McCalla v. A. J. Industries, Inc.

352 F. Supp. 544, 1973 U.S. Dist. LEXIS 15415
CourtDistrict Court, E.D. Wisconsin
DecidedJanuary 12, 1973
DocketCiv. A. 71-C-573
StatusPublished
Cited by1 cases

This text of 352 F. Supp. 544 (McCalla v. A. J. Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McCalla v. A. J. Industries, Inc., 352 F. Supp. 544, 1973 U.S. Dist. LEXIS 15415 (E.D. Wis. 1973).

Opinion

MEMORANDUM DECISION AND ORDER FOR DISMISSAL

REYNOLDS, District Judge.

This is a diversity action for alleged misrepresentation and breach of contract. Plaintiffs were Wisconsin consumers at the time this action arose. Plaintiff Vernon Erbstoeszer is still a citizen of Wisconsin; plaintiff David McCalla is now a citizen of Florida. They are seeking to rescind a contract in which they purchased a houseboat from defendants. Defendant Marine Sales and Services, Inc., is the Arkansas corporation that sold plaintiffs the houseboat. Its chief managing officer is defendant Charles Smith, a citizen of Arkansas; it is allegedly an agent of defendant A. J. Industries, Inc., a Delaware corporation with its principal place of business in California. Marine Sales and Services, Inc., and Charles Smith were served in Russellville, Arkansas; A. J. Industries, Inc., was served in Los Angeles, California.

The issue presented is whether this court has personal jurisdiction over defendants. For personal jurisdiction to exist it must arise under one of the provisions of the Wisconsin long-arm statute, Wis.Stats. § 262.05, and the provision, as applied to defendants, must satisfy the constitutional requirements of due process.

The due process question need not be considered for I conclude that § 262.05 does not provide for personal jurisdiction over defendants under the facts of this case. Accordingly defendants’ motion to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure is granted.

For purposes of this motion I find the following facts. On January 24, 1970, in Russellville, Arkansas, plaintiffs entered into a verbal agreement for the purchase of a houseboat at the price of $31,000. Among the verbal representations defendants made was that the boat was “sufficiently seaworthy, safe, and fit for plaintiffs’ intended use of it in the Mississippi River, the Gulf of Mexico, the inland waterways of the eastern coast of the United States, the Great Lakes, and the open ocean.” (Paragraph 5 of plaintiffs’ complaint.) Defendants knew the boat would also be used in Wisconsin.

Two days later defendant Smith sent a letter to plaintiffs’ address in Oconomowoc, Wisconsin, repeating the terms discussed verbally in Arkansas. Plaintiffs replied by sending defendants a $5,000 deposit. In the accompanying letter plaintiffs referred to defendant Smith’s letter to them as merely a quotation letter, confirming the agreement actually reached in Arkansas. In their original complaint plaintiffs again indicated that Smith’s letter merely confirmed the prior agreement. Subsequently, however, plaintiffs alleged in their brief that Smith’s letter created the contract and that, therefore, the contract was created in Wisconsin. Since the location of the contract’s creation does not affect'the outcome of this opinion, plaintiffs’ latest allegation will be presumed correct.

No other contacts between the defendants and the State of Wisconsin are alleged. Several months later defendant Marine Sales and Service, Inc., delivered the boat at a site outside Wisconsin. After less than four months of actual use, plaintiffs learned that the boat would not perform as represented. They asked for rescission of the contract, but defendants refused.

Under Rule 4 of the Federal Rules of Civil Procedure, federal district courts have jurisdiction over at least those persons who could be reached by the courts of the state in which the district court is located. Rules 4(d)(7) and 4(e), Federal Rules of Civil Procedure. Since the specific provisions of Rule 4 giving federal courts a greater range of in personam jurisdiction than their state counterparts do not apply to these defendants, see Rule 4(f), jurisdiction must *546 arise under the Wisconsin long-arm statute, Wis.Stats. § 262.05.

Plaintiffs believe defendants fall within the sweep of § 262.05(5) (c). The pertinent portions of subsection 262.-05(5) provide:

“(5) Local services, goods, or contracts. [A court of this state has jurisdiction over a person] [i]n any action which:
* * * * * *
“(c) Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff’s benefit, by the defendant to deliver or receive within this state or to ship from this state goods, documents of title, or other things of value; or
* * * * * *
“(e) Relates to goods, documents of title, or other things of value actually received by the plaintiff in this state from the defendant without regard to where delivery to carrier occurred.”

The subsection reflects the modern extension of in personam jurisdiction. See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Travelers Health Assn. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950). It is designed to reach persons like the defendants here who were not regularly doing business in the state but whose isolated contact with the state was related to the very cause of action in question. Nagel v. Crain Cutter Co., 50 Wis.2d 638, 643, 184 N.W.2d 876, 880 (1971). Yet even under the most liberal interpretation, none of its provisions can be said to apply to these defendants.

In relying on paragraph (c) plaintiffs evidently believe the action ‘Taróse] out of a promise * * * by defendant[s] to deliver * * * within this state -x- * * goods * * *.” * But plaintiff has never alleged that defendants promised to deliver the boat in Wisconsin. They admit that delivery, in fact, occurred elsewhere. It appears from the language of the paragraph that its major purpose was to reach defendants who breached executory contracts which, if executed, would have involved substantial connection with the state. That the contract here was executed further indicates that the paragraph simply does not apply.

The only support for the strained interpretation of paragraph (c) needed to bring these defendants within its reach comes from the revision notes to § 262.-05(5) as a whole. 30 Wis.Stat.Ann. § 262.05 (1972 Supp.), at 36-53. The notes were prepared by Professor George W. Foster, Jr., of the University of Wisconsin Law School. They originally appeared in the draft of § 262.05 published by the Judicial Council in 1959, and they have been cited with approval by the Wisconsin Supreme Court. Pavalon v.

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Related

Maney v. Ratcliff
399 F. Supp. 760 (E.D. Wisconsin, 1975)

Cite This Page — Counsel Stack

Bluebook (online)
352 F. Supp. 544, 1973 U.S. Dist. LEXIS 15415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mccalla-v-a-j-industries-inc-wied-1973.