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Froning & Deppe Inc. v. Continental Illinois National Bank & Trust Co.

decided: December 9, 1982.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 81 C 2678 -- Bernard M. Decker, Judge.

Wood and Eschbach, Circuit Judges, and Bartels, Senior District Judge.*fn* Eschbach, Circuit Judge, concurring.

Author: Wood

WOOD, Circuit Judge.

This is an appeal from a district court order granting the third party defendant appellee's motion to dismiss the third party complaint against it for lack of personal jurisdiction. Because we conclude that the district court properly applied the "minimum contacts" test of International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945), and its progeny in dismissing the third party complaint, we affirm.


This case arises from the allegedly forged and unauthorized endorsement of six checks, totaling $229,077.28. The payee designated on the checks was Froning and Deppe, an Iowa corporation with its principal place of business in Iowa, and the checks were drawn upon an account at Continental Illinois Bank and Trust Co. (Continental) in Chicago, Illinois. The alleged forger cashed the checks at South Story Bank & Trust (South Story) in Slater, Iowa. South Story then remitted the checks for collection and credit to its clearing house bank, Valley National Bank (Valley National) in Des Moines, Iowa. Subsequently, Valley National remitted the checks for collection and credit to Continental in Illinois.

The payee Froning and Deppe initially brought suit against South Story and Continental in Iowa state court. Although Continental was dismissed from that case pursuant to the national bank exclusive venue provision of 12 U.S.C. § 94, South Story is still a party to that suit. Froning & Deppe, as required by 12 U.S.C. § 94, brought suit against Continental in federal district court in Illinois. Continental thereafter impleaded Valley National, alleging breach of warranty of good title under Illinois law, and in turn Valley National named South Story as a third party defendant, alleging breach of warranty of good title and conversion under Iowa law. South Story, served at its Iowa offices pursuant to the Illinois long-arm statute, entered a limited appearance to contest the validity of personal jurisdiction and moved to dismiss Valley National's complaint pursuant to Fed. R. Civ. P. 12(b) (3).

In ruling on South Story's motion, the district court relied upon a series of undisputed facts. First, the court noted, South Story maintains only two offices, both in Iowa, and the bank does not have any agents or offices in Illinois. Additionally, none of South Story's officers have traveled into Illinois for the purpose of transacting business within the last five years. Although South Story does maintain a bank account at Continental for limited tax and bond purposes, the court found, and Valley National concedes, that the existence of this account is irrelevant to the jurisdictional inquiry here. Finally, the court found, all of South Story's activities in connection with the transactions at issue here took place in Iowa; South Story had no contact with Continental, instead dealing solely with Valley National, another Iowa bank. The district court did not consider whether these facts supported exercise of jurisdiction under the Illinois Long Arm Statute, for it found these same facts insufficient to support the finding required under International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945), that South Story possessed "minimum contacts" with Illinois sufficient to avoid offense to traditional notions of fair play and substantial justice if jurisdiction over it were maintained.

In concluding that the assertion of personal jurisdiction over South Story would have offended due process, the court confronted two arguments put forth by Valley National: first, that, since South Story knew that the final destination of the checks was Continental in Illinois, it should have reasonably anticipated being haled into court there, thus satisfying the International Shoe test as elaborated in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980); and second, that since any possible claim by South Story against Continental would have had to have been filed in Illinois and would have relied upon Illinois law, South Story invoked the benefits and protections of Illinois law, thus satisfying the gloss on International Shoe added by Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958). The district court concluded that neither argument was persuasive, and dismissed the complaint. Valley National appealed.


A. Foreseeability

As to Valley National's first argument based on the "foreseeability" of the checks' arrival in Illinois, the district court noted that similar reasoning was flatly rejected by the Supreme Court in World-Wide Volkswagen, where a plaintiff sought jurisdiction over a non-resident defendant automobile dealer in connection with a claim for injuries sustained in the forum state, on the theory that the non-resident could have foreseen that the automobile, transitory by its nature, would have caused injury there. The district court noted the Court's holding that

the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.

World-Wide Volkswagen, 444 U.S. at 297. The district court concluded that, in view of the enormous volume of interstate check processing which every bank performs on a daily basis, it would be unreasonable to charge each bank with the knowledge that it may at any time be called to answer in the courts of any ...

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