Western Smelting & Refining Co. v. Pennsylvania R. Co., Civ. No. 95-47

• Decision Date: 03 December 1948
• Docket Number: Civ. No. 95-47,112-47.
• Citation: 81 F. Supp. 494
• Parties: WESTERN SMELTING & REFINING CO. v. PENNSYLVANIA R. CO. (two cases).
• Court: U.S. District Court — District of Nebraska

81 F. Supp. 494

WESTERN SMELTING & REFINING CO. v. PENNSYLVANIA R. CO. (two cases).

Civ. Nos. 95-47, 112-47.

United States District Court D. Nebraska, Omaha Division.

December 3, 1948.

Jack W. Marer, of Omaha, Neb., for plaintiff.

John L. Barton (of Brown, Crossman, West, Barton & Quinlan), all of Omaha, Neb., for defendant.

DONOHOE, Chief Judge.

These two actions originated in the state district court of Douglas County, Nebraska, and were removed to this forum prior to the effective date of the new Judicial Code, which creates a different removal procedure than that heretofore existing, 28 U.S. C.A. § 1446. Except for the fact that the party upon whom summons was served differs in both actions, the two suits are otherwise identical. After No. 95-47 Civil was removed, counsel for plaintiff, apparently dubious as to the validity of the service therein, caused a new petition to be filed in the state court, and secured service thereunder upon a different party. This suit was in turn removed to this court, and appears in the above caption as No. 112-47 Civil. The defendant has filed motions, supported by affidavits, in both cases, attacking the sufficiency of service, and asking that the suits be dismissed. Its contention in substance is that the defendant has not consented to this suit; has not appointed an agent to receive service of process in Nebraska; is not doing business in Nebraska, and that the state court could not maintain the action without oppressively burdening interstate commerce. Furthermore, the defendant maintains that the Transportation Act, 49 U.S.C.A. § 20(11), precludes the state court in this matter. As an alternative, and in lieu of dismissal, the defendant asks the court to quash the service of summons. Due to the identity of the two actions, with the exception hereinbefore noted, the cause will be considered as one and the same except in that portion of this memorandum which deals specifically with the sufficiency of service.

The nature of the parties and the plaintiff's claim may be briefly stated. The plaintiff is a corporation organized under the laws of Nebraska with its principal place of business in Omaha; the defendant is a railroad company incorporated under the laws of Pennsylvania, with its principal place of business in Philadelphia. Plaintiff's claim sounds in tort for damages allegedly due as a result of the defendant's negligent handling and carriage of freight, and the conversion thereof.

The oral testimony taken at the time of the submission of the motions, and the pleadings, disclose the following facts: No line of the defendant enters into, extends from, or traverses the state of Nebraska. The western terminus of its main line is in Chicago, Illinois. The defendant maintains an office in Omaha, Nebraska, under the joint supervision of H. B. Peterson and H. W. Johnson, whose designated titles are District Passenger Agent and District Freight Agent respectively. This office serves the territory comprising part of Wyoming, part of South Dakota, and all of Nebraska. It is used to maintain records; to serve as a place for the performance of clerical tasks; and is the focal point for Peterson's and Johnson's activities, which constitutes the solicitation of passenger and freight travel over the defendant's line. Personnel is furnished Peterson and Johnson by the defendant to assist them in the performance of duties. It appears that the hiring and firing of such personnel is not within the province of either of these men. Discretion in this matter is lodged with the defendant's branch office in Chicago. The defendant owns the furniture and fixtures in this Omaha office; maintains a telephone and listing thereto in the Omaha directory; and H. W. Johnson's name appears therein in his designated capacity as district freight agent for the defendant. The Omaha office has been in existence for sixteen years. No bank account is maintained within the state of Nebraska by the defendant, and no cash transactions are handled by the Omaha office. However, on several occasions it has accepted pre-payments of freight charges from the plaintiff and has transmitted them onward. On one occasion, it accepted a cashier's check from the plaintiff to compensate for the under-payment of freight charges. As incidental to the solicitation of freight business, H. W. Johnson issues exchange bills of lading. Neither he, nor the Omaha office in general, has authority to settle claims; yet when they pertain to shippers in his area, Mr. Johnson is kept informed as to the status of the claims. Johnson may refuse to issue an exchange bill of lading, but has never done so to date. He diverts shipments upon request of the shipper; traces shipments; furnishes information regarding rates over the Pennsylvania Railroad; and advises shippers the necessary documents needed to present a claim against the defendant.

In suit No. 95-47, Civil, Thomas E. Rohan, Jr., was served with summons. In suit No. 112-47 Civil, H. W. Johnson was served. As heretofore stated, Johnson was District Freight Agent for the territory comprising the state of Nebraska. In that capacity, he exercised joint control and management over the Omaha office. The personnel therein were under his co-supervision and direction. Rohan, however, was not vested with any managerial duties. His tasks were primarily clerical.

The scope of the defendant's activities in relation to the plaintiff's claim may be more briefly stated. The shipment out of which this controversy arises involves aluminum sheeting belonging to the plaintiff, situated at Detroit, Michigan. The plaintiff originally wished this aluminum shipped to Baltimore, Maryland. Pursuant to this plan, it contacted H. W. Johnson of the defendant's Omaha office, and asked for information relative to rates. Mr. Johnson was unable to furnish the desired information, but transmitted to the plaintiff the name of the defendant's freight agent in Detroit, Michigan, and suggested that plaintiff contact him regarding any matters pertaining to the shipment. Following Johnson's suggestions, the plaintiff contacted the Detroit agent, and obtaining the information he wished. Before this shipment could be commenced, however, the plaintiff concluded to transfer the aluminum not to Baltimore, Maryland, but to Long Island, New York. Accordingly, a bill of lading was prepared in the defendant's Omaha office, and the original and copies thereof were left with Johnson, and by him forwarded to Detroit. The aluminum moved on this bill of lading. Johnson notified plaintiff when the said aluminum arrived at its destination. After the consignee refused to accept the shipment, Johnson asked the plaintiff for a disposition of it. What occurred thereafter is not pertinent to the scope of the court's present inquiry. It suffices to say that the defendant sold the aluminum, and the plaintiff filed its claim.

A preliminary observation seems appropriate. Although the new Judicial Code establishes a different removal procedure, nothing appears therein to abrogate the following rules:

(a) The jurisdiction acquired by the federal court in a removal action is derived from the state court. If that court lacks jurisdiction over the parties or over the subject matter, the federal court is powerless to proceed. Lambert Run Coal Co. v. Baltimore & Ohio R. Co., 258 U.S. 377, 382, 42 S.Ct. 349, 66 L.Ed. 671.

(b) And the challenge to the jurisdiction of the state court, as well as the sufficiency of the service of its mesne process may be asserted in the federal tribunal. Courtney v. Pradt, 196 U.S. 89, 92, 25 S.Ct. 208, 49 L.Ed. 398.

It appears undisputed that the state court had jurisdiction over the subject matter of the controversy. Herrmann v. Franklin Ice Cream Co., 114 Neb. 468, 208 N.W. 141, and hence the ensuing question arises as to whether the defendant was doing business in Nebraska so as to make it amenable to process therein. This question involves a federal issue to be determined apart from Nebraska authorities. Mechanical Appliance Co. v. Castleman, 215 U.S. 437, 30 S.Ct. 125, 54 L.Ed. 272.

It appears that the defendant's activities in Nebraska were so related to the claim now pending as to validate a judgment in personam which the state court may have rendered. In reaching this conclusion, the court is not unmindful of the rule urged by the defendant that the mere solicitation of business, unaccompanied by more, is insufficient to support a finding of jurisdictional presence. See, however, Frene v. Louisville Cement Co., 77 U.S. App.D.C. 129, 134 F.2d 511, 146 A.L.R. 926. Nor has it looked lightly upon such cases as Green v. Chicago, Burlington & Quincy R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916; Maxfield v. Canadian Pacific R. Co., 8 Cir., 70 F.2d 982, or Sowl v. Union Pacific R. Co., D.C., 72 F.Supp. 542, wherein the courts, upon facts similar but not identical to those at bar, have reached a contrary conclusion from that indicated herein. If a measure of the defendant's activities as compared to those in the cited cases was the proper criteria...