Opinion ID: 1492376
Heading Depth: 1
Heading Rank: 2

Heading: THE CASE vs. AETNA

Text: Before ascertaining the sufficiency of Aetna's contacts, there is a threshold question. May Aetna have the validity of its jurisdictional objection determined prior to a final adjudication of the case on its merits? Precedent says no. Under our practice this court does not customarily tolerate interlocutory review. And, except as an incident to a review of a final determination on the merits, it will not pass upon a ruling denying a motion to dismiss based upon an alleged lack of jurisdiction over the person of a defendant. McMahon v. Edelstein, 75 R.I. 402, 67 A.2d 32. The rationale of that case was that the jurisdictional ruling did not have that degree of finality which the then controlling statute imposed as a precondition to review on a bill of exceptions. Finality in the prescribed sense, we have said, occurs only when there has been a determination upon the merits    which will in due time by operation of law lead to a final judgment in the cause. Troy v. Providence Journal Co., 43 R.I. 22, 25, 109 A. 705, 706. We see no reason, nor has any been suggested, for departing from these principles. It is of no consequence that the method by which review is now obtained in civil actions is by an appeal, [4] rather than by a bill of exceptions as was the case when McMahon was decided. Under the new procedure, just as under the old, piecemeal review is generally impermissible and the requirement of finality still persists. Apollonio v. Kenyon, 101 R.I. 598, 225 A.2d 789. See also Industrial National Bank v. Colt, 101 R.I. 488, 224 A.2d 900. Aetna's cross-appeal must therefore be dismissed pro forma. Just as we have refused to entertain a bill of exceptions which, pending final determination on the merits, seeks review of an interlocutory jurisdictional ruling, so, too, have we refused to review such a ruling on certiorari. Chew v. Superior Court, 43 R.I. 194, 110 A. 605. The reason for our refusal was that another adequate remedy was available for reviewing the alleged error, viz., the prosecution of a bill of exceptions after the litigation had finally terminated. If we were to hew strictly to that line, a disposition of Aetna's claim that our courts lack jurisdiction in this case would have to await a termination of this litigation on its merits. Chew, however, was decided almost 50 years ago, and in the interval the strict requirement that the availability of another adequate remedy for review will defeat an application for certiorari has been relaxed in some instances. Thus, for example, we have elected to exercise our discretion and to grant certiorari, notwithstanding the availability of another remedy, where the circumstances have been unusual or exceptional, or in order to prevent unusual hardship, or where not to act might result in irreparable injury or loss. Rogers v. Rogers, 98 R.I. 263, 201 A.2d 140; Dyer v. Keefe, 97 R.I. 418, 198 A.2d 159; Maczuga v. American Universal Ins. Co., 92 R.I. 76, 166 A.2d 227; Mancini v. Superior Court, 77 R.I. 262, 75 A.2d 300; In re Estate of Lucy Wortham James, 64 R.I. 144, 11 A.2d 289; Brickle v. Quinn, 63 R.I. 120, 7 A.2d 890; Conte v. Roberts, 58 R.I. 353, 192 A. 814. This case, in our judgment, falls into the unusual circumstances category. This is not because jurisdiction over the person of a defendant is the issue, for if that were the only consideration Chew would control. Rather are we moved because the jurisdictional issue arises within the context of the recently enacted long-arm statute. That statute has not yet been before us, and questions will undoubtedly frequently arise on the extent to which a foreign corporation or a nonresident individual may by virtue of the statute's application become amendable to the process of our courts. To the extent that we can now provide some guidance to the bar and to the courts on the scope of the statute, as well as on its limitations, much future litigation may be avoided and to that extent action on our part at this time certainly seems justified. These are the circumstances which make this case unusual and exceptional. They prompt us to depart from, but not to overrule, the holding in Chew. We consider Aetna's case properly here on certiorari and we look now to its contacts with this state. Aetna is a Delaware corporation with a principal place of business in Missouri. It has no office in this state, nor has it applied for or received any authorization or taken any action to qualify to do business in this state; neither does it maintain a bank account, or own or lease any real or personal property, or advertise or solicit any business, or offer any goods or services for sale within this state. It does, however, own stock in eight domestic corporations each of which conducts an installment loan business in this state. How much stock it owns, and whether its interest is large or small, or a majority or a minority interest, the record does not tell us. Even if it owned 100 per cent of stock of each of those corporations, that would not be conclusive or controlling because complete ownership of a subsidiary which does business in the forum state will not alone without more subject the parent to the jurisdiction of the local courts. This was decided by the United States Supreme Court many years ago in Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634. And while there may be more recent holdings of other courts which appear contrary, Cannon, although a pre-minimum contacts case, still continues in our judgment to represent the better view. See Foster, Personal Jurisdiction Based on Local Causes of Action, 1956 Wis. L. Rev. 522 at 563; Developments in the Law: State-Court Jurisdiction, 73 Harv. L. Rev. 909 at 932-933. The plaintiff concedes that Aetna's stock ownership in the subsidiaries without more does not constitute a qualifying minimum contact. He argues, however, that the control which Aetna exercises over the conduct of the affairs of its subsidiaries plus that stock ownership taken together clearly evidence that the corporate separation is unreal and a legal fiction, and that it should therefore be ignored as a device which has been designed to permit Aetna to carry on a business in this state in somebody else's name. If plaintiff can bring his case within the general principles he urges, he may be on sound ground. Focht v. Southwestern Skyways, Inc., 220 F. Supp. 441, aff'd 336 F.2d 603; Curtis Publishing Co. v. Cassel, 302 F.2d 132. See Velandra v. Regie Nationale Des Usines Renault, supra. [5] Accepting as tenable the thesis that stock ownership plus control may create amenability, the question remains whether the facts of this case demonstrate that Aetna controlled and regulated the affairs and business of the domestic subsidiaries to a point where the substance of the relationships so contradicts their form as to demand that the fiction be disregarded. It is, of course, true that the subsidiaries regularly and frequently turned over their receipts to Aetna, and that they were required to have their books examined by Aetna's employees as well as to report to Aetna at stated intervals concerning the general status of their accounts. On the other hand. Aetna, responding to a request from plaintiff to admit to specific facts, stated that it does not control the subsidiaries to a great extent    in the actual mechanical conduct of their business. Obviously, the foregoing factual matter concerning control is abbreviated. Our task would be easier, if we knew the purposes underlying the requirements to account and to remit, and if we were advised in detail on what was contemplated within the term actual mechanical conduct. We must, however, decide a case, not on an evidentiary frame of reference as we would like to have it, but on the record as it comes to us. When we scrutinize this record within the context of the cases which decide when stock ownership plus control furnish the prerequisite contacts, it is apparent that at best this case falls in the grey area. Perhaps the facts here would be sufficient to justify an exercise of jurisdiction had the agreement forming the basis of this litigation been entered into in this state. That, however, is not the case. Here the cause of action arose out of activities which, as far as we can ascertain, are completely unconnected with this state. That is an influencing consideration. See von Mehren and Trautman: Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121 at 1149, 1153. Its significance was commented on in Hanson v. Denckla, supra , where the court in denying jurisdiction, said The cause of action in this case is not one that arises out of an act done or transaction consummated in the forum State. Id., at 251, 78 S.Ct. at 1238, 2 L.Ed.2d at 1296. Conversely, the court found jurisdiction in McGee v. International Life Ins. Co., supra , where, factually, the only contact was that the decedent, a California resident, had purchased a life insurance policy in that state from an Arizona company whose obligations were later assumed by the defendant, another Arizona insurer. Neither insurance company, other than for the policy involved, had ever engaged in business in California, or had an office or agent in that state. When the policy matured as a death claim suit was brought in California. The supreme court emphasized the importance of the place where the contract had been entered into and said It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State. (cites omitted) The contract was delivered in California, the premiums were mailed from there and the insured was a resident of that State when he died. Id., at 223, 78 S.Ct. at 201, 2 L.Ed.2d at 226. We do not, of course, go to the extent of saying that the appropriateness of an exercise of jurisdiction will turn solely on whether or not the litigation arose out of activities which were related to the forum state. Indeed, the inappropriateness of that factor as a conclusive determinant is clearly indicated in Perkins v. Benquet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485. That it may not be conclusive does not, however, mean that it is not both relevant and significant. In sum, then, what we have is a suit arising out of an alleged contractual relationship having no connection with this state; and a parent-subsidiary relationship where the stock ownership is something less than complete and where the parent's control over the business and affairs of its subsidiaries is considerably less than total. In our judgment the totality of these contacts did not give our courts in personam jurisdiction over Aetna. To hold otherwise would be offensive to traditional notions of fair play and substantial justice. and would therefore run afoul of the limitations imposed by International Shoe Co. v. Washington, supra .