Opposition Brief — Holland-America Line v. Foreign Study League

I censnenssneneneneninieneninniates

CONSTITUTION AND STATUTES INVOLVED

STATEMENT OF THE CASE ensininneiininniies

REASONS FOR DENYING THE WRIT

POINT I

THE UTAH SUPREME COURT HAS INTERPRE-

TED THE “TRANSACTING OF ANY BUSINESS”

CONCEPT OF THE UTAH LONG-ARM STATUTE

AND THE “DOING BUSINESS” CONCEPT OF

INTERNATIONAL SHOE CO. V. WASHINGTON,

326 US. 310 (1945) TO BE SYNONYMOUS AND

THIS INTERPRETATION OF STATE LAW IS NOT

REVIEWABLE BY THIS COURT :

POINT ll

THE UTAH SUPREME COURT HAS CORRECTLY

FOUND THAT HOLLAND-AMERICA LINE'S

CONTACTS WERE SUFFICIENT TO MEET THE

MINIMAL STANDARDS REQUIRED BY THE

DUE PROCESS CLAUSE OF THE US. CONSTI-

TUTION, AMEND. XIV § 1, AND THAT HOL-

LAND-AMERICA LINE “DID BUSINESS IN UTAH

UNDER THE LETTER AND SPIRIT” OF INTER-

NATIONAL SHOE CO. V. WASHINGTON, 326

US. 310 (1945). sasnseneenncenesillll pnenesumanensnmmseanses

POINT Ill

THE PETITION FOR CERTIORARI DOES NOT

PRESENT AN IMPORTANT FEDERAL QUES.

TION AND THE DECISION BELOW TURNS ON

NARROW FACTUAL CONSIDERATIONS, LIMIT-

ED TO THE PRESENT CASE

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INDEX OF AUTHORITIES

Hanson v. Denckla, 357 US. 235 (1958) ........ 2, 7, 8, 10, 11

Hill v. Zale, 25 Utah 2d 357 (1971) ......--.----------0-ee0-eseeees 3,11

International Shoe v. Washington,

326 US. 310 (1945) .................. 2, 3, 4, 6, 7, 8, 9, 10, 11

McGee v. International Life Insurance Co.,

oe wp TE) yp enn 2, 3, 7, 8, 9, 10, 11

Missouri, ex rel. Wabash Ry. Co. v. Public Service

Commission, 273 U.S. 126 (1927) ........-.--..--0---00--0e 5

Murdock v. City of Memphis, 87 U.S. 590 (1874) .......... <e

Skelly Oil Co. v. Phillips Petroleum Co.,

MS Acniesiscananaie 5

Williams v. Kaiser, 323 US. 471 (1945) -2022.22222eceeeeeeeee 5

CONSTITUTION

United States Constitution

Amendment XIV, Section I ........................--------0e-ee0000 2,7

STATUTE

Laws of Utah, 1969, ch. 246 secs. 1-7; Utah Code Annotated

§ 78-27-22 et seq. ..............----- aesiiiciatibassiiaiais 2, 5, 6, 7, 10

28 U.S.C. § 1257

EL OEE Ste 8 EE EE et Si I en ls = Ihe ee

No. 72-587

IN THE

Supreme Court of the United States

OCTOBER TERM OF 1972

HOLLAND-AMERICA LINE,

we Tege,

Petitioner,

-V.-

FOREIGN STUDY LEAGUE,

Respondent.

BRIEF IN OPPOSITION TO THE PETITION

FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Supreme Court of the State of Utah

is reported at 497 P.2d 244 (1972), but not yet officially report-

ed; the Order of the District Court of the Third Judicial District

of Utah was not officially reported. The opinion of the Utah

Supreme Court is set forth in Appendix A hereto.

JURISDICTION

Petitioner alleges jurisdiction of this Court pursuant to 28

USC. § 1257(3).

aa | Pa ee ws Te ’

QUESTION PRESENTED

Whether the Utah Supreme Court correctly applied the due

process standard as explained by this Court in Imternational Shoe

Co. v. Washington, 326 US. 310 (1945), McGee v. Interna.

tional Life Insurance Company, 355 U.S. 220 (1957), and Han

son v. Denckla, 357 US. 235 (1958), in finding petitioner sub.

ject to the jurisdiction of the Utah Courts pursuant to the pro.

visions of the Utah Long-Arm Statute, Utah Code Ann. § 78.

27-22, et seq. (Pocket Supp. 1971). The Utah Long-Arm Statute

is set forth in Appendix C hereto.

CONSTITUTION AND STATUTES INVOLVED

The relevant provision of the United States Constitution in

this suit is Amendment XIV, Section 1. Relevant statutory pro-

visions are the Utah Long-Arm Statute, Laws of Utah, 1969, ch.

246, secs. 1-7, Utah Code Ann. § 78-27-22 et seg. (Pocket Supp.

1971). These provisions are set forth in Appendix B and C re-

spectively.

STATEMENT OF THE CASE

The petitioner, Holland-America Line (hereinafter referred

to as “HAL”), is a Netherlands steamship company engaged in

furnishing passage and cargo services on various ocean trade

routes, pr.ncipally on the North Atlantic Ocean. The respondent,

Foreign Stzdy League (hereinafter referred to as “FSL”), is in-

corporated in Utah and charters overseas passage as part of its

foreign study plan. During 1969, respondent FSL engaged in

negotiations with petitioner HAL to charter petitioner's passenger

vessel, the S.S. Ryndam, for the summer of 1970. A dispute arose

as to whether such negotiations had resulted in an enforceable

contract and if so, whether FSL was in breach thereof. FSL com-

menced suit for a declaratory judgment in the District Court of

SOE + SE eB OR ETM a ER Ee ~ =. 2h

3

the Third Judicial District of Utah on April 10, 1970. A copy

of the summons and complaint was mailed to HAL in Rotter-

dam, the Netherlands, another copy was delivered to HAL’s New

York office by a Deputy Sheriff of New York City. On April

17, 1970, HAL commenced a suit in the United States District

Court for the Southern District of New York for breach of con-

tract which arises out of the identical facts as are involved in

this suit.

HAL moved to dismiss the complaint filed by FSL in the

Urah District Court for the Third Judicial District of Utah for

lack of im personam jurisdiction. The District Court granted

HAL’s motion to quash service of summons, primarily on the

ground chat HAL’s jurisdictional contacts with Utah were in-

sufficient to satisfy the requirements of International Shoe Co. v.

Washington, 326 U.S. 310 (1945) and McGee v. International

Life Insurance Company, 355 US. 220 (1957). The Supreme

Court of Utah reversed the District Court’s decision. ( Appendix

A)

The bases for jurisdiction of the petitioner as dealt with by

the lower courts were:

1. HAL signed “Sub-Agency Appointment Agreements”

which authorized 18 or 19 travel agents in Utah to display HAL’s

literature, sell bookings on HAL’s behalf, receive commission for

accepted buokings, and escrow the fares. ( A-4, 6, 7)*

2. Between March 31, 1969 and January 17, 1970, Joh-

annes Tuinman, Jan Boeren and John Vos, HAL employees, made

business visits to respondent FSL in Salt Lake City. In March

1969 and in January 1970, Mr. Tuinman, general sales manager

for HAL, met with Mr. Touw, President of FSL, and FSL’s

attorney with respect to the contract to employ the ship Ryndam,

* Page numbers refer to pages of the appendix hereto.

+

¢

PE ree eS TOT He Me RE SEER CRT PE TAG EESTI RT OE

+

which is he subject of this suit and the suit filed by HAL in the

New York District Court. (A-5)

3. In 1968, 1969 and 1970 there was correspondence,

telegrams and telephone calls between FSL in Utah and HAL in

New York and Rotterdam with respect to chartering the Ryn-

dam. HAL sent an agreement for employment of the Ryndam

to FSL in Salt Lake City and by telegraphic and telephonic com.

munications HAL insisted that a contract had been consummated

and a representative of HAL came to Utah to confer with FSL

concerning the dispute or misunderstanding as to the contract

which is the subject of this law suit. (A-5, 7)

On the basis of these uncontradicted statements, the Utah

Supreme Court found that within the letter and spirit of Inter.

national Shoe, the leading Utah case, Hill v. Zale, 25 Utah 2d

357, 482 P.2d 332 (1971), and the Utah Long-Arm Statute there

was a “doing of business” by HAL in Utah and that these actions

justified the local courts exercising jurisdiction over HAL with-

out avoiding the due process concept. (A-5, 6) The Petition

seeks review of this judgment of the Utah Supreme Court, filed

May 15, 1972, reversing the Judgment and Order of the Dis

trict Court of the Third Judicial District of Utah, based upon pro-

visions of Utah’s Long-Arm Statute.

REASONS FOR DENYING THE WRIT

1. THE UTAH SUPREME COURT HAS INTEK-

PRETED THE “TRANSACTING OF ANY BUSI-

NESS” CONCEPT OF THE UTAH LONG-ARM

STATUTE AND THE “DOING BUSINESS” CON-

CEPT OF INTERNATIONAL SHOE CO. V. W ASH-

INGTON, 326 US. 310 (1945), TO BE SYNONY-

MOUS AND THIS INTERPRETATION OF STATE

LAW IS NOT REVIEWABLE BY THIS COURT.

5

Under Utah law, Utah courts have im personam jurisdiction

over a nonresident where the nonresident is found to have “cer-

tain significant minimal contacts with this state” including “trans-

acting any business” within the state. Utah Code Ann. §§ 78-

27-22, 24(1). Petitioner asks as the second of its questions pre-

sented for review:

Whether the Court below erred in failing to dis-

tinguish between the two concepts of “doing business”

and a “transaction of business” from which an action-

able claim could arise, under Utah’s “long-arm” statute

.... (Petition at 2)

The Utah Supreme Court held that these two concepts were

synonymous. Petitioner urges that the Utah Supreme Court erred

in interpreting the Utah Long-Arm Statute to include the con-

cept of “doing business” within the meaning of “transacting of

any business” as provided by the Utah Statute. This interpreta-

tion is a question of state law.

The Utah Supreme Court is the final arbiter of the interpre-

tation of Utah statutes. Under the opinion of the United States

Supreme Court in Murdock v. City of Memphis, 87 US. 590

(1874), this Court is without power to re-examine judgments on

the question of state law. See also, Skelly Oil Co. v. Phillips Pe-

troleum Co., 399 U.S. 667, 674 (1950), Williams v. Kaiser, 323

US. 471, (1945), and Missouri, ex rel. Wabash Ry. Co. v. Public

Service Commission, 273 U.S. 126 (1927).

The Utah Supreme Court found that the Utah District Court

had im personam jurisdiction over petitioner HAL pursuant to a

Utah statute, the validity of which is not brought in question by

the Petition for a Writ of Certiorari. This determination by the

Court below was made on the basis of the interpretation of a

valid state statute. The Court below ruled that it is the purpose

and intent of Utah’s Long-Arm Statute “to assert jurisdiction over

rs Set ESS PES

a a “at a

|

6

non-resident defendants to the fullest extent permitted by the due

process clause of the Fourteenth Amendment.” The Utah Supreme

Court interpreted this purpose to mean that the extent of Utah’s

Long-Arm Statute is coterminous with, not in excess of, the due

process standard set down by this Court.

Petitioner, admitting that the Utah Supreme Court inter.

preted the limits of Utah’s Long-Arm Statute and the “doing busi-

ness” requirement of International Shoe to be synonymous, argues

that in fact the two concepts are not synonymous and that this

interpretation is not only incorrect but a denial of due process.

It {the Utah Supreme Court} concluded that juris-

diction arising under Utah’s “Long-Arm” statute, and

that based upon “doing business”, were “synonymous”.

As a result,-the Court created a new concept, in which

jurisdiction would appear to exist over a nonresident

where there are insufficient contacts with the forum

state (none of which give rise to the cause of action) to

constitute “doing business”, merely because a “long-

arm” statute exists. (Petition at 6)

Petitioner attempts to argue that by interpreting as synonymous

the “doing business” concept of International Shoe and the “cer-

tain significant minimal contacts” concept of the Utah Statute,

Utah Code Ann. § 78-27-22, the Utah Supreme Court has

rendered the “territorial limits of state jurisdiction to be virtually

inconsequential.” This simply is not what the Utah Supreme

Court said.

The Utah Court did not extend the scope of the Utah Long-

Arm Statute and its opinion does not suggest “the territorial

limits of state jurisdiction to be virtually inconsequential.” What

the Court did was affirm that the Utah Long-Arm Statute should

be applied so as to assert jurisdiction over nonresident defendants

to the fullest extent permitted by the due process clause of the

Fourteenth Amendment. (A-2)

COPY BOUNL

ate

-

The Utah Supreme Court found, after examining all the

contacts which HAL had with Utah as contained in the record,

including furthering its business interests through sub-agents and

negotiating the contract which is the subject of the suit in the

court below with FSL, petitioner HAL subject to the jurisdiction

of the Utah District Court on the ground that within the meaning

of International Shoe Co. v. Washington, 326 U.S. 310 (1945),

HAL kad sufficient purposeful “minimum contacts” with the

state of Utah to satisfy the constitutional right to due process of

law and. therefore, sufficient to satisfy the “transacting any busi-

ness” requirement of the Utah Long-Arm Statute, Utah Code Ann.

§ 78-27-22 et seq. (1969).

The only question, therefore, presented by HAL’s petition is

whether the Utah Supreme Court properly applied the due pro-

cess standard of International Shoe, McGee and Denckla and not

whether the Court below has “extended the reach of Utah’s ‘long-

arm’ statute beyond its permissible limits.” (Petition at 9)

2. THE UTAH SUPREME COURT HAS COR-

RECTLY FOUND THAT HOLLAND-AMERICA

LINE’S CONTACTS WERE SUFFICIENT TO MEET

THE MINIMAL STANDARDS REQUIRED BY

THE DUE PROCESS CLAUSE OF THE U.S. CON-

STITUTION, AMEND. XIV § 1, AND THAT HOL-

LAND-AMERICA LINE “DID BUSINESS IN UTAH

UNDER THE LETTER AND SPIRIT” OF INTER-

NATIONAL SHOE CO. V. WASHINGTON, 326

US. 310 (1945).

The due process standard, as laid down by this Court in

International Shoe v. Washington, 326 US. 310 (1945) and

McGee v. International Life Insurance Co., 355 U.S. 220 (1957)

as defined by Hanson v. Denckla, 357 US. 235 (1958) requires

that to warrant state court jurisdiction over a nonresident, there

be certain purposeful “minimum contacts” with that state:

JND CLOSE IN CENTER

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{I}t 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 protections

of its laws. Hanson v. Denckla, 357 US. 235, 253

(1958).

Thus, it is necessary that the state court determine that the non.

resident defendant has enjoyed the benefits and protections of the

state and further that these activities were purposeful. The Court

below properly considered these factors and concluded that HAL

was subjct to the jurisdiction of the Utah courts.

The record below shows that HAL purposefully engaged

in a “bundle” of contacts beginning at least in 1968 and con.

tinuing until 1970, within the State of Utah, evidencing a de-

sire to invoke the benefits and protections of Utah’s laws, which

in the aggregate amounted to “doing business in the statutory

and constitutional connotations of that phrase.” A number of

these contacts were outlined in the majority’s opinion below. For

example, HAL signed written agency contracts with 18 or 19

Utah travel agents containing comprehensive terms relating to

the sale of tickets and escrowing of funds for HAL. The agree-

ments were executed by HAL which relied on their validity in

the State of Utah and their enforceability in the courts of that

state. (A 4-6) The Utah Supreme Court considered the following

additional contacts: during 1968-69 HAL’s relations with the

Utah based FSL resulted in the realization by HAL of roughly

$600,000 in gross sales ( A-4); charter of the ship Ryndam, which

is the subject of the contract in the suit below, was discussed at

considerable length at a meeting held in Utah (A-7); negotia-

tions of this contract took place, at least in part, in Utah (A-5);

the contract was mailed by HAL to FSL in Utah for signing

(A-7); FSL mailed HAL $160,000 from Utah on account of the

proposed contract (A-7); and the contract was rejected by FSL

is a Fe a PSE a NG ON a a Ae Le att ho Sa es abe he ett age Ree

COPY BOUNI

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aes

9

in a meeting with representatives of HAL in Utah (A-8). These

contacts furnish more than adequate support for the opinion of

the Court below that HAL had purposefully engaged in signifi-

cant minimum contacts sufficient to incur obligations to citizens

of the State of Utah and establish jurisdiction of the courts of

Utah over HAL.

This Court in McGee v. International Life Insurance Co.,

355 US. 220 (1957), upheld the jurisdiction of a California

court where the only contacts with that state were the act of

mailing a reinsurance certificate to the plaintiff in California, and

the plaintiff accepting the offer and paying the premiums by mail

from California. All of the contacts which were necessary to

support the jurisdiction of the California court in McGee exist

in the present case, together with many others. HAL sent the con-

tract to FSL in Utah, FSL paid part of the contract price by mail

from Utah, and HAL asserts that FSL accepted the contract in

Utah.

Under “the letter and spirit of International Shoe,” HAL had

established sufficient purposeful minimum contacts with the

State of Utah to meet the standard required by the due process

clause.

3. THE PETITION FOR CERTIORARI DOES

NOT PRESENT AN IMPORTANT FEDERAL

QUESTION AND THE DECISION BELOW TURNS

ON NARROW FACTUAL CONSIDERATIONS,

LIMITED TO THE PRESENT CASE.

The question presented by HAL’s Petition for Certiorari is

whether the contacts of HAL with the State of Utah are suffi-

cient to establish a “doing of business” in Utah within the limits

of the due process standard as set down by this court in Interna-

tional Shoe, McGee, and Denckla, and thereby establish jurisdic-

JND CLOSE IN CENTER

a —_— . “a

tion of the Utah Court pursuant to the Urh Long-Arm Scare

Petinoner HAL erroncously attempts to mislead this Court mp

belreving that there is 2 sygnificant federal question presented by

the petition, to wit:

By crroncously construing 4 state statute, and «.

tending the reach of Utah's “long-arm”™ stature

its permussible limits the Court below has vs the

petitioner's constitutional right to due process of lew

( Petition at 9)

The Utah Supreme Court has not attempted to extend the limi

of its Long-Arm Statute beyond the permusible standard of the

due process clause. The Utah Supreme Court in its opinion below

refutes this contention. The language of the Utah Long-Am

Statute and of the Utah Supreme Court reveal that the extent of

jurisdiction allowed by the Utah Long-Arm Statute and that per.

mitted by the due process clause of the fourteenth amendment to

stated that:

e

?

E

“minimal” in our case of Hall ©. Zale.

Thus, m its opinion below and also in Hill ». Zale, 25 Utah 375,

#82 Pd 332 (1971), the Utsh Supreme Court defined the

‘qansating of amy business” of the Utah Long-Arm Statute and

the “mmnemum contacts” of Imternatromal Shoe to be synonymous.

(Petition at 6) This interpretation of stare law is binding on

ths Court.

Thess Gourt has already stated the standard required by the

due process Clause of the fourteenth amendment to the Federal

Gonstirution for a state court t exert jurisdiction over a non-

reudent defendant m Isternatronal Shoe Co. +. Washington. 326

US. 310 (1995), MeGee ov. Internationa Life lammrance Co.

355 US. 220 (1957), and Hanson +. Denchla, 257 US. 235

(1958). The question of whether a nonresident is doing busi-

ness within a state within the meaning of that state's long-arm

stature is strictly a factual one. Each case, therefore, must be

dercrmined on its own peculiar and significant facts. The ques-

non presented by HAL's Petition turns on whether a bundle of —

factual contacts amounts to “doing business”. In light of the

sandard already established by this Court, a decision under the

peculiar facts of this case will necessarily relate only to the factual

seuaton presented by HAL's Petition and will not enlarge on any

federal question of substance that has nor already been decided

by the Court.

Ths Court has in numerous decisions laid down the duc

process standard which must be met by state courts in applying

ther, so<alled, “long-arm™ statutes before jurisdiction may be

__— a re = ne

—_

CLOSE IN CENTER

12

had of nonresident defendants. Consideration by this Coun af

the establishment of jurisdiction pursuant to a particular long

arm statute involves 4 factual consaderation lumeted to that par.

ticular suit and not of broad applicability. As long as stars af

here to the rules set down by thes Court im /stermatromal Shoe

McGee and the Hanson cases, the sate long-arm statutes will be

assured uf the degree of unsformety required by the Unsed Sears

Constionti

Ths duc process standard was properly applied by the Unb

Supreme Court and for this reason, the Petition for a Wre of

Cervoran should be densed.

Respectfully submerred.

ARTHUR A. ALLEN, JR.

Of Comnsel,

DANIEL L BERMAN

1010 Kearns Buskding

Salt Lake City, Utah 84101

COPY GOUND |

13

CERTIFICATE OF SERVICE

| Arthur A. Allen, Jr. Acorney for Respondent For-

eign Study League, do hereby certify that on this, the

day of November, 1972, a copy of the foregoing Brief in Opposi-

tee to the Petition for a Writ of Certiorari has been served on

the followmg:

Frank L. Wiswall, Jr.

Offce and Pose Office address

25 Broadway

New York, New York 10004

Amorney of Record for the Petinoner, by mailing the same to him

through th. Unsted Seates Mail. postage pre-pasd.

12 CLOSE IN CENTER

A-1

APPENDIX A

IN THE

SUPREME COURT OF UTAH

—_

No. 12445

Foreign Study League, a Utah corporation,

Plaintiff and Appellant,

Vv.

Holland-America Line,

Defendant and Respondent.

Supreme Court of Utah

May 15, 1972

Henriod Justice:

Appeal from an order quashing service of process in an

action instituted under the Utah Declaratory Judgment Act (Title

78-33, Utah Code Annotated 1953). Reversed and remanded

for further proceedings consonant with this decision with costs

wo planuff.

The question here, that of whether a nonresident is doing

business in the state is strictly a factual one, and each case, there-

fore, must be determined on its own peculiar and significant

facts’ to determine if the local forum has jurisdiction to try and

adjudge the claims or obligations of one domiciled elsewhere.

The rule leading to a conclusion that such nonresident consti-

* McGriff v. Chas. Anrell, 123 Utah 166, 256 P.2d 703 (1953).

.

A-2

tutionally must subject himself or itself to the jurisdiction of our

courts, is one of reason, — which is only an alternate way of

saying that the minimum guarantees of due process must be

afforded, else our courts are without authority to bind or grant

relief to the nonresident. This concept is embraced within the

prefatory language of our so-called Long Arm Statute* which says

the act “should be applied so as to assert jurisdiction over non-

resident defendants to the fullest extent permitted by the due

process clause of the Fourteenth Amendment to the United

States Constitution,” — to provide “an effective means of redress

against nonresident persons, who through certain significant mini-

mal contacts with this state, incur obligations to citizens entitled

to the state’s protecion.” It appears almost obvious that this

language was prompted by International Shoe v. Washington,’

which used the word “minimum” contacts rather than “minimal”

contacts employed in our act, — which language seems to be

synonymous, but motivated by our use of “minimal” in our case

of Hill v. Zale.*

Since these cases are strictly factual and dispositive by the

application of case and statutory law to the fact situation pre-

sented in the instant case, there seems to be merit in recalling the

facts and conclusions in the Shoe and Zale cases (upon which

our act seems to be founded), in some kind of qualitative and/or

quantitative analytical comparison with those in the instant case

for a solution of the problem by this tribunal.

In the Shoe case, — one involving contributions by employ-

ers to a workmen’s compensation fund, the Shoe Company,

domiciled in St. Louis, had no place of business or office in Wash-

2 Title 78-27-22, Utah Code Annotated 1953 (Laws of Utah 1969, ch

246, sec. 1; Vol. 9, 1971 Pocket Supplement, p. 44).

*326 US. 310, 66 S.Cr. 154, 90 LEd. 95 (1945).

*25 Utah 2d 357, 482 P.2d 332 (1971).

A-3

ington State, no contracts of sale there, no stock of merchandise

there, but employed resident salesmen there. They worked on

commissions, carried samples and occasionally rented sample

rooms paid for from St. Louis. They sent their orders to St. Louis

for acceptance or rejection, and if accepted the shoes were shipped

from the Missouri city to buyers in Washington. The salesmen

had no authority to enter into contracts or make collections. The

United States Supreme Court said that Constitution-wise this

was doing business in Washington warranting the invocation of

jurisdiction there to determine controversies between Washing-

tonians buying footwear therefrom lasts abroad.

In the Zale case plaintiff Hill, who claimed wages earned

in Alaska as employee of Zale, a Texas corporation, sought recov-

ery in Utah, asserting that Zale was “doing business” in Utah.

Zale was a jewelry outfit for whom Hill had worked in Utah.

It had stores in a number of states, — several of which in Utah

were subsidiarized and subsidized by separate corporations officer-

ed by identical gentlemen. The advertising, collections and audit-

ing functions funneled in and out of the subsidiaries and their

defendant parent, that paid the salaries of all employees. Ostensi-

bly, Zale of Texas, was phantom in Utah. Nonetheless, we had

little or no difficulty in holding that it was mundane enough to

have used Utah in such fashion as to conclude that the hand it

extended here for profit equally was capable of effectively ac-

cepting service of process.

Now, as to the facts in our instant case: It is believed and

submitted that the evidence adduced under the discovery process,

substantially and without serious contradiction, accurately may

be abstracted thus:

Plaintiff is a Utah corporation which, among other things,

charters ships for educational purposes, visiting foreign lands.

Defendant on its ship accommodates such travel for a fixed fee.

A-4

It has offices principally in Rotterdam, but also in New York,

San Francisco, Los Angeles and other likely ports of call. Most of

the evidence in and out of the inordinately protracted transcript

here, flows from the frank responses of two top officials of the

Holland-America sail and sales maritime operations. The inter.

pretations of their frankness by the litigants here understandably

are poles apart.

Tuinman, a top and authoritative representative of defend.

ant says: That he resides in New York, is general sales manager

for defendant; that he markets defendant's passenger service

in the United States, amounting to about forty million dollars

per year, including charter service, in which area the plaintiff

was by far its chief customer in 1968-69, and out of which a

roughly estimated gross of $600,000 was realized from the Utah-

based corporation's relations with defendant, — and in which

sales effort he had a close connection; that his company’s opera-

tions were fostered by field agents, also through about 18 or 19

travel agents in Utah who were authorized through defendant's

front institution Trans-Atlantic Passenger Conference, by written

agency contracts, ratified by, subscribed to and authorized by de-

fendant, to display in Utah the defendant's literature, “sell book-

ings” on its behalf, and receive commissions for accepted book-

ings; that defendant's representatives call on them personally (in

Utah), encourage them to sell defendant's space on the ship;

that defendant has field agents that do about the same thing; that

Mr. Tuinman knew Mr. Touw who used to work for the Holland

Companv, but now for plaintiff, who was responsible for the first

college cruise contract between plaintiff and defendant; that Mr.

Tuinman, because of his friendship for Touw, made combined

social and business calls on the latter in Utah; that he called in

March 1969 and in January 1970, meeting with Touw and plain-

tiff's attorney with respect to a contract to employ a ship for a

Mt ae SA OER IA NE BSR EI OLIN LOS CORD TGR MTN Yorn

A-5

foreign trip; that one trip for a college was completed through

plaintiff in 1969; that talks took place in Utah, New York and

Rotterdam; that business was always discussed on such occasions;

that in 1968 and 1969, with respect to the ship Ryndam, plain-

tiff was defendant's principal customer; that there were corre-

spondence, telegrams and telephone calls with respect to charter-

ing the Ryndam, between local authorities for plaintiff and those

of defendant; that he sent out an agreement for employment of

the Ryndam in 1970; that it was not signed by plaintiffs, — but

that a telegraphic and phonic communication, Tuinman insisted

that a contract had been consummated; that he came to Utah to

confer with plaintiff's officers re a dispute or misunderstanding

as to the contract for 1970, — ar plaintiff's request, so he says:

that he was in Salt Lake a couple of days and another representa-

tive stayed longer.

Although these uncontradicted statements on the part of

one of defendant's top officials seem rather persuasive in con-

cluding that the defendant did business here under the letter and

spirit of the Shoe case, the Zale case, and our Long Arm Statute,

the following facts also should lend weight to a conclusion that

there was a “doing business” in Utah under the act that justified

~ the local court's exercising jurisdiction without aborting the due

process concept.

About two weeks after plaintiff filed this suit in Utah, de-

fendant filed a suit in New York to collect damages for a breach

of a contract executed by plaintiff, — which plaintiff here asserts

to be unenforceable for one reason or another. It is difficult to

understand how defendant can take the position that there is a

contract, that under the facts recited above seem to have some

basis for a conclusion that there were business dealings in Utah,

but that everything, including the charter, profit, execution of the

contract, etc.. was accomplished outside of Utah. At any rate,

— oe a

ee ee ee eo ee |

comparing this case with the Shoe and Zale cases, we think the

trial court erred, — particularly when its decision was bottomed

at least on a statute’ not cited in the brief and apparently not

relied upon by either party as a matter for appeal here.

The record further reflects that Holland signed “Sub-Agency

Appointment Agreements” with local travel agents wherein the

agents agreed to comply with the company’s instructions and

the regulations of the Steamship Conference, of which defendant

was a member, and in which comprehensive terms and conditions

were incoiporated relating to the sale of tickets, escrowing fares,

etc., largely as testified to by Holland’s Mr. Tuinman. It is

conceded that each travel agent is not an exclusive agent for the

steamship line and there is some kind of merit to a contention

that there must be more contacts than just sales and sales pro-

motions within the state by independent non-exclusive sales rep-

resentatives, to constitute doing business. The contention would

seem to beg the question, however, since it is based on the assump-

tion that such sales and promotion are the only contacts in the

state, —— but in the instant case and in the Shoe case and in the

Zale case the “more contacts” were extant. These last mentioned

contacts cannot be ignored, and the written agency contracts men-

tioned using the term “agent” time and again, and containing ele-

ments of control at least when sales were accomplished, making

such “agents” trustees for defendant and keepers of the faith for

the latter, certainly do not detract from the ultimate conclusion

that they, supportive of other facts, are part and parcel of a bundle

of facs which in the aggregate are not misnomered if called “doing

business” in the statutory and constitutional connotations of that

phrase.

® Title 16-10-102 (Laws of Utah 1963, ch. 19, sec. 8; Vol. 2, 1971 Pocket

Supp., p. 263).

The record reflects that after considerable talk at a March

1969 meeting in Utah where minutes were taken, with plain-

tiffs counsel present, concerning a charter party for the ship

Ryndam in 1970, after one had been completed in 1969, and

after considerable telephonic and telegraph communications be-

tween the parties, — plaintiff in Utah and defendant in New

York, — defendant, in November 1969 sent a lengthy and detail-

ed contract to plaintiff in Salt Lake City for signature. The record

is not too clear as to why it was not signed, except as reflected

in the complaint, but a $160,000 check was sent to defendant

in connection with the negotiations for the 1970 charter party.

The Utah meetings were characterized and emphasized in defend-

ant’s brief as being strictly social and sort of in between stops.

Such characterization does not reconcile itself as an absolute,

with the frank concessions of Mr. Tuinman that the meetings

were social and business meetings, and that business was discussed

at all of them, nor with the fact that after the proffered contract

was forwarded to plaintiff, but rejected without signature, Mr.

Tuinman came to Salt Lake in January 1970 to discuss the differ-

ences.

We think that under the International Shoe case and the

Zale case, the order quashing service of process was in error, and

the case remanded for further proceedings, — and that there is no

useful purpose in discussing any of the other authorities cited

by the parties.

CALLISTER, C.J., and TUCKETT, /., concur.

CROCKETT, Justice: (dissenting).

I am unable to reach the same conclusions as to the facts,

nor as to che application of law to them, as does the majority

opinion. I do not see that there is any substantial disagreement

among us as to the applicable principles of law: that foreign cor-

1 ae NRE a SE Lae RA RROD Rat ORS 0 9 SN Se [PRE I Seed NT (A NGON te Ne Pye ce

= a

AS

porations are not subject to the jurisdiction of the courts of this

State unless they have a “business presence” here. This requires

the engaging in business or activities to the extent of “ar lee

certain minimum contacts” therein. This ss not satisfied by contacs

which are merely irregular or sporadic, but there must be some

carrying on of the business in a manner which is t0 some degre

systematic and continuous, so that it can fairly be said thar the

corporation has a business presence in the state such thar ce

maintenance of the suit and the compelling of a defense therem

doce act offend equine: endidensl actions of Slr play end ab

cnnails “mane conus . . . than sales and sales promotion within

the state by independent nonexclusive sales representatives.”

I am also in agreement with the statement of the main opm-

jon that “these cases are strictly factual” and that they are tw be

determined by application of the law to the tacs of the particular

case. However, we should also keep in mind that our basic rule

of appellate review requires us to accord to the erial court the pre-

rogative of weighing the evidence and of drawing inferences there.

from, and upon that basis of determining the facts. It is the dur.

of this court to respect that prerogative: to look at the evidence

and the inferences therefrom in the light favorable to sustaming

the findings and judgment of the trial court, and not to the con-

trary for the purpose of overturning the findings and judgment as

On the basis of the pleadings, affidavits, answers © @

terrogatories. and a plenary hearing, the crial judge made he

findings and ruling in the form of a memorandum decision, ex-

tensively treating its view of the facts and the law, and which

includes the following statements:

' Foornore 3 of main opinion.

Hs

Hn?

a

Ny

{et

as & being done here.

‘Foornore 3 of main opinion.

———_— eae

A-10

In the recent case of Hill v. Zale Corporation,” 25 Ush

357, 482 Pld 332, we seated char the question of whether ,

foreign corporation & “doing business” within the sare w ab

ject « to the jurisdicnon of our cours is w be determined from

consideraion of all of the relevant circumstances. That opimice

pointed out 2 number of significant activities of the Zale Seors

organizatmmn in Usth which distinguish « from the imsanrt ae

The Ucah stores, though separate corporarons, all did busines

under the name of Zale Scores, similar w the parent Texas corpo

ration. The officers and directors, and the actual policy-making

management, were practically identical. Thos was also mur of

the holding out to the publ un advertusing and in doing busness

and of vital importance, the Utah stores did nor have individad

bank accounts, but the moncy was deposited to the credit of de

Zale-Texas Corporation whih controlled and disbursed

By way of contrast to the Zale case, im the instant one ther

ss a considerably different fact sstuation. The defendant Holland

America Line has no stores or offices in Utah by the name, o x

all. It has no employees or personne! here. The only outkr o

contact with the public is through the travel agencies who ar

authorized wo book ics services along with similar services for

other transportation companies. None of them serve Holland

America exclusively, bur all book other transportation servis

generally. Each agency has a subagency appointment by agre-

ment with the secretary of the Trans-Arlantic Passenger Seam

ship Conference. It permits the agency to book travel for os

members in conformity with certain terms and procedurss =

determined for the most part by the Conference. The individual

travel services, such as defendant Holland-America, arrange for

distribunon of thew own lerature, reservation rates, accepeancs

of reservations, and commissions t the agencies. Neither dr

* Foornore 3 of main opumon.

All

offues. durectory listings, or employ the own sales agents. De-

fendant’s evxdence also ss thar instead of being constant and regu-

lar, « has been somewhar inconsistent and separate im ts adverts

ing and contracts with the crave! agencies in Utah.

Ic seems to me that fairness requires thar this court keep

the balance of justice true by applying the law in the same man-

ser when it s to the disfavor of our courts and the disadvantage

of car citizens as when « is tw the contrary. This requires us ©

compare our own adjudication in Conn v. Whamore’ where we

dened jurisdiction to the state of Illinois. There a similar prob-

was a resadent of Illinois. Invoking their “long-arm™ statute, he

had served defendant Whamore, a resident of Utah, and had ob-

ained a judgment for which he was seeking full faith and credit

a oer Ush court, Whiemore challenged the Illinois court's

grudktion and sought to defend on the merits here. Plaintiff

Goan had solicited business (sale of horses) by mail in Usah.

Whamore had sent an agent to Illinos to look over the horses;

had sent part of the purchase price im the mail, and had sent his

agent who paid the balance and wok delivery of the horses in

lines. It is my opinion that there was at least as much “contact”

by Whatmore in domg business in [linoss im chat case as there is of

Holland-America Line doing business in Ucah im this one. Yer

we held chat thes did not constitute the “transaction of business”

* by Whiemore in Illinoss to give it jurisdiction within the mean-

ing of is “long-arm™ stature.

Based upon what has been said above, | am unable tw sce

any justification for overturning the findings of our tial court,

ELLETT, J.. concurs in the dissenting opinion of

CROCKETT, /.

“Utah 2d 250, 342 P2d 871 (1959).

ee ee 2.

Bl

APPENDIX B

UNITED STATES CONSTITUTION

Amendment XIV

Section 1. All persons born or naturalized in the United

Sates, and subject to the jurisdiction thereof, are citizens of the

United States and of the State wherein they reside. 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

deprive 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.

» OPE UE at PRA Prag Meee “OSIRIS Peay? rer ome

| Be ae ee ee Te RO AD orgie arte &

C1

APPENDIX C

THE UTAH “LONG-ARM” STATUTE

Title 78-27-22 et seq., Utah Code Annotated,

Laws of Utah 1969, Ch. 246, secs. 1-7.

78-27-22. Jurisdiction over nonresidents — Purpose of act.

— Ir is declared, as a matter of legislative determination, that the

public interest demands the state provide its citizens with an

effective means of redress against nonresident persons, who

through certain significant minimal contacts with this state, incur

obligations to citizens entitled to the state’s protection. This legis-

lative action is deemed necessary because of technological progress

which has subsantially increased the flow of commerce between

the several states resulting in increased interaction between per-

sons of this state and persons of other states.

The provisions of this act, to ensure maximum protection to

citizens of this state, should be applied so as to assert jurisdiction

over nonresident defendants to the fullest extent permitted by

the due process clause of the Fourteenth Amendment to the

United States Constitution.

78-27-33. Jurisdiction over nonresidents — Definitions. —

As used in this act:

(1) The words “any person” mean any individual, firm,

company, association, or corporation.

(2) The words “transaction of business within this state”

mean activities of a nonresident person, his agents, or represen-

tatives in this state which effect persons or businesses within the

state of Utah.

:

.

bs

>

BS

%

:

C2 .-

78-27-24. Jurisdiction over nonresidents — Acts submitting

person to jurisdiction. — Any person, notwithstanding section

16-10-102, whether or not a citizen or resident of this state, who

in person cr through an agent does any of the following enumer.

ated acts, submits himself, and if an individual, his personal repre.

sentative. to the jurisdiction of the courts of this state as to any

claim arising from:

(1) The transaction of any business within this state;

(2) Contracting to supply services or goods in this state;

- (3) The causing of any injury within this state whether

tortions or by breach of warranty;

(4) The ownership, use, or possession of any real estate

situated in this state;

(5) Contracting to insure any person, property or risk lo-

cated within this state at the time of contracting.

(6) With respect to actions of divorce and separate main-

tenance, the maintenance in this state of a matrimonial domicile

at the time the claim arose or the commission in this state of the

act giving rise to the claim.

78-27-25. Jurisdiction over nonresidents — Service of pro-

cess. — Service of process on any patty outside the state may be

made pursuant to the applicable provisions of Rule 4 of the Utah

Rules of Civil Procedure.

Service of summons and of a copy of the complaint, if any,

may «lso be made upon any person located without this state by

any individual over 21 years of age, not a party to the action,

with the same force and effect as though the summons had been

personally served within the state. No order of court is required.

An affidavit of the server shall be filed with the court stating the

COPY BOUND CL

C3

rimé, manner and place of service. The court may consider the

affidavit, or any other competent proofs, in determining whether

proper service has been made.

Nothing contained in this act shall be construed to limit

or affect the right to serve process in any other manner provided

by law.

78-27-26. Jurisdiction over nonresidents — Only claims

arising from enumerated acts may be asserted. — Only claims

arising from acts enumerated herein may be asserted against a de-

fendant in an action in which jurisdiction over him is based upon

this act.

78-27-27. Jurisdiction over nonresidents — Default judg--

ments. — No default shall be entered until the expiration of at

least thirty days after service. A default judgment rendered on

service may be set aside only on a showing which would be

timely and sufficient to set aside a default judgment rendered on

personal service within this state.

78-27-28. Jurisdiction over nonresidents — When may be

exercised. — Subject to the applicable statute of limitations, juris-

diction established under this act shall be exercised regardless of

when the claim arose.

) CLOSE IN CENTER