Modern Globe, Inc. v. Spellman

263 S.E.2d 859 (1980)

MODERN GLOBE, INC. v. Edward J. SPELLMAN.

No. 7923SC418.

Court of Appeals of North Carolina.

March 18, 1980.

*862 McElwee, Hall, McElwee & Cannon by W. H. McElwee, Wm. H. McElwee, III, and William C. Warden, Jr., North Wilkesboro, for plaintiff-appellant.

E. James Moore, North Wilkesboro, for defendant-appellee.

MORRIS, Chief Judge.

The sole question posed for decision is whether the trial court acquired personal jurisdiction over defendant pursuant to G.S. 1-75.4(5) and Rule 4(j) of the North Carolina Rules of Civil Procedure. G.S. 1-75.4 provides, in pertinent part, as follows:

A court of this State having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to Rule 4(j) of the Rules of Civil Procedure under any of the following circumstances: . . . . . (5) Local Services, Goods or Contracts. In any action which: (a) Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services within this State or to pay for services to be performed in this State by the plaintiff. . .

G.S. 1A-1, Rule 4(j), prescribes the manner of service of process in any action where the State has acquired personal jurisdiction by G.S. 1-75.4. The manner of service of process is not disputed.

In order to exercise jurisdiction over a nonresident defendant under these sections, a court must have proper statutory authorization, and its exercise of such jurisdiction must comport with the requirements of due process. United Buying Group, Inc. v. Coleman, 296 N.C. 510, 251 S.E.2d 610 (1979); Dillon v. Numismatic Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977). We must, therefore, determine whether personal jurisdiction may be exercised over defendant on the basis of the contract between the parties in this case.

With respect to statutory authorization, we recognize that the provisions of G.S. 1-75.4, commonly referred to as the "long-arm" statute, are to be liberally construed in favor of finding personal jurisdiction. Munchak Corp. v. Riko Enterprises, Inc., 368 F. Supp. 1366 (M.D.N.C.1973); Telerent Leasing Corp. v. Equity Assocs., Inc., 36 N.C.App. 713, 245 S.E.2d 229 (1978). This section is only part of a broad legislative attempt to assert personal jurisdiction over nonresident defendants to the full extent permitted by the Due Process Clause of the United States Constitution. Dillon v. Numismatic Funding Corp., supra. However, in order for G.S. 1-75.4(5)(a) to apply to the contract under consideration, the contract must embody "a promise, made anywhere to the plaintiff" by the defendant "to perform services within this State." Here, the contract required that defendant perform certain consulting services, and in fact defendant did perform such services on two occasions via long distance telephone conversation. However, the contract is silent as to whether those services were to be *863 performed in North Carolina. We need not determine whether the contract is in accord with G.S. 1-75.4(5)(a), since we hold that even if the statute is satisfied here, due process is not.

"[D]ue process, and not the language of the statute, is the ultimate test of `longarm' jurisdiction over a nonresident . . . ." Chadbourn, Inc. v. Katz, 285 N.C. 700, 706, 208 S.E.2d 676, 680 (1974). The due process doctrine requires that in order to subject a nonresident defendant to a judgment in personam, he must have certain minimum contacts with the forum state such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice". International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945); United Buying Group, Inc. v. Coleman, supra; Dillon v. Numismatic Funding Corp., supra; Telerent Leasing Corp. v. Equity Assocs., Inc., supra. In determining whether there are sufficient minimum contacts to invoke in personam jurisdiction, the interests of and fairness to both plaintiff and defendant must be carefully weighed and considered. Dillon v. Numismatic Funding Corp., supra. We find language from Farmer v. Ferris, 260 N.C. 619, 625, 133 S.E.2d 492, 497 (1963), pertinent:

Whether the type of activity conducted [by defendant] within the State is adequate to satisfy the requirements [of due process] depends upon the facts of the particular case. Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445, 72 S. Ct. 413, 96 L. Ed. 485, 492. It seems. . . that the question cannot be answered by applying a mechanical formula or rule of thumb, but by ascertaining what is fair and reasonable and just in the circumstances. In the application of this flexible test, a relevant inquiry is whether defendant engaged in some act or conduct by which [he] may be said to have invoked the benefits and protections of the law of the forum. Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283, 1298; International Shoe Co. v. Washington, supra, 326 U.S. p. 319, 66 S. Ct. 154, 90 L.Ed. p. 104.

See also Parris v. Garner Commercial Disposal, Inc., 40 N.C.App. 282, 253 S.E.2d 29, cert. denied and appeal dismissed, 297 N.C. 455, 256 S.E.2d 808 (1979). Absent such purposeful activity by defendant in the forum State, there can be no contact sufficient to justify personal jurisdiction over defendant. United Buying Group, Inc. v. Coleman, supra.

This lawsuit revolves around defendant's alleged connection with North Carolina. It is well settled that a single contract can provide the basis for the exercise of jurisdiction over a nonresident defendant. McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201, 2 L. Ed. 2d 223, 226 (1957) (Where the Court said: "It is sufficient for purposes of due process that the suit [is] based on a contract which [has] substantial connection with [the forum] State."); Chadbourn, Inc. v. Katz, supra; Byrum v. Register's Truck & Equip. Co., 32 N.C.App. 135, 231 S.E.2d 39 (1977). However, it remains essential that "there be some act by which the defendant purposefully avails [himself] of the privilege of conducting activities within the forum State . . . ." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283, 1298 (1958). In our opinion, neither the contract in dispute nor any activities by defendant provides sufficient minimum contacts with this State so as to satisfy the requirements of due process. The findings of fact make it clear that the contract was entered into outside of North Carolina; that the contract is governed by the law of another state; that there is no provision in the contract requiring defendant to perform services within North Carolina; that defendant has performed all services under the contract outside of North Carolina; and that for the life of the contract defendant has not been in this State for any purpose. These findings are supported by competent evidence and are, therefore, conclusive on *864 appeal. Goldman v. Parkland of Dallas, Inc., 277 N.C. 223, 176 S.E.2d 784 (1970). Therefore, defendant's connection with the State of North Carolina is far too attenuated, under the standards implicit in the Due Process Clause of the Constitution, to justify imposing upon him the "burden and inconvenience" of defense in North Carolina. See Kulko v. California Superior Court, 436 U.S. 84, 98 S. Ct. 1690, 56 L. Ed. 2d 132, rehearing denied, 438 U.S. 908, 98 S. Ct. 3127, 57 L. Ed. 2d 1150 (1978). We hold that the trial court properly dismissed plaintiff's action for want of personal jurisdiction.

The judgment entered thereon is hereby

Affirmed.

PARKER and HILL, JJ., concur.