453 F.2d 435 (3rd Cir. 1971), 19482, Somportex Limited v. Philadelphia Chewing Gum Corp.

• Citation: 453 F.2d 435
• Party Name: SOMPORTEX LIMITED v. PHILADELPHIA CHEWING GUM CORPORATION, Appellant, v. BREWSTER, LEEDS & CO., Inc. and M. S. International, Inc., Third-Party Defendants.
• Case Date: December 20, 1971
• Court: United States Courts of Appeals, U.S. Court of Appeals — Third Circuit

Page 435

453 F.2d 435 (3rd Cir. 1971)

SOMPORTEX LIMITED

v.

PHILADELPHIA CHEWING GUM CORPORATION, Appellant,

v.

BREWSTER, LEEDS & CO., Inc. and M. S. International, Inc., Third-Party Defendants.

No. 19482.

United States Court of Appeals, Third Circuit.

December 20, 1971

Argued Oct. 19, 1971.

Certiorari Denied March 27, 1972.

See 92 S.Ct. 1294.

Page 436

Marvin Comisky, Blank, Rome, Klaus & Comisky, Philadelphia, Pa. (Goncer M. Krestal, Philadelphia, Pa., on the brief), for Philadelphia Chewing Gum Corp.

James J. McCabe, Jr., Duane, Morris & Heckscher, Philadelphia, Pa. (Richard A. Kraemer, Philadelphia, Pa., on the brief), for Somportex Ltd.

Dennis R. Suplee, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa. (Arthur H. Kahn, Philadelphia, Pa., on the brief), for Brewster, Leeds & Co., Inc.

Warren J. Kauffman, Abrahams & Loewenstein, Philadelphia, Pa., for M. S. International, Inc.

Before ALDISERT, GIBBONS and ROSENN, Circuit Judges.

OPINION

ALDISERT, Circuit Judge.

Several interesting questions are presented in this appeal from the district court's order, 318 F.Supp. 161, granting summary judgment to enforce a default judgment entered by an English court. To resolve them, a complete recitation of the procedural history of this case is necessary.

This case has its genesis in a transaction between appellant, Philadelphia Chewing Gum Corporation, and Somportex Limited, a British corporation, which was to merchandise appellant's wares in Great Britain under the trade name "Tarzan Bubble Gum." According to the facts as alleged by appellant, there was a proposal which involved the participation of Brewster Leeds and Co., Inc., and M. S. International, Inc., third-party defendants in the court below. Brewster made certain arrangements with Somportex to furnish gum manufactured by Philadelphia; M. S. International, as agent for the licensor of the trade name "Tarzan," was to furnish the

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African name to the American gum to be sold in England. For reasons not relevant to our limited inquiry, the transaction never reached fruition.

Somportex filed an action against Philadelphia for breach of contract in the Queen's Bench Division of the High Court of England. Notice of the issuance of a Writ of Summons was served, in accordance with the rules and with the leave of the High Court, upon Philadelphia at its registered address in Havertown, Pennsylvania, on May 15, 1967. The extraterritorial service was based on the English version of long-arm statutes utilized by many American states. ¹ Philadelphia then consulted a firm of English solicitors, who, by letter of July 14, 1967, advised its Pennsylvania lawyers:

I have arranged with the Solicitors for Somportex Limited that they will let me have a copy of their Affidavit and exhibits to that Affidavit which supported their application to serve out of the Jurisdiction. Subject to the contents of the Affidavit, and any further information that can be provided by Philadelphia Chewing Gum Corporation after we have had the opportunity of seeing the Affidavit, it may be possible to make an application to the Court for an Order setting the Writ aside. But for such an application to be successful we will have to show that on the facts the matter does not fall within the provision of (f) and (g) [of the long-arm statute, note 1, supra] referred to above.

In the meantime we will enter a conditional Appearance to the Writ in behalf of Philadelphia Chewing Gum Corporation in order to preserve the status quo.

On August 9, 1967, the English solicitors entered a "conditional appearance to the Writ" and filed a motion to set aside the Writ of Summons. ² At a

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hearing before a Master on November 13, 1967, the solicitors appeared and disclosed that Philadelphia had elected not to proceed with the summons or to contest the jurisdiction of the English Court, but instead intended to obtain leave of court to withdraw appearance of counsel. The Master then dismissed Philadelphia's summons to set aside plaintiff's Writ of Summons. Four days later, the solicitors sought to withdraw their appearance as counsel for Philadelphia, contending that it was a conditional appearance only. On November 27, 1967, after a Master granted the motion, Somportex appealed. The appeal was denied after hearing before a single judge, but the Court of Appeal, reversing the decision of the Master, held that the appearance was unconditional and that the submission to the jurisdiction by Philadelphia was, therefore, effective. ³ But the court let stand "the original order which was made by the master on Nov. 13 dismissing the application to set aside. The writ therefore will stand. On the other hand, if the American company would wish to appeal from the order of Nov. 13, I see no reason why the time should not be extended and they can argue that matter out at a later stage if they should so wish." ⁴

Thereafter, Philadelphia made a calculated decision: it decided to do nothing. It neither asked for an extension of time

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nor attempted in any way to proceed with an appeal from the Master's order dismissing its application to set aside the Writ. Instead, it directed its English solicitors to withdraw from the case. There being no appeal, the Master's order became final.

Somportex then filed a Statement of Claim which was duly served in accordance with English Court rules. In addition, by separate letter, it informed Philadelphia of the significance and effect of the pleading, the procedural posture of the case, and its intended course of action. ⁵

Philadelphia persisted in its course of inaction; it failed to file a defense. Somportex obtained a default judgment against it in the Queen's Bench Division of the High Court of Justice in England for the sum of £39, 562.10.10 (approximately $94,000.00). The award reflected some $45,000.00 for loss of profit; $46,000.00 for loss of good will and $2,500.00 for costs, including attorneys' fees.

Thereafter, Somportex filed a diversity action in the court below, seeking to enforce the foreign judgment, and attached to the complaint a certified transcript of the English proceeding. The district court granted two motions which gave rise to this appeal: it dismissed the third-party complaints for failure to state a proper claim under F.R.C.P. 14; and it granted plaintiff's motion for summary judgment, F.R.C.P. 56(a).

We will quickly dispose of the third-party matter. We perceive our scope of review to be limited to an inquiry whether the district court abused its discretion in refusing impleader. ⁶ At issue here was not the alleged contract to peddle Tarzan chewing gum in England. Had such been the case, Philadelphia's third-party arguments would have been persuasive. The complaints might have met the liability test and "transaction or occurrence" requirement of F.R.C.P. 14(a). ⁷ But the transaction at issue here is not the contract; it is the English judgment. And neither

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third-party defendant was involved in or notified of the proceedings in the English courts. Accordingly, we find no abuse of discretion in the district court's dismissal of the third-party complaints.

Appellant presents a cluster of contentions supporting its major thesis that we should not extend hospitality to the English judgment. First, it contends, and we agree, that because our jurisdiction is based solely on diversity, "the law to be applied . . . is the law of the state," in this case, Pennsylvania law. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Svenska Handelsbanken v. Carlson, 258 F.Supp. 448 (D.Mass.1966).

Pennsylvania distinguishes between judgments obtained in the courts of her sister states, which are entitled to full faith and credit, and those of foreign courts, which are subject to principles of comity. In re Christoff's Estate, 411 Pa. 419, 192 A.2d 737, cert. denied, 375 U.S. 965, 84 S.Ct. 483, 11 L.Ed.2d 414 (1964).

Comity is a recognition which one nation extends within its own territory to the legislative, executive, or judicial acts of another. It is not a rule of law, but one of practice, convenience, and expediency. Although more than mere courtesy and accommodation, comity does not achieve the force of an imperative or obligation. Rather, it is a nation's expression of understanding which demonstrates due regard both to international duty and convenience and to the rights of persons protected by its own laws. Comity should be withheld only when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect. ⁸ See Orfield and Re, International Law, Note, "Recognition and Enforcement of Foreign Judgments and Awards," pp. 736-737.

Thus, the court in Christoff, supra, 192 A.2d at 739, acknowledged the governing standard enunciated in Hilton v. Guyot, supra, 159 U.S. at 205, 16 S.Ct. at 159:

When an action is brought in a court of this country by a citizen of a foreign country against one of our own citizens . . . and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless

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some special ground is shown for impeaching the judgment, as by showing that it was affected by fraud or prejudice, or that by the principles of international law, and by the comity of our own country, it should not be given full credit and effect.

It is by this standard, therefore, that appellant's arguments must be measured.

Appellant's contention that the district court failed to...