General Time Corp. v. Eye Encounter, Inc.

274 S.E.2d 391 (1981)

GENERAL TIME CORPORATION
v.
EYE ENCOUNTER, INC.

No. 8026SC555.

Court of Appeals of North Carolina.

February 3, 1981.

DeLaney, Millette, DeArmon & McKnight by Ernest S. DeLaney, III, Charlotte, for plaintiff-appellee.

Kennedy, Covington, Lobdell & Hickman by Charles V. Tompkins, Jr., and Joseph B. C. Kluttz, Charlotte, for defendant-appellant.

HARRY C. MARTIN, Judge.

The sole issue raised on this appeal is whether the trial court erred in denying defendant's motion to dismiss for lack of in personam jurisdiction. Defendant contends that the court's conclusions sustaining jurisdiction are based on erroneous conclusions of law, unsupported by findings of fact based on the evidence presented. The crux of defendant's argument is that no contract was made in this state, and absent such a contract, defendant has insufficient contacts with North Carolina to subject it to suit here.

N.C.G.S. 55-145(a) provides the basis for jurisdiction over foreign corporations, which are not transacting business in this state, under four delineated circumstances:

(a) Every foreign corporation shall be subject to suit 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 as follows:

(1) Out of any contract made in this State or to be performed in this State; or

(2) Out of any business solicited in this State by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the State; or

(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; or

(4) Out of tortious conduct in this State, whether arising out of repeated activity or single acts, and whether arising out of misfeasance or nonfeasance.

It has been noted: "If one of these four activities is present but the cause of action arises elsewhere, or if none of the four activities is present although others may be present, there is no jurisdictional grant." Bowman v. Curt G. Joa, Inc., 361 F.2d 706, 714 (4th Cir. 1966). See also Allen Co. v. Quip-Matic, Inc., 47 N.C.App. 40, 266 S.E.2d 768 (1980). While the mere act of entering into a contract with a North Carolina resident does not constitute the necessary minimum contacts for the exercise of jurisdiction over a nonresident, Phoenix America Corp. v. Brissey, 46 N.C.App. 527, 265 S.E.2d 476 (1980), a single contract which was made or was to be performed in this state is sufficient to subject a nonresident corporation to suit under N.C.G.S. 55-145(a)(1). Goldman v. Parkland, 7 N.C.App. 400, 173 S.E.2d 15, aff'd, 277 N.C. 223, 176 S.E.2d 784 (1970). Accord, Leasing Corp. v. Equity Associates, 36 N.C.App. 713, 245 S.E.2d 229 (1978); Equity Associates v. Society for Savings, 31 N.C.App. 182, 228 S.E.2d 761 (1976), disc. rev. denied, 291 N.C. 711, 232 S.E.2d 203 (1977); Chadbourn, Inc. v. Katz, 21 N.C.App. 284, 204 S.E.2d 201, aff'd, 285 N.C. 700, 208 S.E.2d 676 (1974).

In Goldman, supra, this Court reaffirmed the constitutionality of N.C.G.S. 55-145(a)(1) and stated: "[W]here it is found that the contract was made in North Carolina or was to be performed in North Carolina, a sufficiently substantial contact to confer jurisdiction on the North Carolina courts has been established." 7 N.C.App. at 406, 173 S.E.2d at 20. In Goldman, the defendant had sent a letter to the plaintiff, a North Carolina resident, which set forth terms of a contract for the plaintiff to act as manufacturer's representative for the defendant. The letter provided that, if the terms were agreeable, the plaintiff should sign and return the original letter. The plaintiff's so doing was held to be the final act necessary to create a binding obligation and the contract was thus held to have been made in this state. Judge Hedrick, speaking for this Court, stated:

For a contract to be made in North Carolina, it must be executed in North Carolina, that is, "the final act necessary to make it a binding obligation must be done in the forum state." [Citations omitted.] The final act in the present case which was necessary to make the agreement a binding obligation, and therefore, a contract, was the depositing of the letter containing the signature of Artie W. Goldman in the mail.

7 N.C.App. at 407-08, 173 S.E.2d at 21. In affirming this decision, our Supreme Court stated: "In the instant case the contract in question clearly met the requirement of `substantial connection' with North Carolina. It was made in this State." 277 N.C. at 229, 176 S.E.2d at 788. Justice Moore further noted:

[B]y entering into a contract made in North Carolina and to be performed in part in North Carolina, the defendant availed itself of the privilege of conducting its business in this State thus invoking the benefits and protection of its laws, and clearly the North Carolina Legislature, by the express words of the statute authorizing such service on a foreign corporation when the contract was made in North Carolina, sought to give to its courts the power to assert jurisdiction over nonresident defendants to the full extent permitted by the due process requirement.

Id. at 229-30, 176 S.E.2d at 788-89.

The question remaining in the instant case, then, is whether the findings of fact are based upon evidence in the record and whether they support Judge Burrough's conclusion that the contract was made in North Carolina. "For a contract to be made in North Carolina, the final act necessary to make it a binding obligation must be done here." Realty Corp. v. Savings & Loan Assoc., 40 N.C.App. 675, 677, 253 S.E.2d 621, 624, disc. rev. denied, appeal dismissed, 297 N.C. 612, 257 S.E.2d 435 (1979), appeal dismissed, 444 U.S. 1061, 100 S. Ct. 1000, 62 L. Ed. 2d 744 (1980). Accord, Bundy v. Commercial Credit Co., 200 N.C. 511, 157 S.E. 860 (1931); Leasing Corp., supra; Goldman, supra. The record reveals that defendant, from its California office, made an offer to purchase goods from plaintiff by telegraph, or telex, directed to plaintiff's facility in Davidson, North Carolina. That communication specifically directed plaintiff to "confirm the acceptance of the terms and conditions of this agreement by return wire." Plaintiff responded: "Consider this telex a confirmation of your telex of 9-30-77. We agree with all terms included in your telex with the exception of the warranty. Our warranty is 18 months maximum. Cannot accept the 14 months from date of delivery." Defendant then sent plaintiff a purchase order identical to the original order except for this additional notation at the bottom: "NOTE: Seller confirmed the acceptance of the terms and conditions by return wire." Defendant forwarded a check for $1,000 to plaintiff, accompanied by a letter stating: "We are pleased to be doing business with your company and are looking forward to a mutually prosperous relationship. Enclosed please find check from our company which will act as consideration for the agreement made by exchange of wires on September 29th and 30th."

Despite defendant's affidavits to the contrary, there is ample evidence in the record demonstrating that both parties considered themselves to have executed a contract. Plaintiff shipped goods from North Carolina to defendant in California, some of which were returned to the plaintiff in North Carolina for repair. In its affidavits and its brief on appeal, defendant repeatedly refers to the "contract" in question, submitting that the contract was executed in California. We cannot accept defendant's argument that no valid contract was formed because of the variance in warranty terms. We find that plaintiff's wire constituted a "definite and seasonable expression of acceptance" under N.C.G.S. 25-2-207. See Realty Corp., supra. The Official Comment to N.C.G.S. 25-2-207 states:

2. Under this Article a proposed deal which in commercial understanding has in fact been closed is recognized as a contract. Therefore, any additional matter contained either in the writing intended to close the deal or in a later confirmation falls within subsection (2) and must be regarded as a proposal for an added term unless the acceptance is made conditional on the acceptance of the additional terms.

3. Whether or not additional or different terms will become part of the agreement depends upon the provisions of subsection (2). If they are such as materially to alter the original bargain, they will not be included unless expressly agreed to by the other party. If, however, they are terms which would not so change the bargain they will be incorporated unless notice of objection to them has already been given or is given within a reasonable time.

The variance in warranty terms does not invalidate the entire contract, and the effect of that variance, with respect to which term controls, is not an issue presently before this Court. We hold that the evidence in the record supports the trial court's findings of fact and conclusions of law.

Defendant further argues that jurisdiction cannot be sustained under N.C.G.S. 55-145(a)(1) because the trial court made no finding of fact that the cause of action arose in this state, citing R.R. v. Hunt & Sons, Inc., 260 N.C. 717, 133 S.E.2d 644 (1963); Dillon v. Funding Corp., 29 N.C.App. 513, 225 S.E.2d 137 (1976), rev'd on other grounds, 291 N.C. 674, 231 S.E.2d 629 (1977); Rendering Corp. v. Engineering Corp., 10 N.C.App. 39, 177 S.E.2d 907 (1970); and several federal cases. None of these cases involved a contract made in North Carolina. Furthermore, in Equity Associates, supra, 31 N.C.App. at 186, 228 S.E.2d at 763, this Court commented that "the broad assertion in Dillon that G.S. 55-145 applies only to a cause of action arising in North Carolina is dictum," as Dillon concerned a contract neither made nor performed in this state. In any case, it is apparent from the complaint that the present cause of action is based upon the contract discussed above.

The constitutionality of applying N.C.G.S. 55-145(a)(1) when a contract was made in this state has been discussed at length by our Courts in numerous prior cases. E. g., Byham v. House Corp., 265 N.C. 50, 143 S.E.2d 225, 23 A.L.R. 3d 537 (1965); Realty Corp., supra; Leasing Corp., supra; Equity Associates, supra. We will refrain from repeating those principles. The facts disclosed by the record come within the above holdings. In light of our decision that the contract was made in North Carolina, it is unnecessary to discuss the additional statutory grounds on which plaintiff asserts jurisdiction over defendant.

Affirmed.

MORRIS, C. J., and WHICHARD, J., concur.