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Gordon v. Tow





Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.


Plaintiff, Jerome J. Gordon, brought a two-count action against defendant, Robert Y. Tow, the general partner of Matrix Alpha Ltd. (Alpha), a Rhode Island limited partnership. Plaintiff sought rescission of his purchase of a limited partnership interest in Alpha, alleging violations of the Illinois Security Law of 1953 (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137 et seq.) and common law fraud. Tow, a Rhode Island resident, moved to dismiss the complaint for lack of in personam jurisdiction. The trial court sustained this motion, holding that Tow had not invoked the benefits and protections of Illinois law and was not engaged in the "transaction of business within this State" within the meaning of the Illinois "long-arm" statute. (Ill. Rev. Stat. 1983, ch. 110, par. 2-209(a)(1).) Gordon appeals, contending that Tow was subject to in personam jurisdiction in Illinois.

We affirm.


Robert Tow (Tow) is the president of Matrix Publications, Inc. (Matrix), a Rhode Island corporation located in Providence, Rhode Island, which is primarily engaged in the publication of photography books. Tow, a resident and citizen of Rhode Island, has no office, place of business, bank account, employee or agent in Illinois. In October 1981 Tow and Matrix formed the Alpha limited partnership under the laws of Rhode Island. The limited partnership agreement provides that "the rights and liabilities of the parties shall be determined in accordance with the applicable provisions of the laws of the State of Rhode Island, and this Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations of such state." The performance of Alpha's business was intended to take place in its principal place of business in Providence, Rhode Island. According to Tow, he intended to restrict the sales of interests in Alpha to Rhode Island residents in order to avoid subjecting those interests to the laws of other States.

On March 29, 1982, Gordon, domiciled in Chicago, purchased a limited partnership interest in Alpha for $20,000. On May 2, 1984, Gordon filed a two-count complaint for rescission, alleging that this investment was a "security" within the meaning of the Illinois Security Law of 1953 (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.2-1) which was not registered in Illinois prior to its sale (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.5) entitling Gordon to void the transaction (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 137.13). Gordon further alleged that a prospectus provided by Tow in connection with the sale contained numerous misstatements and omissions which amounted to fraud. Gordon asserted that he had been solicited in Illinois by Tow to purchase the limited partnership interest.

On June 11, 1984, Tow filed a special and limited appearance and a motion to dismiss Gordon's complaint for lack of personal jurisdiction. Attached to his motion was Tow's affidavit, which described his version of the events preceding the sale of the shares in Alpha. According to Tow, he met Gordon in 1980. Gordon obtained his name from Charles Traub, a New York City art instructor who served as a consultant editor for Matrix. At this initial meeting, and at a subsequent meeting in March 1981, Gordon visited Tow in Rhode Island and proposed that Matrix publish Gordon's photography book, but Tow declined the offers both times. Tow's affidavit stated that in the fall of 1981, after the Alpha partnership had been formed, Tow received a telephone call from Traub. Although Traub was not associated with or employed by Alpha, he advised Tow that he, Traub, mentioned Alpha to Gordon, that Gordon seemed interested in investing in the partnership, and that Gordon would subsequently contact Tow. Gordon later telephoned Tow in Rhode Island, expressed a desire to invest in Alpha, requested materials regarding Alpha and again discussed the possibility of Matrix distributing his book. Tow claimed that he did not solicit or communicate with Gordon regarding Gordon's investment in Alpha prior to this telephone conversation. At no time was Tow or any of his agents physically present in Illinois in connection with Tow's transactions with Gordon. Pursuant to Gordon's request, Tow forwarded an Alpha prospectus and other materials to Gordon's investment advisors. Subsequently, Tow mailed other materials regarding Alpha from Rhode Island to Chicago, but all materials which were mailed into Illinois were sent at the request of Gordon or his agents.

After March 22, 1982, Tow received, in Rhode Island, a subscription agreement, which was signed by Gordon, accompanied by a $20,000 check, offering to become a limited partner in Alpha. According to Tow, when he received this agreement, it bore only Gordon's signature, and subsequently was signed and accepted by Tow in Rhode Island.

In opposition to Tow's motion to dismiss, Gordon presented his own affidavit as well as those of his two investment advisors and his attorney. According to Gordon's affidavits, Traub introduced him to Tow in 1981 in New York City and they "discussed the possibility of [Gordon's] investment in the limited partnership [Tow] was forming in exchange for [Tow's] publication and/or distribution of [Gordon's] photographic book." Gordon told Tow that he lived in Chicago and that Tow should contact his advisors and attorney in Chicago. In October 1981, Gordon's advisor received, in Illinois, an Alpha prospectus and limited-partnership subscription agreement for a limited partnership interest in Alpha. The affidavits submitted by Gordon further reveal that between November 1981 and March 1982, Tow and Gordon's advisors and attorney were in frequent contact through telephone calls and written correspondence concerning the negotiations for Gordon to invest in Alpha and Matrix's distribution of Gordon's photography book. Accompanying these affidavits were financial materials and advertisements pertaining to Matrix and Alpha which had been sent to Illinois from Rhode Island as well as correspondence between the participants to the negotiations.

Based on the parties' pleadings, documents, affidavits and written and oral argument, the trial court dismissed Gordon's complaint for lack of in personam jurisdiction on December 5, 1984. A timely notice of appeal was filed.


The sole issue on appeal is whether the trial court correctly determined that the facts of this case were insufficient to subject Tow to in personam jurisdiction under the "long-arm statute," section 2-209(a)(1) of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-209(a)(1)), which provides in relevant part:

"(a) Any person, whether or not a citizen or resident of the State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person * * * to the jurisdiction of the courts of this State as to ...

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