No. 82-134

I N THE SUPREME COURT O THE STATE O MONTANA F F

ROBERT S. BENHAM a s r e c e i v e r of MANUFACTURERS and WHOLESALERS I N D E M N I T Y EXCHANGE,

P l a i n t i f f and A p p e l l a n t ,

VS.

AGNES WOLTERMANN, GARY G . W L E M N OTR A N and RONALD LEE W L E M N , OTR A N

D e f e n d a n t s and Respondents.

Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County o f Y e l l o w s t o n e IIonorable R o b e r t Wilson, J u d g e p r e s i d i n g .

Counsel of Record:

For Appellant:

Hauf and F o r s y t h e , B i l l i n g s , Montana John Hollow, H e l e n a , Montana Sidney Delong a r g u e d , Denver, C o l o r a d o

For Respondents:

Thomas E . Boland a r g u e d , G r e a t F a l l s , Montana

Submitted: September 8, 1982

Decided: PTovenber 3 , 1982 M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n of the Court.

Appellant, Benham, filed a complaint in the Thirteenth

J u d i c i a l District i n and f o r t h e County o f Y e l l o w s t o n e , o n May 2 9 , 1 9 8 1 , t o c o l l e c t on a judgment t a k e n a g a i n s t r e s p o n d e n t s , t h e Woltermanns, i n Colorado on O c t o b e r 21, 1980. The W o l t e r m a n n s

l e t t h e C o l o r a d o j u d g m e n t be t a k e n a g a i n s t them by d e f a u l t . When the complaint on the judgment was filed in Montana District

Court, t h e W o l t e r m a n n s moved f o r summary j u d g m e n t . The Montana District Court granted the Woltermannls motion and held the

Colorado District C o u r t had no p e r s o n a l jurisdiction over the

Woltermanns and the judgment entered i n C o l o r a d o was v o i d and

c o u l d n o t be g i v e n f u l l f a i t h and c r e d i t i n t h e S t a t e of Montana. From t h e summary j udgment , Benham a p p e a l s . In 1974, the Woltermanns purchased a one-year insurance

p o l i c y i s s u e d by M a n u f a c t u r e r s and W h o l e s a l e r s I n d e m n i t y Exchange ( M & W ) t h r o u g h t h e H a r r i s I n s u r a n c e Agency o f Columbus, M o n t a n a .

M & W is a r e c i p r o c a l i n t e r i n s u r a n c e exchange organized under

s e c t i o n 10-13-101, e t seq., C o l o .Rev . S t a t . ( 1973 ) . Reciprocal interinsurance exchanges are recognized in Montana by section 33-5-101 e t seq., MCA. An i n t e r i n s u r a n c e e x c h a n g e is a method of

c r e a t i n g an insurance fund whereby t h e p o l i c y h o l d e r s , known as

subscribers, operate individually and collectively through an

attorney-in-fact to provide reciprocal insurance among them- selves. V i a a n exchange of i n d e m n i t y , e a c h s u b s c r i b e r is b o t h a n insured and an insurer of each of the other subscribers. E x c h a n g e premiums t a k e t h e form o f i n i t i a l d e p o s i t s made by each subscriber. A t t h e end o f each y e a r t h e s u b s c r i b e r s e i t h e r receive the excess of premiums paid over claims and expenses p a i d , or become c o n t i n g e n t l y l i a b l e f o r e x c e s s claims and expen- ses o v e r premiums p a i d . Thus, the subscribers can receive a

r e t u r n i n a good y e a r b u t may h a v e t o p a y a d d i t i o n a l premiums i n

a bad y e a r . In 1975, M & W1s claims and expenses exceeded the total amount o f premiums p a i d . T h u s , M & W was p l a c e d into receivership and the receiver, Benham, initiated lawsuits in the S t a t e of Colorado against former policyholders of M & W in order to c o l l e c t a n a s s e s s m e n t l e v i e d b y him. The a s s e s s m e n t a m o u n t s were

e q u a l t o o n e y e a r ' s a n n u a l premium p a i d b y t h e p o l i c y h o l d e r s f o r e a c h p o l i c y i n f o r c e d u r i n g 1974 or 1975.

The W o l t e r m a n n s , as p o l i c y h o l d e r s of M & W, were sued by

-- - S Benham,.- .-a s ----- Benham i n o n e s u c h a c t i o n e n t i t l e d , -R o b e r t --. - . Receiver of . - Manufacturers and W h o l e s a l e r s I n d e m n - Exchange - ity - Frank v. Whitson, -- - / b / a Jr. d A-1 A u t o - a n d Used C a r , .- -- Parts -- et al. - - This

a c t i o n was f i l e d i n t h e D i s t r i c t C o u r t , i n and f o r t h e C i t y and C o u n t y of D e n v e r , S t a t e of C o l o r a d o . The W o l t e r m a n n s were s e w e d w i t h a c o p y o f t h e summons and c o m p l a i n t by t h e S t i l l w a t e r C o u n t y

s h e r i f f on J u n e 3 , 1 9 8 0 . The W o l t e r m a n n s d i d n o t a p p e a r i n t h e Colorado action and the Colorado District Court entered a d e f a u l t judgment a g a i n s t them o n O c t o b e r 1, 1 9 8 0 , i n t h e amount

Benham t h e n f i l e d a c o m p l a i n t on t h e C o l o r a d o judgment i n t h e

D i s t r i c t C o u r t of the Thirteenth J u d i c i a l District, i n and for

the County o f Yellowstone, S t a t e of Montana. The W o l t e r m a n n s moved for summary judgment on the complaint . The Montana D i s t r i c t Court granted t h e m o t i o n f o r summary j u d g m e n t and h e l d

t h e C o l o r a d o D i s t r i c t C o u r t had no p e r s o n a l j u r i s d i c t i o n o v e r t h e

Woltermanns. In holding t h a t the judgment t a k e n by d e f a u l t in C o l o r a d o was v o i d , t h e c o u r t h e l d t h a t it c o u l d n o t be g i v e n f u l l

f a i t h and credit i n t h e S t a t e of Montana. Benham a p p e a l s t h e D i s t r i c t C o u r t ' s summary j u d g m e n t . The i s s u e r a i s e d o n a p p e a l is w h e t h e r t h e Montana D i s t r i c t

Court erred in granting the Woltermanns' motion for summary j u d g m e n t , and i n f i n d i n g t h a t t h e C o l o r a d o D i s t r i c t C o u r t d i d n o t

h a v e j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s when judgment was e n t e r e d

a g a i n s t them by d e f a u l t . Benham claims C o l o r a d o h a s jurisdiction of t h e Woltermanns

via section 13-1-124, Colo.Rev.Stat., which provides: " -- u r i s d i c t i-- - c o u r t s . J o n of (1) E n g a g i n g i n a n y a c t e n u m e r a t e d i n t h i s s e c t i o n by a n y p e r s o n , w h e t h e r o r n o t a r e s i d e n t o f t h e s t a t e of C o l o r a d o , e i t h e r i n p e r s o n o r b y a n a g e n t sub- m i t s such p e r s o n , and, i f a n a t u r a l person h i s p e r s o n a l r e p r e s e n t a t i v e to t h e j u r i s d i c t i o n of t h e c o u r t s of t h i s s t a t e c o n c e r n i n g any cause o f a c t i o n a r i s i n g from: "(a) t h e t r a n s a c t i o n of any b u s i n e s s w i t h i n this state;

"(d) c o n t r a c t i n g to i n s u r e any p e r s o n , pro- perty, o r r i s k residing o r located within t h i s s t a t e a t t h e t i m e of c o n t r a c t i n g . " Benham a r g u e s C o l o r a d o had j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s

b e c a u s e as s u b s c r i b e r s t o t h e i n s u r a n c e e x c h a n g e t h e W o l t e r m a n n s both transacted insurance business in Colorado through their appointed attorney-in-fact , and i n s u r e d r i s k s i n C o l o r a d o t h r o u g h

t h e exchange of indemnity. However, t h e C o l o r a d o long-arm stat-

u t e c a n n o t be u t i l i z e d t o o b t a i n p e r s o n a l j u r i s d i c t i o n w h e r e it would deny one's right to due process of law. In Safari Outfitters, Inc. v. S u p e r i o r Court (1968)r 167 Colo. 456, 448 P.2d 783, the C o l o r a d o Supreme C o u r t h e l d : "By e n a c t i n g the l a t t e r s t a t u t e s , o u r l e g i s l a t u r e i n t e n d e d to extend t h e j u r i s d i c -

t i o n of our courts to t h e f u l l e s t e x t e n t p e r m i t t e d by t h e due p r o c e s s c l a u s e of t h e United S t a t e s C o n s t i t u t i o n . " The U n i t e d States Supreme Court has addressed the question of personal

jurisdiction s e v e r a l times. I n I n t e r n a t i o n a l Shoe C o . v . State o f Washington ( 1 9 4 5 ) r 326 U.S. 310, 66 S.Ct. 1 5 4 , 9 0 L.Ed. 95, t h e Supreme C o u r t s t a t e d :

". . . due process requires only t h a t in order t o s u b j e c t a d e f e n d a n t to a j u d g m e n t - -r - i n pe sonam, i f he be n o t p r e s e n t w i t h i n t h e terri- - - t o r y o f t h e f o r u m , h e h a v e c e r t a i n minimum c o n t a c t s w i t h it s u c h t h a t t h e m a i n t e n a n c e of t h e s u i t does not offend ' t r a d i t i o n a l notions o f f a i r p l a y and s u b s t a n t i a l j u s t i c e . I " 3 26 U.S. a t 3 1 6 , 66 S . C t . a t 1 5 8 . The Supreme C o u r t f u r t h e r s t a t e d :

" W h e t h e r d u e p r o c e s s is s a t i s f i e d m u s t depend r a t h e r upon t h e q u a l i t y and n a t u r e of t h e a c t i v i t y i n r e l a t i o n t o t h e f a i r and o r d e r l y a d m i n i s t r a t i o n o f t h e laws w h i c h it was t h e p u r p o s e o f t h e d u e p r o c e s s c l a u s e to i n s u r e . " 326 U.S. a t 3 1 9 , 66 S . C t . a t 1 6 0 . The determination of whether there are s u f f i c i e n t minimum

contacts t o warrant personal j u r i s d i c t i o n h i n g e s upon t h e facts of each i n d i v i d u a l case. I n May v . Figgins (1980), - - .- . Mont.

-- - - . -. 607 P.2d 1132, 37 St.Rep. 493, t h i s Court traced the d e v e l o p m e n t and a p p l i c a t i o n o f t h e minimum c o n t a c t s r u l e i n t h e U n i t e d S t a t e s Supreme C o u r t . W e do n o t f i n d it n e c e s s a r y to ela-

b o r a t e on t h e r u l e h e r e . However , t h e f a c t s of - May, s u p r a , are

helpful in determining the outcome of the present case.

I n -- May, supra, F i g g i n s was a road c o n t r a c t o r who d i d r o a d

work i n M o n t a n a . P u r s u a n t to a c o l l e c t i v e b a r g a i n i n g c o m p l i a n c e

a g r e e m e n t w i t h t h e t e a m s t e r ' s u n i o n , F i g g i n s was r e q u i r e d to make c o n t r i b u t i o n s t o t h e T e a m s t e r s P e n s i o n T r u s t Fund a t t h e d e p o s i -

t o r y bank i n Denver, Colorado. Figgins s e n t t h i r t y - f i v e checks t o t h e t r u s t account i n Denver, Colorado. A f t e r an a u d i t , the administrator of the trust brought an action in Colorado to

c o l l e c t d e l i n q u e n t e m p l o y e r c o n t r i b u t i o n s from F i g g i n s . Figgins was s e r v e d w i t h a summons i n Montana, b u t he d i d n o t d e f e n d t h e

lawsuit and judgment was taken against him by d e f a u l t . The

plaintiff then filed a complaint on the judgment i n Montana. F i g g i n s moved f o r summary j u d g m e n t c l a i m i n g C o l o r a d o had n o p e r - s o n a l j u r i s d i c t i o n b u t t h e Montana D i s t r i c t C o u r t d e n i e d summary

judgment and found for the plaintiff. On appeal this Court

reversed the d e c i s i o n of the lower c o u r t b e c a u s e t h e r e was a n insufficient showing of the r e q u i s i t e minimum c o n t a c t s as man-

dated by the United States Supreme Court. This Court held although Figgins had s e n t checks t o a Colorado t r u s t account, t h e r e w a s no a c t b y w h i c h t h e d e f e n d a n t p u r p o s e l y a v a i l e d h i m s e l f o f t h e p r i v i l e g e of c o n d u c t i n g a c t i v i t i e s w i t h i n t h e f o r u m s t a t e , thus invoking the benefits and protections of i t s laws. This requirement w a s defined by t h e United States Supreme C o u r t in Hanson v . D e n k l a ( 1 9 5 8 ) , 357 U.S. 235, 78 S.Ct. 1 2 2 8 , 2 L.Ed.2d 1283. I n t h e p r e s e n t case we f i n d a similar f a c t u a l s i t u a t i o n . The

W o l t e r m a n n s p u r c h a s e d a n i n s u r a n c e p o l i c y from a n i n s u r a n c e a g e n t i n Columbus, Montana. They d i d n o t e v e n know t h e name of the company t h a t i s s u e d the policy. The W o l t e r m a n n s s i m p l y had n o

contact with the S t a t e of Colorado. This type of insurance

"company" is n o t w h a t was c o n t e m p l a t e d when t h e long-arm statutes were d r a f t e d . T h e s e s t a t u t e s were i n t e n d e d t o remedy t h e t y p e of situation that arose in MaGee v. International Life Ins. Co.

( 1 9 5 7 ) , 3 5 5 U.S. 2 2 0 , 78 S . C t . 1 9 9 , 2 L.Ed.2d 223. I n Magee, a b e n e f i c i a r y o f a l i f e i n s u r a n c e p o l i c y p u r c h a s e d by t h e d e c e d e n t

f r o m a n A r i z o n a company, b r o u g h t s u i t in California to enforce t h e terms o f t h e p o l i c y . The o n l y c o n n e c t i o n t h e i n s u r a n c e com- p a n y had w i t h t h e S t a t e of C a l i f o r n i a was t h a t it had m a i l e d a r e i n s u r a n c e c e r t i f i c a t e t o t h e d e c e d e n t i n C a l i f o r n i a and l a t e r delivered the insurance contract there. When t h e T e x a s c o u r t s

r e f u s e d t o g i v e f u l l f a i t h and c r e d i t t o a judgment t h e b e n e f i - c i a r y obtained i n C a l i f o r n i a on t h e g r o u n d s t h a t C a l i f o r n i a had no personal j u r i s d i c t i o n over the i n s u r a n c e company, the United S t a t e s Supreme C o u r t r e v e r s e d h o l d i n g t h e r e was p e r s o n a l juris- d i c t i o n i n C a l i f o r n i a b a s e d o n t h e minimum c o n t a c t s r a t i o n a l e of

I n t e r n a t i o n a l - oe, s u p r a . - Sh - The C o u r t s t a t e d : " I t c a n n o t be d e n i e d t h a t C a l i f o r n i a h a s a m a n i f e s t i n t e r e s t i n p r o v i d i n g e f f e c t i v e means of r e d r e s s f o r i t s r e s i d e n t s when t h e i r i n s u r e r s r e f u s e t o p a y claims. T h e s e resi- d e n t s would be a t a s e v e r e d i s a d v a n t a g e i f t h e y were f o r c e d t o f o l l o w a n i n s u r a n c e com- p a n y t o a d i s t a n t S t a t e i n o r d e r t o h o l d it l e g a l l y accountable. When claims were small o r moderate i n d i v i d u a l s could not a f f o r d t h e c o s t o f b r i n g i n g a n a c t i o n i n a f o r e i g n forum - t h u s i n e f f e c t making t h e company j u d g m e n t proof ." 355 U.S. a t 223, 7 8 S . C t . a t 201.

Obviously, t h i s is n o t t h e same t y p e o f s i t u a t i o n t h a t c o n f r o n t s u s i n t h e p r e s e n t case. Further, the record does not i n d i c a t e t h e Woltermanns pur- p o s e l y a v a i l e d t h e m s e l v e s of t h e p r i v i l e g e of c o n d u c t i n g act i v i - ties in the State of Colorado. As was stated above, the

W o l t e r m a n n s d i d n o t e v e n know t h e name o f t h e i n s u r a n c e company

t h a t issued the policy. T h u s , we f i n d t h e r e w a s n o t t h e r e q u i r e d

minimum c o n t a c t w i t h t h e S t a t e of C o l o r a d o n e c e s s a r y to g i v e t h a t s t a t e p e r s o n a l j u r i s d i c t i o n o f t h e W o l t e r m a n n s , n o r is t h e r e a n y showing that the Woltermanns purposely availed themselves to Colorado's j u r i s d i c t i o n .

Judgment is a£ f irmed .

W e concur:

Chief ~ u s ' t i c e cveeq

Justices

H o n o r a b l e L. C. G u l b r a n d s o n , D i s t r i c t Judge, s i t t i n g i n p l a c e o f M r . J u s t i c e J o h n C. Sheehy Mr. Justice Frank B. Morrison, Jr., dissenting: I respectfully dissent.

The majority correctly notes that Colorado's "long- arm" statute provides for jurisdiction where persons have contracted to insure any person, property, or risk located

within the State of Colorado. There can be little question that the defendants, Woltermann, contracted to insure other members of the exchange who resided in Colorado, and thereby fall within the ambent of Colorado's "long-arm" statute.

The majority apparently feels that Colorado's "long- arm" statute offends due process notions articulated in International Shoe Co. v. State of Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. However, since the Woltermanns contracted to insure people and risks in the State of Colorado, they did business within the State of

Colorado and no violence is done to due process concepts.

As the majority opinion points out, Woltermanns dealt through an insurance agency in Columbus, Montana. It is

true that Woltermanns may not have fully understood the

ramifications of their insurance contract. This is no

excuse. Under such circumstances, Woltermanns' remedy would be against their agent. The agent did, in fact, bind the

Woltermanns to an insurance contract insuring risks and persons in the State of Colorado thereby subjecting Woltermanns to the jurisdiction of Colorado courts. In my opinion, the majority here denies full faith and credit to a valid judgment of a

/

k D i s t r i c t Judge, s i t t i n g in place o f Mr. ustice John C. Sheehy