Dungan, Hood & Co., Inc. v. C. F. Bally, Limited

• Decision Date: 17 February 1921
• Docket Number: 7694.
• Citation: 271 F. 517
• Parties: DUNGAN, HOOD & CO., Inc., v. C. F. BALLY, Limited.
• Court: U.S. District Court — Eastern District of Pennsylvania

271 F. 517

DUNGAN, HOOD & CO., Inc., v. C. F. BALLY, Limited.

No. 7694.

United States District Court, E.D. Pennsylvania.

February 17, 1921

Conlen Brinton & Acker, of Philadelphia, Pa., for plaintiff.

John Cadwalader, Jr., of Philadelphia, Pa., for defendant.

THOMPSON District Judge.

The defendant is a corporation organized under the laws of Switzerland, and engaged in Switzerland and France in the manufacture of boots and shoes. The plaintiff is a corporation of Pennsylvania, engaged in the manufacture of leather. In 1919 the plaintiff accepted an order from the defendant for the sale of 3,000 skins. Part of the leather under this contract had been delivered and paid for at the time of the service of the writ in this case, but there was a controversy between the parties as to the quantity of the merchandise delivered.

During November, 1920, Ernest O. Bally, a director of the defendant corporation, came to Philadelphia as a witness for his company in a suit brought by it against the Quaker City Corporation, pending in this court. While present in Philadelphia, an arrangement was made through correspondence between the New York office of C. F. Bally, Limited, and Dungan, Hood & Co., for the purpose of an interview between Mr. Bally and the officers of Dungan, Hood & Co., to attempt to settle the controversy over the contract. Mr. Bally went to the office of the plaintiffs; the dispute between the parties was discussed; no agreement was reached, and Mr Bally thereupon, having authority to do so, declined on behalf of the defendant to accept any further shipments. Thereafter a writ was issued and served upon Mr. Bally as a director of the defendant corporation. It appears that C. F Bally Limited, bought the leather from Dungan, Hood & Co. through an order given and accepted by mail, and that it was sold f.o.b. cars Philadelphia.

While Mr. Bally was in Philadelphia, he also called upon the Surpass Leather Company and examined certain skins at that company's premises with the view of making an arrangement whereby leather which had been sold and delivered to C. F. bally, Limited, should be taken back and another kind of leather substituted. While in Philadelphia, he also called at the office of John B. Evans and Co., leather dealers, for the purpose of getting one of the firm to testify in the case pending in this court as to prices at a prior date. While at the Evans premises, Mr. Bally examined leather and obtained prices on the same, and it was while there he was served with the writ of summons.

The question raised by the rule is whether the defendant, C. F. Bally, Limited, in view of these facts, was engaged in business within the district, so as to bring it within the jurisdiction of this court through service of the summons upon Mr. Bally, as one of its directors. When Mr. Bally came within the district, he came as a witness for the corporation, for the purpose of attending a session of this court. It is not disputed that such attendance did not bring the corporation, through its director, into the jurisdiction, for the purpose of bringing it into court as defendant in another case.

The defendant has no factory, does not manufacture within the Eastern district of Pennsylvania; it has not now and never has had any of its capital invested, and does not sell any of its output, within this district. It has purchased leather from various manufacturers and dealers in the district. It never registered in the state of Pennsylvania under the Act of April 22, 1874 (P.L. 108), nor has it appointed the secretary of the commonwealth its agent upon whom process can be served under the Act of June 8, 1911 (Act June 8, 1911 (P.L. 710); Pa. St. 1920, Secs. 11054-11058). The purpose of the acts of assembly of Pennsylvania requiring a foreign corporation to register with the secretary of the commonwealth is to enable those having business dealings with them to make them answerable in the courts of the state in which they are engaged in business. One penalty for failure to comply with the act of 1911 is that the corporation may not maintain an action in the courts of the state. Failure to comply, however, does not render it immune from process, if it has, in fact, through duly appointed agents, been engaged in business within the state.

As the present suit is brought in a federal court on the ground of diversity of citizenship, the fact that the defendant has not complied with the act of 1911 is immaterial. The contract for the alleged breach of which the present suit was brought was to the extent that the leather was to be delivered by the plaintiff f.o.b. cars, to be performed at Philadelphia. The carrier thereby became the agent of the defendant for the purpose of delivery. While delivery to the carrier under a sale f.o.b. cars is not engaging in business, so as to bring the defendant within the jurisdiction for the purpose of suit, yet it was considered a circumstance in connection with other facts in the case of Premo...