Court: New Jersey Superior Court Appellate Division; February 7, 1958; New Jersey; State Appellate Court
Goldmann, S. J. A. D. delivered the court's opinion regarding an appeal by plaintiffs from an order by the Superior Court, Law Division, which granted defendant Liberty Coach Co. Inc. a motion to set aside service of process. Liberty, an Indiana corporation that manufactures home trailers, was named alongside Bordentown Trailer Sales, Inc., a New Jersey corporation, after plaintiffs purchased a defective Liberty trailer on June 29, 1955. Following the trailer's return to Bordentown, plaintiffs did not receive a refund of the $2,218.32 downpayment and subsequently filed a lawsuit seeking rescission and damages for warranty breaches, including claims for injuries suffered by plaintiff Helen Miklos due to the trailer's defects.
Service of process was attempted on Liberty by serving Bordentown’s president, Vincent Buettner, as Liberty's 'registered agent,' a claim Liberty contested. In its motion to quash, Liberty provided affidavits, including one from its president, Spencer, asserting that Liberty has no registered agent or office in New Jersey and does not conduct business there, with all sales occurring in Indiana. Spencer stated Buettner was neither an employee nor an authorized representative of Liberty. During the hearing, Buettner testified about his role as an exclusive dealer for Liberty trailers, indicating that while Liberty provided guarantees for the trailers sold, Bordentown did not receive compensation from Liberty and profited solely from trailer sales. He suggested that Liberty retained legal title of the trailers until they were sold, although his understanding of the transfer of title was unclear. Relevant New Jersey statutes were referenced to clarify the distinction between a manufacturer's certificate of origin and a certificate of ownership, which is critical for understanding the legal context of Buettner’s testimony.
Buettner's testimony raised questions regarding the title to the trailers, referencing N.J.S.A. 39:10-6, which mandates that individuals possess a certificate of ownership for motor vehicles in New Jersey, to be presented upon request by the Director of Motor Vehicles or an inspector. N.J.S.A. 39:10-8 requires manufacturers to provide a certificate of origin when delivering new vehicles, and N.J.S.A. 39:10-10 stipulates that sellers must transfer the ownership certificate upon title transfer. Additionally, N.J.S.A. 39:10-19 addresses the licensing of dealers, while N.J.S.A. 39:10-21 requires dealers to have necessary ownership or registration certificates for vehicles in their possession.
Buettner confirmed that Bordentown was not employed by Liberty, only selling their trailers. The court denied Liberty's motion without prejudice, allowing renewal before trial. Liberty later sought reargument and submitted an affidavit from the Chief of the Certificate of Ownership Bureau, which affirmed that Liberty had filed a certificate designating Bordentown as its dealer and that Bordentown was licensed to assign manufacturer's certificates and engage in motor vehicle transactions.
Additionally, warranty certificates and service policies for Liberty trailers were presented, outlining the dealer's responsibilities for servicing trailers and Liberty's obligation to repair or replace defective items within a 90-day warranty period. The key issue to resolve is whether Liberty was "doing business" in New Jersey and subject to service of process in this case.
Prior to 1945, courts established jurisdiction over foreign corporations based on three theories: 'consent,' 'presence,' and 'submission,' with significant reliance on the concept of a corporation 'doing business' in the forum state. These theories faced criticism, which was compiled in Fletcher's Cyclopedia of Private Corporations. The U.S. Supreme Court's decision in *International Shoe Co. v. State of Washington* established that to subject a foreign corporation to a personal judgment, it must have "certain minimum contacts" with the forum that do not violate traditional notions of fair play and substantial justice. This marked a shift from categorically assessing a corporation's 'presence' to evaluating the specific ties and connections between the corporation and the forum state relevant to the lawsuit. Key factors in this assessment include the regularity and extent of the corporation's activities within the state, whether the cause of action arose from those activities, and the convenience to the parties involved. The application of this doctrine was further illustrated in *McGee v. International Life Ins. Co.*, where the Supreme Court ruled that a California court could bind a Texas corporation due to substantial connections stemming from an insurance contract with a California resident, highlighting the state's interest in providing redress for its citizens.
Liberty regularly sold trailers through its authorized dealer, Bordentown, which was permitted by the Division of Motor Vehicles to assign the manufacturer's certificate of origin. It is assumed that Liberty's warranty certificate and service policy were provided to purchasers by Bordentown or sent directly from Liberty's Indiana plant. Plaintiffs claimed that Liberty sent crews to New Jersey for repairs and replacements on trailers, a claim not denied by Liberty. There is an indication that Liberty may have retained title to the trailers until after sale, although it appears more likely that Bordentown held the title before transferring it to the buyer. Under the precedent set by the International Shoe and McGee cases, Liberty had sufficient minimum contacts with New Jersey, making it reasonable for it to defend against the lawsuit without violating traditional notions of fair play. The text notes a trend toward expanding state jurisdiction over foreign corporations, driven by the nationalization of commerce and improved transportation and communication.
The document then addresses the proper procedure for serving Liberty, emphasizing that service must be made on an officer, director, or agent, or a servant acting in the discharge of duties if no officer or business location exists in New Jersey. Since Liberty has no registered office or authorized agent in the state, the critical question is whether Bordentown can be considered a "servant" of Liberty for the purposes of service. The regulations governing service (R. R. 4:4-4(d)) are broader than previous legal practices and align with Federal Civil Rule 4(d)(3).
Rule 3:4-4(d), as amended on September 9, 1953, allows service of process on any servant of a corporation in New Jersey when service cannot be made on a corporate officer, director, trustee, or managing/general agent, and the corporation lacks an office or business location in the state. Prior to using this provision, an affidavit should be filed to demonstrate efforts to locate the corporate representative or business. The rule's 'any servant' provision expands the scope of permissible service, accommodating current business needs for accessible process service to corporations operating within New Jersey.
A relevant case, Wright v. News Syndicate Co., involved service on a truck driver delivering newspapers for years in New Jersey, illustrating application of the rule. However, in distinguishing cases like Westerdale v. Kaiser-Frazer Corp., the court noted that the local dealer did not qualify as the manufacturer's managing agent for service purposes, as the manufacturer was not doing business in New Jersey.
The term 'servant' emphasizes a subordinate relationship, defined as someone performing tasks for another under their control. Several factors determine if an individual is a servant or independent contractor, including the degree of control exercised by the employer and the nature of the work. In the case analyzed, Bordentown was found to be an independent contractor, not a servant of Liberty, which limits the state's ability to serve foreign corporations through individuals not included in R. R. 4:4-4(d). Consequently, the court concluded that service on Bordentown could not bring Liberty before the court without an amendment to the rule. The existing rule must be followed as it stands, as affirmed in X-L Liquors, Inc. v. Taylor.
