194 F.2d 422 (2nd Cir. 1951), 98, Lopinsky v. Hertz Drive-Ur-Self Systems

Docket Nº:98, 22156.
Citation:194 F.2d 422
Case Date:December 10, 1951
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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194 F.2d 422 (2nd Cir. 1951)




Nos. 98, 22156.

United States Court of Appeals, Second Circuit.

December 10, 1951

Argued Nov. 16, 1951.

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Harry Zeitlan, New York City, for plaintiff-appellant; Herbert L. Fine, New York City, on the brief.

John W. Trapp, New York City, for defendant-appellee; Peter M. J. Reilly, New York City, on the brief.

Before AUGUSTUS N. HAND, Chase, and CLARK, Circuit Judges.


The appellant initiated the present action in the District Court for the Southern District of New York against the Hertz Drive-Ur-Self System, Inc. (hereinafter called 'Hertz'), Edward J. O'Brien, and Charles A. Harrison administrator of the estate of Walter Benedict Baer. Briefly, the complaint alleges that the plaintiff's intestate was killed on May 29, 1950, in an automobile collision on Route 22 in the State of New York; that the automobile which caused the death of the deceased was operated by Walter Benedict Baer, was owned by the defendant Edward J. O'Brien, and was rented by Walter Benedict Baer from Edward J. O'Brien; that Edward J. O'Brien rented the automobile to Walter Benedict Baer as a licensee of and on behalf of Hertz, and that the licensee, Edward J. O'Brien, conducted his business in East Norwalk, Conn. Service upon the defendant Hertz was made through a United States Marshal by leaving a copy of the summons and complaint with George R. Gannon, assistant comptroller of the Carey Driveurself System, Inc. (hereinafter called 'Carey'), a New York corporation. On the motion of Hertz, Judge Ryan, on the ground that the court lacked jurisdiction over Hertz, vacated the service of the summons and complaint and entered judgment in favor of Hertz. The questions arising on this appeal are whether Hertz is jurisdictionally present in the State of New York, and if so, whether service was properly made. Since we agree with the conclusion reached by the district judge that the court lacked jurisdiction over Hertz, it is unnecessary to decide the latter question.

The jurisdictional presence of a foreign corporation depends on whether the corporation is doing business within the state. People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587. From the affidavits it appears that Hertz maintains no offices of its own and does not directly conduct any business in New York. However, the appellant contends that Carey was in fact acting as the agent of Hertz in the business transacted by Carey in New York. This contention is based on the following facts: Hertz devised a plan or system of renting automobiles to customers who drive the automobiles themselves, the system being known

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under the trade-name of Hertz Drive-Ur-self System. In order to effectuate the system on a national scale, Hertz licenses hundreds of local individuals and corporations throughout the United States and Canada to use its system and the trade-name. Carey Driveurself, Inc., a New York corporation, is such a Hertz licensee, but independent and locally owned. The license agreement between Hertz and Carey provides, inter alia, for the payment of specified fees by the licensee for each car maintained by Carey in its Driveurself business. The licensee is required to use the Hertz standard form of rental agreement and to permit the licensor to inspect its premises, automobiles and records and accounts. Hertz's obligations are limited to assisting the licensee in procuring the various materials used in the Driveurself business and to help in locating automobiles which may have been stolen from the licensee.

This license agreement cannot be described as a subterfuge to avoid local jurisdiction, see Bach v. Friden Calculating Machine Co., 6 Cir., 167 F.2d 679, and does not constitute an appointment by Hertz of Carey as its agent for the purpose of renting automobiles in New York. Echeverry v. Kellogg Switchboard & Supply Co., 2 Cir., 175 F.2d 900. The appellant makes much of the fact that the Manhattan Telephone Directory lists Carey's address and telephone number under the name of Hertz Drive-Ur-Self System and that an advertisement in the Classified Directory features the name 'Hertz' rather than that of Carey. However, it appears that the advertisement is paid for by Carey, and the featuring of the Hertz name is simply a means of dire-ting potential customers to a place which rents automobiles since the Hertz name would in all likelihood be more familiar than that of Carey. In our opinion Carey was not an agent of Hertz to do business in New York but a mere licensee.

For the foregoing reasons, the judgment is affirmed.

CLARK, Circuit Judge (concurring).

I agree with the opinion and decision both in which is explicitly stated and in what is necessarily implied, viz., that we have here on appeal an appealable judgment. In view of developments in this circuit hereinafter noted, I believe it is necessary or at least desirable to indulge in some fuller explanation of this part of our decision. For the parties named as defendants and legally responsible for the one accident which killed plaintiff's intestate were the administrator of the deceased operator of the colliding car, the owner, and the asserted licensor under the Hertz Drive-Ur-Self Systems (the present defendant-appellee) and no order or judgment was entered against the first two. Since the core of the case was this single accident, here were all the elements of 'jointness' so called, as stressed in Republic of China v. American Express Co., 2 Cir., 190 F.2d 334, 335, 336, to render this separate judgment not immediately appealable under the principles of law in force before the amendment to Fed. Rules Civ. Proc. rule 54(b), 28 U.S.C.A. But here the judge in directing the entry of a final judgment for this defendant also proceeded under the new form of the rule to determine that there was no just reason for delay. This action by him brought the case within the operation of the statute granting appeals from final decisions of the district courts, 28 U.S.C. § 1291, as we held in Pabellon v. Grace Line, 2 Cir., 191 F.2d 169, July 26, 1951, certiorari denied Coston Supply Co. v. Pabellon, 342 U.S. 893, 72 S.Ct. 201, citing numerous decisions of appellate courts on the new rule.

Hence, but for one circumstance, no further comment would be necessary. That circumstance is the decision eight days later by another panel of this court that the rule as thus applied must necessarily be considered invalid: Flegenheimer v. General Mills, 2 Cir., 191 F.2d 237, Aug. 3, 1951. 1 Although the court provided no documentation

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for its holding either in the past history of rule-making or in precedents such as the directly relevant holding of Reeves v. Beardall, 316 U.S. 283, 62 S.Ct. 1085, 86 L.Ed. 1478, the opinion and decision necessarily put in jeopardy fully a third of the federal civil rules. When an act of Congress is under attack the Attorney General must be notified so that he can come in and defend it. 28 U.S.C.A.§ 2403. No similar procedure protects the rules even though they have been formally passed upon by the Supreme Court, and, having been laid before Congress, found unobjectionable there. Questions such as this are not the kind counsel are likely to examine and brief; while litigants desire certainty, their interest is what certainty is not so immediate. Consequently the question is likely to come up in the court, with no help whatsoever from outside sources- as has indeed occurred with all our recent cases on the point. The background of history and precedent is then likely to be unknown to the adjudicators. But it is important and, I submit with deference, impelling. 2

When in 1935 the Supreme Court constituted the Advisory Committee on Rules of Civil Procedure and charged it with the duty of drafting a set of rules for effective district court procedure, that Committee was confronted at once with definite problems as to the extent of the Court's power to adopt particular rules urgently needed to make the new procedure workable. These arose because the questions had not been visualized by the draftsmen of the then Enabling Act, passed on June 19, 1934- the former 28 U.S.C. §§ 723b, 723c- and that act appeared to have certain gaps and ambiguities. The statute granted authority to regulate the practice and procedure in the district courts, and questions hence arose as to the extent of the power by rule to regulate the admission of evidence, to supersede statutes, to provide for appellate practice, and to amend rules once adopted. These were all matters of consequence; they assumed increased importance because the Supreme Court, pursuant to a well understood popular mandate, 3 had already announced its determination to unite the federal law and equity procedures. How could that mandate be carried out if, for example, the numerous existing statutes regulating details of federal procedure continued to apply in equity, but not in law, because the superseding power of the rules was stated only in that section of the act which dealt with rules in actions at law? (That particular problem was definitely settled, in accordance with the Committee's view, in the decision in Sibbach v. Wilson & Co., 312 U.S. 1, 61 S.Ct. 422, 85 L.Ed. 479, in 1941, in which the Court-although divided on another point- was unanimous as to the validity of the superseding power; it is now made extensive with the grant of rule-making authority in the present statute, 28 U.S.C. § 2073.) And how further could it be carried out if the two distinctive and separate types of appellate review must necessarily be continued?

The Committee had no difficulty in reaching at once the decision that rule-making authority existed as to all activities taking place in the district courts, even though they might consequentially affect appellate practice; this would...

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