Costan v. Manila Electric Co.

• Decision Date: 06 February 1928
• Docket Number: No. 98.,98.
• Citation: 24 F.2d 383
• Parties: COSTAN v. MANILA ELECTRIC CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

24 F.2d 383 (1928)

COSTAN v. MANILA ELECTRIC CO. et al.

No. 98.

Circuit Court of Appeals, Second Circuit.

January 16, 1928.

On Petition for Reargument, February 6, 1928.

Frank L. Tyson, of New York City (Ralph O. L. Fay, of New York City, of counsel), for plaintiff in error.

Spence & Hopkins, of New York City (Kenneth M. Spence, of New York City, of counsel), for defendants in error.

Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge.

There was complete lack of jurisdiction as to the Manila Electric Company. It is a Philippine corporation, and as such is not an alien. See Gonzales v. Williams, 192 U. S. 1, 13, 24 S. Ct. 177, 48 L. Ed. 317; Toyota v. United States, 268 U. S. 402, 411, 45 S. Ct. 563, 69 L. Ed. 1016. Neither is it a citizen of a state. Hooe v. Jamieson, 166 U. S. 395, 17 S. Ct. 596, 41 L. Ed. 1049. The defect is not merely one of venue, which may be waived by a general appearance, as in Western Loan Co. v. Butte & Boston Min. Co., 210 U. S. 368, 28 S. Ct. 720, 52 L. Ed. 1101. Therefore dismissal as to this defendant was correct.

The plaintiff did not oppose the nonsuit as to J. G. White & Co., Inc., and his brief claims no error in the order granting a nonsuit to this defendant.

The errors assigned in nonsuiting the plaintiff against the other two defendants are predicated upon the contention that they were the active tort-feasors, the J. G. White Management Corporation operating and managing the street railway and the car which caused plaintiff's injuries, and the Manila Electric Corporation owning and controlling the Manila Electric Company, which was the nominal owner of the railway. This involves a review of the relations of the several corporations.

The Manila Electric Corporation (hereafter referred to as the holding company) owned all of the capital stock (except shares necessary to qualify directors) of the Manila Electric Company, the corporate entity owning the railway property in Manila. While stock ownership alone does not render a holding company responsible for the torts of the subsidiary company, still, if the holding company uses its stock ownership in such manner as actually to control and operate the properties of its subsidiary, it does become responsible. Davis v. Alexander, 269 U. S. 114, 117, 46 S. Ct. 34, 70 L. Ed. 186; Chicago, M. & St. P. Ry. v. Minn. Civic Assn., 247 U. S. 490, 501, 38 S. Ct. 553, 62 L. Ed. 1229; The Willem Van Driel (C. C. A. 4) 252 F. 35; Lehigh Valley R. Co. v. Delachesa (C. C. A. 2) 145 F. 617. It is claimed that the holding company so dominated and controlled the owning company, by putting a manager in charge of its operation, as to come within this principle. The evidence as to this is Exhibit F and Moffat's testimony.

Exhibit F is a contract between the holding company¹ and the J. G. White Management Corporation, hereinafter referred to as the manager. It recites that the holding company, through the ownership of the capital stocks of Manila Electric Company¹ and the Manila Suburban Railways Company, "controls certain street and interurban railway and electric properties in the city of Manila, Philippine Islands, and vicinity and is desirous that all such properties owned or controlled by it * * * should have their operation supervised and managed by a competent operating staff." The contract provides that the holding company "employs the manager as general operating manager of its properties with authority to direct, manage and operate such properties." It gives the operating manager "authority to employ on behalf of" the holding company such persons as the manager "may deem necessary for the proper operation and business of" the holding company, and to discharge such employees and fix their compensation, "subject to such general supervision and control as may be exercised by the directors" of the holding company. It authorizes the manager to purchase such labor, materials, apparatus, and supplies as in its judgment shall be necessary for the operation of the properties and business, and, subject to certain limitations, to make purchases for construction work. The manager is to furnish a statistician to analyze the financial and operating reports of the holding company and "compare results obtained by the companies evidently meaning the subsidiary companies with the results obtained by others," in order to check any tendency towards increase in operating expenses. The manager was to receive $25,000, plus a certain commission of the net earnings.

Attached to the contract is a document which states that the committee, appointed by the directors of the holding company to enter into an agreement with the manager "for the supervision of the management and operation of the properties of the holding company and its subsidiaries, has approved the annexed agreement." This document also states that the committee...