Green v. Advance Ross Electronics Corp.
56 Ill. Dec. 657, 427 N.E.2d 1203, 86 Ill.2d 431 (1981)
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Rule of Law:
A non-resident's out-of-state tortious acts do not constitute the 'commission of a tortious act within this State' under the Illinois long-arm statute merely because the economic consequences of those acts are felt by a corporation headquartered in Illinois.
Facts:
- Roy W. Green, Sr., a Texas resident, sold his Texas business to Advance Ross Corporation, a corporation with its headquarters in Illinois.
- Green, Sr. subsequently served as president of two of Advance Ross's subsidiaries and later as a consultant for one of them, Advance Ross Steel Corporation (Steel), a Texas corporation.
- All of Green, Sr.'s corporate responsibilities and activities for these companies were performed entirely outside of Illinois.
- Advance Ross alleged that while in Texas, Green, Sr. misappropriated corporate assets by improperly charging personal expenses, using corporate employees for personal work, and using corporate facilities without payment.
- The alleged misappropriations also included Green, Sr.'s receipt of an improper $26,500 'severance' payment, which was drawn from Steel's Texas bank account.
- Additionally, it was alleged that Green, Sr. improperly received salary payments while on disability and entered into an improper retainer agreement with a Texas law firm where his other son was a partner.
Procedural Posture:
- Roy W. Green, Jr. sued Advance Ross Electronics Corporation and its parent, Advance Ross Corporation, in the circuit court of Cook County, Illinois (a state trial court), for breach of contract.
- The defendant corporations filed a counterclaim against Green, Jr. and moved to join his father, Roy W. Green, Sr., as an additional counterdefendant.
- Green, Sr. filed a special and limited appearance to contest the Illinois court's personal jurisdiction over him.
- The circuit court denied the defendants' motion to join Green, Sr. as a party for lack of jurisdiction.
- The defendants (as appellants) appealed to the Illinois Appellate Court (an intermediate appellate court), which affirmed the circuit court's ruling.
- The defendants (as appellants) were granted leave to appeal to the Supreme Court of Illinois (the state's highest court).
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Issue:
Does a non-resident's commission of tortious acts entirely outside of Illinois, which cause only a resulting financial injury to a corporation headquartered in Illinois, constitute the 'commission of a tortious act within this State' for the purposes of the Illinois long-arm statute?
Opinions:
Majority - Justice Simon
No. A non-resident does not commit a tortious act 'within this State' simply because the economic consequences of out-of-state conduct are felt by an Illinois corporation. The court held that the statutory language requires a more direct connection to Illinois than the mere diminution of a resident corporation's funds. Relying on the 'last event' test from prior case law, the court reasoned that the situs of the wrong is where the last event necessary to render the actor liable occurs. In this case, all alleged tortious acts—the misappropriation of funds, labor, and facilities—occurred and were completed in Texas. Therefore, the injury was complete in Texas, and the subsequent financial loss felt in Illinois was too remote and attenuated to confer jurisdiction. The court rejected the 'economic consequence' theory, warning it would improperly open Illinois courts to any non-resident who causes financial harm to an Illinois resident, regardless of where the wrongful act took place. The court also dismissed the conspiracy theory, noting that the son's presence in Illinois was a result of him initiating a separate lawsuit and not because he committed tortious acts in Illinois as an agent for his father.
Analysis:
This decision significantly narrows the application of the 'tortious act' provision of the Illinois long-arm statute, clarifying that purely economic injury felt in Illinois is insufficient to establish jurisdiction over a non-resident whose wrongful conduct occurred entirely elsewhere. It establishes a clear precedent distinguishing between torts where the injury itself physically manifests in Illinois and those where only secondary financial repercussions are felt in the state. This prevents Illinois corporations from using their headquarters as a universal forum to sue non-resident employees or business partners for disputes arising from out-of-state activities, thereby reinforcing the principle that jurisdiction must be based on the defendant's conduct and connection with the forum state, not the plaintiff's location.
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