Grobark v. Addo MacHine Co., Inc.

Mr. Justice Davis, dissenting: I dissent from the decision of the court which I believe to be an unrequired limitation upon the salutary purpose of sections 16 and 17 of the Civil Practice Act. The opinion finds that the due process clause of the Fourteenth amendment to the United States constitution prohibits the exercise of jurisdiction by the Illinois courts in this case. I do not agree.

Within a three-year period, Addo, a large manufacturing company, shipped $150,000 worth of machines into Illinois. In order to stimulate a greater demand for its products here, it named plaintiffs as its exclusive distributor in the Greater Chicago Trading Area. Addo had close, continuous and important business contacts with the Illinois plaintiffs, its distributors. The contract between the parties contemplated that the plaintiffs would use their efforts to get other persons or corporations in Illinois to engage in the sale of Addo’s products, and provided a specific compensation in the form of an additional discount, for plaintiffs’ efforts in this respect. The president of Addo negotiated in Illinois to establish this business relationship; it made commitments to plaintiffs concerning activities to be performed almost solely in this State; it exacted from plaintiffs a list of their dealers in Illinois, and then, for its own benefit, terminated its relationship with the plaintiffs and set up a different method of merchandising.

Regardless of the legal right to control the manner and method of distribution, the sole manufacturer of a product may exert compelling influence on the activities of its distributors by shutting off their source of supply. It is alleged in the complaint that this was done by Addo in violation of the terms of the contract between the parties. While Addo contends that the legal nature of the distribution was merely one for the sale of goods, it is charged in the complaint that there was a continuing relationship between Addo and the plaintiffs which extended beyond that of buyer and seller and in this case the contract specifically" provided, as the opinion of the court points out, for “dealer j development.”

Under the allegations of the complaint, the individual defendants, Berg and Hanson, Illinois residents, with full knowledge of plaintiffs’ contractual relationship with Addo, wrongfully induced the termination and breach of Addo’s contract with plaintiffs by causing their own appointment as Addo’s distributor, by participating in and adopting the benefit of the list of dealers supplied by plaintiffs to- Addo, by interfering with customer relations between plaintiffs and certain of their valuable accounts, and by causing Addo to breach its contract to continue plaintiffs as a dealer of Addo-X adding machines for a reasonable timé following any termination of plaintiffs’ contract of distributorship. The presence of the individual resident defendants, as parties, argues in favor of jurisdiction, as does the inability of plaintiffs to join them as parties defendant in any proceedings instituted against Addo in the State of New York.

The cause of action sought to be enforced arises out of activities in this State in connection with this relationship. This is not an action by a third party arising out of the sale of Addo’s machines by plaintiffs. Rather, it is the business relationship between the plaintiffs and Addo which constitutes the qualifying contact with the forum.

I submit that these facts constitute minimum contacts with the forum required by International Shoe Co. v. Washington, 326 U.S. 310 , 90 L. ed. 95. Addo’s ties with Illinois were at least as great as in McGee v. International Life Insurance Co. 355 U.S. 220 , 2 L. ed. 2d 223; Perkins v. Benguet Consolidated Mining Co. 342 U.S. 437 , 96 L. ed. 485, and Travelers Health Association v. Virginia, 339 U.S. 643 , 94 L. ed. 1154.

I am convinced that this court was right in Nelson v. Miller, 11 Ill.2d 378, 389 , where it stated: “Sections 16 and 17 of the Civil Practice Act reflect a conscious purpose to assert jurisdiction over nonresident defendants to the extent permitted by the due-process clause.” This view is supported by the commentators on the section. (Cleary and Seder, Extended Jurisdictional Bases for Illinois Courts, 50 N.U.L.R. 599; Joint Committee Comments, SmithHurd. Anno. Stat., chap, 110, par. 17, p. 164; Jenner and Tone, Historical and Practice Notes, Smith-Hurd Anno. Stat., chap, 110, par. 17, p. 165; Expanded Concepts of State Jurisdiction over Nonresidents, O’Connor & Goff, 31 Notre Dame Lawyer, 223.) In Nelson we noted that with the change of social, technological, and legal developments, the rigid concepts of Pennoyer v. Neff yielded to fiction, and fiction in turn yielded to the realistic considerations of fairness under the minimum contact doctrine established by International Shoe. And, at page 384 we stated: “The foundations of jurisdiction include the interest that a State has in providing redress in its own courts against persons who inflict injuries upon, or otherwise incur obligations to, those within the ambit of the State’s legitimate protective policy. The limits on the exercise of jurisdiction are not ‘mechanical or quantitative’ (International Shoe Co. v Washington, 326 U.S. 310, 319 (1945),) but are to be found only in the requirement that the provisions made for this purpose must be fair and reasonable in the circumstances, and must give to the defendant adequate notice of the claim against him, and an adequate and realistic opportunity to appear and be heard in his defense."

The legislature did not restrict such jurisdiction to actions arising out of express contracts, but has extended the jurisdictional basis to the transaction of any business within the State. (Ill. Rev. Stat. 1957, chap, 110, par. 17(1) (a).) This should be construed to include any business activity sufficient to create the essential minimum contacts with the forum.

The United States Supreme Court has come far from the doctrine of in personam jurisdiction enunciated in Pennoyer v. Neff, 95 U.S. 714 , but as I read the opinion in the case at bar, I cannot but believe that this court is again dealing with the early historic legalistic definition of “doing business" rather than with the concept of “minimal contacts" established in International Shoe and McGee.

There is nothing in Hanson v. Denckla, 357 U.S. 235 , 2 L. ed. 2d 1283, which either requires this result, or justifies the court’s timorous approach to the practical aspects of in personam jurisdiction. If, as we held in Nelson, “The foundations of jurisdiction include the interest that a State has in providing redress in its own courts against persons who inflict injuries upon, or otherwise incur obligations to, those within the ambit of the State’s legitimate protective policy,” then this court should not needlessly render Illinois courts impotent to serve our residents by reason of a supposed compulsion stemming from the Fourteenth amendment. .That Hanson involves an entirely different problem is apparent from the discussion of that case in the court’s opinion.

In International Shoe, 326 U.S. 310 , at page 319, Chief Justice Stone, speaking for the court, stated: “But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.”

I would sustain jurisdiction, reverse the trial court and remand the cause with directions to deny the motion to quash.

Mr. Justice Schaefer joins in this dissent.