Friction Materials Co. v. Stinson

833 S.W.2d 388, 1992 Ky. App. LEXIS 139, 1992 WL 126617
CourtCourt of Appeals of Kentucky
DecidedJune 12, 1992
DocketNos. 91-CA-116-MR (Direct Appeal), 91-CA-223-MR (Cross-Appeal)
StatusPublished
Cited by22 cases

This text of 833 S.W.2d 388 (Friction Materials Co. v. Stinson) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Friction Materials Co. v. Stinson, 833 S.W.2d 388, 1992 Ky. App. LEXIS 139, 1992 WL 126617 (Ky. Ct. App. 1992).

Opinion

HOWERTON, Judge.

This is a contract dispute in which James Stinson was terminated as sales representative with Friction Materials Company (FMC), and he sued for sales commissions. From an adverse judgment, FMC appeals. Stinson cross-appeals from the denial of prejudgment interest. We affirm on the direct appeal but remand on the cross-appeal for further proceedings.

FMC sells industrial friction products in a multi-state area. Stinson signed a sales representative agreement with FMC to cover the period of November 24, 1986, through December 31, 1987. Stinson had previously worked for H.K. Porter Company and his division had been bought by FMC. At H.K. Porter, he worked for a salary plus commission, whereas at FMC, his only compensation was a commission for sales. The agreement provided that either party could terminate the relationship without cause on 30 days’ written notice. During the course of this agreement, FMC deleted the General Electric (GE) account from Stinson’s six-state territory because of problems with an earlier order which FMC officials thought Stinson should have handled differently. In October 1987, FMC notified Stinson that it was cancelling their agreement effective November 20, 1987; this date was subsequently changed to November 30, 1987. Stinson sued for breach of contract and unpaid commissions. In a bench trial, Stin-son was awarded $13,626.59 in unpaid com[390]*390missions and court costs, plus post-judgment interest.

The issues on direct appeal are whether the trial court: (1) properly exercised jurisdiction, (2) erred in excluding parol evidence to determine the intent of the agreement, and (3) erred in finding that the GE exclusion was effective August 3, 1987. On cross-appeal, Stinson contends it was error to deny prejudgment interest.

FMC first argues that it was not subject to the personal jurisdiction of the court because FMC is a Delaware corporation with its principal place of business in Huntington, Indiana. FMC has no offices or employees in Kentucky and characterizes Stinson as an independent contractor who solicits orders and makes calls for more than one company. The sales representative agreement was negotiated and signed in Indiana. Under KRS 454.210(2)(a), Kentucky may assert personal jurisdiction “over a person [including a corporation] who acts directly or by an agent, as to a claim arising from the person’s: 1. Transacting any business in this Commonwealth.”

FMC concedes that it would be subject to the jurisdiction of the court if one of its customers, GE for instance, sued it on a claim arising out of FMC’s supplying products to the customer. But FMC differentiates the transaction between Stinson and FMC as one arising from their contract executed in Indiana and not from FMC’s business with its Kentucky customers.

Kentucky’s long-arm statute is designed to permit the exercise of personal jurisdiction over nonresident defendants while complying with federal constitutional requirements of due process. Texas American Bank v. Sayers, Ky.App., 674 S.W.2d 36, 38 (1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1180, 84 L.Ed.2d 328 (1985). KRS 454.210 allows the courts “to reach to the full constitutional limits of due process in entertaining jurisdiction over non-resident defendants.” Mohler v. Dorado Wings, Inc., Ky.App., 675 S.W.2d 404, 405 (1984). Inherent in the proper exercise of personal jurisdiction is the requirement that the nonresident defendant 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. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342-43, 85 L.Ed. 278 (1940); see also Mohler, 675 S.W.2d at 405. To determine the outer limits of personal jurisdiction, the following three-part test has been put forth:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant’s activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.

Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir.1968), citing McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), and Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). See also Perry v. Central Bank & Trust Co., Ky.App., 812 S.W.2d 166 (1991).

The contract between Stinson and FMC governed their relationship, and it was the instrument by which FMC reaped substantial commercial benefits in Kentucky. While the contract may have been negotiated and executed in Indiana, Stinson was contacted in Richmond right after Stin-son’s division at H.K. Porter had been sold to FMC, and was asked to come to Indiana to negotiate the agreement. Much of Stin-son’s activities were carried on in Kentucky, as well as the other five states in his territory. The agreement contained no choice of law clause. We believe that FMC has met the three-pronged test of McGee, supra, by directing the representative relationship. It was not unreasonable to think that FMC could be hauled into court in Kentucky over the sales representative agreement. To limit suit to only Indiana is [391]*391unreasonable when the sales representatives garnering the sales for FMC work in widespread territories. The trial court properly exercised personal jurisdiction pursuant to KRS 454.210.

The next issue deals with the time at which commissions are triggered. Stin-son admits that whether he is a representative at the time of the invoice governs his entitlement to commissions on after-market sales. The agreement provides in paragraph D3 that commissions are earned when the invoice is paid by the purchaser, and paragraph E3 provides that upon termination of the agreement, commissions are payable on “all orders submitted by the REPRESENTATIVE” prior to the effective date of termination. It was stipulated that the sales representatives did not submit orders to FMC, but merely solicited the orders from the customers, and it was the customers who sent in the orders, which FMC would accept or reject. Then FMC would invoice and ship the items ordered.

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Cite This Page — Counsel Stack

Bluebook (online)
833 S.W.2d 388, 1992 Ky. App. LEXIS 139, 1992 WL 126617, Counsel Stack Legal Research, https://law.counselstack.com/opinion/friction-materials-co-v-stinson-kyctapp-1992.