The opinion of the court was delivered by: Decker, District Judge.
This case involves a lawsuit by Magnaflux Corporation, a
Delaware corporation licensed to do business and with its
principal place of business in the State of Illinois,
(hereinafter referred to as Magnaflux). Magnaflux sues Dr.
Friedrich Foerster (hereinafter referred to as Foerster) for
breach of a contract executed November 5, 1954, and subsequently
amended July 14, 1961.
Foerster is a citizen of the Federal Republic of Germany, and
he maintains his residence in the City of Reutlingen in West
The complaint is founded on the diversity jurisdiction of this
Court. Equitable relief is sought against all four defendants,
including a declaratory judgment that the contract between
Foerster and Magnaflux prevents Foerster from selling his
products to Forster/Hoover, an injunction of Foerster from making
any further sales to Forster/Hoover, an injunction of Hoover Ball
and Forster/Hoover and Hentschel from further inducing Foerster
to further breach the contract, and for an accounting for damages
against all of the defendants.
This matter has come on for decision on the following motions:
(1) A motion filed by the defendants Foerster, Forster/Hoover
and Hentschel to dismiss the action pursuant to Federal Rule 12
on the ground that the Court lacks jurisdiction over the person
of these defendants.
(2) A motion filed by Hoover Ball to dismiss the action or in
the alternative to quash the return of the service of summons on
the ground that the Court lacks jurisdiction over the person of
(3) All four defendants also moved to dismiss on the ground
that the complaint fails to state a claim on which relief can be
The motions to dismiss for want of jurisdiction over the
persons of the defendants will be discussed first. The defendants
have filed a number of affidavits in support of their motions to
dismiss for want of jurisdiction. Plaintiff has filed
counter-affidavits in opposition to the same motions. Depositions
have been taken by the plaintiff and by the defendants, and
references have been made by both plaintiff and defendants to
statements contained therein relating to the issue of
Disposition of these motions requires individual treatment of
the service of summons on each of the four defendants, and
accordingly, because of the complex facts surrounding the
service, each will be dealt with individually.
Foerster was served, by special order of court under Federal
Rule 4(e), personally at his home in Germany. Foerster's service
is sought to be upheld under Section 17(1)(a) of the Illinois
Civil Practice Act (Illinois Revised Statutes, Chapter 110, §
17(1)(a)). Service was effected on Foerster by one Roland
Willmitzer, who was specially appointed by this Court to serve
Foerster argues that to subject him to service of process
pursuant to the Illinois statute would: (1) Violate Rule 4(f)
which prohibited service of process out of the forum state, which
in this case is Illinois, unless a statute of the United States
so provided; and (2) would be improper even under the Illinois
statute, since he had not "transacted any business" in Illinois,
and to subject him to extra-territorial service of process
without his having had more substantial minimal contacts with the
State of Illinois would violate both the due process and the
commerce clauses of the United States Constitution.
Foerster's contacts with the State of Illinois are as follows:
(1) Prior to April 24, 1952, Foerster did maintain office
facilities in Illinois to market his own products by himself.
Subsequent to that date, he removed all of his own facilities
pursuant to the contract with plaintiff Magnaflux, whereby it was
given the exclusive distribution rights in the United States to
(3) Paragraph 22 of this contract, which is attached as Exhibit
B to the complaint, and which remains unamended, reads:
"This agreement shall be construed in accordance with
the laws of the State of Illinois."
(4) On July 14, 1961, the 1954 contract was amended (the
execution and delivery of this amendment took place entirely in
Foerster now contends that the 1954 contract was cancelled and
superseded by the 1961 contract. However, paragraph U. of the
1961 amendment reads:
"Except as specifically amended by the foregoing
paragraphs A. through T. inclusive, said agreement of
November 5, 1954, shall remain unchanged and, as thus
amended, shall be and remain in full force and effect
between the parties hereto."
The Court finds that the 1954 contract was not cancelled, as
Foerster contends, but rather it was amended.*fn1
(5) Performance of this amended contract has continued, at
least in part, in Illinois down to the present.
(6) Negotiations for the 1954 agreement took place at
plaintiff's place of business in Illinois, with Foerster
personally present and actively engaged in the negotiations from
October 27, 1954, through November 5, 1954.
(7) As a part of the immediate performance of this 1954
contract, plaintiff delivered to Foerster a check for $22,
000.00, which Foerster cashed on November 6, 1954, in Chicago, by
endorsing it to The First National Bank of Chicago.
(8) During the period from 1951 to 1962, Foerster spent a total
of approximately 54 days at the plaintiff's plant in Illinois.
These 54 days were divided among thirteen separate visits, at all
of which Foerster discussed problems of manufacture and sale of
Foerster equipment with plaintiff's engineers in furtherance of
the 1954 agreement, as amended in 1961, and under which the
plaintiff now sues. The last of these visits was on March 15 and
16, 1962, when Foerster discussed performance of the contract
with Magnaflux and with some of the other defendants.
(1) As for Foerster's contention that Rule 4(f) prohibits
reference to the law of Illinois in order to sustain service of
process made extra-territorially, reference to the amendments to
the Rules of Federal Procedure which became effective July 1,
1963, should suffice.
Rule 4(f) has now been clarified to specifically authorize the
service of process on an out-of-state individual or
corporation, "* * * in the manner prescribed by the law of the
state in which the district court is held * * *," as outlined in
The Supreme Court Advisory Committee on Civil Rules in a
comment states that this clarification did not change the prior
law, but rather more explicitly stated and adopted "the salutary
results" of those cases which sustained out-of-state service
pursuant to statute such as Section 17 of the Illinois Civil
by "reading paragraph (7) as not limited by subdivision (f)."
It is also interesting to notice in the comments of the Supreme
Court Advisory Committee on Civil Rules relating to paragraphs
(e), (f) and (i) of Rule 4, it is stated that "the Party seeking
to make the service may proceed under the Federal or the State
law, at his option." Further, regarding service on a defendant in
a foreign country, specifically referring to the Illinois Civil
Practice Act, the Supreme Court Advisory Committee expressly
commends the manner in which service was made on Foerster here:
"Foreign service by personal delivery on individuals
and corporations, partnerships and associations,
provides for a manner of service that is not only
traditionally preferred, but also is most likely to
lead to actual notice."
And, as regards the order of this Court specifically appointing
Willmitzer to make service in Germany, the Supreme Court says:
"* * * by permitting the court by order to tailor the
manner of service to fit the necessities of a
particular case or the peculiar requirements of the
law of the country in which the service is to be
made * * this alternative increases the possibility
that the plaintiff will be able to find a process
server who can proceed unimpeded in the foreign
country * * *."*fn3
Therefore, I hold that Rule 4(d)(7) prior to the July 1, 1963,
amendment, rather than Rule 4(f), establishes the mode of
effecting service on a defendant outside the state in which this
Court sits. Therefore, we must look to the law of Illinois to
determine whether service of process on Foerster was sufficient
to give this Court jurisdiction over his person.
(2) In regard to Foerster's contention that even if Section 17
of the Illinois Civil Practice Act does apply, its requirements
have not been satisfied, I think the law is to the contrary.
There have been numerous Illinois and Seventh Circuit cases on
this question, all of which I believe establish beyond any doubt
that Foerster's contacts with Illinois are substantial enough to
him to service of process consistent with due process.
Rather than summarize all of these cases, I will refer to the
latest Illinois authority, which exhaustively reviews all of the
previous authorities. The case is Kropp Forge Co. v. Jawitz,
37 Ill. App.2d 475, 186 N.E.2d 76 (1962). Briefly, there the
plaintiff and the defendant conducted negotiations by
correspondence by mail between New York and Chicago; on January
15, 1958, defendant came from New York to plaintiff's plant in
Chicago, where he spent one morning conversing with plaintiff's
employees, inspecting plaintiff's plant facilities, and measuring
the equipment which was the subject of the contract under
negotiation. The Court concluded that by his acts in the
plaintiff's plant on that one morning, the defendant accepted
plaintiff's offer and a contract was consummated. On the strength
of these "contacts" with Illinois, the Court held that the United
States Supreme Court test, as set forth in Hanson v. Denckla,
357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), was satisfied,
and that service was properly made on defendant in New York
pursuant to Sections 16 and 17 of the Illinois Civil Practice
Act. The test, as quoted in Kropp Forge, is:
"`* * * it is essential in each case that there be
some act by which the defendant purposefully avails
itself of the privilege of conducting activities
within the forum State, thus invoking the benefits
and protections of its laws.'" (At p. 479, 37
Ill.App.2d, at p. 78, 186 N.E.2d.)
The defendant in that case argued that one visit alone to
Illinois does not satisfy the "minimum contacts" test for
jurisdiction. The Court distinguished all previous cases which
held that "contracting from outside the State" was not
transacting business in Illinois sufficient to give an Illinois
court jurisdiction over the person of the defendant.
The Court held that the performance of one of the four
jurisdictional acts set out in Section 17 by a non-resident or by
his agent, "while physically present in Illinois," is essential.
The one morning visit to the plaintiff's plant by the defendant
at which, it was held, defendant by his conduct accepted
plaintiff's offer and formed a contract, was further held
sufficient by the Illinois Court to satisfy the test of the
"transaction of any business within this State" as set out in
Section 17(1)(a) of the Illinois Civil Practice Act.
Certainly, considering the findings set out above regarding
Foerster's contacts with Illinois, service of process on Foerster
in Germany pursuant to the Illinois statute should be upheld
under the Kropp Forge case.
Hoover Ball is a Michigan corporation which is not licensed to
do business in the State of Illinois, but which does maintain a
sales office for soliciting orders for its products in Illinois.
No contracts are made at this office and all orders are forwarded
to Michigan where they are accepted or rejected. Hoover Ball's
business can be best described by quoting from an advertising
pamphlet published by it, which is attached as an exhibit to the
"Diller Affidavit" filed by Magnaflux:
"Hoover Ball and Bearing Company serves more than
5,000 customers with a wide variety of industrial and
consumer products. The company is a well-known
producer of precision metal balls, ball and roller
bearings, cold drawn steel and wire, automotive and
furniture seat springs, blowmolded plastic
containers, bulk material handling systems and metal
containers, electric motor commutators, plumbing and
automotive die castings and special machine tools."
Hoover Ball was served at this office which it maintains at
8581 South Chicago Ave., Chicago, Illinois. Plaintiff Magnaflux
contends that by having this office in Chicago, Hoover Ball was
"doing business" in Illinois and therefore subject to service at
that office. Plaintiff Magnaflux also argues that Hoover Ball
"transacted business" under Section 17 of the Illinois
Civil Practice Act, which would alternatively make it subject to
service of process.
Hoover Ball moves to dismiss the complaint or to quash service
of summons on the grounds that:
(1) The Chicago office is used merely for soliciting orders for
acceptance at its home office in Michigan, and that no orders
solicited in Illinois are accepted in the Chicago office;
(2) All of the products so ordered and accepted are delivered
in Illinois by shipment from Michigan or Tennessee in interstate
commerce only, f.o.b. the points of shipment;
(3) No discussions or transaction of any kind relating to
Foerster, Hentschel or Forster/Hoover have occurred in the
Chicago office which Hoover Ball maintains;
(4) None of the salesmen nor the office girl who use Hoover
Ball's Chicago office have ever had any contact with Foerster or
the other defendants; and
(5) Hoover Ball is not qualified as a foreign corporation to do
business in Illinois.
The contacts of Hoover Ball with Illinois are as follows:
(1) It maintains an office in Chicago.
(2) It staffs this office with one office girl, Miss Killeen,
who acts as a secretary-receptionist, and with the Sales Manager
of the Central Zone of the United States, Mr. McGregor, and
several other salesmen who have intermittently used the office
(Messrs. Merren, Lawrence and Maschek). The Central Zone
encompasses eleven midwestern states, including Illinois.
(3) In addition to working as salesmen, the employees at the
Chicago office perform the additional activities of furnishing
engineering services for customers, handling complaints of
customers regarding the performance of Hoover ...