California Stucco Products v. National Gypsum Co.

• Decision Date: 15 May 1940
• Docket Number: No. 5.,5.
• Citation: 33 F. Supp. 61
• Parties: CALIFORNIA STUCCO PRODUCTS OF N. E., Inc., v. NATIONAL GYPSUM CO.
• Court: U.S. District Court — District of Massachusetts

33 F. Supp. 61

CALIFORNIA STUCCO PRODUCTS OF N. E., Inc., v. NATIONAL GYPSUM CO.

No. 5.

District Court, D. Massachusetts.

May 15, 1940.

Frank I. Rose, of Boston, Mass., for plaintiff.

Malcolm K. Buckley and Bean, Brooks, Buckley & Bean, all of Buffalo, N. Y., and Leonard Wheeler, Jr., and Goodwin, Proctor & Hoar, all of Boston, Mass., for defendant.

FORD, District Judge.

The present proceeding involves a motion to dismiss filed by the defendant to the plaintiff's complaint for patent infringement. The grounds relied upon by the defendant are presented in its motion as follows:

1. That the defendant, National Gypsum Company, has its regular and established place of business in the City of Buffalo, State of New York.

2. That the defendant has no "regular and established place of business" within the territorial jurisdiction of this court as required by said Judicial Code, Section 48, 28 U.S.C.A. § 109, in order to grant jurisdiction of this cause to this court.

3. That the Henry F. Long, Commissioner of Corporations and Taxation of the Commonwealth of Massachusetts, on whom the summons in civil action or subpoena in this case was served, is not such an agent engaged in conducting such "regular and established place of business" in the territorial jurisdiction of this cause to this court in respect of defendant.

4. That the defendant named herein has not committed acts of infringement of the patent named in the Bill of Complaint within the territorial jurisdiction of this court as required by said Judicial Code, Section 48, 28 U.S.C.A. § 109, in order to grant jurisdiction to this court to try and determine this cause in respect of defendant.

The following facts were established by affidavits and evidence introduced at the hearing on the motion:

The plaintiff is a Massachusetts corporation with its principal place of business in Cambridge, and the defendant is a Delaware corporation engaged in the business of manufacturing and selling gypsum products, building materials, and allied products. The defendant company maintains a sales office at 250 Stuart Street, Boston, Massachusetts, in charge of one Harry G. Cover. Service of the summons and complaint were made on (1) the said Harry G. Cover and (2) Henry F. Long, Commissioner of Corporations and Taxation for the Commonwealth of Massachusetts, whom the defendant designated as its attorney for the service of processes. The service was made on said Cover "by giving in hand to Harry G. Cover agent doing business in Massachusetts * * * a true and attested copy of the within summons." The said Cover and the salesmen working out of the Stuart Street office solicited orders for various products of the defendant, such orders being subject to approval and acceptance at the general offices of the defendant at Buffalo, New York. Neither Cover nor any other person at this office had the authority to contract for or bind the defendant by contract. Cover was a resident of Belmont, Massachusetts, and was employed as salesmanager at the Stuart Street office and he sent all orders to Buffalo for acceptance. It was his duty to supervise the salesmen. The defendant kept no bank accounts in Massachusetts other than a courtesy account in the First National Bank, in Boston, to which no deposits and from which no withdrawals were made, and there was no other account from which Cover could draw for expenses except a petty cash account of not more than $40. The Stuart Street offices consisted of a main office and two smaller offices connecting with the main office. The offices were furnished with desks, chairs and tables and filing cabinets. Rent for these offices were paid by the home office at Buffalo, New York. There were employed at the Boston office, in addition to Cover, a chief clerk and two stenographers. The duties of the chief clerk were to receive telephone orders concerning sales and transmit them to the home office at Buffalo, New York. It was the duty of the stenographers to write letters requested by salesmen, type orders and direct these orders to the home office at Buffalo, New York. Records were kept of the sales orders at this office. When the orders came into the office copies of the orders were in some instances sent directly to the mill of the company at Portsmouth, New Hampshire, although these orders were not binding until accepted by the company at its home office. Orders for products not manufactured at Portsmouth were sent to the home office and, if approved, sent from there to the mill. When the mill filled these orders from the Boston office, copies of the loading orders were sent to the Boston office and retained at Boston. Sales orders and loading orders were the only business records kept at the Boston office outside of the records as to expenditures as to petty cash. All invoices for goods were sent from the home office and all accounts kept by it. There was no stock of any sort carried by the Stuart Street office nor had the agent Cover any control of any stock. All stock was directly under the control of the home office at Buffalo, New York. It further appeared that the telephone directory listed the name and telephone of the defendant's Boston office on Stuart Street.

The facts further showed alleged acts of infringement in Massachusetts. I understand that the defendant does not now rely on this ground as it does not argue it in its brief.

The venue of patent suits is dependent upon 28 U.S.C.A. § 109, Judicial Code, Section 48, which provides as follows: "Patent cases. In suits brought for the infringement of letters patent the district courts of the United States shall have jurisdiction, in law or in equity, in the district of which the defendant is an inhabitant, or in any district in which the defendant, whether a person, partnership, or corporation, shall have committed acts of infringement and have a regular and established place of business. If such suit is brought in a district of which the defendant is not an inhabitant, but in which such defendant has a regular and established place of business, service of process, summons, or subpoena upon the defendant may be made by service upon the agent or agents engaged in conducting such business in the district in which suit is brought."

The Supreme Court of the United States in the case of Green v. Chicago B. & Q. Railway Co., 205 U.S. 530, 27 S.Ct. 595, 596, 51 L.Ed. 916, said: "The business shown in this case was, in substance, nothing more than that of solicitation. Without undertaking to formulate any general rule defining what transactions will constitute `doing business' in the sense that liability to service is incurred, we think that this is not enough to bring the defendant within the district so that process can be served upon it."

This language is applicable to the present case. There does not appear here to have been more than a solicitation of orders in Massachusetts by the defendant foreign corporation. True it carried on some business, but it was not carrying on business so as to come within the general rule laid down in the case of People's Tobacco Co., Ltd. v. American Tobacco Co., 246 U.S. 79, 87, 38 S.Ct. 233, 235, 62 L. Ed. 587, Ann.Cas. 1918C, 537, which is to the effect that "the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state or district where service is attempted." Rosenberg Bros. & Co., Inc., v. Curtis Brown Co. 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372; Philadelphia & Reading Railway Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L. Ed. 710; Zimmers et al. v. Dodge Brothers Inc., D. C., 21 F.2d 152; Hinchcliffe Motors, Inc. v. Willys-Overland Motors, Inc., D. C., 30 F.Supp. 580; Haight v. Viking Pump Co. of Delaware, D. C., 29 F.Supp. 575.

The invoices sent from the home office of the defendant to the plaintiff, which were...