                                    No.    82-134

          I N THE SUPREME COURT O THE STATE O MONTANA
                                 F           F




ROBERT S. BENHAM a s r e c e i v e r of
MANUFACTURERS and WHOLESALERS
I N D E M N I T Y EXCHANGE,

                                              P l a i n t i f f and A p p e l l a n t ,

              VS.

AGNES WOLTERMANN, GARY G . W L E M N
                            OTR A N
and RONALD LEE W L E M N ,
                 OTR A N

                                              D e f e n d a n t s and Respondents.



Appeal from:        D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
                    I n and f o r t h e County o f Y e l l o w s t o n e
                    IIonorable R o b e r t Wilson, J u d g e p r e s i d i n g .

Counsel of Record:

      For Appellant:

           Hauf and F o r s y t h e , B i l l i n g s , Montana
           John Hollow, H e l e n a , Montana
           Sidney Delong a r g u e d , Denver, C o l o r a d o

      For Respondents:

           Thomas E .       Boland a r g u e d , G r e a t F a l l s , Montana




                                           Submitted:           September 8, 1982

                                              Decided:         PTovenber 3 , 1982
M r . J u s t i c e John        Conway H a r r i s o n d e l i v e r e d             t h e O p i n i o n of       the
Court.

        Appellant,         Benham,          filed        a    complaint              in    the       Thirteenth

J u d i c i a l District         i n and      f o r t h e County o f Y e l l o w s t o n e ,                o n May
2 9 , 1 9 8 1 , t o c o l l e c t on a judgment t a k e n a g a i n s t r e s p o n d e n t s , t h e
Woltermanns,          i n Colorado on O c t o b e r 21,                    1980.           The W o l t e r m a n n s

l e t t h e C o l o r a d o j u d g m e n t be t a k e n a g a i n s t them by d e f a u l t .                   When
the      complaint         on    the       judgment          was    filed           in    Montana         District

Court,       t h e W o l t e r m a n n s moved f o r summary j u d g m e n t .                     The Montana
District        Court       granted          the      Woltermannls motion                      and    held        the

Colorado District                C o u r t had        no p e r s o n a l     jurisdiction                 over    the

Woltermanns          and    the        judgment        entered          i n C o l o r a d o was v o i d           and

c o u l d n o t be g i v e n f u l l f a i t h and c r e d i t i n t h e S t a t e of Montana.
From t h e summary j udgment , Benham a p p e a l s .
        In   1974,      the      Woltermanns              purchased             a    one-year         insurance

p o l i c y i s s u e d by M a n u f a c t u r e r s and W h o l e s a l e r s I n d e m n i t y Exchange
( M & W ) t h r o u g h t h e H a r r i s I n s u r a n c e Agency o f Columbus, M o n t a n a .

M   &    W   is a r e c i p r o c a l       i n t e r i n s u r a n c e exchange organized                    under

s e c t i o n 10-13-101,             e t seq.,       C o l o .Rev . S t a t .       ( 1973 )   .     Reciprocal
interinsurance             exchanges          are      recognized           in       Montana         by     section
33-5-101       e t seq.,        MCA.       An i n t e r i n s u r a n c e e x c h a n g e is a method of

c r e a t i n g an   insurance            fund whereby t h e p o l i c y h o l d e r s ,                  known as

subscribers,          operate             individually          and      collectively                through       an

attorney-in-fact                to     provide        reciprocal            insurance              among      them-
selves.        V i a a n exchange of               i n d e m n i t y , e a c h s u b s c r i b e r is b o t h a n
insured        and    an        insurer        of      each        of     the        other         subscribers.
        E x c h a n g e premiums t a k e t h e form o f                  i n i t i a l d e p o s i t s made by
each subscriber.                A t t h e end o f         each y e a r t h e s u b s c r i b e r s e i t h e r
receive       the    excess          of    premiums          paid       over        claims and            expenses
p a i d , or become c o n t i n g e n t l y l i a b l e f o r e x c e s s claims and expen-
ses     o v e r premiums p a i d .              Thus,        the    subscribers                can receive          a

r e t u r n i n a good y e a r b u t may h a v e t o p a y a d d i t i o n a l premiums i n

a bad y e a r .
        In   1975,     M    &    W1s       claims       and     expenses             exceeded         the    total
amount o f premiums p a i d . T h u s , M                   &   W was p l a c e d              into receivership
and     the     receiver,         Benham,           initiated          lawsuits                in      the    S t a t e of
Colorado         against        former           policyholders            of       M       &       W    in    order     to
c o l l e c t a n a s s e s s m e n t l e v i e d b y him. The a s s e s s m e n t a m o u n t s were

e q u a l t o o n e y e a r ' s a n n u a l premium p a i d b y t h e p o l i c y h o l d e r s f o r
e a c h p o l i c y i n f o r c e d u r i n g 1974 or 1975.

      The W o l t e r m a n n s ,     as p o l i c y h o l d e r s      of     M       &       W,      were    sued     by

                                                        --
                                                         -          S Benham,.- .-a s -----
Benham i n o n e s u c h a c t i o n e n t i t l e d , -R o b e r t --. -
                                                                        .             Receiver
of
.
-
      Manufacturers             and       W h o l e s a l e r s I n d e m n - Exchange
                                                          -                 ity                               - Frank
                                                                                                              v.
Whitson,        -- - / b / a
                Jr. d               A-1     A u t o - a n d Used C a r ,
                                            .-
                                            --
                                                    Parts   --                                         et al.
                                                                                                       - -          This

a c t i o n was f i l e d i n t h e D i s t r i c t C o u r t ,            i n and f o r t h e C i t y and
C o u n t y of D e n v e r , S t a t e of C o l o r a d o .           The W o l t e r m a n n s were s e w e d
w i t h a c o p y o f t h e summons and c o m p l a i n t by t h e S t i l l w a t e r C o u n t y

s h e r i f f on J u n e 3 , 1 9 8 0 .           The W o l t e r m a n n s d i d n o t a p p e a r i n t h e
Colorado         action        and        the      Colorado           District              Court            entered     a
d e f a u l t judgment         a g a i n s t them o n O c t o b e r 1, 1 9 8 0 , i n t h e amount


      Benham t h e n f i l e d a c o m p l a i n t on t h e C o l o r a d o judgment i n t h e

D i s t r i c t C o u r t of     the Thirteenth J u d i c i a l District,                                i n and       for

the    County o f          Yellowstone,             S t a t e of      Montana.                  The W o l t e r m a n n s
moved      for     summary           judgment          on       the     complaint              .        The     Montana
D i s t r i c t Court granted             t h e m o t i o n f o r summary j u d g m e n t and h e l d

t h e C o l o r a d o D i s t r i c t C o u r t had no p e r s o n a l j u r i s d i c t i o n o v e r t h e

Woltermanns.            In holding               t h a t the     judgment          t a k e n by d e f a u l t           in
C o l o r a d o was v o i d , t h e c o u r t h e l d t h a t it c o u l d n o t be g i v e n f u l l

f a i t h and     credit        i n t h e S t a t e of           Montana.              Benham a p p e a l s t h e
D i s t r i c t C o u r t ' s summary j u d g m e n t       .
      The i s s u e r a i s e d o n a p p e a l             is w h e t h e r   t h e Montana D i s t r i c t

Court      erred      in    granting             the    Woltermanns'               motion               for     summary
j u d g m e n t , and i n f i n d i n g t h a t t h e C o l o r a d o D i s t r i c t C o u r t d i d n o t

h a v e j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s when judgment was e n t e r e d

a g a i n s t them by d e f a u l t .
      Benham claims C o l o r a d o h a s                   jurisdiction               of       t h e Woltermanns

via       section           13-1-124,               Colo.Rev.Stat.,                        which             provides:
               " -- u r i s d i c t i-- - c o u r t s .
                  J                   o n of                 (1) E n g a g i n g i n a n y
               a c t e n u m e r a t e d i n t h i s s e c t i o n by a n y p e r s o n ,
               w h e t h e r o r n o t a r e s i d e n t o f t h e s t a t e of
               C o l o r a d o , e i t h e r i n p e r s o n o r b y a n a g e n t sub-
               m i t s such p e r s o n , and, i f a n a t u r a l person h i s
               p e r s o n a l r e p r e s e n t a t i v e to t h e j u r i s d i c t i o n of
               t h e c o u r t s of t h i s s t a t e c o n c e r n i n g any cause
               o f a c t i o n a r i s i n g from:
               "(a)   t h e t r a n s a c t i o n of           any b u s i n e s s w i t h i n
               this state;



               "(d)       c o n t r a c t i n g to i n s u r e any p e r s o n , pro-
               perty, o r r i s k residing o r located within t h i s
               s t a t e a t t h e t i m e of c o n t r a c t i n g . "
       Benham a r g u e s C o l o r a d o had j u r i s d i c t i o n o v e r t h e W o l t e r m a n n s

b e c a u s e as s u b s c r i b e r s t o t h e i n s u r a n c e e x c h a n g e t h e W o l t e r m a n n s
both      transacted           insurance            business       in     Colorado        through        their
appointed attorney-in-fact                     ,   and i n s u r e d r i s k s i n C o l o r a d o t h r o u g h

t h e exchange of           indemnity.              However, t h e C o l o r a d o long-arm              stat-

u t e c a n n o t be u t i l i z e d t o o b t a i n p e r s o n a l j u r i s d i c t i o n w h e r e it
would      deny      one's          right      to     due     process        of    law.          In   Safari
Outfitters,          Inc.      v.     S u p e r i o r Court       (1968)r 167 Colo.               456,     448
P.2d     783,     the     C o l o r a d o Supreme C o u r t h e l d :               "By e n a c t i n g    the
l a t t e r s t a t u t e s , o u r l e g i s l a t u r e i n t e n d e d to extend t h e j u r i s d i c -

t i o n of     our courts            to t h e f u l l e s t e x t e n t p e r m i t t e d     by t h e due
p r o c e s s c l a u s e of    t h e United S t a t e s C o n s t i t u t i o n . "           The U n i t e d
States       Supreme        Court        has       addressed        the     question        of    personal

jurisdiction          s e v e r a l times.            I n I n t e r n a t i o n a l Shoe C o . v .       State
o f Washington           ( 1 9 4 5 ) r 326 U.S.           310, 66 S.Ct.           1 5 4 , 9 0 L.Ed.        95,
t h e Supreme C o u r t s t a t e d :

                ". . .      due process requires only t h a t in order
               t o s u b j e c t a d e f e n d a n t to a j u d g m e n t - -r -
                                                                              i n pe
               sonam, i f he be n o t p r e s e n t w i t h i n t h e terri-
               - -
               t o r y o f t h e f o r u m , h e h a v e c e r t a i n minimum
               c o n t a c t s w i t h it s u c h t h a t t h e m a i n t e n a n c e of
               t h e s u i t does not offend ' t r a d i t i o n a l notions
               o f f a i r p l a y and s u b s t a n t i a l j u s t i c e . I "     3 26
               U.S. a t 3 1 6 , 66 S . C t . a t 1 5 8 .
The Supreme C o u r t f u r t h e r s t a t e d :

               " W h e t h e r d u e p r o c e s s is s a t i s f i e d m u s t depend
               r a t h e r upon t h e q u a l i t y and n a t u r e of t h e
               a c t i v i t y i n r e l a t i o n t o t h e f a i r and o r d e r l y
               a d m i n i s t r a t i o n o f t h e laws w h i c h it was t h e
               p u r p o s e o f t h e d u e p r o c e s s c l a u s e to i n s u r e . "
               326 U.S. a t 3 1 9 , 66 S . C t . a t 1 6 0 .
         The        determination          of     whether        there        are        s u f f i c i e n t minimum

contacts t o warrant personal                           j u r i s d i c t i o n h i n g e s upon t h e             facts
of       each i n d i v i d u a l case.            I n May v .         Figgins           (1980), -          - .-
                                                                                                               .   Mont.

-- - -    .   -.    607     P.2d      1132, 37 St.Rep. 493, t h i s                         Court      traced        the
d e v e l o p m e n t and a p p l i c a t i o n o f          t h e minimum c o n t a c t s r u l e i n t h e
U n i t e d S t a t e s Supreme C o u r t .             W e do n o t f i n d it n e c e s s a r y to ela-

b o r a t e on t h e r u l e h e r e .            However , t h e f a c t s of -
                                                                               May,                     s u p r a , are

helpful             in      determining           the        outcome         of        the       present           case.

         I n --
             May,          supra,      F i g g i n s was a       road       c o n t r a c t o r who d i d r o a d

work i n M o n t a n a .            P u r s u a n t to a c o l l e c t i v e b a r g a i n i n g c o m p l i a n c e

a g r e e m e n t w i t h t h e t e a m s t e r ' s u n i o n , F i g g i n s was r e q u i r e d to make
c o n t r i b u t i o n s t o t h e T e a m s t e r s P e n s i o n T r u s t Fund a t t h e d e p o s i -

t o r y bank i n Denver,                  Colorado.           Figgins s e n t t h i r t y - f i v e checks
t o t h e t r u s t account i n Denver, Colorado.                                      A f t e r an a u d i t ,      the
administrator                of    the     trust        brought        an     action            in    Colorado        to

c o l l e c t d e l i n q u e n t e m p l o y e r c o n t r i b u t i o n s from F i g g i n s .              Figgins
was s e r v e d w i t h a summons i n Montana, b u t he d i d n o t d e f e n d t h e

lawsuit             and     judgment       was     taken       against        him           by d e f a u l t .       The

plaintiff             then     filed       a     complaint        on    the       judgment            i n Montana.
F i g g i n s moved f o r summary j u d g m e n t c l a i m i n g C o l o r a d o had n o p e r -
s o n a l j u r i s d i c t i o n b u t t h e Montana D i s t r i c t C o u r t d e n i e d summary

judgment             and     found       for     the    plaintiff.                On     appeal        this        Court

reversed            the     d e c i s i o n of    the     lower c o u r t b e c a u s e              t h e r e was a n
insufficient                showing of           the    r e q u i s i t e minimum c o n t a c t s as man-

dated          by     the     United       States        Supreme        Court.                This     Court        held
although            Figgins        had    s e n t checks         t o a Colorado t r u s t account,
t h e r e w a s no a c t b y w h i c h t h e d e f e n d a n t p u r p o s e l y a v a i l e d h i m s e l f
o f t h e p r i v i l e g e of c o n d u c t i n g a c t i v i t i e s w i t h i n t h e f o r u m s t a t e ,
thus          invoking       the     benefits          and    protections              of     i t s laws.           This
requirement w a s defined                        by t h e United            States           Supreme C o u r t        in
Hanson v .            D e n k l a ( 1 9 5 8 ) , 357 U.S.         235,       78 S.Ct.           1 2 2 8 , 2 L.Ed.2d

1283.
         I n t h e p r e s e n t case we f i n d a similar f a c t u a l s i t u a t i o n .                         The

W o l t e r m a n n s p u r c h a s e d a n i n s u r a n c e p o l i c y from a n i n s u r a n c e a g e n t
i n Columbus, Montana.                      They d i d n o t e v e n know t h e name of                      the
company t h a t i s s u e d           the policy.                The W o l t e r m a n n s s i m p l y had n o

contact        with      the     S t a t e of          Colorado.          This     type     of     insurance

"company" is n o t w h a t was c o n t e m p l a t e d when t h e long-arm                          statutes
were d r a f t e d .     T h e s e s t a t u t e s were i n t e n d e d t o remedy t h e t y p e of
situation         that        arose        in     MaGee     v.     International          Life     Ins.      Co.

( 1 9 5 7 ) , 3 5 5 U.S.       2 2 0 , 78 S . C t .        1 9 9 , 2 L.Ed.2d        223.       I n Magee, a
b e n e f i c i a r y o f a l i f e i n s u r a n c e p o l i c y p u r c h a s e d by t h e d e c e d e n t

f r o m a n A r i z o n a company, b r o u g h t                 s u i t in California to enforce
t h e terms o f t h e p o l i c y .               The o n l y c o n n e c t i o n t h e i n s u r a n c e com-
p a n y had w i t h t h e S t a t e of               C a l i f o r n i a was t h a t it had m a i l e d a
r e i n s u r a n c e c e r t i f i c a t e t o t h e d e c e d e n t i n C a l i f o r n i a and l a t e r
delivered         the    insurance contract                      there.      When t h e T e x a s c o u r t s

r e f u s e d t o g i v e f u l l f a i t h and c r e d i t t o a judgment t h e b e n e f i -
c i a r y obtained         i n C a l i f o r n i a on t h e g r o u n d s t h a t C a l i f o r n i a had
no personal j u r i s d i c t i o n over the                      i n s u r a n c e company,     the United
S t a t e s Supreme C o u r t r e v e r s e d h o l d i n g t h e r e was p e r s o n a l               juris-
d i c t i o n i n C a l i f o r n i a b a s e d o n t h e minimum c o n t a c t s r a t i o n a l e of

I n t e r n a t i o n a l - oe, s u p r a .
                      - Sh -                        The C o u r t s t a t e d :
               " I t c a n n o t be d e n i e d t h a t C a l i f o r n i a h a s a
               m a n i f e s t i n t e r e s t i n p r o v i d i n g e f f e c t i v e means
               of      r e d r e s s f o r i t s r e s i d e n t s when t h e i r
               i n s u r e r s r e f u s e t o p a y claims.                T h e s e resi-
               d e n t s would be a t a s e v e r e d i s a d v a n t a g e i f
               t h e y were f o r c e d t o f o l l o w a n i n s u r a n c e com-
               p a n y t o a d i s t a n t S t a t e i n o r d e r t o h o l d it
               l e g a l l y accountable.              When claims were small
               o r moderate i n d i v i d u a l s could not a f f o r d t h e
               c o s t o f b r i n g i n g a n a c t i o n i n a f o r e i g n forum
               - t h u s i n e f f e c t making t h e company j u d g m e n t
               proof    ."      355 U.S. a t 223, 7 8 S . C t . a t 201.

Obviously,         t h i s is n o t t h e same t y p e o f s i t u a t i o n t h a t c o n f r o n t s
u s i n t h e p r e s e n t case.
       Further,         the    record           does     not     i n d i c a t e t h e Woltermanns pur-
p o s e l y a v a i l e d t h e m s e l v e s of       t h e p r i v i l e g e of c o n d u c t i n g act i v i -
ties      in    the      State        of        Colorado.            As   was     stated         above,      the

W o l t e r m a n n s d i d n o t e v e n know t h e name o f                 t h e i n s u r a n c e company

t h a t issued the policy.                      T h u s , we f i n d t h e r e w a s n o t t h e r e q u i r e d

minimum c o n t a c t w i t h t h e S t a t e of C o l o r a d o n e c e s s a r y to g i v e t h a t
s t a t e p e r s o n a l j u r i s d i c t i o n o f t h e W o l t e r m a n n s , n o r is t h e r e a n y
showing      that     the    Woltermanns         purposely   availed   themselves   to
Colorado's j u r i s d i c t i o n .

      Judgment is a£ f irmed           .


W e concur:



    Chief ~ u s ' t i c e
                                cveeq




    Justices

H o n o r a b l e L. C. G u l b r a n d s o n ,
D i s t r i c t Judge, s i t t i n g i n p l a c e
o f M r . J u s t i c e J o h n C. Sheehy
Mr. Justice Frank B. Morrison, Jr., dissenting:
         I respectfully dissent.

         The majority correctly notes that Colorado's "long-
arm" statute provides for jurisdiction where persons have
contracted to insure any person, property, or risk located

within the State of Colorado.                   There can be little question
that the defendants, Woltermann, contracted to insure other
members of the exchange who resided in Colorado, and thereby
fall within the ambent of Colorado's "long-arm" statute.

        The majority apparently feels that Colorado's "long-
arm" statute offends due process notions articulated in
International Shoe Co. v. State of Washington (1945), 326
U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.                   However, since the
Woltermanns contracted to insure people and risks in the
State of Colorado, they did business within the State of

Colorado and no violence is done to due process concepts.

        As the majority opinion points out, Woltermanns dealt
through an insurance agency in Columbus, Montana.                   It is

true that Woltermanns may not have fully understood the

ramifications of their insurance contract.                  This is no

excuse.        Under such circumstances, Woltermanns' remedy would
be against their agent.                   The agent did, in fact, bind the

Woltermanns to an insurance contract insuring risks and
persons in the State of Colorado thereby subjecting Woltermanns
to the jurisdiction of Colorado courts.
        In my opinion, the majority here denies full faith and
credit to a valid judgment of a



                    /

       k
D i s t r i c t Judge, s i t t i n g in place
o f Mr. ustice John C. Sheehy
