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Root Jewelers Inc. v. JDR Contracting Inc.

Decided: May 17, 1989.

ROOT JEWELERS, INC., PLAINTIFF-RESPONDENT,
v.
JDR CONTRACTING, INC., DEFENDANT, AND DONALD BOUFFARD AND JOSEPH BOUFFARD, JOINTLY, SEVERALLY, INDIVIDUALLY OR IN THE ALTERNATIVE, DEFENDANTS-APPELLANTS



On appeal from Superior Court of New Jersey, Law Division, Burlington County.

King, Brody and Ashbey. The opinion of the court was delivered by Brody, J.A.D.

Brody

This is an action based upon a $42,829.50 judgment by default that plaintiff obtained against appellants in Virginia. Appellants were the principals and officers of defendant JDR Contracting, Inc., a defunct New Jersey corporation. They contend that the judgment is not entitled to full faith and credit because Virginia did not have personal jurisdiction over them. Judge Gottlieb disagreed and entered a summary judgment for plaintiff. We affirm.

JDR had contracted with plaintiff, a retail jeweler, to renovate its store in Virginia. The only time appellants were in Virginia was when they attended a meeting at the construction site to resolve a dispute regarding the progress of the work. The Virginia action followed after the parties were unable to settle the matter.

The basis for appellants' liability under Virginia law was JDR's failure to obtain from Virginia a certificate of authority to do business there. Va.Code ยง 13.1-119 (since repealed) provided in relevant part:

If a foreign corporation transacts business in this State without a certificate of authority, its directors, officers and agents doing such business shall be jointly and severally liable for any contracts made or to be performed in the State. . . .

Although on its face the statute appears to render all officers of a corporation personally liable when their corporation transacts business in Virginia without a certificate of authority, the Virginia Supreme Court has interpreted the statute more narrowly:

While the language of the statute may be sufficiently comprehensive to embrace all officers, agents, and employees of such company, no matter where they reside, it is also, we think, under well-settled rules of interpretation,

susceptible of the construction that it was only intended to include such officers, agents, and employees as are or have been in the State aiding in carrying on the prohibited business. [ Richmond Standard Steel Spike and Iron Co. v. Dininny, 105 Va. 439, 53 S.E. 961 (1906).]

That interpretation has more recently been restated in Miller and Rhoads v. West, 442 F. Supp. 341, 345 (E.D.Va.1977):

On its face, the original law did not appear to place any restrictions upon which officers and directors could be held personally liable. [Footnote omitted.] However, in 1906 the Virginia Supreme Court held that [the statute] has no application to officers, agents and employees who are nonresidents of the State and who have never been present in the State engaged in carrying on the business of the company, but only includes such officers, agents and employees as are, or have been, in this State aiding in carrying on the prohibited business.

Thus by entering Virginia to advance the "carrying on" of the prohibited contract, appellants, though nonresidents of that State, became personally liable as ...


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