Davis v. Asano Bussan Co.

• Decision Date: 30 April 1954
• Docket Number: No. 14465.,14465.
• Parties: DAVIS v. ASANO BUSSAN CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

212 F.2d 558 (1954)

DAVIS v. ASANO BUSSAN CO. et al.

No. 14465.

United States Court of Appeals, Fifth Circuit.

April 30, 1954.

Bennett B. Patterson, Cole, Patterson, Cole & McDaniel, Houston, Tex. (Joseph Kirchheimer, John L. Russell, Houston, Tex., of counsel), for appellant.

Vernon Booth Lowrey, Washington, D. C., for appellees.

Before HOLMES, RUSSELL and RIVES, Circuit Judges.

RIVES, Circuit Judge.

The principal questions to be decided are whether the complaint was properly served on Asano Bussan Company and on Fuji Foreign Trading Company,¹ both alien corporations and Nationals of Japan; and whether the district court acquired jurisdiction of those corporations. If the answer to any of those questions is favorable to either company, upon the record as it now stands, then a subsidiary question is presented as to whether the court erred in rendering its judgment of dismissal without first requiring the defendants to answer the interrogatories propounded under Rule 33, Federal Rules of Civil Procedure, 28 U.S.C.A.

The action was instituted in the district court of Harris County, Texas, and removed to the United States District Court because it was between a citizen of Texas, as plaintiff, and citizens or subjects of a foreign state, Japan, as defendants. 28 U.S.C.A. §§ 1332(2), 1441 (a). The facts upon which the district court based its judgment of dismissal² were developed from the pleadings, the returns of service, the affidavits filed by the defendants in support of the motion to dismiss, the counter-affidavit of the plaintiff, and the admissions of the defendants made pursuant to Rule 36, Federal Rules of Civil Procedure. There was conflict between the parties as to some of the facts, but those now to be stated were established without substantial dispute.

On September 30, 1950, Fuji entered into a contract with American Union Transport Company of New York for sale of a cargo of "Asano" brand Portland cement to be delivered at Mobile, Alabama, or Gulfport, Mississippi, shipment to be made not later than October 10, 1950. On October 3, 1950, American Union posted a letter of credit at Chase National Bank in New York in the sum of $178,605.00 to pay for this cement.

"Asano" brand of cement is manufactured by Japan Cement Company of Tokyo, Japan, of which company appellee Asano Bussan Company is a sales agent. Fuji could not purchase the cement from the Japan Cement Company, and hence assigned the letter of credit at Chase National Bank to Asano. Whether Fuji thereafter remained legally interested in the transaction does not clearly appear. Asano took this letter of credit to the Bank of Tokyo, Tokyo, Japan, and borrowed money on it to buy the required cement from Japan Cement Company. The cost of the cement was paid by Asano to Japan Cement Company. The documents were forwarded by the Bank of Tokyo to Chase National Bank and the cement was shipped on the S.S. Hai-Tee.

Due to claimed discrepancies in the documents, with which we are not here concerned, Chase National Bank dishonored the Bank of Tokyo draft against the letter of credit posted with it. The Bank of Tokyo then demanded that Asano repay the money advanced to it and Asano complied with that demand.

At that time the cement was on board the S.S. Hai-Tee off the port of Mobile. By coincidence, one Nobutsugu Utagawa, a director of Fuji, happened at the same time to be in New York on a business tour of his own. Asano cabled him requesting him to approach both American Union and Chase National Bank to settle the matter, which settlement he was unable to accomplish. Asano then requested Utagawa to take charge for Asano of selling the cement elsewhere, but an outright sale was found difficult. Asano then entrusted the cement to J. P. Smith of Fort Worth, Texas, on a consignment basis, Utagawa making the necessary arrangements. At the request of J. P. Smith, the cement, then en route, was eventually unloaded at Houston, Texas, about the middle of December 1950. Utagawa returned to Japan toward the end of December, 1950. The papers in the matter were deposited with the First National Bank, Houston, Texas. By the last of January, 1951, Smith had sold only 220 bags of the cement and had failed to pay for the cargo. It became obvious to Asano that the cement could not stand the humid climate of Houston much longer without serious deterioration. Asano then requested Utagawa, on its behalf and at its expense, to go to Houston to expedite the sale of the cement there. Utagawa left Japan for Houston at the beginning of February, 1951 carrying with him a power of attorney from Asano with reference to the cement at Houston. The terms of that power of attorney, though requested by interrogatories, do not appear in the record, but appellant's counsel state that it was produced by appellee's counsel after the court had rendered final judgment. During his stay in the United States, Utagawa was not called upon to show the power of attorney, but "the delivery orders, tax payment declaration and other documents were signed in the name of Asano Bussan as: N. Utagawa Asano Bussan Company." The affidavit of S. Yamada, President of Asano, shows that "Utagawa, after arriving at Houston, tried hard to sell the cement, but immediate disposal looked difficult. Japan Cement Company Ltd., seeing the predicament Asano Bussan was placed in, contacted their Central America Sales Agent and an expert in cement business, Mr. Sigfried Olsen, One Drumm Street, San Francisco 6, Calif. U. S. A. and asked him for his help, which Mr. Olsen did, and the cement was finally disposed of."

When Japan Cement Company cabled Sigfried Olsen, its Central America sales agent, requesting him to go to Houston on behalf of Asano, Mr. Olsen was in Central America and he did not reach Houston until March 6. He then remained in Houston for ten days when it became necessary for him to return to his office in San Francisco, California. On April 5 he came back to Houston where he found the cement "still unsold and the interest of all parties in great jeopardy." On April 19, Olsen accepted consignment of all of the cement from Utagawa. Mr. Olsen, trading as Sigfried Olsen Shipping Company, San Francisco, California, and not using the name of any other person, was then successful in disposing of the cement.

Summarizing some of the facts having particular relation to Texas, Utagawa admittedly on behalf of Asano, and whether also representing Fuji is not clear,³ was in Texas in December of 1950 and arranged for the storage of the cement in three dock warehouses to be released to J. P. Smith on Utagawa's order as Smith paid for the cement under the consignment agreement. Utagawa returned to Houston bearing the power of attorney from Asano in February, 1951 and remained until he consigned the cement to Olsen on April 19, 1951 and thereafter until he was served with process in this action on April 25, 1951.

As stated, the facts just recited were established without substantial dispute. In addition, the plaintiff made affidavit that Utagawa was present in Houston on three or more different occasions representing Asano and Fuji and stated to plaintiff on those occasions that he was representing both corporations, that Fuji was the real owner and Asano only the ostensible owner, and that both corporations were interested in the transaction. The plaintiff's affidavit further states that Utagawa actually made sales out of the warehouse stock at Houston directly to purchasers and that, while there, Utagawa negotiated with the plaintiff and with three other named persons in an effort to sell the cement direct and through them as agents. The plaintiff's affidavit further claims that, during the time that Utagawa was in Houston, to the plaintiff's knowledge he was not only endeavoring to sell this shipment but was also trying to find a market for Japanese cement, and that Utagawa contacted many other persons in an attempt to find such a market.

The interrogatories propounded by the plaintiff to the defendants sought information in detail as to each and every transaction that took place with respect to this cement from the time it arrived at the port of Houston until it was finally sold and disposed of; who handled the release of the shipment and each portion of the same; each sale made from the shipment and the person to whom sold; the original or photostatic copy of the power of attorney executed by Asano to Utagawa, and the details of each transaction by Utagawa under said power of attorney, and which of those transactions were conducted in Texas; the details of the transactions with respect to this shipment of cement had with Adam H. Harper of New Orleans, Louisiana, with J. P. Smith of Fort Worth, Texas, and with Sigfried Olsen, and also with Stevenson, Fitzgerald and Dunlap, Inc., of Washington and New York. The voluminous interrogatories seek to search out in detail everything that had been done by either of the defendants with reference to this shipment of cement, and also any other business done by either during the years 1950, 1951 and 1952 in Texas or in other parts of the United States.

The interrogatories were served on November 3, 1952, but due to the absence of defendants' counsel from Houston, did not come to his attention until November 17, 1952. On November 20, the defendants filed objections to the interrogatories stating that they agreed substantially to the request for admissions as proposed and further that,

"Defendants submit that the affidavits already on file in connection with said Motion, taken together with the Admissions now being made are sufficient for the determination of said Motion; that on the face of them the interrogatories to which this objection goes, have to do with the final merits of the case, being in minute detail on transactions that have nothing to do with said Motion; and for that matter in certain respects being in minute detail on matters that would be

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