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Delear v. Rozel Packing Corp.

Decided: June 19, 1967.

DANIEL F. DELEAR, TRUSTEE, ETC., PLAINTIFF-APPELLANT,
v.
ROZEL PACKING CORPORATION, DEFENDANT-RESPONDENT



Gaulkin, Lewis and Labrecque. The opinion of the court was delivered by Gaulkin, S.j.a.d.

Gaulkin

[95 NJSuper Page 346] Plaintiff, trustee in bankruptcy of Allied Crude Oil and Refining Corporation and three related

companies (hereafter Allied), filed a complaint in the Chancery Division to recover alleged preferential payments and transfers made by Allied to defendant Rozel Packing Corporation, a New York corporation, which specializes in exporting agricultural commodities. Service upon Rozel was made by registered mail to its New York office, pursuant to R.R. 4:4-4(d). Thereafter, defendant moved to dismiss the action or, in the alternative, to quash service of process for lack of jurisdiction in personam. Following oral argument and consideration of the complaint, the deposition of Harold Nickelsberg, Rozel's vice-president, and Nickelsberg's affidavit in support of the motion, the motion was granted. Plaintiff appeals.

The relationship between Allied and Rozel arose out of three financing transactions. On May 7, 1963 Ronald Platt, an agent of Allied, from its office in New Jersey, telephoned Nickelsberg at Rozel's office in New York, requesting that Rozel lend Allied $75,000 to be secured by commodities equal to 120% of the loan, with compensation to the lender of 1/8 cent per pound of the collateral security. Platt later informed Nickelsberg by telephone that the collateral would consist of Choice White All Hog Grease stored at the Harbor Tank Storage Company in Bayonne, New Jersey. Nickelsberg obtained approval of the loan from the principal officers of Rozel, arranged to borrow the money from Rozel's New York bank, the Irving Trust Company, and for the bank to handle the details. He so advised Platt by telephoning him in New Jersey. On May 9, 1963, at Rozel's direction, Irving Trust delivered $75,000 to Allied at the bank, charging it to Rozel's account; in exchange Allied delivered to the bank a warehouse receipt covering the grease; the warehouse receipt served as collateral both for the loan from Rozel to Allied and from the bank to Rozel.

In June 1963 Allied's messenger delivered checks for $75,000 and $1,762.50 in payment of the loan and the agreed compensation for it, to defendant at its office in New York. Rozel then paid Irving Trust. However, the warehouse receipt

itself was retained by the bank and was "rolled over" as security for a second $75,000 loan, arranged upon the same terms and procedure. This was repaid in the same fashion in July 1963. A week later a third loan agreement was made, this time for $50,000. A new warehouse receipt, covering less grease, was delivered by Allied to the bank in New York, and the bank, in turn, delivered a $50,000 check to Allied's messenger for which it debited Rozel's account. On September 6, 1963 Allied's messenger delivered checks for the $50,000 and for the agreed compensation to Rozel. Both checks were deposited at the bank which, on October 21, 1963, delivered to Allied a delivery order addressed to Harbor Tank Storage, authorizing delivery of the collateral covered by the warehouse receipt to Allied.

Plaintiff asserts that the transactions described above constituted purchases and sales; Rozel contends that it made no purchase from or sale to Allied, although admitting that the loans were set up as "a fictitious purchase and sale" on their books and, apparently, on the books of Allied. Judge Matthews held that they were plainly loans and not sales, and we agree.

Plaintiff asserts that Rozel had the following contacts with New Jersey: "1. Numerous telephone calls from Allied in New Jersey to Rozel in New York. 2. Numerous telephone calls from Rozel in New York to Allied in New Jersey. 3. Letters from Rozel in New York to Allied in New Jersey. 4. Letters from Rozel in New York to Trans World Refining Corporation in New Jersey. 5. Receipt by Rozel of various warehouse receipts representing substantial quantities of agricultural products stored in New Jersey. 6. Mr. Nickelsberg, vice-president of Rozel resides in New Jersey. 7. Delivery order issued from New York to New Jersey directing use of the stored products. 8. Checks drawn on New Jersey bank and sent by Allied to Rozel." It is admitted that Rozel had no other contacts with New Jersey.

For New Jersey to exercise in personam jurisdiction over Rozel it is only necessary that defendant have "certain

minimum contacts" with this 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, 90 L. Ed. 95, 102 (1945). Those contacts which justify subjecting a foreign corporation to suit here must depend not on the quantity but "rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure." Id., 326 U.S., at p. 319, 66 S. Ct., at p. 160, 90 L. Ed., at p. 104.

However, in Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2 d 1283 (1958), Mr. Chief Justice Warren, ...


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