Full opinion text
OPINION AND ORDER THEIS, Chief Judge. This matter comes before the Court on the motion of defendant Superior Overseas Development Company Ltd. (hereinafter “Superior Overseas”) to dismiss this action pursuant to Rule 12(b)(2), Federal Rules of Civil Procedure, for lack of personal jurisdiction. This Court has previously disposed of two motions of defendant Superior Oil Company (hereinafter “Superior”) in an order dated January 5, 1978, which set for hearing the instant motion of Superior Overseas. This hearing was held on January 19, 1978. Counsel for both sides were then granted additional time within which to file supplemental briefs on the personal jurisdiction question before the Court. Having examined the parties’ briefs and having heard their oral argument, this Court finds that the matter is now ready for resolution. This is a declaratory judgment action brought for common law breach of contract. Subject matter jurisdiction is predicated on the diversity statute, 28 U.S.C. § 1332(a). Both defendants are Nevada corporations. Superior has its principal place of business in Texas, and Superior Overseas has its principal place of business in London, England. Superior is authorized to do, and for many years has done, extensive business in Kansas in the oil and gas industry. It appears that plaintiffs obtained service of process in Kansas on Superior’s resident agent for service. Superior does not contest personal jurisdiction. Superior Overseas was served in Houston, Texas, pursuant to the Kansas long-arm statute. K.S.A. § 60-308(b) (1976), and Rule 4(e), Federal Rules of Civil Procedure. The dispute between the parties arises from the contractual arrangements made by plaintiffs to finance the exploration, development and production of License P-244, which covers certain blocks in the North Sea area of the United Kingdom continental shelf. Plaintiffs hold a percentage working interest in the license which conveys rights for oil and gas exploration in the North Sea. Plaintiffs and defendants have entered into agreements to provide financing for the development of the Clinton interest in License P-244, to provide between the parties for the distribution of the earnings expected to flow from that development, and to provide for control of the voting rights attending plaintiffs’ interest in the development of P-244. Plaintiffs are allegedly under contractual obligations to the other owners of interest in the same areas. Plaintiffs allege that the defendants’ refusal to participate in decisions made by the majority interest holders of P-244 has jeopardized the plaintiffs’ license interest and has exposed plaintiffs to severe monetary penalties and possible forfeiture of their interest. Plaintiffs allege that defendants’ failure to participate in the development of exploratory wells, in conformity with the majority vote of interest holders, is a material breach of their agreement with the defendants which excuses them from performance of their obligations under the contract. Plaintiffs allege in a separate count of their complaint that the defendants’ conduct constitutes a default under the terms of the contracts and permits plaintiffs to terminate or rescind the agreements between the parties. Plaintiffs seek declaratory relief in a judgment ruling that the defendants’ rights or interests under the contracts have terminated. Superior Overseas has moved to dismiss on grounds of lack of personal jurisdiction. Superior Overseas has been served pursuant to the Kansas long-arm statute as one who has contracted with a Kansas resident for partial performance in the state. In the alternative, Superior Overseas has been served as one who transacts business in the forum through the agent or instrumentality of its parent corporation, Superior. Plaintiffs also allege that Superior Overseas is the mere “alter ego” of its parent and that jurisdiction over Superior, without more, provides jurisdiction over its absent subsidiary. Plaintiffs therefore urge this Court on corporate law principles to pierce the corporate veil between the two affiliated defendant corporations. Defendants have responded that the two corporations have scrupulously maintained their separate corporate identities and that plaintiffs have demonstrated none of those facts necessary for a finding that the corporate veil may be pierced. Superior Overseas further contends that it lacks contacts with the forum sufficient to render proper this Court’s exercise of jurisdiction over its person. Superior Overseas contends that it lacks any physical contact with Kansas and that its sole relationship with this forum is a signed contract which it mailed into the state for acceptance and final execution here by one of the plaintiffs. Superior Overseas strenuously argues that this sole act is insufficient to render the exercise of personal jurisdiction consistent with traditional notions of fair play and substantial justice as set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). This Court cannot agree. Relying on the concepts of fundamental fairness and substantial justice, this Court" is compelled to hold that personal jurisdiction over Superior Overseas is both authorized by statute and properly within the confines of the due process clause of the Fourteenth Amendment. This Court specifically dedines to reach the issue whether the corporate veil between the two defendants may be pierced. That issue may be appropriately reserved, if necessary, until the trial on the merits of this action. This Court today concludes that alter ego principles no longer play any proper role in the analysis of the constitutional propriety of the exercise of jurisdiction properly invoked by service authorized by statute. This Court further concludes that because of the broad wording of the Kansas long-arm statute, and because of the liberal interpretation to be given its literal reach, alter ego principles play no viable role in the construction and applicability of that statute and consequently do not restrict those who might be reached for service thereunder. The Court thus decides two jurisdictional questions. The Court first holds that the long-arm statute, which authorizes service on anyone who commits certain acts “through an agent or instrumentality,” permits service of process on a non-resident corporation which has in the forum an affiliated corporation that has committed one of those acts at the direction or for the benefit of the non-resident corporation. The statutory language “agent or instrumentality” extends service beyond non-resident corporations who act merely as “alter egos” of an affiliated corporation in the forum and thus permits service on the non-resident corporation without a determination whether the corporate veil might be pierced. This Court concludes that the Kansas legislature did not intend to restrict the reach of the long-arm statute only to those who commit the enumerated acts through a corporate “alter ego,” a concept which derived from principles of corporate law unrelated to the limitations on quasi-sovereign states to issue service of process beyond their territorial borders. The Court secondly holds that formal separation of corporate identities does not raise a constitutional barrier to the exercise of jurisdiction over a non-resident whose affiliated corporation has a substantial nexus with the forum. This follows from the conclusion that the time-honored doctrine of Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925), must no longer be followed. The Court finds Cannon to be limited in scope or modified in holding by International Shoe and its progeny. Reliance on the rule of Cannon is unsound when extraterritorial service is authorized by statute and when personal jurisdiction is predicated on the due process standards of International Shoe. The Court concludes that the constitutional analysis under International Shoe permits consideration of a non-resident’s relationship with an affiliated corporation in the forum, notwithstanding their proper maintenance of separate corporate identities. The Court may also consider as “affiliating circumstances” with the forum the contacts or activities of the affiliated corporation itself where those activities are intended to bestow a benefit upon the nonresident corporation that the latter has purposefully sought or might reasonably foresee. The relative significance of these factors are dependent upon the facts of each given case. They assume greater significance where, as here, the domestic corporation’s activities are substantially related to the obligations giving rise to plaintiffs’ claims against the non-resident subsidiary corporation. The Court considers these contacts relevant to any realistic judgment of the relative fairness of requiring Superior Overseas to defend itself in this forum on the contracts in question. It considers these activities of the parent corporation notwithstanding any lawful and viable separation of corporate identities maintained between the defendants. The Court therefore finds personal jurisdiction over Superior Overseas proper on two grounds. Because of the relationship and conduct established between the parent and subsidiary corporation regarding the contracts in question, the Court may properly conclude that Superior Overseas has transacted business in this forum through the instrumentality of its parent corporation, Superior. Service of process is therefore proper under K.S.A. § 60-308(b)(1). The Court further finds that Superior Overseas has contracted with a Kansas resident for partial performance in the state, thus furnishing the basis for authorized service under K.S.A. § 60-308(b)(5). The exercise of the jurisdiction so invoked is constitutionally unobjectionable when supported by the relationship of Superior Overseas with its parent in the forum and by the activities of Superior in the forum that foreseeably inured to its subsidiary’s benefit. Further considerations regarding the fair and orderly administration of the laws, as mandated by International Shoe, compel. this Court to conclude that the exercise of jurisdiction here is not inconsistent with the requirements of the Fourteenth Amendment as enunciated in International Shoe and Shaffer. FACTUAL BACKGROUND The facts of the instant case that are material to the jurisdictional issue are not substantially in dispute. All parties place great reliance on similar factual developments to reach opposite conclusions on the propriety of jurisdiction. Before developing that factual background, however, the Court must detail the elaborate and complex intercorporate relationships which give rise to the contracts in question and which identify each of the parties before the Court. Plaintiff Energy Reserves Group, Inc. is the successor corporation of the Clinton Oil Company, and the rights and obligations of the two are the same with regard to the issues in this action. For the sake of simplicity and clarity in the discussion of the contracts in question, Energy Reserves Group, Inc. is hereinafter identified as “Clinton.” It is a Delaware corporation with its principal place of business in Kansas. Plaintiff Clinton International Corporation (hereinafter “Clinton International”) is also a Delaware corporation with its principal place of business in Kansas. Clinton owns 90% of the outstanding capital stock of Clinton International, and Richard Volk, who testified at the hearing on the instant motion, is president of both corporations. Plaintiff Clinton International (England) Ltd. (hereinafter “Clinton England”) is a wholly owned subsidiary of Clinton International and has its principal places of business in Kansas and London. A related corporation, but not a party here, is Clinton International North Sea Ltd. (hereinafter “Clinton North Sea”), also a wholly owned subsidiary of Clinton International and a corporation organized under the laws of the United Kingdom. As noted above, Superior is a Nevada corporation which has done extensive business in Kansas in the oil and gas industry. It is authorized to do business here and it owns numerous interests in oil and gas fields in the state. Its principal place of business is in Houston, Texas. Superior Overseas is also a Nevada corporation and a wholly owned subsidiary of Superior and has its principal place of business in London. Clinton North Sea was the owner of the P-244 license interest in offshore oil development which is the subject of this controversy. Clinton North Sea owned that interest subject to the terms of an operating agreement with the other percentage interest holders in the same license. In a contract in March, 1972, Clinton North Sea agreed to transfer to Clinton England a substantial beneficial interest in the proceeds from the license development. Clinton England essentially agreed that it would perform and discharge all the obligations of Clinton North Sea under the latter’s license, subject to the operating agreement which Clinton North Sea had signed with the majority percentage interest holders of the same license. This type of intercorporate organization is apparently common in the international industry of oil and gas exploration, development and production. For purposes of tax advantages it is deemed advisable to have a separate foreign corporation own the license interest for oil development. The Court was also informed at the hearing that the laws of the United Kingdom, as well as those of many other foreign countries, require or encourage the holders of oil license interests to be domestic corporations of the particular nation. Clinton North Sea is such a corporation. Clinton International is a holding company specifically designed to own Clinton’s various foreign oil companies that hold licenses for oil exploration in different countries around the world. Clinton International is, of course, a subsidiary of Clinton and they both share the same offices in Kansas. In this manner Clinton itself ultimately retains control over its percentage interest in the P-244 license in the North Sea area. Mr. Volk also indicated that in a like manner Clinton controls other licenses in different countries around the world. As the defendants have illustrated in an exhibit before the Court, Clinton sought financial backing to develop: “[its] holdings in the North Sea . [permitting Clinton] through its subsidiary Clinton International . . [to] participate in the drilling of a well . in the United Kingdom sector of the North Sea.” (Clinton Oil Company, Letter to Shareholders, Defendants’ Exhibit A.) Superior first offered that financial backing. Joe Reid, Vice President of Superior and President of Superior Overseas, first telephoned Volk from Houston, Texas, in September, 1973, to explore the possibilities of participation in Clinton’s interest in P-244 in the North Sea area. Reid expressed an interest in meeting Volk regarding Clinton’s North Sea interests, and Reid traveled to Wichita, Kansas, and met with Volk on October 31, 1973. Reid signed into the office as a representative of Superior. Negotiations continued between the two corporations and culminated in a meeting in June, 1974, between Volk and Reid in Houston, where both parties reached an agreement regarding Superior’s participation in the North Sea development. Volk’s notes from that meeting reflect that he and Joe Reid, of Superior, agreed that “Superior assumes Clinton’s full obligation” for exploration, production, and development under Clinton’s license interests. Superior received as consideration for financing the project a “call on Clinton’s share of the oil.” The notes further reflect that: “Clinton will assign its interest in the license to Superior or, if possible, sufficient ownership of the subsidiaries holding title and the illustrative agreement to enable Superior and Clinton to take full advantage of the tax laws of the countries involved.” (Plaintiffs’ Exhibit No. 2, Plaintiffs’ Brief in Opposition to Defendants’ Motion.) Following the meeting a “letter of intent” was mailed by Mr. Clark, as senior vice president of Superior, to Volk, as president of Clinton. In essence, the letter was a contract to enter into a further and more detailed contract at a later date. It stated: “Subject to entering into a more detailed and definitive agreement within 30 days from today and being subject to Superior acquiring acceptable U.K. ownership in the licenses or Superior acquiring acceptable ownership of the subsidiary holding title to the licenses, Superior is willing to do the following.” (Emphasis added.) The letter then set forth terms substantially the same as those which Volk’s notes had indicated to be the agreement reached in Houston. This “letter of intent” contained an acceptance block which Volk signed as President of Clinton on July 1, 1974. The time limitation of the “letter of intent” was later extended beyond the initial thirty-day period in a separate agreement signed by Reid and Volk representing Superior and Clinton. Throughout the entire negotiations Superior and Clinton significantly bargained over “Clinton’s interest” in P-244, “Clinton’s obligations” and “Clinton’s rights” to proceeds thereunder. Superior initially contacted Clinton to inquire about its participation in “Clinton’s interest” in the North Sea area. Every step of these negotiations reflects in substance the arrangements of two parent corporations to dispose of certain rights and duties. Clinton, of course, did not own any interest in, nor did it have any rights to or obligations under the United Kingdom license and operating agreements. Clinton North Sea and Clinton England held those interests, rights and obligations. Both of these corporations were owned by Clinton International, which, in turn, was owned by Clinton. It is also apparent chat Superior was aware of these facts. Superior’s “letter of intent” clearly contemplated that Clinton would cause its subsidiaries to transfer to Superior an interest in the license itself, or that Clinton would cause Clinton International to transfer to Superior “acceptable ownership” of Clinton England and Clinton North Sea. In a similar regard, Clinton was advised by Reid that Superior would likely not itself accept such ownership or title, but rather would place it in a foreign subsidiary for tax purposes. Clinton was, therefore, likewise on notice that the ultimate execution of the arrangements with Superior would likely be achieved through the employment of subsidiary corporations. Two contracts ultimately arose from these and further negotiations between the two parent corporations. The contract anticipated in the “letter of intent” was executed October 29, 1974, and was identified by the parties as the “letter agreement” of that date. On the same day each company’s subsidiary, Clinton England and Superior Overseas, entered into a contract referred to as the “Main Agreement.” The “letter agreement” constituted a binding bilateral contract wherein both parent corporations exchanged promises of performance on their own behalf and on behalf of their subsidiaries. The “letter agreement” was signed by Superior in Texas and was accepted and finally executed both by Clinton and by Clinton International in Kansas on October 31, 1974. Superior Overseas was not a party to this contract, nor was Clinton England or Clinton North Sea. A cursory review of the terms of the instant contracts is in order. In a document known as the “Illustrative Agreement,” Clinton England contracted with Clinton North Sea, the English subsidiary holding title to the P-244 license, to provide the funds and equipment necessary for the exploration, production and development of the license interest in conformity with the operating agreement between all percentage holders of the interest. In exchange, Clinton England received a five-sevenths interest in the 25% working interest of Clinton North Sea in P-244. Under the Main Agreement, Clinton England contracted with Superior Overseas to obtain assistance in discharging its obligations under the “Illustrative Agreement” to develop the P-244 license. Superior Overseas agreed to provide the funds and equipment required of Clinton England to develop P-244 under its contract with Clinton North Sea. After Superior Overseas’ recoupment of its initial outlay, both Superior Overseas and Clinton England were to share equally in the expenses and the proceeds under the license interest. The contract stated that all notices and communications required under the agreement must be mailed to specified offices of Superior Overseas, Clinton England, and to the Kansas office of Clinton International. The Main Agreement contract substantially controlled the flow of funds to and from plaintiff Kansas corporations, and further required substantial communication with corporations in this form, i. e., Kansas. This is the sole partial performance contemplated under the contract which has any physical connection with this forum. The “letter agreement” between Superi- or, Clinton and Clinton International added material terms to the Main Agreement between the two subsidiaries. Each subsidiary gained rights and obligations under this contract although the subsidiaries themselves were not parties to the contract. Rather, they were committed under this letter agreement to the performance of certain obligations undertaken “by [them] or by the parties hereto for and on behalf of their respective . . subsidiaries.” The contract was executed by Superior in Houston and by Clinton and Clinton International in Kansas. The letter agreement between the parents, for example, stated that “it is agreed between our companies and our respective affiliates and subsidiaries . . ” that Clinton England must assign to Superior Overseas on request a percentage interest in P-244. Clinton England became bound to vote as a member of the operating committee as Superior Overseas demanded. Superior Overseas assumed responsibility for a specific percentage of the costs incurred in the drilling of two initial exploratory wells. Certain default provisions were added which may be material to the dispute here between the subsidiaries. Provisions were also made between the parents for an accounting of the proceeds of petroleum accruing both to Clinton England and Superior Overseas. Beginning at paragraphs five and six of the contract, Clinton and Clinton International expressly promised that they would “cause Clinton England . . [and] Clinton North Sea” to undertake various activities. They authorized Superior Overseas “on behalf and in the name of Clinton North Sea or Clinton England” to take any action necessary to maintain the license interest, provided notice was first given to Clinton and Clinton International. Clinton International agreed to permit Superior Overseas to designate 50% of the members of the Board of Directors of both Clinton England and Clinton North Sea. Clinton International also agreed that upon certain conditions, either it would transfer to Superior Overseas half-ownership of Clinton North Sea and cause Clinton England to assign a one-half interest in its license, or it would cause Clinton North Sea to assign to a corporation designated by Superior Overseas a one-half interest in the license. The parents lastly guaranteed the performance of the obligations imposed on their subsidiaries under this letter agreement to which the subsidiaries were not party. The record before this Court makes it clear that underlying all these transactions is a bargain between two parent corporations to control and develop a license interest in North Sea oil operations. For reasons of tax advantage and compliance with foreign law, both parents chose to proceed in their endeavors through subsidiary corporations. Clinton held the license in its subsidiary corporation, Clinton North Sea, but Clinton’s exploitation of that interest was arranged through its chain of corporate ownership. Clinton desired assistance from other companies to develop its license. Superior offered this assistance with the announced intention of either receiving part ownership of the Clinton subsidiaries or accepting and placing partial ownership of the license interest in a Superior subsidiary. Ultimately, Clinton’s subsidiaries conveyed certain rights to Superi- or’s subsidiary which, in exchange, promised the financial and mechanical support required to develop those rights. Each subsidiary acted in reliance upon the representations and guarantees of the parent corporation controlling the respective subsidiary. It is even more indubitably clear that the agreement at the subsidiary level was bargained for and agreed upon at the parent level by the officers of the parents acting on behalf of both the parent corporations and their subsidiaries. Indeed, there is not a scintilla of evidence in the record to show that the subsidiaries ever negotiated directly between themselves independently of their parents’ negotiations. Both parents caused their subsidiaries to enter into a contract at the subsidiary level. The parents conducted their negotiations on behalf of the subsidiaries. The parents further contracted between themselves to cause their subsidiaries to perform in a certain manner under the subsidiaries’ contract. The parents contracted between themselves that they would cause their subsidiaries to perform additional obligations imposed on the subsidiaries by the parents’ contract to which the subsidiaries were not party. Indeed, the very ownership of the Clinton subsidiaries, and the right to elect the directors of those subsidiaries, were main elements in the bargaining between the parents. The element of control established here by the parent corporations over their subsidiaries is as substantial as it is vivid. This Court relies on this fact for two alternative purposes. The Court finds the intercorporate relationship sufficient to hold that Superior Overseas has transacted business in the forum through the instrumentality of a parent corporation that conducted contractual negotiations in the forum on its behalf. Although Superior purportedly represented only itself during its business in Kansas, it is clear that Superior intended, and that Superior Overseas understood, that the subsidiary would receive the benefit of the contractual negotiations. Without examining whether this relationship might support a finding of traditional agency or corporate control sufficient to “pierce the corporate veil,” this Court concludes that the purposeful activity of Superior in the forum on behalf of its subsidiary is sufficient to render it the “instrumentality” of its subsidiary within the meaning of the long-arm statute. Having found that Superior Overseas is subject to service of process, both under subsections (b)(1) and (b)(5) of the Kansas long-arm statute, the Court secondly relies on this factor of control to give substantial weight to those contacts of Superior with this forum which are intimately connected with plaintiffs’ claims. This consideration is but one of several which support the conclusion that the exercise of personal jurisdiction so invoked satisfies the constitutional test of fundamental fairness and substantial justice. Personal jurisdiction over Superior Overseas is therefore proper. DEVELOPMENT OF THE RULE OF CANNON Superior Overseas has argued extensively that all preliminary negotiations on the instant contracts were undertaken by its parent, Superior. Superior Overseas resists the attribution of Superior’s contacts with this forum, and argues that personal jurisdiction may not be constitutionally predicated on the single contact of Superior Overseas with Kansas — a contract substantially governing the rights and duties of two subsidiary corporations in oil drilling operations in the North Sea area of the United Kingdom. Superior Overseas argues that the plaintiffs may prevail only upon showing that the corporate veil between the defendant corporations may be pierced, that the subsidiary corporation is the mere “alter ego” of the parent, and that this Court may therefore treat the two as one and consider the parent’s relationship with this forum in order to establish jurisdiction over the nonresident subsidiary. Defendants rely heavily on the rule of Cannon Mfg. Co. v. Cudahy Packing Co., supra, as adopted and applied by Kansas in Farha v. Signal Companies, Inc., 216 Kan. 471, 532 P.2d 1330, modified, 217 Kan. 43, 535 P.2d 463 (1975). Plaintiffs argue to the contrary on these same facts. Superior and Superior Overseas have substantially the same officers and directors. Mr. Reid, who primarily negotiated the instant contracts, was an officer of both corporations. Superior did all the bargaining on the instant contracts and “held itself out” as the real party behind the subsidiary’s contract. Superior thereby led plaintiffs to believe that they were in fact dealing with Superior, and the plaintiffs relied on that belief. Plaintiffs argue that Superior Overseas was used at the last moment as the “mere instrumentality” or “alter ego” of its parent corporation in order to effectuate the ultimate goal of Superior’s negotiations. Plaintiffs therefore urge this Court to pierce the corporate veil between the two corporations and exercise jurisdiction over the non-resident subsidiary by virtue of this Court’s conceded jurisdiction over the parent corporation in this forum. As stated previously, this Court finds it unnecessary to reach the issue whether on these facts it might permissibly pierce the corporate veil and find Superior Overseas to be the “alter ego” of its parent, Superior. The Court finds, instead, that the rule of Cannon is no longer viable in jurisdictional analysis. While the rule of Cannon, and alter ego analysis generally, may in some situations retain statutory value, they no longer have any bearing on the constitutionality of jurisdiction over a defendant who is properly served. Cannon was decided in a context where extraterritorial service of process on a nonresident corporation was statutorily unauthorized and constitutionally restricted by the old notions of territorial power limitations on a state’s ability to issue service beyond its borders. Gánnon therefore imposed merely a statutory obstacle to service on a non-resident corporation on the basis of its subsidiary’s business in the forum. That statutory obstacle, however, was reflective of the constitutional obstacle to extraterritorial service then extant under the territorial due process constraint that a state might exercise jurisdiction only over those persons present in the forum. The decision in Cannon represented merely one of many cases that defined the parameters of a non-resident corporation’s “doing business” within the forum sufficient to warrant the inference that the non-resident corporation was “present” and therefore amenable to domestic service of process in the forum. After the decision in International Shoe, the “presence” of a non-resident, as measured under the old quantitative “doing business” standard, was no longer necessary to a state court’s exercise of personal jurisdiction over that non-resident. The rule of Cannon thus lost its constitutional significance when extraterritorial service of process was authorized by statute and when the constitutionality of the exercise of the jurisdiction so invoked was measured under the new qualitative fundamental fairness test of International Shoe. After the recent decision in Shaffer, the “presence” of a non-resident in the forum is neither necessary nor sufficient to render constitutional the exercise of jurisdiction, whether invoked pursuant to extraterritorial service on the non-resident or domestic service on the non-resident’s designated agent for service of process. All exercise of state court jurisdiction, and impliedly the exercise of personal jurisdiction in federal court pursuant to Rule 4(d)(7) or 4(e), must be analyzed under the standards of International Shoe. Reliance on the rule of Cannon to determine a non-resident’s “presence” is therefore no longer relevant to the proper inquiry into whether the exercise of personal jurisdiction offends traditional notions of fair play and substantial justice, notwithstanding the non-resident’s presence or lack thereof in the forum. With the demise of the territorial power theory of state court jurisdiction, and the concomitant demise of the necessity or sufficiency of “presence” as a precondition to the exercise of personal jurisdiction, the rule of Cannon no longer plays a viable role in jurisdictional analysis. A review of the context in which Cannon was decided is necessary. The decision in Cannon predates International Shoe by twenty years and falls among those cases that examined whether a corporation was “doing business” in the forum and therefore “present” there. Although often cited for the proposition that the mere presence of a subsidiary corporation within a state does not provide a basis for personal jurisdiction over a non-resident parent corporation, Cannon specifically held that the business of a subsidiary in the state did not constitute sufficient “doing business” in that state by the parent to warrant an inference of the parent’s “presence” there. Thus, local service of process on the domestic subsidiary was held insufficient as a means to invoke jurisdiction over the nonresident parent. The narrowness of this holding, and the jurisdictional context in which it arose, are crucial to an understanding of the propriety of jurisdiction when invoked under modern long-arm statutes. Cannon was a breach of contract action where a North Carolina corporate plaintiff brought suit against Cudahy Packing Company, a Maine corporation, and against Cudahy of Alabama, a wholly-owned subsidiary of Cudahy, and the “instrumentality employed to market Cudahy products within the state.” Cannon, supra, 267 U.S. at 335, 45 S.Ct. at 251. The subsidiary acted in a role not uncommon to many present distributorship arrangements. The subsidiary bought products from its non-resident parent and in turn sold them to dealers within the forum. All the products, however, were shipped by Cudahy directly to the buyers in North Carolina, where the subsidiary would collect the purchase price. The subsidiary, however, was not found to be the agent of its parent, and the Court found that the subsidiary was both financially and commercially preserved as a distinct corporate entity in all respects. Although the parent completely dominated and controlled the subsidiary, “the corporate separation, though perhaps merely formal, was real. It was not pure fiction.” 267 U.S. at 337, 45 S.Ct. at 251. At the time Cannon was decided, plaintiff could only invoke jurisdiction over the nonresident parent corporation by finding it “present” in the forum. Domestic service was had on the subsidiary alone, and although the Court stated that the claim for jurisdiction was not based on any state statute, the Court referred to the non-existence of a statute that specifically authorized service based on the presence of a subsidiary corporation in the forum. See Empire Steel Corp. v. Superior Court, 56 Cal.2d 823, 830, 17 Cal.Rptr. 150, 154, 366 P.2d 502, 506 (1961). It was stated in Cannon, supra, 267 U.S. at 336, 45 S.Ct. at 251: “The obstacle insisted upon is that the court lacked jurisdiction because the defendant, a foreign corporation, was not within the state.” No questions of the constitutional powers of the state or of the federal government were directly involved. Thus, the Court in Cannon, at 334-335, 45 S.Ct. at 250, framed the question before it as: “. . . whether at the time of the service of process, defendant was doing business within the state in such a manner and to such an extent as to warrant the inference that it was present there.” (Citing Bank of America v. Whitney Central National Bank, 261 U.S. 171, 43 S.Ct. 311, 67 L.Ed. 594 (1923). This was the same standard of corporate “presence” established in Philadelphia & Reading Ry. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710 (1917), and cited in Shaffer, supra, 433 U.S. at 201, 97 S.Ct. at 2579, as one of the jurisdictional fictions displaced by International Shoe. Because the Cudahy parent had not entered the forum, but rather had elected to have a separate subsidiary do business there, the only way for plaintiff to attempt to obtain service was to establish on traditional corporate law principles those facts that would permit a court to pierce the corporate veil, find the subsidiary to be the mere “alter ego” of its parent, and treat the two corporations as a single entity. Numerous courts have concluded that this would have rendered the non-resident “doing business within the state in such a manner and to such an extent as to warrant the inference that it was present there.” The business done, however, would be that of its subsidiary, and the “presence” would be that of the two corporations treated as one. Even this conclusion, however, finds dubious support in the Cannon opinion. The trial court there had already concluded that on the given facts the corporate veil between the two corporations could be pierced for liability purposes. Cannon Mfg. Co. v. Cudahy Packing Co., 292 F. 169, 176 (W.D.N.C.1923). On the facts before the Cannon Court, the issue was “simply whether the corporate separation carefully maintained must be ignored in determining the existence of jurisdiction.” 267 U.S. at 336, 45 S.Ct. at 251. The language of Cannon relied on the concepts of the corporate fiction, limited corporate liability, and the privileges that flow from formal separation of corporate identities. The Court held that absent a statute authorizing extraterritorial service, or a statute authorizing service on a local corporation’s non-resident parent, service of process could not be had on the parent by virtue of service on its subsidiary “present” in the forum. If service was issued under a “doing business” statute, separation of corporate identities was sufficient to separate the “business done” and render the non-resident beyond the scope of the service authorized by statute. Jurisdiction therefore could not be invoked. The Court stated, at 267 U.S. 338, 45 S.Ct. at 252: “We cannot say that for purposes of jurisdiction, the business of the Alabama [subsidiary] corporation in North Carolina became the business of the defendant [parent corporation].” The theory of corporate “presence” required no less. Interpreting only the elements of “presence,” Cannon therefore represented one piece of that “patchwork of legal and factual fictions . . . generated from the decision in Pennoyer v. Neff [95 U.S. (5 Otto) 714, 24 L.Ed. 565].” Shaffer, 433 U.S. at 220, 97 S.Ct. at 2588 (Brennan, J., concurring and dissenting). The jurisdictional theory that underlay Cannon examined whether a corporation was “doing business” sufficient to warrant an inference of “presence” in the forum. It was but one of three fictional theories historically developed to facilitate service of process on corporations and individuals in an age when jurisdiction was predicated on a state’s sovereign power over persons and property within its territorial borders. State court jurisdiction was then: “. . . defined by the ‘principles of public law’ that regulate the relationships among independent nations. The first of those principles was ‘that every State possesses exclusive jurisdiction and sovereignty over persons and property within its territory. . . . ’ [I]f the defendant consented to the jurisdiction of the state courts or was personally served within the State, a judgment could affect his interest in property outside the State. But any attempt ‘directly’ to assert extraterritorial jurisdiction over persons or property would offend sister States and exceed the limits of the State’s power.” Shaffer, supra, 433 U.S. at 195, 97 S.Ct. at 2576-77 (Marshall, J.) The territorial power theory of jurisdiction found its most permanent embodiment in the case of Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1877). Justice Field there cited Story’s Conflict of Laws, and held that a state’s ability to exercise jurisdiction over; non-residents was limited by the territorial restrictions on the state’s sovereign power: “. . . where the entire object of the action is to determine the personal rights and obligations of the defendant, that is, where the suit is merely in personam . [p]rocess from the tribunals of one state cannot run into another state, and summon parties there domiciled to leave its territory and respond to proceedings against them.” (95 U.S. 727.) To reach this conclusion, Justice Field relied on the earlier Supreme Court decision of Mills v. Duryee, 11 U.S. (7 Cranch) 481, 486, 3 L.Ed. 411 (1813), which recited that: “There are certain eternal principles of justice, which ought never to be dispensed with, and which courts of justice never can dispense with, but when compelled by positive statute. One of these is, that jurisdiction cannot be justly exercised by a state over property not within the reach of its process, or over persons . not subjected to their jurisdiction, by being found within their limits.” The Pennoyer Court read into the due process clause of the Fourteenth Amendment these same “eternal principles of justice:” “To give such proceedings any validity, there must be a tribunal competent by its constitution — that is, by the law of its creation — to pass upon the subject matter of the suit; and, if that involves merely a determination of the personal liability of the defendant, he must be brought within its jurisdiction by service of process within the State, or his voluntary appearance.” (95 U.S. at 733.) The principles of Pennoyer and the corollaries derived from them became the basic elements of the constitutional doctrine which governed state court jurisdiction. See Shaffer, supra, 433 U.S. at 198, 97 S.Ct. at 2577. The territorial power theory, however, posed unusual problems when jurisdiction was sought over non-resident corporations that conducted business in more than one state. These arose from the early notion that a corporation was an artificial person existing only within the state of its creation, a notion which derived from the famous dictum in Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519, 588, 10 L.Ed. 274 (1839): “A corporation can have no legal existence out of the boundaries of the sovereignty by which it is created. It exists only in contemplation of law, and by force of the law; and where that law ceases to operate, and is no longer obligatory, the corporation can have no existence. It must dwell in the place of its creation; and cannot migrate to another sovereignty.” The quasi-sovereignty of the several states did not foreclose a corporation’s engaging in business activity beyond the borders of the sole state of its incorporation, but it impliedly predicated that out-of-state activity on the permission of the government of the state in which the business activity was conducted. See Kurland, The Supreme Court, the Due Process Clause and the In Personam Jurisdiction of State Courts, 25 U.Chi.L.Rev. 569, 578 [hereinafter cited as “Kurland, In Personam Jurisdiction”]. Without more, however, this rule left corporations amenable to suit only in the state of their incorporation. See Bank of Augusta v. Earle, supra, at 587-88. Consistent with the notion that state court jurisdiction was based on the de facto territorial power of a state to seize a person or thing within its boundaries, extraterritorial service of process was unavailable to bring a non-resident corporation into the jurisdiction and to require it to defend itself in litigation there. The inappropriateness of this limitation became evident when viewed in light of commercial realities and a growing reliance on the corporate form as a means of conducting economic activity. See Kurland, In Personam Jurisdiction, supra, at 578. Even the Pennoyer Court recognized that a literal application of the rigid territorial power analysis of jurisdiction there enunciated was not consistent with contemporary standards of jurisdiction in certain cases. See Shaffer, 433 U.S. at 201, 97 S.Ct. at 2579; Pennoyer, 95 U.S. at 734-36. The difficulties in reaching a corporate defendant for suit led to the development of three fictional jurisdictional theories, which ultimately prompted the Supreme Court to respond in International Shoe. See Note, Developments in the Law—State Court Jurisdiction, 73 Harv.L.Rev. 909, 917 (1960) [hereinafter “Note, State Court Jurisdiction.’’] The first theory to evolve was the “consent” theory, which rested jurisdiction on the power of a state to permit or refuse a non-resident corporation the privilege of doing business within that state. As stated in Paul v. Virginia, 75 U.S. (8 Wall) 168, 181, 19 L.Ed. 357 (1868), quoted in Kurland, In Personam Jurisdiction, supra at 581: “The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. . . . Having no absolute right of recognition in other states, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those states may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion.” The state could, therefore, impose as a condition precedent to its permission the statutory requirement that the non-resident corporation consent to service of process in that state by appointing an agent therein for service of process. LaFayette Insurance Co. v. French, 59 U.S. (18 How.) 404, 407, 15 L.Ed. 451 (1855). The state was also found able to impose by implication the requirement that a corporation be amenable to service on an agent in the forum state for any claim arising out of the corporation’s transactions in the state. This theory of “implied consent” appeared in St. Clair v. Cox, 106 U.S. 350, 356, 1 S.Ct. 354, 27 L.Ed. 222 (1882), but carried with it the limitation that the “consensual” acceptance of service must be related to causes of action arising out of the corporation’s business dealings in the forum. The distinction between “implied” and “expressed” consent, and the accuracy of the term “consent” itself, were criticized by various judges and authors, as in Smolik v. Philadelphia & Reading Co., 222 F. 148, 151 (S.D.N.Y.1915) (L. Hand, J.): “When it is said that a foreign corporation will be taken to have consented to the appointment of an agent to accept service, the court does not mean that as a fact it has consented at all, because the corporation does not in fact consent; but the court, for purposes of justice treats it as if it had. . . . The court, in the. interests of justice, imputes results to the voluntary act of doing business within the foreign state, quite independently of any intent.” The Supreme Court nevertheless continued to rely on the restrictive corporate fiction declared in Bank of Augusta v. Earle, supra, and thus continued to apply the consent theory as late as 1933. Washington, ex rel. Bond & Goodwin & Tucker, Inc. v. Superior Court, 289 U.S. 361, 364, 53 S.Ct. 624, 77 L.Ed. 1256 (1933). See generally, Kurland, In Personam Jurisdiction, at 578-80. This theory was later supplemented by the “presence” doctrine in Philadelphia & Reading Ry. v. McKibbin, supra, 243 U.S. at 264-265, 37 S.Ct. 280, cited in Shaffer, supra, 433 U.S. at 201, 97 S.Ct. at 2579: “A foreign corporation is amenable to process to enforce a personal liability, in the absence of consent; only if it is doing business within the state in such manner and to such extent as to warrant the inference that it is present there.” The presence theory was suggested for the first time in 1882 in St. Clair v. Cox, supra, but was first used independently to sustain jurisdiction in International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479 (1914). The theory rejected by implication the dicta in Bank of Augusta and, unlike the consent theories, would sustain jurisdiction against corporations on claims not arising out of the business done within the state. Notwithstanding the inconsistencies in the different theories, they became merged, in effect, into a “doing business” test. The application of either necessitated a determination whether the foreign corporation was “doing business” within the state, either to decide whether its consent could be implied, or to decide whether the inference of “presence” could be drawn. See Shaffer, 433 U.S. at 201, 97 S.Ct. at 2579. See also, Kurland, In Personam Jurisdiction, at 582-86; Note, State Court Jurisdiction, at 921-923. A great body of case law developed that drew technical distinctions between various activities constituting the “doing of business.” These fine lines made little sense in terms of either theory. Hutchinson v. Chase & Gilbert, 45 F.2d 139, 141-42 (2d Cir. 1930). See also, Gavin, Doing Business As Applied to Foreign Corporations, 11 Temp.L.Q. 46 (1936); Issacs, An Analysis of Doing Business, 25 Colum.L.Rev. 1018, 1028-29 (1925). The application of the “presence” doctrine was soundly criticized by Judge Learned Hand, in Hutchison v. Chase & Gilbert, Inc., supra, at 141: “It scarcely advances the argument to say that a corporation must be ‘present’ in the foreign state, if we define that word as demanding such dealings as will subject it to jurisdiction, for then it does no more than put the question to be answered. Indeed, it is doubtful whether it helps much in any event. It is difficult, to us it seems impossible, to impute the idea of locality to a corporation, except by virtue of those acts which realize its purpose. “When we say, therefore, that a corporation may be sued only where it is ‘present’ we understand that the word is used, not literally, but as shorthand for something else. “[Business in the state of the forum] appears to us to be really the controlling consideration, expressed shortly by the word ‘presence,’ but involving an estimate of the inconveniences which would result from requiring it to defend, where it has been sued. We are to inquire whether the extent and continuity of what it has done in the state in question makes it reasonable to bring it before one of its courts. Nor is it anomalous to make the question of jurisdiction depend upon a practical test ... at least it puts the real question, and that is something.” As noted by Judge Hand, the test of “presence” had offered a mere legal conclusion. Jurisdiction existed when a corporation did sufficient business to warrant the inference of “presence.” It did not, however, offer a test which would aid in reaching that conclusion. The “doing business” test added little. Judge Hand’s characterization of the test as “shorthand for something else” foreshadowed the eventual acknowledgment and acceptance of the test as one of fairness and relative interest balancing, which the Supreme Court established in International Shoe. THE IMPACT OF INTERNATIONAL SHOE AND SHAFFER ON THE CANNON RULE The Court in International Shoe rejected the jurisdictional requirement that a nonresident defendant be “present” within the forum before service of process on the nonresident and jurisdiction would be proper. The Court, however, did not purport to overrule those old cases which founded jurisdiction on “presence” or “consent.” Rather, Chief Justice Stone acknowledged, as had Judge Hand in Hutchinson v. Chase & Gilbert, Inc., supra, that the two doctrines were fictional theories which employed conclusory language to indicate when the assumption of jurisdiction was reasonable. The Court then set out the now famous factors that weigh in the balance of interests and control the determination whether the exercise of jurisdiction over a non-resident meets constitutional requirements. This analysis is by now well known. As stated in International Shoe, supra, 362 U.S. at 316, 317, 66 S.Ct. at 158, 159: “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.’ ” “It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. . . . Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. “But to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.” The due process “fundamental fairness” test of International Shoe substantially altered the focus of those considerations which were deemed relevant to the constitutional exercise of personal jurisdiction over non-residents. The tests that had emerged from the earlier fictional doctrines had in essence been quantitative. See Shaffer, 433 U.S. at 201, 97 S.Ct. at 2579; also Note, State Court Jurisdiction, at 923. International Shoe rendered the test a qualitative analysis of several circumstances of each particular ease. The relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of the states on which the rules of Pennoyer rest, became the central concern of the inquiry into personal jurisdiction. Shaffer, 433 U.S. at 203, 97 S.Ct. at 2580, quoted International Shoe, 326 U.S. at 317, 66 S.Ct. at 154, as follows: “The inquiry into the State’s jurisdiction over a foreign corporation appropriately focused not on whether the corporation was ‘present’ but on whether there have been ‘such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.’ ” The existence of jurisdiction under International Shoe thus depends on a “sufficient connection between the defendant and the forum State as to make it fair to require defense of the action in the forum.” See Kulko v. Superior Court, 436 U.S. 84, at 91, 98 S.Ct. 1690, at 1697, 56 L.Ed.2d 132 (1978). The requirement of overall fairness is as significant as the necessity that a defendant have at least a minimal tie or relationship to the forum. See 2 Moore, Federal Practice, ¶ 4.25[5] at 1171-73 (2d ed. 1977). Relevant due process considerations include the inconvenience of litigation in the forum, concerns relating to the fair and orderly administration of the laws, the “quality and nature” of the defendant’s contacts with the forum, and whether these contacts bear any relation to plaintiffs’ claims. International Shoe, 326 U.S. at 317, 66 S.Ct. 154; also Casad, Long Arm and Convenient Forum, 20 Kan.L.Rev. 1, 4-7 (1971) (hereinafter “Casad, Long Arm ”). It remains the duty of the court to weigh the facts of each case to determine whether the requisite “affiliating circumstances” are present, so that it is both reasonable and fair to require the defendant to answer in the forum. Kulko v. Superior Court, supra, 436 U.S. at 91, 98 S.Ct. at 1697. A court, however, cannot acquire jurisdiction over a party solely by being the “center of gravity” of the controversy. It is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the state. Hanson v. Denckla, 357 U.S. 235, 253-54, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Yet there is no requirement that these activities be conducted personally by the non-resident defendant physically in the forum. See McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1951). Due process may be satisfied and jurisdiction may be constitutionally exercised over a non-resident who has no physical contacts with a forum. Travelers Health Ass’n. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950). Similarly, jurisdiction may be predicated on a non-resident’s activities in the forum even when they bear no relation to plaintiffs’ claim. Perkins v. Benquet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952); Shaffer, supra, 433 U.S. at 208-09, 97 S.Ct. at 2582-83. The decision inlnternational Shoe withdrew the constitutional implications from the Cannon decision and the “alter ego” doctrine as applied in juiisdictional analysis. Because extraterritorial service of process was statutorily unavailable on the facts before the Cannon Court, the decision there spoke only to the insufficiency of the manner of service — domestic service on a corporation “present” within the forum through the business activities of a separately maintained subsidiary in the forum. Cannon impliedly relied on corporate law principles to determine whether a parent corporation was “doing business” in the forum and therefore subject to domestic service of process under the appropriate statute. Cannon merely imposed this statutory obstacle. The constitutional due process constraint of “presence” that Gannon reflected was disapproved in International Shoe. Physical presence in the forum was no longer a necessary element to support jurisdiction. Reliance on Cannon and the alter ego doctrine for constitutional purposes thus became unnecessary whenever extraterritorial service on the particular defendant was authorized by statute and when, under International Shoe, the propriety of jurisdiction was solely dependent upon the qualitative fairness of requiring the defendant to answer in the forum. Cannon, however, did retain some marginal vitality in two situations — one statutory and one constitutional. The Cannon rule and alter ego principles generally still applied in cases that raised the statutory issue of the sufficiency of the method of service under state or federal law — namely, whether a particular statute authorized service on a given defendant. Thus, if a statute authorized service on “anyone who does business in the forum,” satisfaction of the alter ego test was necessary to permit service, under the statute and Rule 4(e), Fed.R. Civ.P., on a non-resident who did business in the forum through an alter ego corporation. Alter ego principles might thus be an appropriate device to extend extraterritorial service to persons not specifically within the literal ambit of the statute or rule that authorized service. Similarly, if a non-resident corporation was not personally served, but rather received service solely on its subsidiary in the forum, as