Meetings & Expositions, Inc. v. Tandy Corporation

• Citation: 490 F.2d 714
• Decision Date: 09 January 1974
• Docket Number: Docket 73-2571.,No. 606,606
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Parties: MEETINGS & EXPOSITIONS, INC., Plaintiff-Appellant, v. TANDY CORPORATION, Defendant-Appellee.

490 F.2d 714 (1974)

MEETINGS & EXPOSITIONS, INC., Plaintiff-Appellant, v. TANDY CORPORATION, Defendant-Appellee.

No. 606, Docket 73-2571.

United States Court of Appeals, Second Circuit.

Argued December 19, 1973.

Decided January 9, 1974.

John G. Ledes, New York City (Gabriel I. Levy, and Levy & Ledes, New York City, of counsel), for plaintiff-appellant.

Alexander R. Hamilton, New York City (J. Frederic Taylor, and Burke & Burke, New York City, of counsel), for defendant-appellee.

Before FRIENDLY, MANSFIELD and OAKES, Circuit Judges.

PER CURIAM:

The complaint in this diversity action, filed in the District Court for the Southern District of New York on October 2, 1973, was for breach of a contract between plaintiff, Meetings & Expositions, Inc., and Storm Printing Company (Storm). Under the contract, Storm agreed to print the September, 1973, issue of plaintiff's magazine which was intended for distribution at a trade show in Detroit. The complaint alleged that defendant Tandy Corporation (Tandy) was a Delaware corporation having its principal place of business in Fort Worth, Texas; that Tandy, "a conglomerate of various divisions and companies engaged in diversified activities throughout the United States," maintained offices for the transaction of business within the Southern District of New York; and that Storm was part of one of the divisions of Tandy and had its principal place of business in Dallas, Texas. The judge signed an order submitted along with the complaint requiring Tandy to show cause on October 3 why the court should not issue a preliminary injunction restraining Storm, which allegedly had breached its contract, from retaining possession of various materials that plaintiff had furnished and from interfering with the printing and publication of plaintiff's magazine. On the return day Tandy submitted a cross-motion to dismiss pursuant to F.R.Civ.P. 12(b) (2). This was supported by an affidavit of its attorney, which alleged that the offices of Tandy mentioned in the complaint were not business offices but merely retail outlets of Tandy's "Radio Shack" division; that Storm was not a division of Tandy but rather of Trinity Forms Company (Trinity), a Texas corporation which was in turn a wholly-owned subsidiary of Tandy; and that Trinity was a viable corporate entity with its own board of directors, a majority of whom were not officers or directors of Tandy. Without giving plaintiff an opportunity to answer the affidavit, the judge heard argument on the motion to dismiss and indicated that he would render a decision on the following day. During the argument he suggested the possibility of settlement.

The parties acted on this suggestion and executed what they termed an "Agreement and Stipulation of Settlement," which Judge Duffy approved on October 4.¹ Tandy agreed to cause Storm to deliver to plaintiff in New York on October 4 fifty copies of the magazine against receipt of plaintiff's check for $7500 personally guaranteed by plaintiff's president, and also to cause Storm to ship or deliver another 500 copies in accordance with plaintiff's instructions. By noon on October 9 plaintiff was to replace its $7500 corporate check with a certified, cashier's or bank check of the same amount, to be delivered in New York to Tandy's attorneys. Thereafter Tandy would cause Storm to ship or deliver the remaining copies of the magazine and various advertising materials in accordance with plaintiff's instructions. It was agreed that Storm would not be required to pay or advance any shipping or delivery costs. If plaintiff failed to deliver the check, the clerk, upon an affidavit of default by one of Tandy's attorneys, was to enter judgment against plaintiff in the sum of $9800 plus costs. Upon full performance of the agreement, the parties were to file with the court a further stipulation dismissing the action with prejudice.

Plaintiff claims that it timely delivered the certified check, and concedes that Tandy met its obligations under the settlement agreement to the extent of arranging for delivery of the first 550 copies of the magazine. However, it alleges that Tandy failed to cause Storm to deliver to the Dallas Postmaster the remaining 32,000 copies in accordance with its instructions. Accordingly, on October 17, plaintiff submitted to Judge Duffy an order requiring Tandy to show cause why it should not be punished for contempt. For two days the judge declined to sign the order to show cause. Then, on the afternoon of October 19, he filed an order, supported by a two-page opinion, dismissing the action for lack of in personam jurisdiction over Tandy. While the opinion referred to the settlement agreement, there was no discussion of its effect on the jurisdictional dispute. The opinion concluded:

Rather than perpetuate the needless charade to maintain this action on the books of this District, it is hereby ordered that the case be dismissed in its entirety.

After plaintiff filed a notice of appeal, the judge substituted a revised and somewhat longer opinion. The new material included a reference to a New York principle that "absent an agency relationship or facts sufficient to pierce the corporate veil a parent corporation is not subject to jurisdiction because of the activities of a subsidiary." The court then concluded that plaintiff had failed to show an agency relationship or facts that would justify the "piercing of the corporate veil" — a conclusion that was quite irrelevant to a case where the parent was subject to jurisdiction because of its own activities in New York. Proceeding to the settlement agreement, the opinion sought to dispose of this on the basis that ...