International Shoe V. Washington - Ruling

Ruling

The issue involved a determination of the level of connection that must exist between a non-resident corporation and a state in order for that corporation to be sued within that state. The Supreme Court, in an opinion by Chief Justice Harlan Fiske Stone (and in which Justice Robert Jackson did not participate), held that in view of 26 U.S.C. § 1606(a), providing that no person shall be relieved from compliance with a state law requiring payments to an unemployment fund on the ground that he is engaged in interstate commerce, the fact that the corporation is engaged in interstate commerce does not relieve it from liability for payments to the state unemployment compensation fund. The activities in behalf of the corporation render it amenable to suit in courts of the State to recover payments due to the state unemployment compensation fund. The activities in question established between the State and the corporation sufficient contacts or ties to make it reasonable and just, and in conformity to the due process requirements of the Fourteenth Amendment, for the State to enforce against the corporation an obligation arising out of such activities. In such a suit to recover payments due to the unemployment compensation fund, service of process upon one of the corporation's salesmen within the State, and notice sent by registered mail to the corporation at its home office, satisfies the requirements of due process. The tax imposed by the state unemployment compensation statute—construed by the state court, in its application to the corporation, as a tax on the privilege of employing salesmen within the State—does not violate the due process clause of the Fourteenth Amendment. In reaching its decision the Court stated that throughout American history, the jurisdiction of courts to render judgment in personam has been grounded on their de facto power over the defendant's person. Hence, his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that, in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Justice Hugo Black wrote a separate opinion, agreeing with the outcome in this case, but contending that the Court has excessively restricted the power of states to find jurisdiction over companies doing business therein.