Petition — Beech Aircraft Corp. v. Braband

FEB 28 i979

a IR., CLERK

In the

Supreme Court of the United States

No. 28-1328

BEECH AIRCRAFT CORPORATION,

Petitioner, —

vs.

GALE BRABAND and ELIZABETH FORSYTHE,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE SUPREME COURT OF ILLINOIS

LORD, BISSELL & BROOK

115 S. LaSalle Street

Chicago, Illinois 60603

(312) 443-0342

Attorneys for Petitioner

WituiaMm P. Butter

Gary W. WESTERBERG

Hucu C. Grirrin

Of Counsel

—_—~

Midwest Law Printing Co., Chicago 60601, Financial 6-3988

TABLE OF CONTENTS

PAGE

a csunnases id 1

JURISDICTION ................... oor 2

QUESTIONS PRESENTED FOR REVIEW ................ 3

APPLICABLE CONSTITUTIONAL PROVISIONS... 3

STATEMENT OF THE CASE. ........................................ 4

0 SEE 4

Manufacture Of Aircraft In Kansas And Subse-

Er 4

EEE 5

. Beech’s Lack Of Presence In J]linois ........................ 5

EES SLES 5

a ..sensisadespnasorencnsones 7

REASONS RELIED ON FOR ALLOWANCE OF

THE WRIT:

I.

The Illinois Supreme Court Erred In Consider-

ing The Activities Of A Separate And Independ-

ent Illinois Corporation (Hartzog) As The Activ-

ities Of A Kansas Corporation (Beech) For Pur-

poses Of Asserting Illinois Jurisdiction Over

Beech. Moreover, The Conflict And Confusion

Among The States, The Circuits And The Districts

Over The Continuing Vitality Of The Cannon De-

cision Should Be Resolved By This Court ................ 9

Conflict And Confusion Over Vitality Of Can-

NE a 11

Cases Finding No Jurisdiction Over Beech .... 14

Cases Upholding Jurisdiction Over Beech .... 14

ii

II.

If Cannon Is Still The Law, Then The Illinois

Supreme Court’s Decision, Subjecting Beech To

Jurisdiction For A Cause Of Action Arising Out-

side Of Illinois, Violates Beech’s Right To Due

Process Of Law Under The Fourteenth Amend-

I seiiettaceis cick ccentinageaie tart nese paianceidnaleneaiatecbagucnchineiimivens 15

PTET - detecting cittiinsctihiccannniinatlebpreaninnintdsinnitoian 19

LIST OF AUTHORITIES CITED

Cases

Aanestad v. Beech Aircraft Corp., 521 F. 2d 1298 (9th

Cir. 1974), cert. den. 424 U.S. 998 (1976) ................... 14

ASC Industries, Ine. v. Keller Industries, Inc., 296 F.

Supp. 1160 (D.C. Conn. 1969) . 13

Boryk v. deHavilland Aircraft Co., 341 F. 2d 666 -

Cir. 1965) 13

Braasch v. Vail Associates, Inc., 370 F. visi 809 (N. D.

Til. 1973) 18

Cannon Mfg. Co. v. Cudahy On. 267 U.S. 333 (1925) ..

ideas 9, 11, 13, 14

Crow Tribe v. Mohasco Pudien. “406 F. Supp. 738 (D.

Mont. 1975) 12

DeWalker v. Pueblo International, Inc., 569 F.. 2d 1169

(1st Cir. 1978) 11, 13

Dunn v. Beech Aircraft Corp., 276 F. Supp. 91 (E.D.

Pa. 1967) 15

Energy Reserves Group, Inc. v. Superior Oil Co., 460

F. Supp. 483 (D. Kan. 1978) 13, 14

Farkas v. Texas Instruments, Inc., 429 F. 2d 849 (1st

Cir. 1970) 12

iii

Frito-Lay, Ine. v. Procter & Gamble Co., 364 F. Supp.

243 (W.D. Tex. 1973)

Hanson v. Denckla, 357 U.S. 235 (1957)

Harris v. Deere and Co., 223 F. 2d 161 (4th Cir. 1955) ..

Hitt v. Nissan Motor Co., Ltd., 399 F. Supp. 838 - D.

SEIN STII sihitdaveie bnaecccnnilneshasiobainiiéctaomaeie

International Shoe Co. v. Washington, 326 U. Ss. 310

(1945)

Marantis v. Dolphin Aviation, Inc., 453 F. Supp. 803

8 pe ERSTE CS MAS anne eS ene toe RS CR

McPheron v. Penn Central Transp. Co., 390 F. Supp.

I I, MND ibethahee iceSctccces cares Snethccslictatninnpiiin

Perkins v. Benguet Consolidated Mining Co., 342 U.S.

437 (1952)

Sealise v. Beech Aircraft Corp., 276 F. ian 58 (EB. D.

Pa. 1967)

Shaffer v. Heitner, 433 U.S. 186 (1977) 2.0.02.

Smith v. Piper Aircraft Corp., 425 F. 2d 823 (5th Cir.

1970) ...

Szantay v. Beech Aircraft Corp., 237 F. Supp. 393 (E.D.

S.C. 1965), aff’d, 349 F. 2d 60 (4th Cir. 1965) 00000...

Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F. 2d

Ie I IED lead. adeadieinendicdatatachcnmnscichshecncicsiiitcnbscnies

Williams v. Canon, Inc., 432 F. Supp. 376 (C.D. Cal.

1977)

13

12

3n the

Supreme Court of the United States

No.

BEECH AIRCRAFT CORPORATION,

Petitioner,

vs.

GALE BRABAND and ELIZABETH FORSYTHE,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE SUPREME COURT OF ILLINOIS

Petitioner Beech Arrcrart Corporation, prays that a

Writ of Certiorari issue to review the judgment and opin-

ion of the Illinois Supreme Court affirming an order de-

nying Beech’s motion to dismiss for lack of personal juris-

diction over Beech.

OPINIONS BELOW

The opinion of the Illinois Supreme Court appears at

72 Tll.2d 548 and 382 N.E.2d 252 (1978) and is printed in

2

the Appendix hereto. The divided Appellate Court opin-

ion (lead opinion, concurring opinion and dissenting opin-

ion) is reported at 51 IllApp.3d 296, 367 N.E.2d 118

(1977) and is also printed in the Appendix hereto. The

Appellate Court’s order granting a certificate of importance

to the Illinois Supreme Court, the Illinois Circuit Court’s

order certifying the question to the Appellate Court, and

the Supreme Court’s order denying the petition for re-

hearing are also contained in the Appendix.

JURISDICTION

The opinion and judgment of the Illinois Supreme Court

was entered on October 6, 1978 and a petition for rehearing

was denied December 1, 1978. This petition for certiorari

was filed within 90 days of that date. The statutory provi-

sion granting jurisdiction to this Court is contained in 28

U.S.C. §1257 as follows:

‘*$1257. State courts; appeal; certiorari

Final judgments or decrees rendered by the highest

court of a State in which a decision could be had, may

be reviewed by the Supreme Court as follows:

(3) By writ of certiorari, where the validity of a

treaty or statute of the United States is drawn in

question or where the validity of a State statute is

drawn in question on the ground of its being repug-

nant to the Constitution, treaties, or laws of the Unit-

ed States, or where any title, right, privilege or im-

munity is specially set up or claimed under the Con-

stitution, treaties or statutes of, or commission held

or authority exercised under, the United States.’’

mii.

QUESTIONS PRESENTED FOR REVIEW

1. Is this Court’s holding in Cannon Mfg. Co. v. Cudahy

Co., 267 U.S. 333 (1925)—that a subsidiary’s presence and

activities in the forum state do not constitute the pres-

ence and activities of the parent for purposes of asserting

in personam jurisdiction over the parent—still the law?

2. If so, did the denial of Beech Aircraft Corporation’s

motion to dismiss for lack of personal jurisdiction in the

instant case violate Beech’s constitutional rights under the

due process clause of the Fourteenth Amendment of the

United States Constitution?

APPLICABLE CONSTITUTIONAL

PROVISIONS

The constitutional provision applicable to this case is

contained in Section 1 of Amendment XIV of the United

States Constitution as follows:

‘‘Constitution of the United States, Amendment XIV:

Section 1. All persons born or naturalized in the

United States, and subject to the jurisdiction thereof,

are citizens of the United States and of the State where-

in they recide. No State shall make or enforce any law

which shall abridge the privileges or immunities of

citizens of the United States; nor shall any State de-

prive any person of life, liberty, or property, without

due process of law; nor deny to any person within its

jurisdiction the equal protection of the laws.’’

nile

STATEMENT OF THE CASE

The case was decided on an ‘‘agreed statement of facts”’

as follows:

Accident In Canada

On December 10, 1971, « Beechcraft B80 Queen Air

crashed near an airport on Frobisher Bay in northern

Canada. At the time of the crash, the plane was on its way

to London, England where it had been purchased by an

entity known as Eagle Aircraft Services, Ltd. The three

persons on board the plane at the time of the accident

were James L. Braband, Donald R. Forsythe and James

Going, all pilots. Each was killed in the crash. At the time

of the accident, Braband and Forsythe were [llinois resi-

dents.

Manufacture Of Aircraft In Kansas

And Subsequent History

The aircraft in question was manufactured by Beech

Aireraft Corporation in Wichita, Kansas. In 1966, Beech

sold the plane to a distributor in San Antonio, Texas.

Tn 1968, the plane was sold by the San Antonio distrib-

utor to a Nevada corporation, Mission Broadcasting Com-

pany, located in Reno, Nevada. In 1971, Mission Broad-

casting Company sold the airplane to Coleman Aircraft

Corporation of Morton Grove, Illinois. Coleman in turn

sold the plane to Eagle Aircraft Services Ltd., a British

corporation, with its principal place of business in London,

England. The plane was being delivered to Eagle at the

time of the crash.

lls

Lawsuit In Illinois

In 1973, the administrators of the Braband and Forsythe

estates filed an action against Beech under the [Illinois

Wrongful Death Act (Til. Rev. Stats., Ch. 70, §§1-2) as-

serting a theory of strict products liability (Appendix

1-7).

Beech’s Lack Of Presence In [Illinois

Beech does not own, sell, service or maintain aircraft

in Illinois. Beech is incorporated in Delaware and has its

offices and principal place of business in Wichita, Kansas.

Beech is not incorporated in Illinois, is not qualified or

authorized to do business in Illinois, and is not otherwise

chartered or licensed to do business in Illinois. Beech

pays no Illinois taxes of any kind. Beech owns no real

estate in Illinois. Beech has no officers, directors, or em-

ployees living or stationed in Illinois or any subdivision of

Tlinois. Beech has no appointed agent in Illinois for serv-

ice of process. Beech makes no aircraft sales in Illinois.

All sales of Beech aircraft are made F.O.B. Wichita,

Kansas, with delivery in Wichita.

Hartzog Aviation

Hartzog Aviation Inc., is an Illinois corporation with

its principal place of business at the Greater Rockford

Airport in Rockford, Illinois. Hartzog buys airplanes from

Beech F.O.B. Wichita, Kansas pursuant to a mutually

cancellable sales agreement and written purchase orders.

Hartzog then attempts to sell the planes which it buys

from Beech to Hartzog’s customers in certain counties of

Tilinois, Indiana, Michigan and Wisconsin. Hartzog is a

totally independent and separate business corporation. None

of the stock of Hartzog is owned by Beech and there are

no interlocking directors or officers.

a a

Hartzog also advertises and sells planes made by other

manufacturers besides Beech. Hartzog is not a defendant

in this lawsuit and the plane involved in the instant crash

was never bought, sold, owned or serviced by Hartzog. As

set forth in the Agreed Statement of Facts:

“‘The aircraft invelved in this accident which is the

subject of this litigation was not owned or sold by

Hartzog Aviation. Hartzog is not a defendant to this

action. Neither Hartzog nor the relationship between

Hartzog and Beech has any relationship to this acci-

dent or the aircraft involved herein.’’

‘‘This agreement does not constitute CENTER [ Hart-

zog| the agents or other legal representative of

BEECH FOR ANY PURPOSE WHATSOEVER.

CENTER is not granted any express or implied right

or authority to assume or create any obligation or

responsibility on behalf of or in the name of BEECH

or to bind BEECH in any manner or thing whatso-

ever.’’

Over a nine-year period, Carl Berg, a Beech representa-

tive from Wichita, has visited Hartzog a total of twelve

times. Only one of Berg’s visits involved sales promotion

with a potential customer and ‘‘no sale was consummated

as a result of this visit.’’ One other time four Beech em-

ployees from Wichita attended a dinner in Rockford and,

in conjunction with Hartzog, presented a film and slide

presentation to 60 sales prospects. Again, ‘‘no sales were

consummated at that time.’’ The stipulated facts further

provide:

‘“‘The record reflects no further Beech ‘activities’ in

Tilinois beyond those detailed above.’’

= oe

Proceedings Below

Circuit Court

On January 9, 1974, Beech filed a special and limited

appearance for the purpose of objecting to service and

jurisdiction and moved to vacate and quash the service

of process on it (Appendix 8-9). On February 15, 1974,

the Cireuit Court of Cook County ordered Beech to re-

spond to the Amended Complaint ‘‘without waiver of its

objection to jurisdiction.’’

On February 18, 1975, the Cireuit Court heard Beech’s

motion to quash and stated that it would enter an order

denying the motion. The order was entered on July 28,

1975 and contained the court’s certification that its order

‘‘involves a question of law as to which there is a sub-

stantial ground for difference of opinion and that an im-

mediate appeal from the order may materially advance

the ultimate termination of the litigation’’ (Appendix 13).

In the course of its decision denying Beech’s motion,

the Circuit Court accurately remarked:

‘‘There is no case ever decided in Illinois that allowed

jurisdiction in Illinois under the circumstances.’’

Appellate Court

Pursuant to Illinois Supreme Court Rule 308, the IIli-

nois Appellate Court then granted Beech’s application for

leave to file an interlocutory appeal.

On July 19, 1977, the three-judge Appellate Court af-

firmed the trial court’s dismissal order in a divided opinion

containing three separate opinions (lead opinion, concur-

ring opinion, dissenting opinion) (Appendix 14-40).

On August 18, 1977, the Appellate Court granted Beech’s

application for a certificate of importance to the Illinois

oo

Supreme Court under Supreme Court Rule 316 (Appendix

41).

Supreme Court

The Illinois Supreme Court, while ultimately affirming

the Appellate Court, did not wholly adopt either the view

of the lead opinion or the concurring opinion. With respect

to plaintiff’s claim that the Illinois presence of Hartzog

Aviation, Ine. constituted the presence of Beech for juris-

dictional purposes, the court noted Beech’s reliance on

this Court’s decision in Cannon Mfg. Co. v. Cudahy Co.,

267 U.S. 333 (1925). However, the Illinois Supreme Court

found Cannon unpersuasive, first because Cannon was de-

cided 20 years before International Shoe Co. v. Washing-

ton, 325 U.S. 310 (1945), and second because the Illinois

Supreme Court purported not to base its decision on Hart-

zog’s activities ‘‘standing alone’’, but also the presence of

Beech personnel in Illinois as follows:

1) Beech’s marketing manager ‘‘frequently’’ (12

times in 9 years) came to Illinois to promote the sale

of Beech planes;

2) Beech representatives once put on a sales din-

ner in Illinois (no sales were consummated) :

3) The Beech logo had appeared in the Chicago

telephone directory in an ad for Hartzog (Appendix

53).

From these sporadic and isolated activities and the

Illinois presence of Hartzog, the Illinois Supreme Court

concluded that Beech was generally present and amenable

to service of process in Dlinois for torts whenever and

however caused including the instant accident in Canada

which undisputedly had no connection with any [Illinois

activity by Beech or Hartzog (Appendix 42-54).

oe

REASONS RELIED ON FOR ALLOWANCE

OF THE WRIT

1.

THE ILLINOIS SUPREME COURT ERRED IN CONSIDER.

ING THE ACTIVITIES OF A SEPARATE AND INDEPEND-

ENT ILLINOIS CORPORATION (HARTZOG) AS THE ACTIV-

ITIES OF A KANSAS CORPORATION (BEECH) FOR PUR-

POSES OF ASSERTING ILLINOIS JURISDICTION OVER

BEECH. MOREOVER, THE CONFLICT AND CONFUSION

AMONG THE STATES, THE CIRCUITS AND THE DIs-

TRICTS OVER THE CONTINUING VITALITY OF THE CAN-

NON DECISION SHOULD BE RESOLVED BY THIS COURT.

In Cannon Mfg. Co. v. Cudahy Co., 267 U.S. 333 (1925),

this Court held that North Carolina could not assert juris-

diction over Cudahy, a Maine corporation not licensed to

do business in North Carolina, even though Cudahy had

a wholly-owned Alabama subsidiary licensed and doing

business in North Carolina as ‘‘the instrumentality em-

ployed to market Cudahy products within the State’’ (267

U.S. at 335). Moreover, in Cannon it was established that:

1) The subsidiary bought the parent’s products and

resold them to dealers in the state (267 U.S. at 335).

2) The products were shipped directly from the

parent to the in-state dealers (267 U.S. at 335).

3) Through ownership of the capital stock or other-

wise, the parent ‘‘dominated’’ the subsidiary corpora-

tion ‘‘immediately and completely ;’’ (267 U.S. at 335)

4) The parent ‘‘exerts its control both commer-

cially and financially in substantially the same way,

and mainly through the same individuals, as it does

over those selling branches or departments of its busi-

—10—

ness not separately incorporated which are established

to market the Cudahy products in other states’’ (267

U.S. at 335) .

Even with this evidence of ‘‘ownership,’’ ‘‘control,’’ and

‘*domination’’ (not present in the case at bar), this Court

held that the formal separateness maintained between the

two corporations was sufficient to prevent the acts of the

subsidiary from being considered the acts of the parent

for purposes of personal jurisdiction. The Court reasoned

(at 335-338) :

“‘The existence of the Alabama Company as a distinct

corporate entity is, however, in all respects observed.

Its books are kept separate. All transactions between

the two corporations are represented by appropriate

entries in their respective books in the same way as if

the two were wholly independent corporations . . .

* * *

The defendant wanted to have business transactions

with persons resident in North Carolina, but for rea-

sons satisfactory to itself did not choose to enter the

State in its corporate capacity. It might have con-

ducted such business through an independent agency

without subjecting itself to the jurisdiction. Bank of

America v. Whitney Central National Bank, 261 U.S.

171. It preferred to employ a subsidiary corporation.

Congress has not provided that a corporation of one

State shall be amenable to suit in the federal court

for another State in which the plaintiff resides, when-

ever it employs a subsidiary corporation as the instru-

mentality for doing business therein. Compare Lumiere

v. Mae Edna Wilder, Inc., 261 U.S. 174, 177-8. That

such use of a subsidiary does not necessarily subject

the parent corporation to the jurisdiction was settled

by Conley v. Mathieson Alkali Works, 190 U.S. 406,

409-11; Peterson v. Chicago, Rock Island & Pacific

Ry. Co., 205 U.S. 364; and People’s Tobacco Co., Ltd.

v. American Tobacco Cu., 246 U.S. 79, 87. In the case

|

at bar, the identity of interest may have been more

complete and the exercise of control over the sub-

sidiary more intimate than in the three cases cited,

but that fact has, in the absence of an applicable

statute, no legal significance. The corporate separa-

tion, though perhaps merely formal, was real. It was

not pure fiction. There is here no attempt to hold the

defendant liable for an act or omission of its sub-

sidiary or to enforce as against the latter a liability

of the defendant. Hence, cases concerning substantive

rights, like Hart Steel Company v. Railroad Supply

Co., 244 U.S. 294; Chicago, etc. Ry. Co. v. Minneapolis

Civic Association, 247 U.S. 490; Gulf Oil Corp. v. Lew-

ellyn, 248 U.S. 71; and United States v. Lehigh Valley

R.R. Co., 254 U.S. 255, have no application.

* * *

But whatever might be other legal consequences of

the concentration, we cannot say that for purposes of

jurisdiction, the business of the Alabama corporation

in North Carolina became the business of the defend-

ant.’’ (Emphasis added)

If the presence and activities of a wholly-owned, domi-

nated, and controlled subsidiary did not constitute the pres-

ence and activities of the parent ‘‘for purposes of juris-

diction’’ in Cannon, then the presence and activities of a

distributor (Hartzog) that was not owned, dominated or

controlled by Beech, did not constitute the presence and

activities of Beech ‘‘for purposes of jurisdiction’’ in the

instant case.

Conflict And Confusion Over Vitality Of Cannon

The cases following Cannon are legion. See, e.g. :

1. DeWalker v. Pueblo International, Inc., 569 F. 2d

1169 (1st Cir. 1978) (activities of wholly-owned New York

subsidiary not attributable to parent Delaware corpora-

tion) ;

a |) ae

2. Williams v. Canon, Inc., 432 F. Supp. 376 (C.D. Cal.

1977) (activities of wholly-owned U. S. subsidiary doing

business in California not attributable to Japanese cor-

poration) ;

3. Frito-Lay, Inc. v. Procter & Gamble Co., 364 F. Supp.

243 (W.D. Tex. 1973) (Texas had no jurisdiction over

Procter & Gamble Co., even though a wholly-owned sub-

sidiary, with common officers and directors, Procter &

Gamble Distrib. Co., did substantial business and sales of

Gamble products in Texas) ;

4. McPheron v. Penn Central Transp. Co., 390 F. Supp.

943 (D. Conn. 1975) (activities of Connecticut holding

company not attributable to parent Pennsylvania corpora-

tion) ;

5. Crow Tribe v. Mohasco Indus., 406 F. Supp. 738 (D.

Mont. 1975) (Montana court lacked jurisdiction over non-

resident parent corporation where formal separation was

maintained between it and its subsidiary doing business

within the state) ;

6. Harris v. Deere and Co., 223 F. 2d 161 (4th Cir. 1955)

(Illinois defendant corporation not chargeable with activ-

ities of wholly-owned North Carolina subsidiary corpora-

tion selling defendant’s products) ;

7. Smith v. Piper Aircraft Corp., 425 F. 2d 823 (5th Cir.

1970) (Georgia activities of Florida distributor not at-

tributable to Piper, a Pennsylvania corporation) ;

8. Farkas v. Texas Instruments, Inc., 429 F. 2d 849 (1st

Cir. 1970) (Massachusetts lacked jurisdiction over parent

corporation whose subsidiary was doing business within the

state).

=

Tllustrative of the holdings in these cases is this most

recent adherence to Cannon in DeWalker v. Pueblo In-

ternational, Inc., supra, 569 F. 2d at 1172:

‘Tn determining whether a parent is ‘doing business’

in a state for purposes of personal jurisdiction, the

Supreme Court has held that a separately iucorpo-

rated subsidiary operating in a state ordinarily may

not be considered to be the parent for purposes of

determining whether the parent is doing business there

(citing Cannon).’’ (Emphasis added)

However, Illinois is not the first court or state to rele-

gate Cannon to ‘‘second class’’ status in order to escape

its clear holding. See, e.g.:

1. Boryk v. deHavilland Aircraft Co., 341 F. 2d 666 (2d

Cir. 1965) (Delaware subsidiary’s New York activities at-

tributable to British parent).

2. Hitt v. Nissan Motor Co., Ltd., 399 F. Supp. 838

(S.D. Fla. 1975) (activities of U. S. subsidiary attributable

to Japanese parent).

3. Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.

2d 406, 423 (9th Cir. 1977) (activities and presence of

Nevada subsidiary attributable to Liechtenstein corpora-

tion).

4. Energy Reserves Group, Inc. v. Superior Oil Co., 460

F. Supp. 483 (D. Kan. 1978) (parent corporation’s Kansas

activities attributable to British subsidiary).

5. ASC Industries, Inc. v. Keller Industries, Inc., 296

F. Supp. 1160, 1163 (D.C. Conn. 1969) (activities of wholly-

owned Connecticut subsidiary attributable to Florida par-

ent). _

= =

An example of the view of these cases is this recent state-

ment in Energy Reserves Group, Inc. v. Superior Oil Co.,

supra, 460 F. Supp. at 490:

‘*The Court secondly holds that formal separation

of corporate identities does not raise a constitutional

barrier to the exercise of jurisdiction over a non-resi-

dent whose affiliated corporation has a substantial

nexus with the forum. This follows from the conclu-

sion that the time-honored doctrine of Cannon Manu-

facturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45

S.Ct. 250, 69 L.Ed. 634 (1925), must no longer be fol-

lowed. The Court finds Cannon to be limited in scope

or modified in holding by International Shoe and its

progeny. Reliance on the rule of Cannon is unsound

when extraterritorial service is authorized by statute

and when personal jurisdiction is predicated on the

due process standards of International Shoe.’’ (Em-

phasis added)

In fact, the confusion and conflict have now reached the

point where in addition to the case at bar Beech has been

the subject of five other conflicting decisions on the issue

of whether its relationship with its distributors makes it

amenable to personal jurisdiction for accidents occurring

outside the forum state.

Cases Finding No Jurisdiction Over Beech

1. Aanestad v. Beech Aircraft Corp., 521 F. 2d 1298 (9th

Cir. 1974), cert. den. 424 U.S. 998 (1976);

2. Marantis v. Dolphin Aviation, Inc., 453 F. Supp.

803 (S.D. N.Y. 1978).

Cases Upholding Jurisdiction Over Beech

1. Szantay v. Beech Aircraft Corp., 237 F. Supp. 393

(E.D. S.C. 1965), aff’d, 349 F. 2d 60 (4th Cir. 1965) ;

i OT

—-15—

2. Dunn v. Beech Aircraft Corp., 276 F. Supp. 91 (E.D.

Pa. 1967) ;

3. Scalise v. Beech Aircraft Corp., 276 F. Supp. 58

(E.D. Pa. 1967).

It is thus apparent that the status of the Cannon rule is

an issue on which this Court’s guidance is urgently needed,

not only by Beech, but by all other manufacturers who sell

products to distributors, franchisees, or subsidiary com-

panies in other states. Moreover, the Cannon rule having

been established by this Court, this Court should be the

one to reaffirm or change it.

II.

IF CANNON IS STILL THE LAW, THEN THE ILLINOIS

SUPREME COURT’S DECISION, SUBJECTING BEECH TO

JURISDICTION FOR A CAUSE OF ACTION ARISING OUT-

SIDE OF ILLINOIS, VIOLATES BEECH’S RIGHT TO DUE

PROCESS OF LAW UNDER THE FOURTEENTH AMEND-

MENT.

If Cannon is still the law of these states, then the activ-

ities of an independent, separately-owned distributor (Hart-

zog) should not in any way have been considered the activ-

ities of Beech for jurisdictional purposes in this case and

the order denying Beech’s motion to quash should have

been reversed. Without Hartzog, the sporadic, isolated ac-

tivities by Beech in Illinois, set forth in the Illinois Su-

preme Court’s opinion, are patently insufficient to estab-

lish general presence jurisdiction over Beech for a cause

of action arising outside of Illinois. These Illinois activ-

ities by Beech consisted of the following:

ilies

1) Beech’s marketing manager periodically (twelve

times in nine years) came to Illinois to promote the

sale of Beech planes;

2) Beech representatives once put on a sales dinner

in Illinois (no sales were consummated) ;

3) The Beech logo had appeared in the Chicago

telephone directory in an ad for Hartzog.

In International Shoe Co. v. Washington, 326 U.S. 310

(1945)1, this Court held that a foreign corporation must

conduct ‘‘continuous’’, ‘‘systematic’’ and ‘‘substantial’’

business activities within the forum state in order to sub-

ject the corporation to the general jurisdiction of the forum

for a cause of action arising elsewhere (326 U.S. at 317).

As expressly stated in International Shoe:

‘*{I]t has been generally recognized that the casual

presence of the corporate agent or even his conduct

of single or isolated items of activities in a state in

the corporation’s behalf are not enough to subject it

to suit on causes of action unconnected with the activ-

ities there.’’ (326 U.S. at 317) (Emphasis added)

Hence, once a year promotions, a one-time sales dinner,

and ‘‘time to time’’ visits are exactly the type of ‘‘items

of activities’? which, under International Shoe, are insuffi-

cient to establish :eneral presence jurisdiction.

The leading case applying the ‘‘substantial’’ and ‘‘contin-

uous’’ business activity requirement is Perkins v. Benguet

Consolidated Mining Co., 342 U.S. 487 (1952), holding that

Ohio could assert general jurisdiction over a foreign cor-

poration for an out-of-state cause of action since the cor-

poration’s general manager and principal stockholder lived

in Ohio, staffed, maintained, and conducted the corpora-

1 Reaffirmed in Shaffer v. Heitner, 433 U.S. 186 (1977).

_

tion’s business from an office in his Ohio home, drew and

distributed salary checks on behalf of the company in Ohio,

maintained two active bank accounts in Ohio, used an Ohio

bank as transfer agent for the company’s stock, conducted

directors meetings in Ohio and in general carried on a

‘‘eontinuous and systematic supervision’’ of the company’s

activities from Ohio (342 U.S. at 448).

How opposite is Perkins from the case at bar where

Beech has no office or place of business in Illinois and no

officers, directors, or employees living or stationed in Illi-

nois.

The Illinois Supreme Court also noted that plaintiffs

were Illinois citizens and their suits ‘‘are clearly ‘within

the ambit of the state’s legitimate protective policy’ ’’ (72

Til. 2d at 559). But the inability of the plaintiffs’ forum

residence to confer jurisdiction over a non-forum defend-

ant was established by this Court long ago in Hanson v.

Denckla, 357 U.S. 235 (1957). In Denckla, this Court re-

versed a Florida judgment in a will contest action on the

ground that the Florida court lacked jurisdiction over an

indispensable party, a trustee who was not a Florida resi-

dent. This Court flatly rejected the argument that the

Florida court possessed jurisdiction to settle the dispute

because the settlor and most of the parties were Florida

residents, stating:

‘*Tt is urged that because the settlor and most of the

appointees and beneficiaries were domiciled in Florida

the courts of that State should be able to exercise per-

sonal jurisdiction over the non-resident trustees. This

is a non sequitur. With personal jurisdiction over the

executor, legatees, and appointees, there is nothing in

federal law to prevent Florida from adjudicating con-

=

cerning the respective rights and liabilities of those

parties. But Florida has not chosen to do so. As we

understand its law, the trustee is an indispensable

party over whom the court must acquire jurisdiction

before it is empowered to enter judgment in a proceed-

ing affecting the validity of a trust. It does not ac-

quire that jurisdiction by being the ‘center of gravity’

of the controversy, or the most convenient location for

litigation. The issue is personal jurisdiction, not choice

of law. It is resolved in this case by considering the

acts of the trustee. As we have indicated, they are in-

sufficient to sustain the jurisdiction.’’ (357 U.S. at

254) (Emphasis added)

Likewise, in the case at bar, the fact that plaintiffs’ de-

cedents resided in Illinois is totally insufficient to sustain

jurisdiction over a non-Illinois corporation for an airplane

accident that occurred in Canada. Due process and funda-

mental fairness to Beech require that the issue of jurisdic-

tion over it be limited to a consideration of its own corpo-

rate activities in Illinois. In the words of the District Court

in Braasch v. Vail Associates, Inc., 370 F. Supp. 809, 814

(N.D. Ill. 1973) (refusing to subject a Colorado resort

owner to Illinois jurisdiction in an action for injuries suf-

fered by an Illinois resident) : ‘‘[I]t is the acts of defend-

ant which are relevant’’ (emphasis added).

—19—

CONCLUSION

To decide the continued vitality of a landmark decision

issued more than 50 years ago and thereby resolve the

conflict and confusion among the states, circuits and dis-

tricts including a number of inconsistent opinions involving

this particular petitioner, and to align the Illinois Supreme

Court’s decision in this case with the basic principles of

due process set forth by this Court in International Shoe,

Beech Aircraft Corporation respectfully requests that a

writ of certiorari issue to review the judgment and opinion

of the Illinois Supreme Court herein.

Respectfully submitted,

LORD, BISSELL & BROOK

115 S. LaSalle Street

Chicago, Illinois 60603

(312) 443-0342

Attorneys for Petitioner

Wuuum P. Butter

Gary W. WESTERBERG

Hvuaex C. Grirrin

Of Counsel