John Norrell Arms, Inc. v. Higgins

Annotate this Case
JOHN NORRELL ARMS, INC. v. Curtis HIGGINS

97-610                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 26, 1998


1.   Jurisdiction -- nonresident party -- personal jurisdiction -- "long arm"
     statute. -- Under the state's "long arm" statute, Ark. Code Ann.
      16-4-101(B) (Supp. 1997), Arkansas courts may assert in
     personam jurisdiction over a nonresident party.

2.   Jurisdiction -- nonresident party -- personal jurisdiction -- two-prong
     test -- other considerations. -- For state courts to maintain
     personal jurisdiction over a nonresident person under the Due
     Process Clause of the Fourteenth Amendment, a party must
     satisfy two prongs: the party, first, must show that the
     nonresident has had sufficient "minimum contacts" with the
     state and, secondly, must show that the court's exercise of
     jurisdiction would not offend "traditional notions of fair
     play and substantial justice"; personal jurisdiction over a
     nonresident defendant generally exists when the defendant's
     contacts with the state are continuous, systematic, and
     substantial; it is essential for a finding of personal
     jurisdiction that there be some act by which the defendant
     purposefully avails himself or herself of the privilege of
     conducting business in the forum state; moreover, the contacts
     should be such where a defendant would have a reasonable
     anticipation that he or she would be haled into court in that
     state.
3.   Jurisdiction -- nonresident party -- personal jurisdiction -- test for
     sufficiency of contacts. -- The following five-factor test is
     helpful in determining the sufficiency of a defendant's
     contacts with the forum state so as to result in personal
     jurisdiction: (1) the nature and quality of contacts with the
     forum state; (2) the quantity of such contacts; (3) the
     relation of the cause of action to the contacts; (4) the
     interest of the forum state in providing a forum for its
     residents; and (5) convenience of the parties.

4.   Jurisdiction -- nonresident party -- appellee's contacts with state
     insufficient to satisfy due process considerations. -- Where it was
     clear that the only contact that appellee had with Arkansas
     prior to appellant's complaint was the filing of an out-of-
     state judgment against an Arkansas resident and the issuance
     of a writ of execution based on that judgment, the supreme
     court did not believe that such brief encounters with the
     State for the purpose of enforcing a judgment were the type of
     continuous, systematic, and substantial contacts necessary to
     satisfy due process considerations.

5.   Jurisdiction -- nonresident party -- evidence insufficient to establish
     corporation as appellee's alter ego. -- The supreme court could not
     say that the trial court clearly erred in finding that the
     proof submitted was insufficient to establish an out-of-state
     corporation as appellee's alter ego; but even assuming alter
     ego status, the court did not agree that the corporation's
     contacts with Arkansas were sufficient to justify personal
     jurisdiction over appellee.

6.   Jurisdiction -- nonresident party -- use of interstate mail and banking
     facilities insufficient to satisfy due process. -- The use of arteries
     of interstate mail and banking facilities, standing alone, is
     insufficient to satisfy due process in asserting long-arm
     jurisdiction over a nonresident.

7.   Jurisdiction -- nonresident party -- out-of-state corporation's contacts
     insufficient to warrant personal jurisdiction. -- Where an out-of-state
     corporation was not registered in Arkansas, had neither
     employees nor agent for service in Arkansas, and had never
     initiated contact with people in Arkansas; and where the only
     contact that the corporation had with Arkansas had been sales
     to Arkansas residents set in motion by Arkansas residents and
     merchandise delivered to Arkansas residents by mail or
     delivery service, the supreme court determined that these
     contacts were manifestly insufficient to warrant general
     personal jurisdiction over the corporation, much less over
     appellee.

8.   Jurisdiction -- registration-of-judgment issue -- appellant failed to cite
     authority or make persuasive arguments. -- The supreme court rejected
     appellant's jurisdictional arguments based on the registration
     of appellee's foreign judgment against his former business
     partner, noting that appellant cited no supporting authority
     and made no persuasive arguments.

9.   Judgment -- foreign judgments given full faith and credit. -- The State
     of Arkansas must give full faith and credit to foreign
     judgments under the Constitution of the United States;
     subjecting those who seek to enforce a foreign judgment in
     Arkansas to third-party lawsuits when the property at issue
     may not be located in the state could well impede this basic
     constitutional principle. 

10.  Jurisdiction -- trial court did not err in finding no minimum contacts and
     no personal jurisdiction over appellee. -- The supreme court held
     that the trial court did not clearly err in finding that
     appellee did not have minimum contacts with the State of
     Arkansas; the court further held that the trial court
     correctly concluded that it lacked personal jurisdiction over
     appellee.


     Appeal from Pulaski Chancery Court; Vann Smith, Judge;
affirmed.
     Joel Taylor, for appellant.
     Kemp, Duckett, Spradley & Curry, by: James M. Duckett, for
appellee.

     Robert L. Brown, Justice.
     This appeal by appellant John Norrell Arms, Inc., arises out
of a dismissal of Norrell Arms's complaint against appellee Curtis
Higgins due to lack of personal jurisdiction by the trial court
over Higgins.  Norrell Arms contends on appeal that the trial court
erred in dismissing its complaint.  We affirm the dismissal.
     The facts leading up to the dismissal are these.  Higgins is
a resident of the State of Oklahoma and sole shareholder of an
Oklahoma corporation, S & H Arms of Oklahoma, Inc.  Norrell Arms is
an Arkansas corporation with its principal place of business in
Little Rock.  A third person not a party to this action is Thomas
Seslar, a resident of Carroll County, who was doing business as S
& H Arms Manufacturing Company, apparently a sole proprietorship,
at the time of the events in question.
     On March 28, 1995, an Oklahoma default judgment in favor of
Higgins and against Seslar was filed in Carroll County.  In that
judgment, the Oklahoma trial court found that Higgins and Seslar
had been in business together as a fifty-fifty partnership engaged
in the manufacture and sale of firearms and that Seslar took
certain inventory which belonged to Higgins when the partnership
was dissolved.  That inventory included 330 autosears, which are
parts that convert a semi-automatic firearm into a machine gun. 
The judgment provided that Seslar should return the 330 autosears,
as well as other inventory to Higgins, and that Seslar should pay
Higgins $15,776.30 in attorney fees and $82,500.00 for lost sales.
     On October 6, 1995, a writ of execution was issued to the
Sheriff of Carroll County to pick up "Firearms, autosears ... and
all other property of the Defendant, Thomas Seslar."  On October
14, 1995, the Sheriff issued his return showing that property of
Seslar had been seized, and that return was filed on December 11,
1995.
     On October 29, 1996, Norrell Arms sued Higgins in Pulaski
County Chancery Court seeking declaration of ownership of 60 Ruger
1022 autosears for which Norrell Arms claimed it had paid Seslar
$18,500.  Norrell Arms further claimed that the 60 autosears were
part of the 330 autosears referenced as inventory in the Higgins
judgment taken against Seslar.  According to allegations in the
Norrell Arms complaint, Seslar was incarcerated in federal prison. 
For its second claim, Norrell Arms alleged that Higgins had
tortiously interfered with its contract to buy the 60 autosears
from Seslar by registering his Oklahoma judgment in Arkansas and
prayed for compensatory and punitive damages.
     Higgins entered a special appearance in Pulaski County
Chancery Court to contest personal jurisdiction and subject-matter
jurisdiction as well.  Discovery ensued, and the trial court
conducted a hearing in which Higgins and John Norrell testified. 
The trial court concluded that it had no personal jurisdiction over
Higgins.  In reaching that conclusion, the trial court made these
findings in its order:
         The whereabouts of the autosears at issue is unknown,
          except they may be in Oklahoma.
         Only 36 of the autosears Norrell Arms purchased from
          Seslar were involved in the Higgins judgment.
         Higgins has never done business in Arkansas or advertised
          in any magazine within Arkansas or owned property in
          Arkansas.
         Higgins incorporated S & H Arms of Oklahoma, Inc., in
          Oklahoma, but the corporation has never been registered
          in Arkansas.  The corporation has no agent for service
          in Arkansas or employees in the state.
         S & H Arms of Oklahoma, Inc., has done business in
          Arkansas through the mail and U.P.S. but has not
          initiated calls to people in Arkansas.
         Over the past 3 years, S & H Arms of Oklahoma, Inc., has
          derived between $10,000 and $15,000 in business income
          from Arkansas.  The corporation's annual gross income is
          $100,000 to $150,000.
         There is insufficient proof that S & H Arms of Oklahoma,
          Inc., is an alter ego of Higgins.
The trial court then dismissed Norrell Arms's complaint.
     Norrell Arms maintains on appeal that the trial court erred in
its findings and was wrong in concluding that it lacked personal
jurisdiction over Higgins.  We disagree.
     Under the state's "long arm" statute, Arkansas courts may
assert in personam jurisdiction over a nonresident party:
     B. PERSONAL JURISDICTION.  The courts of this state shall have
     personal jurisdiction of all persons, and all causes of action
     or claims for relief, to the maximum extent permitted by the
     due process of law clause of the Fourteenth Amendment of the
     United States Constitution.
Ark. Code Ann.  16-4-101(B) (Supp. 1997).
     The U.S. Supreme Court has held that in order for state courts
to maintain personal jurisdiction over a nonresident person under
the Due Process Clause of the Fourteenth Amendment, a party must
satisfy two prongs.  The party, first, must show that the
nonresident has had sufficient "minimum contacts" with this state
and, secondly, must show that the court's exercise of jurisdiction
would not offend "traditional notions of fair play and substantial
justice."  International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945).  In this same vein, the Court has held that personal
jurisdiction over a nonresident defendant generally exists when the
defendant's contacts with the state are continuous, systematic, and
substantial.  Helicopteros Naciaonales de Columbia, S.A. v. Hall,
466 U.S. 408 (1984).  See also Perkins v. Benguet Consol. Mining
Co., 342 U.S. 437 (1952).  It is essential for a finding of
personal jurisdiction that there be some act by which the defendant
purposefully avails himself or herself of the privilege of
conducting business in the forum state.  Hanson v. Denckla, 357 U.S. 235 (1957).  Moreover, the contacts should be such where a
defendant would have a reasonable anticipation that he or she would
be haled into court in that state.  World-Wide Volkswagen Crop. v.
Woodson, 444 U.S. 286 (1980).
     The Eighth Circuit Court of Appeals has established a five-
factor test for determining the sufficiency of a defendant's
contacts with the forum state so as to result in personal
jurisdiction:
     (1) the nature and quality of contacts with the forum
     state; (2) the quantity of such contacts; (3) the
     relation of the cause of action to the contacts; (4) the
     interest of the forum state in providing a forum for its
     residents; and (5) convenience of the parties.
Burlington Industries, Inc. v. Maples Industries, Inc. 97 F.3d 1100
(8th Cir. 1996).  See also Glenn v. Student Loan Guar. Found., 53
Ark. App. 132, 920 S.W.2d 500 (1996).  We agree with the Eighth
Circuit and our court of appeals that these factors are helpful in
the minimum-contact analysis.
     Based on the facts asserted in Norrell Arms's complaint and
the testimony of witnesses, it is clear that the only contact that
Higgins had with Arkansas prior to the Norrell Arms complaint was
the filing of an Oklahoma judgment against an Arkansas resident
(Seslar) and the issuance of a writ of execution based on that
judgment.  We do not believe that such brief encounters with the
State for the purpose of enforcing a judgment are the type of
continuous, systematic, and substantial contacts envisioned by the
U.S. Supreme Court to satisfy due process considerations.  See
Helicopteros Naciaonales de Columbia, S.A. v. Hall, supra.
     But Norrell Arms goes further and urges that S & H Arms of
Oklahoma, Inc., is the alter ego of Higgins and that irrespective
of Higgins's slight connection with the State, the corporation has
had sufficient contacts with Arkansas which should subject its sole
shareholder to the jurisdiction of our courts.  As an initial
matter, we cannot say that the trial court clearly erred in finding
that the proof submitted was insufficient to establish the
corporation as Higgins's alter ego.  See Ark. R. Civ. P. 52(a). 
See also Rano v. SIPA Press, Inc., 987 F.2d 580 (9th Cir. 1993). 
But even assuming alter ego status, we do not agree that the
corporation's contacts with Arkansas are sufficient to justify
personal jurisdiction over Higgins.
     Our conclusion appears to comport with the holdings of
analogous cases.  For example, in the Helicopteros case, the Court
refused to hold that personal jurisdiction existed over a defendant
corporation even though a representative of that corporation had
actually traveled to the forum state to negotiate a contract for
the sale of helicopters and had sent people to the forum state for
training.  See Helicopteros Naciaonales de Columbia, S.A. v. Hall,
supra.  In addition, this court has declined to affirm personal
jurisdiction over a Texas lawyer who represented a client from
Arkansas.  See Marchant v. Peeples, 274 Ark. 233, 623 S.W.2d 523
(1981).  In Marchant, we said:
     The undisputed facts are that Peeples is a Texas lawyer
     licensed only to practice in Texas. He has had no contacts in
     Arkansas, except with Mrs. Marchant, and those have been by
     telephone or mail. He has not solicited any business in this
     state nor provided any services in this state. He did not
     initiate contact with Mrs. Marchant.
Id. at 234.  And, finally, we agree with the reasoning of the court
of appeals, which held that "the use of arteries of interstate mail
and banking facilities, standing alone, is insufficient to satisfy
due process in asserting long-arm jurisdiction over a nonresident."
Glenn v. Student Loan Guar. Found., 53 Ark. App. at 134, 920 S.W.2d 
at 501.
     As the trial court found in its order, S & H Arms of Oklahoma,
Inc., is not registered in Arkansas.  It has no employees here.  It
has no agent for service in Arkansas.  And it has never initiated
contact with people in Arkansas.  The only contact that S & H Arms
of Oklahoma, Inc., has had with this state has been sales to
Arkansas residents, set in motion by Arkansas residents and
merchandise delivered to Arkansas residents by mail or UPS.  These
contacts are manifestly insufficient to warrant general personal
jurisdiction over S & H Arms of Oklahoma, Inc., much less over
Higgins.
     We are aware that the U.S. Supreme Court has found in certain
instances that personal jurisdiction over a nonresident defendant
did not violate due process, even though the defendant had had only
one contact with the forum state.  See Burger King Corp. v.
Rudzewicz, 471 U.S. 462 (1985); McGee v. International Life Ins.
Co., 355 U.S. 220 (1957).  In Burger King, the Court held that
specific personal jurisdiction is applicable when the defendant has
purposefully established a contact with the forum state and the
litigation results from alleged injuries that arise out of or are
related to that contact.  In the instant case, Norrell Arms
contends that its complaint is related to and arises out of
Higgins's contacts with this State, which are the registration of
his foreign judgment and his attempt to collect on that judgment.
     In response, Higgins cites this court to one case that, he
contends, is factually similar to the instant case, Frasca v.
Frasca, 330 S.E.2d 889 (Ga. 1985).  In Frasca, the Georgia Supreme
Court refused to subject a nonresident to jurisdiction based solely
on the registration of a New York divorce decree in Georgia.  The
Georgia Supreme Court concluded that the registration of a judgment
did not constitute the transaction of business as contemplated by
Georgia's "long arm" statute.  Because the Georgia decision appears
to have been bottomed on a "transaction of business" rationale
under Georgia's statute as opposed to a "minimum contacts"
examination, it does not appear to be particularly helpful in
deciding this case.
     Norrell Arms makes two claims to support its theory that its
complaint against Higgins arises out of the registration of
Higgins's judgment against Seslar.  First, Norrell Arms maintains
that this lawsuit is related to the Higgins judgment because the
judgment is based on the same property that Norrell Arms claims to
have purchased from Seslar.  Norrell Arms argues briefly, as a
second proposition, that jurisdiction should obtain in Arkansas
because when Higgins registered the judgment, he tortiously
interfered with Norrell Arms's contract to purchase the autosears. 
He cites no authority to support either claim, and we are not
persuaded by the arguments.  If the registration of a foreign
judgment alone is sufficient contact with a forum state, then every
person who has ever registered a judgment in Arkansas is subject to
suit in this State by any person claiming to have an interest in
that property.  This would be so, according to Norrell Arms's
reasoning, even when the claim is by a third party not involved in
the registered judgment and even when the property at issue is no
where to be found.  That goes too far in our judgment and, again,
Norrell Arms cites us to no case to support its contention.
     There is a policy consideration in all of this which is
important to our analysis.  The State of Arkansas must give full
faith and credit to foreign judgments under the U.S. Constitution. 
U.S. Const. art. 4,  1.  See also Ark. Code Ann.  16-66-602
(Supp. 1995).  Subjecting those like Higgins who seek to enforce a
foreign judgment in Arkansas to lawsuits by third parties when the
property at issue may not even be located in Arkansas could well
impede this basic constitutional principle.
     We hold that the trial court did not clearly err in finding
that Higgins did not have minimum contacts with the State of
Arkansas.  See Rule 52(a).  See also Rano v. SIPA Press, Inc.,
supra.  We further hold that the trial court correctly concluded,
based on its findings, that it lacked personal jurisdiction over
Higgins.  Because we decide this matter based on the first prong of
the International Shoe test, there is no need for us to examine the
second prong of fair play and substantial justice.
     Affirmed.