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Grobark v. Addo Machine Co.

OPINION FILED MARCH 20, 1959

JOHN G. GROBARK ET AL., APPELLANTS,

v.

ADDO MACHINE COMPANY, INC., APPELLEE.



APPEAL from the Appellate Court for the First District; — heard in that court on appeal from the Superior Court of Cook County; the Hon. HARRY M. FISHER, Judge, presiding.

MR. CHIEF JUSTICE DAILY DELIVERED THE OPINION OF THE COURT:

Rehearing denied May 22, 1959.

The plaintiffs, John G. Grobark and John C. Grobark, filed their complaint in the superior court of Cook County against Addo Machine Company, Inc., herein referred to as Addo, and John P. Berg and Robert Hanson (who are not parties to this appeal). The plaintiffs asked judgment for $50,000 against the three defendants and $25,000 as punitive damages against the individual defendants.

Personal service was obtained on Addo in New York City by the sheriff of New York County. The plaintiffs assert jurisdiction over Addo under sections 16 and 17 of the Civil Practice Act (Ill. Rev. Stat. 1957, chap. 110, pars. 16, 17,) as a case arising out of the transaction of business within the State of Illinois.

Addo filed a special appearance for the sole and limited purpose of objecting to the jurisdiction of the court upon the ground that it had not transacted business within the State of Illinois, and that the matters complained of took place prior to January 1, 1956, the effective date of the amendatory act. The court, upon the complaint, special appearance and certain affidavits, entered an order quashing the service of summons upon Addo. Upon appeal, the Appellate Court affirmed the order of the superior court upon the ground that Addo was not transacting business in the State of Illinois and, therefore, did not submit to the jurisdiction of the courts of Illinois. We granted leave to appeal. Subsequent to the order of the trial court, this court decided, in Nelson v. Miller, 11 Ill.2d 378, 382, that the 1955 amendments to sections 16 and 17 apply to a cause of action brought after January 1, 1956, the effective date thereof, even though the action arose prior to such date.

From the allegations of the complaint and the affidavits submitted, it appears that from 1939 to 1953, plaintiffs purchased Addo-X adding machines from Addo for resale. In so doing, they developed a list of customers and dealers which, by the year 1953, had considerable trade value. In 1951 and 1952, because of the volume of plaintiffs' business, Addo made various efforts to obtain the names of plaintiffs' customers and dealers, and its president carried on negotiations with plaintiffs in Chicago to make them exclusive distributors of its adding machines for the Greater Chicago Trading Area, which constituted most of Illinois. Plaintiffs entered into a contract with Addo by which they were appointed its exclusive distributors for such area. The terms of the contract were contained in a letter, dated May 19, 1953, from Addo in New York City, to plaintiffs in Chicago, by which plaintiffs were given the right to purchase the machines at a stated discount from list price, with an additional five per cent discount to provide for dealer development. The letter provided for the cancellation of the exclusive distributorship by either party on three months notice, but in the event of cancellation, plaintiffs were to be given the privilege of continuing to purchase the machines on a dealer basis for a reasonable time. After considerable importuning, on July 24, 1953, plaintiffs gave Addo their list of customers and dealers upon assurance that Addo would fully protect their rights therein.

The complaint further alleges that plaintiffs thereafter entered into various sales efforts in the promotion and sale of Addo's product whereby valuable accounts were obtained; that from 1953 to 1955, plaintiffs purchased machines for resale in Illinois having a retail value in excess of $150,000; that on July 1, 1955, Addo cancelled plaintiffs' exclusive distributorship as of October 1, 1955, and appointed two of plaintiffs' former dealers, the individual defendants, Berg and Hanson, as its distributors, effective August 1, 1955, two months in advance of such effective termination date; that prior to such termination, Addo wrongfully used the plaintiffs' customer and dealer lists by giving them to its newly appointed distributors for the purpose of circularizing their appointment and obtaining plaintiffs' customers and dealers; and that on January 20, 1956, Addo refused to fill any orders of plaintiffs, despite the agreement made that they might continue to purchase machines directly at dealer discount for a reasonable time.

The issues in this case concern the applicability of the 1955 amendments to sections 16 and 17 of the Civil Practice Act. (Ill. Rev. Stat. 1955, chap. 110, pars. 16, 17.) As amended, those sections authorize the entry of judgments in personam on personal service of summons outside the State in enumerated classes of cases.

The applicable part of section 17 is as follows:

"(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of said acts:

"(a) The transaction of any business within this State; * * *

"(2) Service of process upon any person who is subject to the jurisdiction of the courts of this State, as provided in this section, may be made by personally serving the summons upon the defendant outside this State, as provided in this Act, with the same force and effect as though summons had been personally served within this State.

"(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.

"(4) Nothing herein contained limits or affects the right to serve any process in any other manner now or hereafter provided by law."

The pertinent part of section 16 is as follows:

"(1) Personal service of summons may be made upon any party outside the State. If upon a citizen or resident of this State or upon a person who has submitted to the jurisdiction of the courts of this State, it shall have the force and effect of personal service of summons within this ...


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