through its distributor, so as to be subject to the jurisdiction of this Court in this action.
Beech is a Delaware corporation with its main office, plant and principal place of business in the State of Kansas. It has no plant, factory, office or real property in Pennsylvania.
At the time of the accident in suit and at least until January 21, 1966, Service was the regional distributor of Beech Aircraft in Pennsylvania under a 1964 distribution agreement extended by letter to cover 1965. An examination of the agreement suggests, and on August 2, 1966, in Civil Action No. 37711, entitled Anapol, Guardian v. Beech, et al., Judge Higginbotham, of this Court so held, that the relationship between Service and Beech, under their 1964 distributorship contract, was such that Beech was doing business through Service in Pennsylvania to an extent which made Beech amenable to the process of this Court. Moreover, in Szantay v. Beech Aircraft Corporation, 237 F. Supp. 393 (E.D.S.Car.1965), aff. 349 F.2d 60 (4th Cir. 1965), a case involving a distributorship agreement almost identical to the 1964 agreement between Beech and Service, it was held that, by reason of the relationship between Beech and its South Carolina distributor, Beech was doing business in South Carolina and, therefore, was subject to the jurisdiction of the United States District Court for the Eastern District of South Carolina by service upon its local distributor.
On November 8, 1965, more than two months after the accident in suit, in United States v. Beech Aircraft Corporation, Civil Action No. W-3129, the United States District Court for the District of Kansas entered an anti-trust consent decree requiring that Beech make certain modifications in its distributor's contract. Beech, in addition to making modifications in the then existing distributor's contracts, and instead of entering into the annual distributor contract with Service, contracted with a new entity on January 21, 1966, as its Pennsylvania distributor, Atlantic Philadelphia, Inc., another wholly-owned subsidiary of Atlantic, while Service operated as a dealer under the new corporation in 1966. Although Atlantic Philadelphia and Service are separate corporations, their officers are identical, their places of business are the same and no part of the officers' salaries are allocated to Atlantic Philadelphia. As counsel for plaintiffs suggests, perhaps the best evidence of the ethereal nature of Atlantic Philadelphia is the fact that, beginning in 1967, it became entirely inactive and was succeeded as the Beech distributor by still another wholly-owned subsidiary of Atlantic, Atlantic Aircraft Sales Corporation. Hence, for all practical purposes, and at least for disposition of the instant motion to quash service of process, Atlantic Philadelphia and Service will be considered as one and the same. Consequently, although the marshal's return indicates that service of process was made only on Atlantic Aviation Service, Inc., service of process upon Atlantic Aviation Service, Inc. will be deemed service of process upon Atlantic Philadelphia, Inc.
In the instant suit, service of process was made on Service and Atlantic Philadelphia on August 22, 1966. Hence, although the 1964 agreement clearly establishes, and Judge Higginbotham so held, supra, that Beech was doing business in Pennsylvania by virtue of said agreement, under the clearly established rule that when the person served is not the alter ego of the defendant at the time of the attempted service of process, the attempted service is ineffectual, the issue upon which this motion to quash service of process lies is whether or not Beech was present in this jurisdiction at the time of the purported service: i.e., were the contacts of Beech, vis-a-vis the 1966 distributor agreement, and the implementation thereof, sufficient to say that it was "doing business" in Pennsylvania at the time of the purported service? Granite Chemical Corporation v. Northeast Coal & Dock Corporation, 249 F. Supp. 597 (D.C.Me.1966); Novitski v. Lykes Steamship Co., 90 F. Supp. 971 (E.D.Pa.1950); Holland v. Parry Nav. Co., 7 F.R.D. 471 (E.D.Pa.1947); Johnson v. Black Diamond Lines, 36 F. Supp. 721 (E.D.Pa.1941).
The amount of control exercised by Beech is readily apparent upon consideration of the distributorship agreement, including addenda, and other incidental papers in the record. Implementation of the contract is outlined in the deposition of Donald R. Redpath, Vice President and General Manager of Atlantic, Service and Atlantic Philadelphia.
In conformity with the dictates of the anti-trust decree, the 1966 distributor agreement between Beech and Atlantic Philadelphia, unlike the 1964 distributor agreement, contains no provision which prohibits the distributor from selling aircraft anywhere in the United States. Although Beech "suggests" retail prices for aircraft, there is no provision in the agreement making these "suggestions" mandatory, and it does not require that the distributor meet any minimum sales quotas. At this point, however, the dissimilarity ceases. As was true of the 1964 agreement, the 1966 distributor agreement is a written non-assignable contract between Beech and its distributors, terminable upon thirty (30) days' written notice by either party to the other, with or without cause, and provides, inter alia, that the distributor agrees: "to maintain such minimum field sales and management organization, both as to number and quality of personnel acceptable to Beech "; "to employ and utilize qualified service personnel, acceptable to Beech "; to cause its dealers "to maintain minimum inventory of parts and equipment as prescribed by Beech "; to use only those "spare parts and equipment manufactured by or supplied by Beech " unless Beech certifies otherwise in writing; "to provide facilities at its place of business as deemed necessary by Beech "; "not to move its place of business to a new location without obtaining the prior written consent of Beech "; "to participate actively and vigorously in promotional, merchandising and advertising programs as outlined from time to time by Beech "; "to purchase, erect in locations designated by Beech and maintain in good repair at all times those approved and recommended product signs deemed necessary by Beech "; "to maintain a finance structure and operating capital satisfactory to Beech "; "to maintain an accounting system which will permit operating reports to Beech "; "to furnish to Beech monthly and annual operating reports"; to supply Beech with such other financial, accounting and marketing information as Beech may request from time to time"; "to allow representatives of Beech from time to time to inspect" the distributor's business facilities, records, supplies and personnel. It also contains the following specific provision:
"H. MARKETING COORDINATION
"It is recognized by DISTRIBUTOR and BEECH that thorough marketing coordination and cooperation are necessary for accomplishment of the objective of improved marketing conditions in the increased sale of BEECHCRAFT products in DISTRIBUTOR'S area of responsibility.