Consolidated Sun Ray, Inc. v. Steel Insurance Company

• Decision Date: 03 January 1961
• Docket Number: Civ. A. No. 28145.
• Citation: 190 F. Supp. 171
• Parties: CONSOLIDATED SUN RAY, INC., a corporation organized and existing under and by virtue of the laws of the State of Delaware, and Sun Ray Drug Co., a Division of Consolidated Sun Ray, Inc. and Bargain City U.S.A., Inc., a corporation organized and existing under and by virtue of the laws of the State of Delaware, v. STEEL INSURANCE COMPANY OF AMERICA, a corporation organized and existing under and by virtue of the laws of the State of Illinois.
• Court: U.S. District Court — Eastern District of Pennsylvania

190 F. Supp. 171

CONSOLIDATED SUN RAY, INC., a corporation organized and existing under and by virtue of the laws of the State of Delaware, and Sun Ray Drug Co., a Division of Consolidated Sun Ray, Inc. and Bargain City U.S.A., Inc., a corporation organized and existing under and by virtue of the laws of the State of Delaware, v. STEEL INSURANCE COMPANY OF AMERICA, a corporation organized and existing under and by virtue of the laws of the State of Illinois.

Civ. A. No. 28145.

United States District Court E. D. Pennsylvania.

January 3, 1961.

David S. Malis, Malis, Malis & Malis, Philadelphia, Pa., for plaintiffs.

Owen B. Rhoads, Philadelphia, Pa., for defendant.

EGAN, District Judge.

This is an action upon a fire insurance policy issued by the defendant to the plaintiff, Consolidated Sun Ray, Inc., (hereinafter referred to as Consolidated), and any affiliated or subsidiary companies or corporations (which the other plaintiffs are alleged to be). Judgment is sought in the amount of $750,000 as a result of a fire at the Horsham, Pennsylvania, store of the plaintiff, Bargain City U. S. A., Inc., which loss it is alleged is covered by the policy.

The plaintiffs are Delaware corporations registered to do business in Pennsylvania and are actually engaged in business in this State, with offices in Philadelphia, Pennsylvania. The defendant is an Illinois corporation with offices at Chicago in that State.

Service of the complaint was made by the United States Marshal mailing two copies thereof by registered mail to the Insurance Commissioner of Pennsylvania who accepted service of the complaint by writing filed of record in this case. He also mailed a copy of the complaint to the defendant by registered mail. The defendant filed a general appearance and promptly filed the present motion to quash service of summons on the basis of improper venue and improper service of the summons and complaint, and to dismiss the complaint for want of jurisdiction of the Court over the person of the defendant.

Venue is proper under the provisions of 28 U.S.C. § 1391 because the plaintiffs, though Delaware corporations, are registered to do business in Pennsylvania and are doing business in this district. Section 1391(a) provides that a diversity suit "may * * * be brought only in the judicial district where all plaintiffs or all defendants reside." Section 1391(c) provides that "A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes." Though the contrary has frequently been argued, the Courts have held that the last portion of § 1391 (c) which reads "* * * and such judicial district shall be regarded as the residence of such corporation for venue purposes" applies to a plaintiff corporation as well as to a defendant corporation, and that the district in which a corporation is licensed to do business or is doing business is the proper place to lay venue for an action brought by the corporation as well as for an action brought against the corporation. Southern Paperboard Corporation v. United States of America, D.C.S.D.N.Y.1955, 127 F.Supp. 649; Standard Insurance Co. v. Isbell, D.C.E.D.Tex.1956, 143 F. Supp. 910; Eastern Motor Express, Inc. v. Espenshade, D.C.E.D.Pa.1956, 138 F. Supp. 426; Travelers Insurance Company v. Williams, D.C.W.D.N.C.1958, 164 F.Supp. 566. The argument of the defendant that venue is improper because it is an Illinois corporation, not licensed to do business in Pennsylvania and not doing business here, cannot prevail because all the plaintiffs are "residents" of this district for venue purposes.

The policy sued on has attached to it a service of suit clause in the following language:

"Service of Suit Clause

"It is agreed that in the event of the failure of the Company hereon to pay any amount claimed to be due hereunder, Company hereon, at the request of the Insured, will submit to the jurisdiction of any Court of competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court.

"Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, Company hereon hereby designates the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Insured or any beneficiary hereunder arising out of this contract of insurance, and hereby designates the above-named as the person to whom the said Insured is authorized to mail such process or a true copy thereof.

"Attached to and forming part of Policy No. 563 issued to Consolidated Sun Ray, Inc. &/or Any Affiliated or Subsidiary Companies or Corporations, AIMA, by The Steel Insurance Company of America at Chicago, Illinois.

"Date: October 28, 1959

"/s/ M. E. Luber "Vice President"

The defendant contends that there was no consideration for the inclusion of the service of suit clause in the policy because it was not a part of the policy when it was delivered in June of 1959 and it bears a later date, namely, October 28, 1959. This service of suit clause, however, is signed by a vice-president of the defendant corporation and recites that it is "attached to and forming part of Policy No. 563 issued to Consolidated Sun Ray, Inc. &/or Any Affiliated or Susbidiary Companies or Corporations, AIMA, by The Steel Insurance Company of America at Chicago, Illinois," which is the policy in suit. This is an admission by the defendant that the clause in question is an integral part of the policy issued to the plaintiff and is, therefore, supported by the original consideration.

Many States, as a condition precedent to permitting an insurance company to engage in business therein, require it to...