Whether or not service of process must be made upon a West German corporation according to the "Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters," 20 U.S.T. 361-367 (1969), is the issue presented by a motion to quash service made under the long-arm rule, R. 4:4-4(c)(1), upon its wholly-owned subsidiary incorporated under the laws of Delaware.
This is a product liability action in which plaintiff Edwin Cintron, alleges injuries arising from the negligent design, manufacture, testing and inspection of an envelope machine. It is alleged that the machine had been purchased by his employer from defendant W & D Machinery Company, Inc., a Delaware corporation, with its principal office in Overland, Kansas, the distributor of the machine allegedly manufactured by its parent Winkler & Dunnebier, a West German corporation. Service was made upon both defendants at Overland, Kansas, by registered mail, return receipt, pursuant to an order entered October 7,
1980 on the ex parte application of plaintiff. W & D Machinery Company, Inc., filed an answer on its own behalf.
Counsel for the West German corporation, appearing specially, conceded that it is the parent company but argued that the subsidiary is not the agent for service of process. Moreover, counsel argues that provisions of the long-arm rule, R. 4:4-4(c)(1), have not been complied with in that service by mail is not, in the language of the cited rule, "consistent with due process of law," which, counsel contends, requires service according to the terms of the treaty referred to as the Hague Convention.*fn1 Article 1 of the treaty, promulgated February 10, 1969, and in effect between the United States and the Federal Republic of Germany on July 26, 1979, reads, in part:
The present Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.
Counsel for plaintiff submits that the present case is not one which presents an "occasion to transmit" process "for service abroad" for the reason that the presence in the United States of a wholly-owned subsidiary distributor of the product in question provides an independent basis for service. In short, plaintiff contends that there is no need to resort to the treaty and that the prerequisites for invoking the provisions of the long-arm rule have been satisfied.
The implications of the parent-subsidiary relationship as it affects compliance with due process in the service of process have been addressed by several courts. It should be noted at the outset that in none of the reported New Jersey cases was the Hague Convention invoked. The decisions invariably turned upon a resolution of the question of "doing business" and the "minimum contacts" criteria. See World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980), for most recent application of the minimum contacts standard followed in NJM, Inc. v. Nationwide Fund Raisers, Inc. , 180 N.J. Super. 100 (Law Div.1981).
In Coons v. Honda Motor Co., Ltd. of Japan , 176 N.J. Super. 575 (App.Div.1980), the Japanese defendant, served through a law firm "acting as its agent" in Washington, D.C., lost its motion to dismiss which it based upon lack of minimum contacts with this forum. That suit was also brought not only against the Japanese corporation but also against its wholly-owned subsidiary which was authorized to do business in New Jersey. Of significance is the comment that the presence of "minor functionaries" such as the several New Jersey Honda dealers did not constitute them as agents for the service of process. 176 N.J. Super. at 583. See "Survey of Recent Developments in New Jersey Law," 11 Seton Hall L.Rev. 639, 641 (1981).
In Van Eeuwen v. Heidelberg Eastern, Inc. , 124 N.J. Super. 251 (App.Div.1973), aff'g Certisimo v. Heidelberg Co. , 122 N.J. Super. 1 (Law Div.1972), a German corporation moved to quash service of process in a product liability action arising from the use of a printing press it manufactured and distributed through defendant third-party plaintiff Heidelberg Eastern, Inc. The German corporation disclaimed that the distributor, incorporated in Delaware, was its agent, pointing out that it did not own any financial interest in the distributor. Judge Byrne, in the Law Division, analyzed the relationship of manufacturer-distributor as detailed in Hoagland v. Springer , 75 N.J. Super. 560 (App.Div.1962), aff'd 39 N.J. 32 (1962), in Olmstead v. Brader Heaters, Inc. , 5 Wash.App. 258, 487 P. 2d 234 (App.Ct.1971), aff'd 80 Wash. 2d 720, 497 P. 2d 1310 (Sup.Ct.1972), in Gray v. American ...