Opinion ID: 1906272
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Heading: Primary Factors

Text: The quantity of contacts here was not great. Appellants' contacts with this state are limited to their participation in a single, isolated loan renewal transaction in April 1976 where appellants' collateral was substituted for collateral formerly provided by Norris and Whelan. Without artificially counting the number of telephone or mail exchanges required to complete the transaction, we observe that where the cause of action arises directly out of defendants' contacts with the state, as here, the United States Supreme Court has recognized that even one single, isolated transaction between a nonresident defendant and a resident plaintiff can be a sufficient contact to justify exercising personal jurisdiction under due process standards. McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). In McGee the single transaction was an insurance contract which the nonresident insurer delivered in California and on which the plaintiff insured, a resident of California, mailed premiums from there. This was sufficient to justify the exercise of personal jurisdiction. See, also, Northwestern National Bank of St. Paul v. Kratt, 303 Minn. 256, 226 N.W.2d 910 (1975); Paulos v. Best Securities Incorporated, 260 Minn. 283, 109 N.W.2d 576 (1961); Dahlberg Co. v. Western Hearing Aid Center, 259 Minn. 330, 107 N.W.2d 381, certiorari denied, 366 U.S. 961, 81 S.Ct. 1921, 66 L.Ed.2d 1253 (1961). Where jurisdiction is thus based on a single transaction contact, the nature and quality of the contact becomes dispositive. The fact that the nonresident appellants were never physically present in the state in the course of their transaction, which was accomplished entirely by telephone and mail, is clearly of no significant consequence. See, e. g., Paulos v. Best Securities Incorporated, supra ; Ellwein v. Sun-Rise, Inc., 295 Minn. 109, 203 N.W.2d 403 (1972). The United States Supreme Court, however, has imposed a limitation upon the nature of single or isolated transactions which can justify exercise of jurisdiction over the defendant. In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283, the court found that the Delaware trustee of a Delaware trust could not be subjected to personal jurisdiction in Florida courts on the sole basis of its having remitted trust income to the settlor who had changed her domicile to Florida. The court said (357 U.S. 253, 78 S.Ct. 1239, 2 L.Ed.2d 1298):    The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection if its laws. International Shoe Co. v. State of Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 159, 90 L.Ed. 95. (Italics supplied.) This court, consistent with the rule of Hanson v. Denckla, supra , has considered a defendant's having purposefully solicited contacts with a Minnesota resident or having initiated or induced the transaction out of which the cause of action arises as a crucial factor justifying the assumption of personal jurisdiction. In Paulos v. Best Securities Incorporated, supra , we found personal jurisdiction over a nonresident seller of securities, who never entered the state and had no agents nor any continuous business in the state, on the basis of a single series of telephone and mail contacts with a Minnesota resident whereby the defendant solicited and promoted a sale of securities. Upon facts analogous to the present case, in Northwestern National Bank of St. Paul v. Kratt, 303 Minn. 256, 226 N.W.2d 910 (1975), we approved as consistent with due process an assumption of personal jurisdiction over a nonresident on the basis of a single transaction whereby the defendant signed a guaranty in Illinois of a loan made in Minnesota to a Minnesota resident. There, as in the present case, the cause of action against the defendant arose directly out of the defendant's participation in a single transaction that was his only contact with Minnesota. Appellants attempt to distinguish Kratt by arguing that Kratt was liable as a guarantor while appellants personally are not guarantors of the Norris and Whelan loans. Whether appellants are personally liable, however, is a question on the merits, yet to be decided. The crucial similarity between the two transactions is the economic effect that appellants' purposeful acts created within Minnesota in both cases. In Kratt, the defendants' guaranty served as an inducement to make a loan within Minnesota. Here, it was appellants' agreement pledging the additional security of their $87,890 notes that induced Marquette to renew the Norris and Whelan loans. Upon this record, the factual allegations do not support appellants' argument that they became involuntarily entangled in the Norris and Whelan transaction giving rise to Marquette's action against them. It was appellant Illinois stockholders who purposefully initiated the transaction whereby they offered and agreed, upon Marquette's renewal of the Norris and Whelan notes, to substitute their preferred shares and their notes for the collateral previously provided to Marquette by Norris and Whelan. Conversely, appellants knew that if Marquette would not accept or rely upon their offer and agreement the collateral pledged by Norris and Whelan would not be surrendered or released. By structuring a transaction in which payment schedules on appellants' notes that they pledged to Marquette were identical to those on the Norris and Whelan notes to Marquette, and by providing authority in the notes and by letter agreement for direct payment to Marquette, the Illinois stockholders intended to, and did, assume an expectant responsibility for paying Marquette directly in pro tanto discharge of the Norris and Whelan obligations. In reasonable reliance thereon, Marquette was induced to enter the transaction proposed by appellants, extending further credit to Norris and Whelan in Minnesota and thereby enabling appellants to complete their objective of the purchase of all of Opar's preferred shares. Appellants rely upon All Lease Co. Inc. v. Betts, 294 Minn. 473, 199 N.W.2d 821 (1972), and Fourth N. W. Nat. Bank v. Hilson Industries, Inc., 264 Minn. 110, 117 N.W.2d 732 (1962), to argue that the quality of appellants' contacts with the state should be found insufficient to confer personal jurisdiction. These cases are different on their facts and did not involve the element of active inducement of a Minnesota resident to enter a transaction to its detriment, which is present here. It would serve little purpose to discuss further authorities cited by the parties that are only partially similar to the unique factual situation presented. In determining the constitutionality of exercising personal jurisdiction, the sufficiency of contacts must be evaluated in each case on its own facts. Upon the factual allegations presented here, it appears to us that appellants' contacts with this state were of such nature and quality in inducing a financial transaction within this state to appellants' planned benefit as to justify subjecting them to the personal jurisdiction of the courts of this state under the purposeful availment of privileges test of Hanson v. Denckla, supra , and within the authority of our holding in Northwestern National Bank of St. Paul v. Kratt, supra . Accordingly, we hold that appellants were properly made subject to personal jurisdiction in the courts of this state under our long-arm statute without offending recognized constitutional standards of due process of law. Affirmed. TODD, J., took no part in the consideration or decision of this case.