Cannon Mfg. Co. v. Cudahy Packing Co.

• Citation: 292 F. 169
• Court: U.S. District Court — Western District of North Carolina
• Decision Date: 08 September 1923
• Parties: CANNON MFG. CO. v. CUDAHY PACKING CO.

292 F. 169

CANNON MFG. CO. v. CUDAHY PACKING CO.

United States District Court, W.D. North Carolina.

September 8, 1923

Tillett & Guthrie, of Charlotte, N.C., for plaintiff.

John M Robinson and F. M. Shannonhouse, both of Charlotte, N.C., for defendant.

WEBB District Judge.

On February 2, 1922, Cannon Manufacturing Company, a local corporation doing business at Kannapolis, N.C., brought an action at law in the superior court of Mecklenburg county N.C., against the Cudahy Packing Company, a corporation organized under the laws of the state of Maine and having its principal place of business in Chicago, Ill., alleging that the defendant had breached a contract made between it and the plaintiff on December 27, 1919, and praying judgment for $49,000, etc.

On February 2, 1922, J.E. Hunter, a deputy sheriff of Mecklenburg county, served a summons and complaint in the action upon one Frank H. Ross, at that time an employee of the Cudahy Packing Company of Alabama, a corporation organized under the laws of the state of Alabama and qualified to do business in North Carolina and in other states; Ross being the process officer of this corporation in North Carolina. The return, which was written by one of the counsel for the plaintiff in this action upon the summons and complaint, is as follows:

'Received Feb. 2, 1922. Executed Feb. 2, 1922, by delivering copy of summons and complaint to Cudahy Packing Company of Alabama agent of the defendant, Frank H. Ross, to whom papers were delivered, being process officer of the Cudahy Packing Company of Alabama.'

The defendant appeared specially on February 18, 1922, and asked for the removal of the case to the District Court of the United States, and accordingly on the 22d of February the cause was ordered removed to the federal court. On April 4, 1922, the defendant appeared specially in the United States District Court and petitioned it to set aside the service of the process in this cause and dismiss the action on the ground that this court has no jurisdiction over the person of the defendant and that it has never been served with process and was not present and doing business in North Carolina.

The transactions out of which the alleged breach of contract in the present case grew had no relation to any activity of the Alabama corporation. The alleged contract was made solely with the packing company, the Maine corporation, and related to the manufacture of cotton sheetings for use in its meat packing business; and the Alabama corporation, as such, is in no way concerned with the merits of the controversy.

The counsel for both plaintiff and defendant agreed that the issue to be passed upon by the court is solely whether there is such an identity between the Alabama corporation and the Maine corporation as that the Maine corporation was present and doing business in North Carolina, because the Alabama corporation was present and doing business there, and whether, therefore, service upon the process agent of the Alabama corporation is equivalent to service made upon the Maine corporation, and is effective to bring the latter within the jurisdiction of this court.

The plaintiff contends that the two corporations are identical, that the Maine corporation itself carries on business in North Carolina through the agency of the Alabama corporation, and in such case the law would regard service upon the Alabama corporation as service upon the Maine corporation.

The defendant denies that service of process in North Carolina upon the process agent of the Alabama corporation is sufficient to give this court jurisdiction over the Maine corporation; and the defendant further denies the identity of the two corporations, and asserts that the Alabama corporation has at all times since its creation maintained its separate existence and business, and denies that any relation of agency exists between the two corporations; and therefore the defendant contends that the law will not regard service of process upon one distinct legal corporate entity as giving jurisdiction over another distinct legal corporate entity.

The court realizes that what constitutes such a doing of business by a foreign corporation as will make such corporation amenable to process in this state is a question which depends upon the facts. Quoting the language of the court in Bank of America v. Whitney Central National Bank, 43 Sup.Ct. 311, 67 L.Ed. . . . :

'The sole question for decision is whether, at the time of the service of the process, defendant was doing business within the district in such manner as to warrant the inference that it was present there.'

The court therefore sets forth briefly the substantial facts in this case as gathered from the depositions of Messrs. Frank H. Ross and John G. Gearen. The salient facts testified to by Mr. Ross are as follows:

At the time process was served on him, he was general agent of the Cudahy Packing Company of Alabama in charge of the office in the city of Charlotte. He had been with the Cudahy Packing Company of Alabama for something like 12 years. This company bought and sold various sorts of meats, lards, compounds, and all packing products, and did a local retail business. This office collected for goods that it sold to the jobbers, and all the money collected from such sales was deposited in the bank or banks at Charlotte to the credit of the Cudahy Packing Company of Alabama.

The Chicago office of the Cudahy Packing Company of Alabama furnished the Charlotte office price quotations or cost sheets. Sometimes this company would buy from outside concerns, and not exclusively from the Cudahy Packing Company of Maine-- particularly if the Cudahy Packing Company of Maine was short. Some time in the spring of 1922 the Cudahy Packing Company of Alabama closed its Charlotte office and deposited all the moneys thereof in the banks to the credit of the Cudahy Packing Company of Alabama, and the Cudahy Packing Company of Alabama officials at Chicago drew this money from the banks. The Cudahy Packing Company officials furnished selling quotations or prices for the goods. The Charlotte office of the Cudahy Packing Company of Alabama had no transactions with the Cudahy Packing Company of Maine. It always bought its goods through the Chicago office of the Cudahy Packing Company of Alabama. It never received any invoice from any company or corporation except the Cudahy Packing Company of Alabama. The Chicago office did all the buying for the Charlotte office. The Charlotte office never knew the Cudahy Packing Company of Maine in any of its transactions. Prior to May 1, 1922, Mr. Ross had a salary contract with the Cudahy Packing Company of Alabama, which was in writing, and during the time he was so employed he never received any salary from the Cudahy Packing Company of Maine.

The salient facts testified to by Mr. Gearen are as follows:

He stated that he was assistant manager of the Cudahy Packing Company of Maine and had immediate charge of the physical work in the general office in Chicago.

The parent company is the Cudahy Packing Company, organized under the laws of Maine. There are also other Cudahy Packing Companies, such as the Cudahy Packing Company of Nebraska, the Cudahy Packing Company of Louisiana, etc. The Cudahy Packing Company of Maine, the parent company, owns all of the other subcorporations, and in many instances the officers and directors are the same, but do not hold the same office in these subcorporations. Mr. E. A. Cudahy, Sr., is president of the Maine corporation, and is also president and treasurer of the Alabama corporation. Mr. E. A. Cudahy, Jr., is vice president of the Maine corporation and is also vice president of the Alabama corporation. These are the only two common officers. Mr. Gearen is also assistant treasurer of the Alabama corporation, which is the same position he holds with the Maine corporation. The Alabama corporation transacts business in Alabama, Kentucky, North Carolina, South Carolina, and Virginia. The relationship between the Maine company and the Alabama company with respect to the sale of goods and merchandise is in the same respect as that of creditor and debtor.

The Alabama corporation makes reports to the general office. There are different kinds of reports, monthly for the most part. Each one of the branch houses of the Alabama corporation sends its reports to the general office in Chicago. The Alabama corporation as such does not make reports to the general office. The headquarters of the Alabama company are 111 West Monroe street, Chicago, which is the same address as that of the Maine corporation. Various kinds of reports are sent from the Charlotte office of the Alabama corporation to the general offices in Chicago, such as reports of invoices covering goods received and taken into stock during certain periods, stock reports, a record of the receipts of stock, including previous inventory, details of sales, as to weight and amounts; also closing inventory as to weight, price, and amount, and also loss or gain in the products sold during the period; also statements of expenses, including detailed records of the items of expense with vouchers and receipts, a statement of freight, a complete record of freight paid on outbound shipments, a statement of earnings and expenses-- all of which constitute a complete resume of the financial results of the branch for the period.

There is also received at the general offices of the Alabama corporation at Chicago a statement of...