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FORT WAYNE CORRUGATED PAPER CO. v. ANCHOR HOCKING

January 24, 1940

FORT WAYNE CORRUGATED PAPER CO.
v.
ANCHOR HOCKING GLASS CORPORATION et al.



The opinion of the court was delivered by: MCVICAR

This is a civil action by the Fort Wayne Corrugated Paper Company, a corporation incorporated under the laws of Indiana, against the Anchor Hocking Glass Corporation and the Anchor Hocking Glass Corporation of Pennsylvania, two corporations incorporated under the laws of Delaware. The Anchor Hocking Glass Corporation has filed two motions which are now before us: The first one dated July 11, 1939 wherein it moves the Court to quash the return of Service of the summons served on it. The second motion is dated November 17, 1939. In it, it moves to dismiss the suit alleging that this Court was without venue to hear and determine the same, and in the same motion it moves to quash the return of service of pluries summons made on it September 23, 1939. The Anchor Hocking Glass Corporation of Pennsylvania, a wholly owned and controlled subsidiary of the Anchor Hocking Glass Corporation, has filed an answer. It, therefore, probably means that if the motions of the Anchor Hocking Glass Corporation prevail that the same cause of action will have to be tried in two different Courts and be subject to separate appeals, etc.

The motion of the Anchor Hocking Glass Corporation dated July 11, 1939 to quash the return of the service of the summons upon it June 21, 1939 is on the ground that the person served is not an officer or agent of the Anchor Hocking Glass Corporation but is an officer or agent of its wholly owned and controlled subsidiary, the Anchor Hocking Glass Corporation of Pennsylvania. These facts having been established, the motion should be sustained. Cannon Manufacturing Company v. Cudahy Packing Company, 1925, 297 U.S. 333, 45 S. Ct. 250, 69 L. Ed. 634; Philadelphia & R.R. Co. v. McKibbin, 1917, 243 U.S. 264, 37 S. Ct. 380, 61 L. Ed. 710; Peterson v. Chicago, R.I. & P.R. Co., 1907, 205 U.S. 364, 27 S. Ct. 513, 51 L. Ed. 841; Consolidated Textile Corp. v. Gregory, 289 U.S. 85, 53 S. Ct. 529, 77 L. Ed. 1047; Mechanical Appliance Co. v. Castleman, 215 U.S. 437, 30 S. Ct. 125, 54 L. Ed. 272; La Varre v. International Paper Company, 1929, D.C., 37 F.2d 141. In Cannon Manufacturing Company v. Cudahy Packing Company, supra, it is stated [ 267 U.S. 333, 45 S. Ct. 251, 69 L. Ed. 634]: "* * * Through ownership of the entire capital stock and otherwise, the defendant dominates the Alabama corporation, immediately and completely, and exerts its control both commercially and financially in substantially the same way, and mainly through the same individuals, as it does over those selling branches or departments of its business and separately incorporated which are established to market the Cudahy products in other states. The existence of the Alabama company as a distinct corporate entity is, however, in all respects observed. Its books are kept separate.All transactions between the two corporations are represented by appropriate entries in their respective books in the same way as if the two were wholly independent corporations.* * *" In the present case, the books of the parent corporation and those of the subsidiary corporation are kept separate.

 In the motion of the Anchor Hocking Glass Corporation of November 17, 1939, it moves to quash the return of service made upon it September 23, 1939. The marshal in his return on service states: "I hereby certify and return, that on the twenty-third day of September, 1939, I received the within summons and on the twenty-third day of September, 1939, at 9:50 A.M. Daylight Savings Time, I served the within summons and complaint on the Anchor Hocking Glass Corporation, a foreign corporation, by serving William C. Porter, personally, who is a representative, agent and manager in charge of the Sales Department of Anchor Hocking Glass Corporation at the Anchor Hocking Glass Corporation office, 811 Investment Building, Fourth Avenue, Pittsburgh, Pennsylvania at which time I made known the contents of the within summons to William C. Porter, agent, by reading to him and leaving with him a copy of the within summons and complaint."

 The reason contended for in support of this motion is that it is not doing business in the State of Pennsylvania and that the service on William C. Porter as its agent was not service upon it. The Anchor Hocking Glass Corporation is not registered in the State of Pennsylvania nor has it appointed an agent upon whom service can be made for it. It sells glass products, including tableware and glass containers manufactured at its plant located at Lancaster, Ohio. It wholly owns and controls the Anchor Hocking Glass Corporation of Pennsylvania, which formerly had a plant located at Connellsville, Pennsylvania, which was abandoned in 1938. It sells a considerable amount of its manufactured product in Pennsylvania. It has three agents in Pennsylvania for the purpose of making sales; two of these agents including the one served solicit orders. After orders have been received they are sent to the Anchor Hocking Glass Corporation at Lancaster, Ohio, for acceptance or rejection. These agents, two of whom are located in Pittsburgh and one in Philadelphia, do not receive any salary.They are furnished with catalogs, order blanks and samples by the Anchor Hocking Glass Corporation. Their payment is on a commission basis. They do not collect any money from purchasers. These agents lease and pay for the rental of the offices which they occupy and for telephone service.

 On the office door in the Investment Building, appears the name: "Anchor Hocking Glass Corp. Hocking Division, William C. Porter, Repr." The office is listed in the Pittsburgh Telephone Directory as "Anchor Hocking Glass Corp. (Tableware Div.) Investment Bl." and in the Pittsburgh City Directory as "Anchor Hocking Glass Corp. (Tableware Div.) William C. Porter, Rep., Table glassware, 810 Investment Bldg." Similar listings and markings were made in relation to the office located in the Fulton Building.

 In Rules of Civil Procedure, Rule 4(d), 28 U.S.C.A. following section 723c, it is stated: "The summons and complaint shall be served together. * * * Service shall be made as follows: * * *

 "(3) Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process."

 In Real Silk Hosiery Mills, Inc., v. Philadelphia Knitting Mills Company, 3 Cir., 46 F.2d 25, 26, the Court adopted the opinion of Judge Dickinson of the District Court. In the opinion of Judge Dickinson, it is stated:

 "The defendant is a corporation existing under the laws of Illinois, with main offices in Indianapolis, Ind. The defendant is a manufacturer, but markets its product by sales to those commonly called the ultimate consumer. Many of these customers are situate in the city of Philadelphia. To reach them, an office is maintained in an office building announced by the usual door sign to be the office of the 'Real Silk Hosiery Mills, Inc., of Indianapolis.' This sign gives the corporate name of the defendant. The office is supplied with stationery carrying the letterhead of the defendant corporation, with the added designation of 'Philadelphia Office.' The directory of the telephone company carries as subscriber the defendant corporation with its room number in the office building mentioned. The person upon whom the writ was served carries the title of a general manager of the defendant corporation in charge of the Philadelphia office. * * * The real position of the defendant in opposing the effort of the plaintiff is disclosed in a statement of how its business is conducted. It claims that it sells its manufactured product direct to the user by a sale made from its office and warehouse in Indianapolis. It employs a large number of so-called solicitors who go from door to door in Philadelphia and elsewhere soliciting orders for hosiery. All such orders are taken by the solicitors subject to confirmation of the solicited purchase by the home office in Indianapolis and its approval. The solicitors make no deliveries, although they do carry with them samples of what they have for sale, and the purchaser buys by these samples. The product which the solicitors use as samples is a part of their soliciting outfit and under their arrangement with the defendant paid for by the solicitors. These solicitors are under the general direction of what the defendant calls a branch sales manager. This manager conducts an independent business of his own, in that his compensation is on a commission basis, and he locates his office so as to suit his convenience and that of the solicitors under him. The solicitors when they secure an order collect from the proposed buyer a sum which is equal to the commission which is ultimately to be paid by the defendant. The order when obtained is reported to the branch sales manager and by him transmitted to the main office of the defendant in Indianapolis. If approved, the purchased goods are shipped C.O.D. to the buyer; credit on account being given him for what he has paid to the solicitor. The expense of furnishing the office, telephone, advertising, bills, and all others incurred by the office are paid by the branch sales manager."

 The ruling of the District Court was sustained, refusing to set aside the service on the ground that the defendant was not doing business in Pennsylvania. The present case seems to be substantially in fact the same as the case just cited, the only difference worthy of mention being that in the case cited, the solicitors for orders collected from purchasers a sum equal to their commission.

 See, also, International Harvester Co. of America v. Commonwealth of Kentucky, 234 U.S. 579, 34 S. Ct. 944, 58 L. Ed. 1479, and the recent case of Neirbo Company et al. v. Bethlehem Shipbuilding Corporation, Ltd., 60 S. Ct. 153, 8 L. Ed. , opinion of Mr. Justice Frankfurter of November 22, 1939. Under the law as laid down in the above Rule of Court and the cases cited, the service made upon William C. Porter as a managing agent of the Anchor Hocking Glass Corporation was a valid service upon said corporation.

 I am of the opinion that the motion to quash or set aside the service was made too late. The pluries summons was served September 23, 1939. The motion to quash said service was made November 17, 1939. The Rules of Civil Procedure require such a motion to be made within twenty days after the service of the summons and complaint. See Reference to Rules and cases infra under the discussion of Venue.

 The Anchor Hocking Glass Corporation in its motion of November 17, 1939, also moved the Court to dismiss said corporation as a party defendant because it is a corporation incorporated under the laws of Delaware and hence under the Federal Venue Statute may not be sued in this Court by the plaintiff corporation incorporated under the laws of Indiana. This motion was made about five months after action was brought and the complaint and summons were served upon the Anchor Hocking Glass Corporation. It was also made after the motion to quash of July 11, 1939 and after depositions had been taken at Lancaster, Ohio, at a considerable expense to the parties, and after other stipulations had been made by the parties. The Federal Statute of Venue, Sec. 51 of the Judicial Code, 28 U.S.C.A. § 112, provides that "* * * ...


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