Telerent Leasing Corp. v. Equity Associates, Inc.

245 S.E.2d 229 (1978) 36 N.C. App. 713

TELERENT LEASING CORPORATION
v.
EQUITY ASSOCIATES, INC., Ted F. Karam, Paso Del Norte Hotel Corporation, Eduard Vasquez, and Uniworld Management Corporation.

No. 7710SC509.

Court of Appeals of North Carolina.

June 20, 1978.

Broughton, Broughton & Boxley by William G. Ross, Jr., Raleigh, for plaintiff.

Poyner, Geraghty, Hartsfield & Townsend by Marvin D. Musselwhite, Jr., and Cecil W. Harrison, Jr., Raleigh, for defendants-appellants.

BROCK, Chief Judge.

Eduard Vasquez and Uniworld Management Corporation were not parties to the motion to dismiss and are not parties to this appeal. All reference to defendants in this opinion are to defendants Equity, Karam, and Hotel Corporation.

The sole question posed by this appeal is whether the trial court acquired in personam jurisdiction over defendants. The resolution of this question involves a two-fold determination: (1) is there a statutory basis for the exercise of jurisdiction by the courts of this State over these defendants in this action, and (2) if so, does the exercise of this power violate due process of law? See Dillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977).

The order of the trial court contained no findings of fact or conclusions of law. The trial court was under no duty to make findings of fact and conclusions of law on this motion absent request by a party. G.S. 1A-1, Rule 52(a)(2). No such request appearing in the record, we presume "that the court on proper evidence found facts to support its judgment." Sherwood v. Sherwood, 29 N.C.App. 112, 113-114, 223 S.E.2d 509, 510-511 (1976).

We must first determine if there is any statutory basis for the exercise of in personam jurisdiction over these defendants. As to the corporate defendants, our inquiry begins with G.S. 1-75.4, which reads in pertinent part as follows:

"A court of this State having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to Rule 4(j) of the Rules of Civil Procedure under any of the following circumstances:"

* * * * * *

"(2) Special Jurisdiction Statutes.— In any action which may be brought under statutes of this State that specifically confer grounds for personal jurisdiction."

G.S. 55-145 is just such a special jurisdictional statute; it reads in pertinent part as follows:

"(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"

Thus, a foreign corporation may be subject to the jurisdiction of the courts of North Carolina by virtue of a contract made or to be performed in this State. In the case sub judice, the uncontradicted evidence in the record shows that both the lease, executed by defendant Equity in Texas, and the assumption agreement, executed by defendant Hotel Corporation in Texas, were "brought" to North Carolina where they were accepted and executed by plaintiff.

"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 was done" in the forum state.' (citations omitted)." Goldman v. Parkland, 7 N.C.App. 400, 407-408, 173 S.E.2d 15, 21, aff'd, 277 N.C. 223, 176 S.E.2d 784 (1970). Paragraph 18 of the lease provides in part:

"This agreement and any amendment hereto shall become binding upon the parties hereto when executed by the President or Vice President of Telerent Leasing Corporation, attested by its Secretary or Assistant Secretary, with corporate seal affixed thereto, and when executed by a duly authorized officer or agent of Lessee."

On the facts of the case sub judice, the final act necessary to make the lease a binding obligation was its execution by plaintiff in North Carolina. Thus the evidence establishes that the lease was a contract made in this State and we presume that the trial court so found.

Likewise, the assumption agreement between plaintiff and defendant Hotel Corporation was a contract made in North Carolina. Paragraph 3 of the lease prohibited transfer, delivery or sublease of the leased equipment or assignment of the lease without prior consent of plaintiff. The assumption agreement, which provided for a transfer to defendant Hotel Corporation of the rights under the lease, was accepted by plaintiff in Raleigh and became binding at that time. A fortiori, the assumption agreement was a contract made in North Carolina; once again, we presume the trial court so found.

We therefore have found a statutory basis for the exercise of in personam jurisdiction by the courts of this State over the corporate defendants. A single contract made in North Carolina is sufficient to subject a non-resident defendant to suit in this State. Goldman v. Parkland, supra. In light of the preceding discussion, we need not consider the additional statutory grounds for assertion of jurisdiction over the corporate defendants set out by plaintiff.

We next must determine whether any statute confers jurisdiction over the person of the individual defendant, Karam. If so, it must arise from the guaranty contract executed by Karam by which he guaranteed performance and payment in the event that defendant Equity should default on the lease.

G.S. 1-75.4(5) confers jurisdiction over a non-resident defendant in any action which:

"(a). Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services within this State, or to pay for services to be performed in this State by the plaintiff; or"

It is well established "that North Carolina's long-arm statute (G.S. 1-75.4) should be liberally construed in favor of finding personal jurisdiction, subject of course to due process limitations." Dillon v. Funding Corp., 29 N.C.App. 513, 516, 225 S.E.2d 137, 140 (1976), rev'd on other grounds, 291 N.C. 674, 231 S.E.2d 629 (1977). Under a liberal construction of G.S. 1-75.4(5)(a), it is our opinion that by executing the personal guaranty, defendant Karam promised to pay for services to be performed in this State by plaintiff, to wit: the execution of the lease, ordering of televisions and causing them to be shipped to Texas, and the shipment of related equipment from Raleigh to Texas.

Having found statutory authorization for subjecting these defendants to the jurisdiction of the courts of this State, we now must determine if the exercise of jurisdiction over defendants violates due process of law.

We will not discuss in detail the due process requirements for the exercise of in personam jurisdiction over a non-resident defendant. This topic has been fully explored in numerous appellate decisions in this State. See, e. g., Byham v. House Corp., 265 N.C. 50, 143 S.E.2d 225, 23 A.L. R.3d 537 (1965); Goldman v. Parkland, 277 N.C. 223, 176 S.E.2d 784 (1970); Dillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977); Trust Co. v. McDaniel, 18 N.C.App. 644, 197 S.E.2d 556 (1973). Briefly summarized, due process requires that defendant have certain minimum contacts with the forum state such that maintenance of suit therein not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). A single contract can provide the basis for the exercise of jurisdiction over a non-resident defendant. See McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957). In our opinion, the ongoing contractual relations, and obligations arising therefrom between plaintiff and defendant Equity, as later assumed by defendant Hotel Corporation, provided sufficient minimum contacts with this State so as to satisfy the requirements of due process. As noted in Byham v. House Corp., supra, "[i]t is sufficient for the purposes of due process if the suit is based on a contract which has substantial connection with the forum state." 265 N.C. at 57, 143 S.E.2d at 232. The lease and assumption agreement were both contracts made in this State. To carry out its initial obligations under the lease, plaintiff placed orders for televisions in this State, and shipped equipment from its warehouse in this State. Monthly payments of rentals due under the lease were mailed to plaintiff's offices in this State. Furthermore, the lease itself expressly provided that North Carolina law would govern should there arise any dispute regarding the lease. In our opinion, taking all of these factors into consideration, the lease and assumption agreement were contracts having a substantial connection with this State based upon which (consistent with due process) the corporate defendants can be subjected to the jurisdiction of the courts of North Carolina. As for the defendant Karam, his contract to pay the debt of defendant Equity, which debt was and is owed to plaintiff, a North Carolina creditor, constitutes sufficient minimum contact to withstand the due process challenge to the exercise of in personam jurisdiction. See Trust Co. v. McDaniel, supra.

The order of the trial court denying these defendants' motion to dismiss is

Affirmed.

HEDRICK and MITCHELL, JJ., concur.