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Corporate Development Specialists Inc. v. Warren-Teed Pharmaceuticals Inc.

Decided: March 11, 1968.


Conford, Collester and Labrecque.

Per Curiam

[99 NJSuper Page 494] Plaintiff appeals from a judgment setting aside service of process and dismissing its action against defendant on the ground of lack of jurisdiction of this State

over the defendant, which is a foreign corporation not registered here.

Present here is a fairly closely balanced question of mixed law and fact as to whether defendant's contacts with the State of New Jersey, both including and apart from those pertaining to the cause of action asserted, are such as to satisfy federal due process requirements for the assertion here of in personam jurisdiction against a foreign corporation. We have concluded that the factual record made in the Law Division is inadequate; efforts by us to elicit further factual information in the course of this appeal have yielded incomplete and inconclusive information; and the interests of a sound determination of the important jurisdictional question presented call for a remand, the taking of plenary proofs and the making of findings of the basic facts, as hereinafter directed. In view thereof, the present discussion of the law and facts will be limited.

Defendant is a Delaware corporation with its principal place of business in Columbus, Ohio. It is a wholly owned subsidiary of Rohm & Haas, a foreign corporation authorized to do business in New Jersey, but operates entirely independently of it. It manufactures and distributes pharmaceutical products, some in New Jersey (about $100,000 of sales to New Jersey purchasers out of a gross of about $6,750,000, according to a post-argument affidavit). Three full-time sales solicitors work for defendant exclusively here (out of their homes) on a commission basis. Orders are subject to confirmation in Ohio, and goods are shipped from Ohio directly to the purchaser. Some of defendant's sales in New Jersey emanate from orders by mail or telephone directly from customers. There are no offices, warehouses, or other employees in New Jersey. Defendant's products are advertised in professional periodicals circulating in New Jersey, and through brochures which it sends physicians in this State.

Plaintiff is a New Jersey corporation engaged in the activity of business-brokerage, with principal office in Newark. Its present action is for the unpaid balance of commissions

allegedly due it from defendant on a written agreement to secure the sale of a subsidiary of defendant situated in Michigan.

Service of process against defendant in this action was effected by registered mail to defendant's Ohio office pursuant to R.R. 4:4-4 (d), which so permits as against a foreign corporation, "subject to due process," where it has no officers or agents, or registered office, available for service in this State.

In view of the remand we are now ordering, we shall not here discuss the merits of a complaint by plaintiff that the trial judge failed properly to exercise his discretion in declining to give plaintiff the opportunity to adduce additional proofs on the argument of the motion to dismiss after previous adjournments thereof.

The dismissal by the trial court was based solely on the ground that in an action against a foreign corporation it is an absolute prerequisite for jurisdiction in the forum state that the cause of action has arisen out of or resulted from the activities of the defendant within the forum. The court held that the cause of action on the "retainer agreement" sued on did not arise from any activities of defendant in this State, and therefore jurisdiction was lacking. As authority, the trial court cited Note, 47 Geo. L.J. 342, 351-2 (1958) which has been favorably cited in several recent decisions of our courts, including one by our own court in Higgins v. American Soc. of Clinical Pathologists, 94 N.J. Super. 243, 249 (App. Div. 1967), reversed on other grounds, 51 N.J. 191 (1968). Read superficially, the Georgetown Note might appear to indicate that jurisdiction over a foreign corporation can be based only on a cause of action arising from activities of the defendant within the forum state, but, as will appear presently, this is a proposition so obviously mistaken that it appears highly probable that the author was positing the applicability of that requirement (Rule "2" in the excerpt from the Note, as quoted in 94 N.J. Super., at p. 249) on a state of facts where the "contact" in

the forum state relied on is an isolated or occasional-type act or transaction, as distinguished from substantial or ...

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