MacInnes v. Fontainebleau Hotel Corp.

Decision Date25 July 1958
Docket NumberDocket 24783.,No. 185,185
Citation257 F.2d 832
PartiesHarriett MacINNES and Malcolm D. MacInnes, individually and as husband and wife, Plaintiffs-Appellants, v. FONTAINEBLEAU HOTEL CORP., Defendant-Respondent.
CourtU.S. Court of Appeals — Second Circuit

Sidney W. Rothstein, New York City (Louis G. Greenfield, New York City, on the brief), for plaintiffs-appellants.

Harry S. Clyne, New York City (Steinberg & Clyne, New York City, on the brief), for defendant-appellee.

Before LUMBARD, WATERMAN and MOORE, Circuit Judges.

MOORE, Circuit Judge.

The defendant owns and operates a large resort hotel in Miami Beach, Florida. The plaintiffs, residents of Scarsdale, New York, allege that while guests in the hotel slanderous, false and defamatory statements about them were made in the hotel lobby by defendant's agents. They brought this action in the federal court in the Southern District of New York and caused service to be made on an employee in defendant's New York office. Defendant then moved to set aside the service on the ground that it was not doing business in New York. The court below granted the motion.

The question of what constitutes "doing business" has been presented to the courts many times over the years Search for a guiding rule for general application shows that the various decisions lack uniformity and harmony and invariably culminate in the scarcely enlightening conclusion that each case must be decided upon its own facts. Yet from the many opinions there can be gleaned a few principles which commend themselves for practical use. If they be sound they should be followed because here is a field in which as much certainty and predictability as possible is to be desired. Many a business will open, or refrain from opening, an office in another state or expand or contract its activities there depending upon the opinion of counsel based upon court decisions as to whether the contemplated activity crosses the nebulous "doing business" borderline.

The nature and character of the business is an important factor. Is the business in the home state of such a nature that it can be carried on in other states bringing in revenue from the business operations conducted there?

Here the business is that of a hotel. All the facilities and attractions offered to its guests, such as, shelter, recreation, and entertainment must be furnished to the guests within the confines of the hotel property in Miami Beach. Defendant's entire business, of necessity, must be carried on there. Defendant may seek to attract patrons by newspaper ads throughout the United States and may even have offices in the larger cities for reservation booking purposes, but it cannot deliver in winter Florida warmth and sunshine to residents of the more northerly states on order by mail, freight or express. There can be no out-of-state delivery on orders taken outside of Florida. Thus the nature of the hotel business is quite different from such businesses in which traveling salesmen take orders for interstate delivery and use office space in other states as headquarters for their operations.

Judge Learned Hand in Hutchinson v. Chase & Gilbert, 2 Cir., 1930, 45 F.2d 139, has said "It is difficult, to us it seems impossible, to impute the idea of locality to a corporation, except by virtue of those acts which realize its purposes" (at page 141). This comment is peculiarly applicable to the resort hotel.

The defendant maintained a small office in New York City with three employees. Their function was to receive requests for reservations which were forwarded to Florida for confirmation, to answer inquiries and to distribute brochures. A small inactive bank account was maintained in New York and defendant's name was listed in the telephone and building directory and appeared on the door of its office. Defendant's ads referred to its New York office. However, there is no allegation here that plaintiffs booked their reservations through the New York office.

Many resort hotels advertise extensively in the newspapers throughout the country but the facilities maintained for receiving responses to this solicitation, namely, whether by telephone, telegraph or mail to a New York office or to Miami, do not change the situs of defendant's business.

The Supreme Court has held that "solicitation" alone is not sufficient to constitute doing business (Green v. Chicago, Burlington and Quincy Railway Company, 205 U.S. 530, 532, 27 S.Ct. 595, 596, 51 L.Ed. 916). There the railroad, although it had no tracks east of Chicago, maintained an office for the solicitation of freight and passenger traffic in Philadelphia, Pennsylvania. Several clerks and soliciting agents were employed there and orders for passenger tickets and for the handling of freight were executed in that office. The court held that "as incidental and collateral to that business it was proper, and, according to the business methods generally pursued, probably essential, that freight and passenger traffic should be solicited in other parts of the country than...

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    ...some large verdicts than it would to pay some compensation, regardless of fault, for every injury. 15 See MacInnes v. Fontainebleau Hotel Corp., 257 F.2d 832, 833-834 (C.A. 2, 1958): "Defendant * * * cannot deliver in winter Florida warmth and sunshine to residents of the more northerly sta......
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