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Govan v. Trade Bank & Trust Co.

Decided: March 17, 1970.


Goldmann, Lewis and Matthews.

Per Curiam

Defendant, administrator of the estate of William Hong, appeals from (1) a judgment of the Law Division in favor of plaintiff in an action to recover the proceeds of a promissory note, made by decedent, in the amount of $25,000, with interest from the date of its making, February 7, 1961, and (2) an interlocutory order denying its motion to dismiss the complaint and/or vacate the service of process. Defendant was served by registered mail pursuant to R.R. 4:4-4(j) [now R. 4:4-4(e)].

Plaintiff, a longtime resident of New Jersey with substantial business interests still in this State, was a close friend of decedent, a New York resident. Sometime after plaintiff had retired to South Carolina, decedent telephoned him to discuss the prospects of a $25,000 loan for the purpose of financing a restaurant venture. On plaintiff's next visit to New Jersey the two parties met in the business office of plaintiff's brother in Hoboken to discuss the loan and negotiate the final arrangements. After talking by telephone to his wife, plaintiff notified his brother (who was his partner) to advance the funds upon decedent's request.

On February 7, 1961 decedent came to the brother's Hoboken office to pick up the money. Plaintiff's brother, acting for plaintiff, drew a check for $25,000 from a joint account,

and decedent then signed a demand promissory note. Decedent died during February 1967 without having paid any interest or principal on the note.

Plaintiff instituted this action in October 1967 against decedent's estate for repayment of the loan. Prior to filing an answer defendant moved to dismiss the complaint and vacate the process on the grounds that the court lacked jurisdiction over it and over the subject matter, and that the action was barred by the six-year statute of limitations. Both motions were denied. The matter was thereafter pretried and tried, resulting in judgment for the plaintiff.

On this appeal defendant contends that (1) the trial judge erred in denying its motion to set aside process on the ground of lack of personal jurisdiction; (2) the action was barred by the statute of limitations, and (3) the evidence was insufficient to establish consideration for the note.

Since the decision of the Supreme Court of the United States in International Shoe v. State of Washington , 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), courts have embarked on a general trend of expanding the contours of traditional concepts of judicial jurisdictional power. Concededly, this trend has been less sweeping in the area of commercial contracts than in torts. The general standard of due process set forth in International Shoe rests on a determination as to whether there exists such "minimum contracts" between defendant and the forum as not to offend the "traditional notions of fair play and substantial justice." 326 U.S. , at 316, 66 S. Ct. , at 158. In the area of contracts it has been held "sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State." McGee v. International Life Ins. Co. , 355 U.S. 220, 223, 78 S. Ct. 199, 201, 2 L. Ed. 2d 223 (1957). It has also been said to be "essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla , 357 U.S. 235, 253, 78 S.

Ct. 1228, 1240, 2 L. Ed. 2d 1283 (1958). See also, Higgins v. American Society of Clinical Pathologists , 94 N.J. Super. 243, 248-249 (App. Div. 1967), rev'd on other grounds, 51 N.J. 191 (1968). In Higgins this court, in examining the extra-territorial power of courts, adopted three basic criteria for the just exercise of such jurisdiction: (1) defendant must have done some act or consummated some transaction within the forum; (2) the cause of action must have arisen out of defendant's activities within the forum, and (3) a general standard of consonance with "fair play" and "substantial justice," which is somewhat akin to the tests for the application of the doctrine of forum non conveniens.

Applying the standards just mentioned, it is readily apparent to us that the facts in this case support jurisdiction of our courts over defendant. This action, although involving two nonresidents, is based upon a promissory note, negotiated, executed and payable at a bank within this jurisdiction. Indeed, this State is in fact the only state that has any substantial connections with the disputed transaction. Compare DeLear v. Rozel Packing Corp. , 95 N.J. Super. 344 (App. Div. 1967).

N.J.S.A. 2A:14-1 establishes a general six-year statute of limitations for actions on a promissory note. Defendant argues that since an action on a demand note accrues from the date of delivery of the instrument, De Raismes v. De Raismes , 70 N.J. Law 15, 18-19 (Sup. Ct. 1903), aff'd 71 N.J. Law 680 (E. & A. 1905), and Denville Amusement Co., Inc. v. ...

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