element occurs within this state; . . . II. Paragraph I(a) does not apply if: . . . (b) causing a particular result is an element of an offense and the result is caused by conduct occuring outisde the state which would not constitute an offense if the result had occurred there. Defendant submits that the secion II(b) saving clause applies and requires the State to prove that either the publication or the sale of the July 1976 issue of Penthouse in fact violated the obscenity laws of New York (where penthouse's principal offices are located). Because the State failed to prove this, defendant argues, the plea in abatement should be granted. The language in section II(b) is less than crystal clear. Read narrowly, the conduct to which II(b) refers could be taken to mean the legally operative conduct, that is, the conduct for which a person other than the actor could be held legally accountable. Under this interpretation, conduct would not include the conduct of the person legally accountable for the conduct of another. Translated into the terms of this case, the conduct to which section II(b) refers could be the alleged conduct of Luv, not the alleged conduct of Penthouse. [7] We do not, however, read RSA 625:4 II(b) this narrowly. The draftsmen of the statute commented that II(b) is designed to give limited effect to foreign law by withholding jurisdiction when the conduct is legal by the law of the place where it takes place. Report of Commission to Recommend Codification of Criminal Laws, proposed RSA 570:4, Comments (1969). This intent dictates that the saving clause be read to apply not only to the legally operative conduct, but also to the conduct of the defendant that allegedly gives rise to its legal accountability. In other words, II(b) applies not only to Luv's alleged conduct, but also to Penthouse's. This interpretation of the clause accords with Hardy v. Betz, 105 N.H. 169, 175, 195 A.2d 582, 585 (1963), wherein we recognized that `[t]he criminal law of a state or nation has no operation or effect beyond its geographical or territorial limits.' Luv's alleged conductsale of obscene materialoccurred in New Hampshire. Thus, section II(b) as applied to Luv's alleged conduct does not limit our territorial jurisdiction. However, the conduct of Penthouse that allegedly makes it legally accountable for Luv publication and distribution of the magazineoccurred in New York. It therefore would be subject to our criminal jurisdiction only if the State can prove that there exists a New York statute (or statutes) that would proscribe publication and distribution of obscene materials. The State may prove this by showing that there is a New York statute directly so providing. Alternatively, the State may meet its burden under RSA 625:4 II(b) by showing that there is a New York statute criminalizing the sale of obscene materials and that Penthouse by its activities would be subject to criminal penalties as an aider or abettor of, or as legally accountable for, such sale. [9] In the instant case, the trial court's denial of Penthouse's plea in abatement represents an implied finding that New York law would in fact penalize such conduct as Penthouse's. See Beaudoin v. Beaudoin, 118 N.H. 325, 386 A.2d 1261 (1978); Cushing v. Thomson, 118 N.H. 292, 386 A.2d 805 (1978). This finding is amply supported by the evidence. At the hearing on the plea, legal counsel for Penthouse, testifying on behalf of the defendants as an expert witness on New York and New Jersey law, stated that if there is a sale or distribution or publication of obscene material, and there is a finding that it is obscene as defined in New York, and, respectively in New Jersey, then the allegations in the indictments would support a conviction. This testimony, from defendants' witness, supplies a firm foundation for the trial court's implied finding that Penthouse's New York activities would have subjected it to prosecution in New York had the ultimate sale in this case taken place in New York. RSA 625:4 II(b) thus does not insulate Penthouse from the instant prosecution. RSA 625:4 I(a) controls, and provides territorial jurisdiction. Penthouse also challenges its legal accountability for the conduct of Luv under New Hampshire law. According to RSA 626:8 I, [a] person is guilty of an offense if it is committed by ... the conduct of another person for which he is legally accountable.... RSA 626:8 II provides: A person is legally accountable for the conduct of another person when: ... (c) he is an accomplice of such other person in the commission of the offense. A person is an accomplice of another person in the commission of an offense if with the purpose of promoting or facilitating the commission of the offense, he solicits such other person in committing it, or aids or agrees or attempts to aid such other person in planning or committing it.... RSA 626:8 III(a). According to Penthouse, there was insufficient evidence before the trial court for the latter to conclude that Penthouse could be an accomplice of Luv under New Hampshire law. We rule otherwise. The relevant portions of RSA 626:8 were derived from section 2.06(3) (a) (i), (ii) of the Model Penal Code (hereinafter MPC), 10 Uniform Laws Annotated 470-71 (1974). Report of Commission to Recommend Codification of Criminal Laws, Proposed RSA 571:8, Comments (1969). These portions of the MPC are themselves based on and substantially similar to section 2.04(3)(a)(1), (2) of the first tentative draft of the MPC. Model Penal Code § 2.04(3)(a)(1), (2) (Tent. Draft No. 1, 1956). In comments to this section of the tentative draft, the draftsmen explain that the accomplice-liability provision represents, it is believed, an exhaustive description of the ways in which one may purposely enhance the probability that another will commit a crime. So long as a purpose to further or facilitate is present, there is no risk to innocence; nor does there seem to be occasion to inquire about the precise extent of influence exerted on the ultimate commission of the crime. . . . . . . Conduct which knowingly facilitates the commission of crimes is by hypothesis a proper object of preventive effort by the penal law, unless, of course, it is affirmatively justifiable.... when a true purpose to further the crime is lacking, the draft requires that the accessorial behavior substantially facilitate commission of the crime and that it do so to the knowledge of the actor. Id. At Comment 3. [10] The allegation in the indictment plus the testimony at the hearing below sufficed to support a finding that the complicity standard of RSA 626:8 was met, at least for purpose of establishing our jurisdiction in the first instance. As stated above, Penthouse not only publishes Penthouse magazine but also aids in its distribution. Its own officer testified that Penthouse forwards shipping labels with names and addresses of wholesalers to its Iowa printer, with instructions to ship X number of copies to each distributor. Penthouse knows and intends that certain New England wholesalers will distribute its magazine to retailers. It may be found that Penthouse knew and, to stay in business, intended that a sale like the one by Luv Pharmacy in the present case take place. Realistically, the only use to which a wholesaler will put bundles of Penthouse is to distribute them to a retailer, who in turn will sell them to retail customers. See Direct Sales Co. v. United States, 319 U.S. 703, 709-11 (1943); United States v. Interstate Engineering Corp., 288 F. Supp. 402, 428-30 (D.N.H. 1967) (knowing facilitation of crime by sale of supplies constitutes aiding and abetting). Moreover, Penthouse's financial success depends on the continuation of sales similar to the instant sale of Penthouse. See Note, Falcone Revisited: The Criminality of Sales to an Illegal Enterprise, 53 Colum. L. Rev. 228, 240 n.67 (1953). [11] We note that the indictment against Penthouse charges that it is accountable for the sale in New Hampshire simply because it publishes the magazine. We might find troublesome the proposition that publication of an allegedly obscene magazine per se renders the publisher an accomplice of a subsequent retail seller. However, the record contains testimony that Penthouse does more than publish the magazine in question. A hearing on a plea in abatement may include evidence of facts outside the indictment and even outside the record. State v. Hampton, 113 R.I. 203, 205, 319 A.2d 364, 366 (1974); State v. Howe, 219 A.2d 116, 119 (Me. 1966); 2 Wharton Criminal Procedure § 351 (12th ed. 1975). Thus, we need not reach the question whether mere publication can make a publisher an accomplice of a retailer. Of course, nothing in this opinion should be taken as a decision on the merits. Rather, all we decide today is that our courts possess jurisdiction to hear this prosecution. It should also be remarked that the indictment against Penthouse does not express that Penthouse's alleged legal accountability is based on RSA 626:8 II(c), the accomplice clause. Nor does the indictment specify just how Penthouse is alleged to have incurred accomplice liability. The defendant has made no challenge to the indictment itself, but rather has assumed that it is being charged as an accomplice; we therefore have no occasion to pass on the facial validity, or sufficiency, of the indictment. We do wish to point out, however, that had there been any confusion about what the State is alleging, such confusion could have been obviated by use of an indictment more clearly charging a defendant with an offense by virtue of his accountability for another. Cf. the attorney general's Law Enforcement Manual, page 78 (1970).