Insurance Co. v. Lone Star Package Car Co., Civ. No. 6281

• Decision Date: 28 August 1952
• Docket Number: 1386,1402,1403.,Civ. No. 6281,6610,1376
• Citation: 107 F. Supp. 645
• Parties: INSURANCE CO. OF NORTH AMERICA v. LONE STAR PACKAGE CAR CO., Inc. (BALTIMORE & O. R. CO., et al., third-party defendants) and five other cases.
• Court: U.S. District Court — Southern District of Texas

107 F. Supp. 645

INSURANCE CO. OF NORTH AMERICA v. LONE STAR PACKAGE CAR CO., Inc. (BALTIMORE & O. R. CO., et al., third-party defendants) and five other cases.

Civ. Nos. 6281, 6610, 1376, 1386, 1402, 1403.

United States District Court, S. D. Texas, Houston Division.

August 28, 1952.

COPYRIGHT MATERIAL OMITTED

Fulbright, Crooker, Freeman & Bates, Malcolm McCorquodale, Houston, Tex., for Insurance Co. of North America.

Butler, Binion, Rice & Cook, M. R. Wilkey, Houston, Tex., for Lone Star Package Car Co., Inc.

Hutcheson, Taliaferro & Hutcheson, Palmer Hutcheson, Jr., Houston, Tex., for Baltimore & O. R. Co.

Helm & Jones, Albert Jones, Houston, Tex., for Mrs. Betty Tullis.

Baker, Botts, Andrews & Parish, R. L. McDermott, Houston, Tex., for Southern R. System.

Brian S. Odem, U. S. Atty., and W. R. Eckhardt, Asst. U. S. Atty., Houston, Tex., for United States.

O. O. Touchstone, Dallas, Tex., for Union Pac. R. Co.

Armstrong, Bedford & Lambdin, G. D. Lambdin, Galveston, Tex., for Chicago, M. St. P. & Pac. R. Co.

CONNALLY, District Judge.

In each of the foregoing six actions, a personal judgment is sought against a foreign railroad corporation which owns no line of railroad and operates no trains within this state. None of these defendants has appointed an agent for service, nor consented to suit within the state. Each such defendant, however, for some twenty-five or thirty years has maintained one or more offices within the state for the solicitation of passenger and freight business upon its lines, and perhaps for other activity.

In each instance, such defendant challenges the jurisdiction of the court, the service of process and (in one or more instances) the venue of the action. The basis of the attack, of course, is the contention that such foreign railroad company is not doing business in the state to such extent as to subject it to in personam jurisdiction, and that an attempt to assert jurisdiction would violate the due process clause. U. S.Const. Amend. XIV, § 1.

Coincidentally, the six motions have come on for consideration at the same time; and by reason of the varying facts between the several cases, necessitate a careful analysis of the controlling authorities upon the question, and an attempt to draw, as accurately as possible, a line of cleavage.

So far as is necessary for consideration of the present motions, the facts of each case are set out as follows:

C.A.6610, Mrs. Betty Tullis v. Southern Railway System

The plaintiffs, citizens of this state and residents of this district and division, initiated this action in the state court against the Southern Railway Co. (hereafter "Southern") and the Alabama Great Southern Railroad Co. (hereafter "Alabama"), alleging that the two companies operated jointly as the "Southern Railway System". Process was issued out of the state court and served on one Martin, the agent of the defendant companies in charge of their Houston office. It was removed to this Court on the basis of diversity of citizenship, for the Southern is a Virginia corporation, and the Alabama an Alabama corporation.

The action seeks to recover for personal injuries allegedly received by Mrs. Tullis and her infant daughter near Woodstock, Alabama, when the train on which plaintiffs were riding as fare paying passengers was wrecked by collision with another train.

As the "Southern Railway System", the two defendant railroads maintain two offices in Texas; one at Dallas, the other at Houston. The Houston office is under Martin, the "general agent" of the System in this area. In addition to the general agent, the Houston office is staffed by a traveling freight agent, a chief clerk and stenographer. The Dallas office consists of approximately the same personnel.

The duties of the office consist of the usual solicitation of passenger and freight business, including the contacting of shippers, quoting schedules, and extolling the virtues of the company's services. The Houston office at least engages in some additional activity. While the office does not issue original bills of lading, on request of a consignee that a car be diverted while in transit, the Houston office will take up the original bill of lading and issue a new one in lieu thereof. While the local office does not sell passenger tickets, it will accept passenger fares, either in check or cash, transmit same to the appropriate company office in another state, and have the ticket returned to Houston where it is delivered by the local office to the passenger. The local office in some instances receives payments of freight charges and delinquent undercharge accounts. It receives, and undertakes to adjust, complaints. The Houston office is authorized to, and from time to time does, order trains to make non-scheduled stops to permit passengers to alight. It issues instructions for certain freight shipments to be expedited. The plaintiffs point to these activities as constituting the doing of business within the state.

C.A.1376 (Galveston Div.) United States v. Union Pacific Railroad Co., and C.A. 1386 (Galveston Div.) United States v. Union Pacific Railroad Co.

In each of these actions, the United States asserts a claim on behalf of the Commodity Credit Corp., its wholly owned agency and instrumentality, against the Union Pacific Railroad Co. (hereafter "Union Pacific"), the City of Galveston, and (in C.A.1376) against the International-Great Northern Railroad Co. (hereafter "I&GN") and (in C.A.1386) against the Burlington-Rock Island Railroad Co. (hereafter "Burlington"). In each instance the action is to recover for the loss of certain wheat owned by the Commodity Credit Corp. It is alleged that the wheat was received by the Union Pacific at Omaha, Nebraska and at Topeka, Kansas for shipment to Galveston, Texas, upon bills of lading issued by that railroad. It was delivered by the I&GN (in C.A.1376) and by the Burlington (in C.A.1386) in Galveston and there stored in a grain elevator owned and operated by the defendant city. The Government alleges that the grain was lost while in transit.

The actions having been filed here, process was issued out of this Court and served upon one Brown, as agent of the Union Pacific. Counsel for the plaintiff contends that service is good under Fed. Rules Civ.Proc. Rule 4(d) (7), 28 U.S.C.A., as being effected in conformity with Texas statutes.

In each case Union Pacific alone attacks the jurisdiction. It is a Utah corporation, maintaining a single office in this state, located in Dallas, Texas, within the Northern District of Texas. The office personnel consists of five individuals whose exclusive duties are to solicit passenger and freight business for their company's lines. Beyond this solicitation activity, the evidence shows only that the Dallas office occasionally receives checks in payment of freight charges, which are forwarded to the proper company offices outside of the state.

C.A.1402 (Galveston Div.) United States v. Chicago, Milwaukee, St. Paul & Pacific Railroad Co., and C.A.1403 (Galveston Div.) United States v. Chicago Milwaukee, St. Paul & Pacific Railroad Co.

In these actions the United States again asserts claims of the Commodity Credit Corporation, its wholly owned instrumentality, against the Chicago, Milwaukee, St. Paul & Pacific Railroad Co. (hereafter "Chicago"), the City of Galveston, and (in C.A.1402) against the Texas & New Orleans Railroad Co. (hereafter "T&NO"), and (in C.A.1403) against the Southern Pacific Co. (hereafter "Southern Pacific"). In each action it is asserted that the Commodity Credit Corp. shipped certain flax from Minneapolis, Minnesota to Galveston, Texas. The Chicago issued its bills of lading in each instance covering the shipments in Minneapolis. The flax was delivered by the T&NO (in C.A.1402) and by Southern Pacific (in C.A.1403) in Galveston, and stored in the elevator of the defendant city. The action against the railroads is predicated upon alleged losses in transit. In each of the cases Chicago alone attacks the jurisdiction.

Each of the actions was filed here, and process issued out of this Court was served upon one Hatcher in Dallas, Texas, as agent for the Chicago, allegedly in conformity with the Texas statute.

The Chicago is a Wisconsin corporation. It maintains a single office in Texas, located in Dallas, within the northern district of this state. Hatcher, the "general agent", is in charge of the Dallas office. Under him are two traveling freight and passenger agents who travel throughout the state. The evidence does not show any activity on the part of these employees beyond the ordinary solicitation. No tickets or bills of lading are issued, handled or procured; no monies are collected either by cash or check. No claims or complaints are handled.

C.A.6281 (Houston Div.) Ins. Co. of N. A. v. Lone Star Package Car Co.

Holding by subrogation the claim of the original owner of the goods (who is not a party to the action), the plaintiff Insurance Co. of North America (hereafter "Insurance Co."), a foreign corporation with permit to do business here, instituted this action in this Court against the defendant Lone Star Package Car Co., Inc. (hereafter "Lone Star"), a Texas corporation and an interstate freight forwarder, for damages to certain machinery shipped from Philadelphia, Pennsylvania to Laredo, Texas, and thence from Laredo back to Philadelphia. Jurisdiction is based on the fact that the action is asserted under the Carmack Amendment, Title 49 U.S.C.A. § 20(11), and likewise by reason of diversity of citizenship. It is alleged that the machines were delivered in good condition to the defendant freight forwarder in Philadelphia, which issued a bill of lading therefor; that the defendant, through the carriers with whom it had arranged transportation, transported the goods to Laredo, but upon their arrival there the machines were found to be damaged; that the machines were returned from Laredo to the...