Court Opinion

ID: 9539977
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:12:00.974426+00
Date Added: 2024-06-11T14:59:30.311742
License: Public Domain

Mr. JUSTICE STAMOS, specially concurring: I would also affirm the order of the trial court denying the motion of defendant, Beech Aircraft Corp. (hereinafter “Beech”), to quash service of process and to dismiss the complaint for lack of jurisdiction. However, in my estimation, defendant is amenable to service of process in Illinois by virtue of its contractual relationship with its distributor, Hartzog Aviation Co. (hereinafter “Hartzog”). Section 13.3 of the Civil Practice Act (Ill. Rev. Stat. 1973, ch. 110, par. 13.3) provides for service on a corporation as follows: “A private corporation may be served (1) by leaving a copy of the process with its registered agent or any officer or agent of said corporation found anywhere in the State; or, (2) in any other manner now or hereafter permitted by law. A private corporation may also be notified by publication and mail in like manner and with like effect as individuals.” Section 16(1) of the Civil Practice Act (Ill. Rev. Stat. 1973, ch. 110, par. 16(1)) provides in part as follows: “Personal service of summons may be made upon any party outside the State. If upon a citizen or resident of this State or upon a person who has submitted to the jurisdiction of the courts of this State, it shall have the force and effect of personal service of summons within this State; ° * Plaintiff concedes that Beech has no registered agent in the State of Illinois, and does not suggest that the directorates of Beech and Hartzog are interlocking. The issue before this court, therefore, is whether the office of Hartzog is agent in fact for service of process upon Beech. Section 16 of the Civil Practice Act reflects a conscious legislative purpose to assert jurisdiction over nonresident defendants to the extent permitted by the due process clause. (Nelson v. Miller (1957), 11 Ill. 2d 378, 389, 143 N.E.2d 673, 679.) Within this context, modem constitutional principles governing the exercise of personal jurisdiction over a foreign corporation were enunciated by the United States Supreme Court in International Shoe Co. v. Washington (1945), 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154. In International Shoe, the court noted that continuous and systematic corporate operations may establish “sufficient contacts or ties with the state of the forum to make it reasonable and just according to our traditional conception of fair play and substantial justice to permit the state to enforce the obligation” incurred there. 326 U.S. 310, 320, 90 L. Ed. 95, 104, 65 S. Ct. 154. Where the business done by a foreign corporation in the State of the forum is of a sufficiently substantial nature, it has been held permissible for the State to entertain a suit against such corporation even though the cause of action arose from activities entirely distinct from its conduct within the State. (Gray v. American Radiator & Standard Sanitary Corp. (1961), 22 Ill. 2d 432, 176 N.E. 761.) Similarly, where the facts indicate that one corporation so controls the affairs of another corporation that the two entities are essentially one, the court will disregard the corporate entities and hold service of process on one corporation effective as to the other. See Rymal v. Ulbeco, Inc. (1975), 33 Ill. App. 3d 799, 338 N.E.2d 209. Application of these principles to the case at bar presents two questions for analysis: (1) Whether the activities of Hartzog, defendant’s distributor, are chargeable to defendant; and (2) Whether such activities are sufficiently pervasive to justify the exercise of jurisdiction in Illinois over a cause of action not directly related to these activities. In my estimation, there can be little question but that the activities of Hartzog, defendant’s distributor, are attributable to defendant foreign corporation. The amount of control which Beech was capable of exercising is apparent from consideration of several determinative factors. These salient factors appear in the contract between Beech and Hartzog. Implementation of this contract is outlined in the deposition of Karl Berg, a marketing manager employed by Beech Aircraft. The distributorship arrangement between Beech and Hartzog indicates that Beech enjoyed extensive control over its products in the State of Illinois and considerable supervision over its distributor. For example: a. Hartzog is required to submit purchase orders for all airplanes ordered by Hartzog under the agreement and all such purchase orders are subject to approval and acceptance by Beechcraft at its principal place of business; b. Hartzog is permitted to sell Beechcraft airplanes within a given area of the State of Illinois; c. Hartzog is required to devote its full sales efforts to the sales of such aircraft; d. Hartzog is required to price the aircraft it sells; e. Hartzog is required to maintain sales control records and advertise Beechcraft airplanes exclusively and completely in accord with the directives and policies of Beechcraft; f. Hartzog is required to perform all warranty, maintenance and repair service on all Beechcraft airplanes covered by warranty provisions of purchase which aircraft were in Hartzog’s area of responsibility during their warranty period and regardless of whether or not they were airplanes sold by Hartzog; g. Hartzog agreed to provide any and all facilities at its place of business which were necessary by Beechcraft to distribute and sell Beechcraft products; h. Hartzog could not move its place of business without obtaining the prior written consent of Beech. In addition, Beechcraft through its officers and employees could enter Hartzog’s sales area to make marketing surveys or gather any other information Beech may desire and to call upon and examine the facilities and/or personnel of Hartzog during business hours and to do anything else which Beech believed necessary and proper for increased sales; i. Beech could inspect the complete operation of Hartzog from time to time including the business facilities, records, supplies and personnel; j. Beechcraft trademark was allowed to be used by Hartzog; k. Under certain conditions, Beechcraft could terminate the sales agreement without any advance notice. Moreover, the testimony of Karl Berg describes the occasional but direct intervention of the Beech Aircraft Corp. into the Illinois market and further establishes defendant’s voluntary invocation of the benefits of the State of Illinois. (Muffo v. Forsyth (1976), 37 Ill. App. 3d 6, 345 N.E.2d 149.) Berg’s testimony has been abstracted as follows: “ ° ° ° With regard to business activities in Illinois, Berg testified among other things as follows: That he was employed directly by Beech Aircraft Corporation in Wichita, Kansas, and had been for nine years and that this present position as of December 12, 1974 was that of marketing manager for reciprocating aircraft. That he had held previous sales managerial positions for the prior six to eight years. As a consequence of his managerial duties, Mr. Berg testified that on one occasion, he visited Hartzog Aviation with the express purpose of promoting the sale of Beech aircraft known as a ‘Duke’ model to a prospective customer of Hartzog. That he himself was actually involved in the promotion of the aircraft to the sales prospect, including coming into personal contact with the prospect. That he engaged in flying the Beechcraft airplane Hartzog desired to sell to the prospect. No sale was consummated as a result of this visit. Mr. Berg testified that he had visited Hartzog Aviation probably a dozen times within his nine years at Beech. In addition, Mr. Berg testified that in the spring of 1974, Beechcraft, in conjunction with Hartzog, sponsored a sales program in Illinois called ‘An Evening with Beechcraft’ in which four of the Wichita based employees came into Illinois and put on a film and slide presentation and hosted a dinner for sales prospects in Illinois. There were approximately 60 prospects who attended that dinner. No sales were consummated at that time.” Such evidence overwhelmingly demonstrates a series of corporate operations by Beech Aircraft, both directly and through its distributor, sufficient to establish its presence in the State of Illinois within the context of International Shoe. I note that similar results have obtained in various other jurisdictions which have had occasion to consider distributor contracts akin to that involved in the instant case. Szantay v. Beech Aircraft Corp. (E.D.S.C. 1965), 237 F. Supp. 393, aff’d, 349 F.2d 60 (4th Cir. 1965); Dunn v. Beech Aircraft Corp. (E.D. Pa. 1967), 276 F. Supp. 91. See also Scalise v. Beech Aircraft Corp. (E.D. Pa. 1967), 276 F. Supp. 58; Delray Beach Aviation Corp. v. Mooney Aircraft, Inc. (5th Cir. 1967), 332 F.2d 135. Nor can it be doubted that these activities are sufficiently pervasive to justify the exercise of jurisdiction over a cause not directly related to such activities. The annual volume of business conducted by Hartzog does not appear of record. However, it is not disputed that the day-to-day sales and service of Beech Aircraft conducted by an apparendy solvent firm, such as Hartzog Aviation, constitutes activity which may be fairly categorized as a substantial and systematic business operation. As previously noted, within this context, Beech controls Hartzog’s sales and service policies, facilities, public relations, accounts and records, and marketing practices. This activity leaves small doubt that Beech has intentionally entered the Illinois market and is actively doing business in this State. Rather than use its own directly employed personnel, the corporation chose to enter into the State by acquiring broad supervisory control over a distributor-sales-corporation. The nature of this broad control and the extent to which it was exercised is adequate basis for finding Hartzog to be the agent of Beech and, thus, the proper and capable recipient of service of process upon Beech. Defendant’s reliance upon the case of Aanestad v. Beech Aircraft Corp. (9th Cir. 1974), 521 F.2d 1298, is not controlling. In Aanestad, with respect to a distributorship arrangement similar to that at issue in the base at bar, the court held that the activities of Beech through its subsidiary were not sufficientiy pervasive to justify jurisdiction in California of a cause of action unrelated to such activities. It does not appear that evidence similar to the Berg deposition was considered by the court in determination of that appeal and the court expressly refrained from ruling on the question of whether the activities of a subsidiary may subject the parent corporation to jurisdiction in the state in which the subsidiary is incorporated or doing business. Similarly, the case of Cannon Manufacturing Co. v. Cudahy Packing Co. (1925), 267 U.S. 333, 69 L. Ed. 634, 45 S. Ct. 245, is inapplicable to the facts of the instant case. That case held only that the mere presence of an independent, albeit wholly owned, subsidiary may not be equated with the presence of the parent for purposes of establishing that the parent was “doing business” in the forum jurisdiction in order to justify the exercise of jurisdiction over the parent. In the case sub judice, the activities of Hartzog and Beech appear to have been joint. The broad control exercised over the distributor and the direct intercession of Beech employees in Illinois serves to distinguish the rationale of Cannon from that of the case at bar and establishes the “minimum contacts” requisite to the exercise of in personam jurisdiction under International Shoe. In my opinion, the order of the trial court denying defendant Beech’s motion to quash service of process and to dismiss the cause for lack of jurisdiction was proper and for the aforementioned reasons should be affirmed.