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Green v. Advance Ross Electronics Corp.





APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH M. WOSIK, Judge, presiding.


This appeal raises the question of whether a parent corporation that is headquartered in Illinois and its subsidiary that is incorporated in Illinois can properly invoke the jurisdiction of an Illinois court to adjudicate their claim against a nonresident whose acts in Texas allegedly injured the corporations in Illinois. The corporations, Advance Ross Corp. (Advance Ross) and Advance Ross Electronics Corp. (Electronics), are defendants and counterplaintiffs in a breach of contract action brought against them by Roy W. Green, Jr., the former president of Electronics and Advance Ross Steel Corp. (Steel). *fn1 The counterplaintiffs seek to hold Green's father, Roy W. Green, Sr., liable along with his son for various allegedly tortious acts. Green, Sr., a Texas resident, entered a special and limited appearance to contest the Illinois court's jurisdiction over him. The trial court denied Advance Ross' and Electronics' motion to join him as counterdefendant. The counterplaintiffs appeal from that order pursuant to Supreme Court Rule 304 (Ill. Rev. Stat. 1978, ch. 110A, par. 304). We affirm.

To determine whether the jurisdictional "minimum contacts" exist between Green, Sr., and Illinois, it is necessary to examine the parties' relationships as well as the circumstances which gave rise to the litigation. Green, Jr., who filed the original complaint, and his father, are both Texas residents. Counterplaintiff-defendant Electronics, an Illinois corporation, has its manufacturing plant in Texas. Electronics is a wholly owned subsidiary of the other counterplaintiff, Advance Ross, a Delaware corporation with its principal place of business in Illinois.

Green, Jr., brought a breach of contract action in the Illinois circuit court pursuant to a clause in his employment agreement with Electronics that required Illinois law to be applied to the construction of the agreement. The complaint charges that Green, Jr., was wrongfully terminated, without the contractual 180-day notice, on October 8, 1978.

Central to this controversy is Green, Jr.'s payment of 6 months' "termination pay" to his father, who had been employed as a consultant to Steel from 1970 until August 8, 1978. His son discharged him on that date at the order of Harve Ferril, who is the president of Advance Ross. Green, Jr. (who had succeeded his father as president of Electronics and Steel in 1975), objected to Ferril's order, but discharged his father anyway. Upon doing so, however, he paid him $26,751 as "severance" pay — an amount equal to six months' salary. Ferril subsequently told Green, Jr., to return the money, but he refused. Consequently, Green, Jr., was discharged, an event that he views as an act of retaliation.

Counterplaintiffs, in contrast, characterize the payment as Green, Jr.'s "unauthorized gift to his father." In count I of their counterclaim, moreover, they charge both Greens with various acts constituting breaches of fiduciary relationship in their former employment capacities. These acts include the following:

(1) [Green Sr. and his son] "caused counterplaintiffs' employees to work for the benefit of the Roy W. Green Company during the normal business day;

(2) caused work to be performed on behalf of the Roy W. Green Company on the premises and facilities of counterplaintiff's corporations without payment to counterplaintiffs;

(3) caused excessive and improper salary to be paid Roy W. Green in that he received both full salary and disability insurance payments;

(4) caused an unauthorized and improper gift from the corporate funds of Advance Ross Steel Corporation * * * to be given to Roy W. Green in the amount of $26,751."

The counterplaintiffs contend that the Illinois long-arm statute (Ill. Rev. Stat. 1977, ch. 110, par. 17(1)(b)) reaches Green, Sr., because he committed the above "tortious acts," the effect of which financially injured the parent corporation, Advance Ross, in Illinois. Alternatively, the counterplaintiffs argue that Green, Jr., acted as his father's agent or co-conspirator. The theory is that, since jurisdiction properly lies over Green, Jr., his contacts with Illinois can be imputed to his father by virtue of their joint activities.


Counterplaintiffs' premise concerning the existence of Green, Sr.'s contacts with Illinois is based upon (1) the allegedly adverse economic impact that his acts had on Advance Ross, the Delaware corporation headquartered in Illinois; (2) the affiliation of Green, Sr., with Electronics, the subsidiary that is incorporated in Illinois; and (3) the interrelationship of his acts with those of his son, Green, Jr. We believe that these ...

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