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Materials Research Corp. v. Metron Inc.

Decided: December 4, 1973.

MATERIALS RESEARCH CORPORATION, PLAINTIFF-APPELLANT,
v.
METRON, INC., A CORPORATION OF THE STATE OF NEW JERSEY AND CHRISTOPHER F. MALO, JR., DEFENDANTS-RESPONDENTS



For reversal and remandment -- Justices Jacobs, Hall, Sullivan, Pashman and Clifford. For affirmance -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

The narrow issue posed by this appeal is whether the application of the foreign corporation qualification provision of New Jersey's statutes to plaintiff's activities unconstitutionally burdens interstate commerce. If so, the court below was in error in dismissing the complaint "on the ground that plaintiff has not obtained a certificate of authority to transact business in this State." That dismissal was on defendants' motion supported by affidavit, in response to which plaintiff filed an affidavit, and it was on this sketchy material that the trial court reached its decision. The Appellate Division, in an unreported opinion, affirmed the dismissal, agreeing with the trial court's finding that the corporate plaintiff was transacting business of an intrastate character in New Jersey "in a degree sufficient to invoke the injunction of N.J.S.A. 14A:13-11 denying such corporation access to our courts." We granted plaintiff's petition for certification, 63 N.J. 329 (1973). Our review of the meager record leads us to an opposite conclusion from that reached below.

Plaintiff, Materials Research Corporation (hereinafter MRC), is a corporation of the State of New York, with its principal office in Orangeburg, New York. It brings this business tort action against Metron, Inc., a New Jersey corporation, and Christopher F. Malo, Jr., an officer, director and founder of Metron and formerly an officer of MRC. Malo resides in New Jersey. It is alleged that defendants have maliciously interfered with the contractual and advantageous relations of plaintiff with its key personnel, inducing them to breach their employment contracts with the plaintiff by resigning and entering the employ of defendant Metron. It is further alleged that "plaintiff has suffered * * * loss of business and profits, diminished sales, low morale among the remaining key personnel, loss of standing and status in its field with its customers and will be put to great expense to recruit and train replacement personnel." The complaint seeks an injunction, an accounting, compensatory

and punitive damages, and a declaration that certain employment contracts are void.

While the answer does not set up any separate defense with respect to the plaintiff's capacity to maintain any action in this State, the dismissal motion previously referred to was timely brought, with affidavits being filed on behalf of all parties. After oral argument the trial court concluded, as indicated above, that plaintiff is transacting business in this State and that to maintain the suit it should first obtain the appropriate certificate within sixty days.*fn1 Plaintiff not having availed itself of the opportunity so afforded, an Order of Dismissal was filed after the sixtieth day.

Plaintiff manufactures and sells scientific equipment, instruments, and ceramics, and it processes metals. It has offices throughout the world. Its products are sold directly to customers throughout this country, including New Jersey. It does not maintain any New Jersey office. The record contains an annual report and financial statement for fiscal 1970, indicating that sales for the year preceding the commencement of the instant action amounted to approximately $5,700,000. According to defendants MRC's New Jersey orders approximated $250,000., or about 4.4% of the total sales.

We have only an incomplete picture of MRC's marketing system, from which it appears that there are eight "sales districts" manned by "sales engineers" who solicit orders on MRC's behalf. They do not "write" or accept orders, but orders obtained by them are subject to approval of the regional sales manager or a corporation officer of the plaintiff at its New York office.

While plaintiff's affidavits in response to the moving papers indicate that it has about thirty New Jersey customers and

about thirty to thirty-five "prospective" customers*fn2 in this State, defendant Metron asserts that in 1970 MRC sold its products to about one hundred New Jersey customers. The trial judge did not make any finding of fact on this point, presumably being of the view that this unresolved discrepancy did not affect his conclusion.

The title of sales engineer appears to be a somewhat pretentious one. We take it that the function of persons holding this title is simply to explain the plaintiff corporation's product lines to customers and potential customers. While Metron says that MRC's New Jersey sales engineer received orders and sells products, apparently the trial court did not take this as an allegation of activity beyond solicitation, in view of his finding that MRC orders originating in New Jersey were subject to acceptance by the home office.

The New Jersey sales engineer lives in New Jersey and his sales region includes this State. He is paid on a salary and commission basis and visits the home office once a week to complete his paper work. MRC denies that the sales engineer uses his residence as an office on the corporation's behalf and says it does not reimburse him for the use of his home. Orders are telephoned to the New York office and most of them are received on customer order forms. Invoicing and receipt of payment takes place in New York. Goods are shipped f.o.b Orangeburg, New York. MRC maintains a listing in the white pages of the Bergen County telephone directory, with the address listed as ...


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