Under the tort theory of the complaint, however, I will sustain the service of process.
The tort of fraud and deceit for fraudulent misrepresentation is complete when the other person acts thereon to his detriment or incurs liability as a result of the misrepresentation. Restatement of Torts, § 889 comment c. Therefore, the defendant's liability arose when the plaintiff acted to his detriment upon the alleged fraudulent misrepresentations of the defendant.
The defendant's liability was created, therefore, when the plaintiff acted to his detriment in the promotion of the distributor and franchise agreement, which action was more extensive than he would have taken in the ordinary course of promoting the agreement. While the plaintiff's first act of reliance may have taken place in Michigan when he agreed to the cancellation of the termination without cause clause, I fail to see how this alone was to his detriment. But even if liability was so incurred in Michigan, additional liability was created when the plaintiff took further action to the extent that I have indicated.
The plaintiff is a domestic corporation located in Philadelphia, Pennsylvania. His distributorship and franchise is for a limited area only. Therefore, the plaintiff could only act where he is situated and within his territory. Since most of the plaintiff's territory was in Pennsylvania, it is logical to conclude that the plaintiff acted within Pennsylvania.
'The place of wrong is in the state where the last event necessary to make an actor liable for an alleged tort takes place.' Restatement of Conflict of Laws § 377. 'The law of the place of wrong determines whether a person has sustained a legal injury'. Restatement of Conflict of Laws § 378. It follows that the defendant's liability arose within the Commonwealth of Pennsylvania and is governed by the laws of Pennsylvania. This is a question of tort, not contract, liability, and the clause of the agreement that Michigan law shall govern has no effect.
I can find nothing in the Pennsylvania cases which have been called to my attention that refutes any of the foregoing statements of law as formulated by the American Law Institute. Cf. Delaware, Lackawanna & Western RR. v. Ashelman et ux., 300 Pa. 291, 297, 150 A. 475, 69 A.L.R. 588; Fidelity-Philadelphia Trust Co. et al. v. Simpson, supra; Standard Interlock Elevator Co. v. Wilson, supra; Knight v. West Jersey R. Co., 108 Pa. 250, 253, 56 Am.Rep. 200; Baltimore & O.R. Co. v. Halchak, D.C., 71 F.Supp. 224, 226.
The crucial question now becomes when did the plaintiff act. In paragraph 17 the plaintiff's complaint states that, 'Relying on the defendant's agreement of rescission and the representations and inducements made by the defendant corporation * * * , and for the purpose of carrying out the terms of the distributorship agreement as modified on or about the 8th day of July, 1947, * * * the plaintiff embarked upon an extensive advertising and promotional campaign * * * .' In paragraph 19 the complaint states that ' * * * the plaintiff from on or about July 8, 1947 until January 13, 1948, contacted and signed up exclusive dealers of the defendant's products * * * .' In paragraph 24 the complaint states, 'The plaintiff continued its activity and performed all of its undertakings in a manner and to an extent and quality satisfactory to the defendant until January 13, 1948 * * * .' Other paragraphs of the complaint allege that between July 8, 1947 and January 13, 1948 defendant's agents repeatedly assured the plaintiff of the permanency of the distributor relationship.
I think it is safe to assume that in the six weeks intervening between July 7, 1947, when the alleged misrepresentations first occurred, and August 20th, when the defendant's certificate of withdrawal was issued, the plaintiff acted within Pennsylvania in reliance upon the defendant's misrepresentations. At least, the plaintiff should have the opportunity to prove that he so acted.
In accordance with the views I have expressed in this opinion, the defendant's motion to dismiss the action is dismissed.