Shepard v. Rheem Manufacturing Company

Annotate this Case

106 S.E.2d 704 (1959)

249 N.C. 454

Kathryn P. SHEPARD v. RHEEM MANUFACTURING COMPANY, Piedmont Natural Gas Company, Inc., and Ervin Construction Company, Inc.

No. 241.

Supreme Court of North Carolina.

January 28, 1959.

Robinson, Jones & Hewson, Charlotte, for defendants appellants.

Blakeney & Alexander, Ernest W. Machen, Jr., Payne & Hedrick, Charlotte, for plaintiff appellee.

WINBORNE, Chief Justice.

Appellant states this as the question involved on this appeal: "Upon the facts found by the Superior Court Judge, did the court err in holding that the defendant Rheem Manufacturing Company is subject to in personam jurisdiction of the court?"

And it is stated in appellant's brief filed in this Court that "the primary errors complained of consist in reaching the wrong legal result upon findings of fact to which no exception is taken."

In this connection it is provided by statute in this State, G.S. § 55-145, in respect to jurisdiction over foreign corporations, not transacting business in this State, that:

"(a) Every foreign corporation shall be subject to suit in this State, by a resident of this State or by a person having a usual place of business in this State, whether or not such foreign corporation is transacting or has transacted business in this State and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising * * * (3) out of the production, manufacture, or distribution of goods by such corporation with the reasonable expectation that those goods are to be used or consumed in this State and are so used, or consumed regardless of how or where the goods were produced, manufactured, marketed, or sold or whether or not through the medium of independent contractors or dealers * * *."

Applying the provisions of this statute, G.S. § 55-145(a) (3), to the facts found by the court, it seems clear that the Legislature in enacting the statute had in mind just such situation as that involved here. For as is succinctly stated by appellee in her brief, "The plaintiff is a resident of this State, and the appellant is a foreign corporation engaged in manufacturing, producing, and assembling gas water heaters and various other appliances for use in the home. Through the efforts of its agents residing and working in the State, the appellant ships large quantities of these appliances to North Carolina with the reasonable expectation that they will be installed and used in the homes of the people of this State, and they are so used. The acts of negligence upon which the plaintiff bases her cause were committed by the appellant in the course of this very activity, that is, her injuries came about through the negligence of the appellant in manufacturing and producing a defective gas water heater and in causing it to be shipped into this State where it was installed and used in the plaintiff's home until, by reason of the defect, the gas explosion occurred," inflicting upon her serious personal injury.

Manifestly, therefore, upon the undisputed facts, the cause of action arises out of activities described in G.S. § 55-145(a) *709 (3). Thus the court had authority, so far as the provisions of the statute are concerned, to assert jurisdiction over the person of Rheem Manufacturing Company in the case.

Now as to the constitutionality of the statute, G.S. § 55-145(a) (3), decisions of the Supreme Court of the United States are controlling. And in this connection the decision of that court in the case of International Shoe Company v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 158, 90 L. Ed. 95, 161 A.L.R. 1057, is pertinent and decisive of the question here involved.

We find it stated there: "Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U.S. 714, 733, 24 L. Ed. 565. But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice'," citing cases.

Attention has been called to the cases of Putnam v. Triangle Publications, 245 N.C. 432, 96 S.E.2d 445, and Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 4 Cir., 239 F.2d 502, in which upon the facts of each particular case, the statute G.S. § 55-38.1(a) (3) identical with present statute § 55-145 (a) (3) was held unconstitutional. It is sufficient to say these cases are distinguishable in factual situation from the case in hand.

In the light of the facts in instant case the statute G.S. § 55-145(a) (3) is not found to be violative of any provision of the Constitution of the State of North Carolina.

Hence the judgment from which appeal is here taken is hereby


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