International Shoe Co. v. State of Washington

The International Shoe case began when the state of Washington sent a notice by registered mail to the company's home office, calling on the company to pay its back taxes to the Washington unemployment compensation system. The state also personally delivered a notice to one of the company's salespeople in Washington. Unemployment tax was levied on companies as a percentage of each employee's earnings, and International Shoe had several sales agents based in Washington earning commissions totaling more than $31,000--a considerable sum in 1945. Washington State wanted the tax due on those earnings.

International Shoe argued that even though its salespeople solicited orders in Washington, it did not really have a "presence" in that state. And because it was not present, it did not come under the jurisdiction of the state. Therefore, Washington could not require it to pay unemployment tax.

In such a situation the idea of a corporation as a person becomes relevant. If a person is in Colorado, he cannot be expected to show up in a Minnesota court just because someone in Minnesota decides to sue him. If the person gets a Minnesota subpoena, he could argue that, in fact, he is not present in Minnesota, and that, therefore, Minnesota does not have any personal jurisdiction over him. Likewise, if the Colorado resident gets a bill for Minnesota state income tax, and he did not earn any of his income in Minnesota, he could claim that the state had no jurisdiction.

However, as in our previous example, suppose a person had a traffic accident in Minnesota and then drove home to Colorado. It could be said that he had had certain "minimum contacts" with Minnesota--he had a traffic accident there. This contact would in fact make him liable to the jurisdiction of a Minnesota state court.

Likewise, if a person had lived and worked in Minnesota half the year and then moved to Colorado, that would constitute enough contact with the state to make him liable for Minnesota state income tax--even if he happened to be living in Colorado the day the tax bill became due. These are examples of times when a state has jurisdiction over a person even when the person is not physically present in the state.