Opinion ID: 318520
Heading Depth: 2
Heading Rank: 1

Heading: statutory considerations-- jacques cousteau and the cousteau group companies

Text: 23 This Court has recognized that Article 2031b represents an effort by Texas to reach as far as federal constitutional requirements of due process will permit in exercising jurisdiction over the persons of nonresident defendants. Jetco Electronic Industries, supra, 473 F.2d at 1234; Gurley v. Lindsley, 5 Cir. 1972, 459 F.2d 268, 278, mandate amended, 466 F.2d 498; Atwood Hatcheries, supra, 357 F.2d at 852-853; accord AMCO Transworld, Inc. v. M/V Bambi, S.D.Tex.1966, 257 F.Supp. 215, 216-217. See generally Thode, supra note 6. This means that many, if not most, challenges to in personam jurisdiction by nonresident defendants, whether in federal or State court will turn on constitutional considerations. See, e.g., Atwood Hatcheries, supra; Lone Star Motor Import, Inc. v. Citroen Cars Corp., S.D.Tex.1960, 185 F.Supp. 48, rev'd on other grounds, 5 Cir. 1961, 288 F.2d 69; Hoppenfeld v. Crook, 498 S.W.2d 52, 56 (Tex.Civ.App.-- Austin 1973, writ ref'd n.r.e.) (Phillips, C.J.); Sun-X International Co. v. Witt, 413 S.W.2d 761 (Tex.Civ.App.-- Texarkana 1967, writ ref'd n.r.e.). Nevertheless, a plaintiff must always look first to the statutory requirements lest a court conclude that the nonresident defendant stands beyond the grasp of Article 2031b. E.g., Frito Lay, Inc. v. Procter & Gamble Co., N.D.Tex.1973, 364 F.Supp. 243, 250; cf. Fulghum Industries Inc. v. Walterboro Forest Products, Inc., 5 Cir. 1973, 477 F.2d 910 (Georgia statute). 24 The case sub judice illustrates the difference between deciding that the Texas Long Arm Statute will by its own terms reach far enough to cover a nonresident defendant and determining whether the statutory stretch must be hamstrung by federal constitutional limitations. We think it is beyond serious dispute that defendant CEMA was within the literal grasp of Article 2031b. The correspondence between Ross of Product Promotions and Caillart of CEMA, the course of conduct by both parties thereafter, and Ross's testimony at the 12(b) (2) hearing clearly establish the existence of a contract between Product Promotions and CEMA, performed at least in part in Texas through delivery of the films and reports to appellant in Dallas. 11 And this proceeding has obviously arisen out of that contractual arrangement. Thus the district court had jurisdiction over the person of CEMA if the operation of the statute would not offend constitutional requirements. 25 Jacques Cousteau and the other corporate defendants, however, stand on different ground. Since the contract was between CEMA and Product Promotions, counsel for appellant relies on an agency theory to establish the other defendants' amenability to process under the statute. According to this theory, in the negotiations and contractual relationship with appellant, CEMA was acting for, on behalf of, and as the agent of Cousteau individually and as agent or subsidiary of the Cousteau Group Companies. Thus these others are also parties to the contract and engaged in business within the State. We detect no particular flaw in this argument abstractly stated. Courts and commentators have recognized that an agency relationship may justify finding that a parent corporation 'does business' in a jurisdiction through its subsidiary's local activities. E.g., Bland v. Kentucky Fried Chicken Corp., S.D.Tex.1971, 338 F.Supp. 871, 875; 4 Wright & Miller, supra, 1069 at 259; see 2 Moore, supra, P4.25(6) (service of process); 4 Wright & Miller, supra, 1004 (service of process). Moreover, an agent may in some circumstances itself be a party to an agreement between its disclosed principal and a third party. See 2 Restatement (Second) of Agency 320, 323 (1958). 26 Under this theory the alleged agency and parent-subsidiary relationships were facts on which jurisdiction was predicated, and appellant had the burden of making a prima facie showing of their existence. It is here that appellant founders from the confusion surrounding the identity of and relationship between the parties defendant. We can find no evidence in the record before us that CEMA was, as appellant argues, a subsidiary of the 'Cousteau Group Companies,' even assuming such a separate corporate entity existed. And even were we to assume the existence of a parent-subsidiary relationship, we can find no evidence that the parent exercised the type of control necessary to ascribe to it the activities of the subsidiary. Nor can we find any support for the assertion that the Cousteau Group Companies, either individually or collectively, were the 'alter-egos' of Jacques Cousteau. 12 Certainly the hearsay testimony regarding Horton's statement to Ross that Cousteau does business through the Cousteau Group Companies does not suffice. We concede that the evidence in the record shows that the so-called Cousteau Group Companies were, at least at the time this contract was executed, related in some way to each other and to Jacques Cousteau. Unfortunately, that is not enough; it was for appellant to sort out those business relationships, and the failure to do so is jurisdictionally fatal. 27 We are likewise convinced that appellant failed to carry the burden of establishing by prima facie evidence the existence of any agency relationship between CEMA and the other defendants other than that based on parentsubsidiary or alter-ego status. Under well-settled principles of law, appellant had to make a prima facie showing that in this contractual dealing CEMA acted with either actual or apparent authority on behalf of the others. 13 Both types of authority depend for their creation on some manifestations, written or spoken words or conduct, by the principal, communicated either to the agent (actual authority) or to the third party (apparent authority). See 1 Restatement (Second) of Agency 26, 27 (1958). It is certainly true that 'the entire transaction between Plaintiff and Defendant C.E.M.A. was permeated with references to Defendants Jacques Cousteau and the Cousteau Group Companies.' Brief for Appellant at 16. Yet none of these references rises to the level of 'manifestations' that Cousteau individually or the other companies were willing for CEMA to act on their behalf in contracting with appellant. More importantly, assuming arguendo that we could find such manifestations, they all came, not from the putative principals, but from the alleged agent CEMA. 14 That appellant's president thought he was in effect dealing with Cousteau himself and an entity called the 'Cousteau Group' is simply not enough on these facts to establish a prima facie case that he was in fact doing so. 15 28 We hold that appellant failed to present prima facie evidence that CEMA was clothed with the agent's authority to contract with Product Promotions on behalf of either Cousteau individually or the other Cousteau Group Companies, individually or collectively. Appellant having failed to carry its burden of bringing these other appellees within the reach of the Texas Long-Arm Statute, the able trial judge correctly dismissed the suit against them for want of personal jurisdiction.