Hall Laboratories v. Millar Bros. & Co.

• Decision Date: 26 June 1957
• Docket Number: Civ. A. 21063.
• Parties: HALL LABORATORIES, Inc., v. MILLAR BROS. & CO., Inc. and John Engelhorn & Sons, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

152 F. Supp. 797

HALL LABORATORIES, Inc., v. MILLAR BROS. & CO., Inc. and John Engelhorn & Sons, Inc.

Civ. A. 21063.

United States District Court E. D. Pennsylvania.

June 26, 1957.

Richard P. Brown, Jr., of Morgan, Lewis & Bockius, Philadelphia, Pa., for plaintiff.

William L. Matz, of Zoob & Matz, Philadelphia, Pa., for defendants.

VAN DUSEN, District Judge.

This matter comes before the court on the motion of defendant John Engelhorn & Sons, Inc. (hereinafter called "Engelhorn") to dismiss this civil action for patent infringement due to improper venue and service.

Paragraph 2 of the complaint alleges, in part, that "Defendant Engelhorn is a New Jersey corporation and has a regular and established place of business at 35th and Reed Streets, Philadelphia, where both Millar and Engelhorn have committed acts of infringement." Plaintiff claims to have effected service of process when the United States Marshal delivered a copy of the summons and of the complaint to Leonard Silverstein at 35th and Reed Streets, Philadelphia, Pennsylvania, as an agent or officer of Engelhorn.

28 U.S.C.A. § 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions. Fourco Glass Co. v. Transmirra Products Corp., 1957, 353 U.S. 222, 77 S.Ct. 787, 788, 1 L.Ed.2d 786. Such section provides as follows:

"(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

Since the complaint alleges that Engelhorn committed acts of infringement in this judicial district, the questions here to be determined are:

I. Does Engelhorn have "a regular and established place of business" at 35th and Reed Streets, Philadelphia, Pennsylvania, and

II. Was service on Leonard Silverstein at the above address, as an agent or officer of Engelhorn, service on Engelhorn?

I. Regular and Established Place of Business

Defendant Engelhorn claims that it has no license to do business in Pennsylvania, that it has not transacted any business in Pennsylvania, and that it does not maintain an office or place of business in Pennsylvania, but from the facts as shown by the depositions, exhibits and affidavits, it appears that Engelhorn does have in Pennsylvania a regular and established place of business.

1. Under the Regulations of the United States Department of Agriculture (see document No. 10 in the Clerk's file), pursuant to the Meat-Inspection Act, 21 U.S.C.A. § 77 ff., federal inspection is required of any meat packing establishment that sells its products (which are capable of being used as food for man) in interstate commerce; and each federally-inspected establishment has an official number assigned to it by the Meat Inspection Branch of the Department of Agriculture. This number must be applied to all of the meat products that such establishment ships in interstate commerce so as to inform the public as to where the meat came from and who was the packer. (Deposition of Frank A. Chalcroft, pp. 3 and 4; deposition of Leonard Silverstein, pp. 14 and 15; Regulations Governing the Meat Inspection of the U. S. Department of Agriculture, §§ 2.1 and 5.1(a).)

2. Until March 1956, the meat packing plant at 35th and Reed Streets was a federally-inspected plant operated solely by Millar and was listed with the Meat Inspection Branch as Establishment No. 261 under Millar. (Deposition of Leonard Silverstein, pp. 14-5.)

3. In March of 1956, Engelhorn, by an agreement of stock purchase,¹ took control of the Millar business and thereafter operated the Millar plant at 35th and Reed Streets, Philadelphia, making all decisions relative to its operation. (Deposition of Lexier, pp. 6, 37, 40, 52, 54 and 61; deposition of Chalcroft, p. 7; Exhibit P5 attached to Lexier's deposition.)

4. On March 20, 1956, Mr. Lexier wrote a letter to the Chief of the Meat Inspection Branch of the Department of Agriculture, stating that Engelhorn had acquired Millar and would operate it under its present name as a wholly-owned subsidiary of Engelhorn (P5 attached to Lexier deposition; see deposition of Lexier, p. 15).

On March 21, 1956, Bernard Zitin, then President of Millar, also wrote to the Chief of the Meat Inspection Branch, stating that Millar recently sold its business to Engelhorn and now is a wholly-owned subsidiary of Engelhorn, and requested that its inspection number be transferred to Engelhorn (see Exhibit 3-A attached to Duncan deposition).²

5. On March 22, 1956, an application for inspection in the name of Engelhorn, and signed by Mr. Lexier, as Executive Vice President of Engelhorn, was made to the Meat Inspection Branch for meat inspection at the plant at 35th and Reed Streets, Philadelphia. (Exhibit 3C, deposition of Duncan; Exhibit D-1 to deposition of Lexier.) The application listed Millar and two other concerns as subsidiaries of Engelhorn doing business requiring inspection at such plant.

6. By letter of March 27, 1956, to Engelhorn from the Meat Inspection Branch, a new grant of inspection for the establishment at 35th and Reed Streets was issued by the Meat Inspection Branch in the name of Engelhorn, superseding the one previously granted to Millar. Official number 261 was thereto assigned. Such letter also granted inspection under the same number to Millar and two other concerns, as subsidiaries of Engelhorn. (Plaintiff's exhibit 3B attached to Duncan's deposition; Exhibit P-6 attached to deposition of Lexier; pp. 33-5 of deposition of Lexier; p. 6 of Duncan's deposition.)

A publication of the Department of Agriculture, dated April 30, 1956, which is available to the public ("Notice No. 10, Livestock Regulatory Programs"), noted that Engelhorn and its subsidiaries (Millar being one of them), instead of Millar, now operated in the name of the official establishment No. 261. (Deposition of Duncan, pp. 3 and 4; plaintiff's Exhibit 1 attached to deposition of Duncan.)

7. On two separate occasions, March 20 and March 22 (1956), Mr. Lexier requested permission for Engelhorn to transfer all sausage casings, ham casings and labels from its New Jersey plant to its new Philadelphia plant, and, also, stated its desire to discontinue ham boning operations at Establishment No. 97 in New Jersey and to start its operations in Philadelphia promptly. (Exhibit P-5 attached to deposition of Lexier; Exhibit 3D attached to deposition of Duncan.)

In addition to the Meat Inspection Branch's grant of an official inspection to Engelhorn for the plant at 35th and Reed Streets in Philadelphia on March 27, telegrams from the Meat Inspection Branch to Engelhorn on March 28 and 30 granted permission for Engelhorn to transfer all previously approved labeling material for sausage and ham casings to its Philadelphia plant, Establishment 261, for use at such plant without adjustment, but with coding the labels or packages in a manner acceptable to the inspector in charge which would definitely identify the product as being prepared at Establishment 261 (see Exhibits 3E and 3F attached to deposition of Duncan).

8. Section 17 of the Regulations Governing Meat Inspection requires that labels for products from official establishments must be approved by the Meat Inspection Branch. Application for approval of the various labels for products from Establishment No. 261 have been made in the name of Engelhorn and not Millar (deposition of Lexier, pp. 26-9).

Section 17.2(b) (3) of the Regulations Governing Meat Inspection provides, in part, that: "When product is not prepared by the person whose name appears on the label, the name shall be qualified by a phrase which reveals the connection such person has with such product, as for example, `Prepared for * * *.'" In Establishment No. 261, where products are packed under the name of someone other than Millar or Engelhorn, the label bears the qualifying legend "Prepared for and distributed by," but no such qualification appears on products bearing the Engelhorn or Millar name (deposition of Lexier, pp. 32-3).

9. By letter of June 22, 1956, the Chief of the Inspection Procedures, Section II, reported to Engelhorn that on June 15, 1956, the inspector in charge at Philadelphia found a considerable amount of unsound meat at Establishment No. 261 (Exhibit 3G attached to deposition of Duncan). Mr. Lexier replied for Engelhorn by letter of July 16, 1956, denying that unsound meat was being used by Engelhorn in preparing sausage products, and stating that this was the first time in the history of Engelhorn that such a complaint had been directed to Engelhorn. He also said that Engelhorn investigated the matter and instituted procedures which would prevent a reoccurrence of the incident. No statement was made therein that Millar was doing the work for Engelhorn at 35th and Reed Streets. (See Exhibit 3H of deposition of Duncan.)

These facts (1 through 9) substantiate plaintiff's claim that Engelhorn has "a regular and established place of business" at Establishment No. 261 at 35th and Reed Streets, Philadelphia, Pa.

Generally, the question of what constitutes the doing of business so as to make the corporation subject to service of process depends upon the facts in each case. The rule can be stated as "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." People's Tobacco Co. v. American Tobacco Co., 1918, 246 U.S. 79, 87, 38 S.Ct. 233, 235, 62 L.Ed. 587. See, also, Remington Rand, Inc., v. Knapp-Monarch Co., D.C.E.D.Pa.1956, 139 F.Supp. 613, 620-621; California Stucco Products of N. E. v. National Gypsum Co., D.C.D.Mass. 1940, 33 F.Supp. 61, 63; Urquhart v. American-La France Foamite Corporation, 1944, 79 U.S.App.D.C. 219, 144 F.2d 542, certiorari...