Middlebrooks v. Curtis Publishing Company

• Decision Date: 22 February 1967
• Docket Number: Civ. A. No. 8368.
• Citation: 264 F. Supp. 373
• Court: U.S. District Court — District of South Carolina
• Parties: Larry Esco MIDDLEBROOKS, Plaintiff, v. The CURTIS PUBLISHING COMPANY, Defendant.

264 F. Supp. 373

Larry Esco MIDDLEBROOKS, Plaintiff, v. The CURTIS PUBLISHING COMPANY, Defendant.

Civ. A. No. 8368.

United States District Court D. South Carolina, Florence Division.

February 22, 1967.

James P. Mozingo, III, D. Kenneth Baker, Darlington, S. C., Thomas E. Smith, Jr., Pamplico, S. C., Kenneth L. Holland, Camden, S. C., for plaintiff.

Carlisle Roberts, Roberts, Jennings & Thomas, Columbia, S. C., for defendant.

ORDER

SIMONS, District Judge.

This is an action for libel brought by plaintiff, Larry Esco Middlebrooks, against defendant, The Curtis Publishing Company, the publisher of the Saturday Evening Post. Plaintiff alleges that a short story entitled "MOONSHINE LIGHT, MOONSHINE BRIGHT" by William Price Fox, published in the March 16, 1963 edition of the Saturday Evening Post libeled him. Suit was originally instituted in the Court of Common Pleas for Darlington County, South Carolina. Plaintiff served the summons and complaint upon Curtis Publishing Company by service upon the Secretary of State of South Carolina pursuant to Section 10-424¹ and Section 12-23.14² of the 1962 South Carolina Code of Laws, as amended. Such substituted service is provided for under Rule 4(d) (7) of the Federal Rules of Civil Procedure.

Defendant appeared specially moving to quash the service of process upon it, to dismiss the complaint upon the ground that the service of process was insufficient, and that the court therefore lacks jurisdiction over it.

Oral arguments by counsel for the parties were heard in Florence, South Carolina and written briefs were thereafter submitted. The sole question before the court for purposes of the motion is whether defendant is now, or at the time of the alleged wrong upon which plaintiff's claim for relief is based was, "doing business" in South Carolina so as to validate the substituted service of process made pursuant to State statutory provisions. The service is valid if the court determines that defendant has the requisite "minimum contacts" with the State of South Carolina. International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). There is no set formula by which "minimum contacts" may be weighed. Each case must be considered and judged upon its own particular facts, and the material factor is the quality and nature of the corporation's activity rather than quantity. Shealy v. Challenger Mfg. Co., 304 F.2d 102, 104 (4th Cir. 1962); Carolina Boat & Plastics Co. v. Glascoat Distributors, Inc., 152 S.E.2d 352 (S.C. 1967); Boney v. Trans-state Dredging Co., 237 S.C. 54, 115 S.E.2d 508 (1960). In this diversity action the court is bound by South Carolina's interpretation of its service of process statutes.

Defendant is a Pennsylvania corporation with its registered office and principal place of business in Philadelphia, Pennsylvania. It is the publisher of the Saturday Evening Post, and it is also its own printer with its manufacturing plant in Sharon Hill, Pennsylvania. Defendant's counsel also advised the court that defendant is registered and admittedly doing business in twelve states other than South Carolina. The nearest to South Carolina is the State of Georgia. Defendant publishes five magazines other than the Saturday Evening Post, including the Ladies Home Journal, Holiday, The American Home and Jack and Jill. All five of these publications are circulated in this State. In the first half of 1960 defendant sold an average of 107,968 magazines per month in South Carolina, not including the circulation of Jack and Jill. For the second half of 1960 it sold 112,365 magazines per month. From January through June of 1963 the average circulation per month was 133,353 magazines. South Carolina distributors received 52,528 copies of the March 16, 1963 issue of the Saturday Evening Post carrying the article in which plaintiff claims he was libeled. No figures were obtained that would show the subscription circulation in South Carolina for this March 16, 1963 issue. Defendant's total distribution was 7,012,944 copies. In 1960, defendant realized $82,714.91 from advertising originating in South Carolina; in 1961, $28,605.79; in 1962, $14,398.28; in 1963, $10,012.15; and in 1964, $21,514.55. It maintains in office in Atlanta, Georgia and from this office three different persons, residents of Georgia, regularly solicit advertising for the Saturday Evening Post, Holiday, The Ladies Home Journal and The American Home magazines in this State. Each of these three men travels to and enters South Carolina approximately once every three months. Such trips last anywhere from one-half to two and one-half days.

Curtis Publishing Company itself does not distribute, circulate, sell or solicit subscriptions for magazines published by it. Its wholly owned subsidiary, Curtis Circulating Company, is exclusively responsible for distribution and sale of its publications. The distribution agreement between it and Curtis Circulation Company provides that:

"(1) Curtis Circulation Company shall have the exclusive right throughout the world to solicit and make subscription sales and single (newsstand) copy sales of defendant's magazines.

"(2) Subscription sales shall be made to the public only at the rates therefor established from time to time by defendant, which rates may be changed by agreement between Curtis Circulation Company and defendant. All subscription orders obtained by Curtis Circulation Company shall contain a provision that a proportionate refund of the subscription price will be made to any subscriber who cancels his subscription prior to the expiration date thereof. Curtis Circulation Company shall pay over to defendant monthly the full subscription price for all subscription sales made during the month. Defendant shall pay to Curtis Circulation Company monthly the prescribed commission on all paid subscription orders. All subscription orders shall become the property of defendant, shall be turned over to defendant as promptly as possible after receipt and shall be faithfully fulfilled by defendant.³

"(3) Curtis Circulation Company shall furnish defendant with an estimate of its single (newsstand) copy requirements for each issue of each of defendant's magazines at least thirty days prior to the scheduled released date. Defendant shall furnish to Curtis Circulation Company all of Curtis Circulation Company's single (newsstand) copy requirements at prices prescribed by defendant. Defendant shall deliver and sell its magazines to Curtis Circulation Company, F.O.B. such delivery points and in such quantities as Curtis Circulation Company shall designate in writing, at the prices prescribed in the agreement. Curtis Circulation Company shall receive credit for unsold copies provided it submits satisfactory proof of the non-sale thereof within sixty days after the close of the month in which such copies were delivered and sold to it.

"(4) Defendant shall reimburse Curtis Circulation Company for those reasonable and proper expenses incurred by it in the promotion, sale and distribution of the magazines as are usual and normal in the trade.

"(5) Curtis Circulation Company shall at all times provide an adequate organization and means for the promotion, sale and distribution of defendant's magazines and shall use its best efforts to maintain and increase the circulation thereof."

Curtis Circulation Company purchases defendant's publications at the latter's Sharon Hills Manufacturing plant, at that time taking title to and possession of the publications. From Sharon Hills, Curtis Circulation Company then ships the magazines by rail and truck into South Carolina to local wholesalers who take title upon delivery to their places of business.⁴ The South Carolina Wholesalers distribute the publications to local retailers. Curtis Circulation Company has agreements with the following wholesale distributors in South Carolina:

E. A. Price & Son 1312 River Street Anderson, South Carolina Charleston News Company 224 Huger Street Charleston, South Carolina Central News Company 920 Hemlock Drive Columbia, South Carolina Pee Dee News Company 160 N. Edisto Drive Florence, South Carolina Palmetto News Company 307 Fall Street Greenville, South Carolina City News Agency Union Road Spartanburg, South Carolina Sam A. Kerhalas 31 Main Street Union, South Carolina

The substance of the agreement between Curtis Circulation Company and these wholesalers is as follows:

"(1) Curtis Circulation Company agrees to sell to the named wholesaler magazines published by various publishers at the prices set forth in Schedule B attached to the agreement. Curtis Circulation Company agrees to ship the various magazines to the wholesaler's place of business, transportation charges prepaid, by mail, express or freight at times designated to assure delivery to the wholesaler at least one day prior to the authorized sales dates thereof.

"(2) Wholesaler agrees to pay Curtis Circulation Company for all copies of magazines delivered to the wholesalers at the respective per copy price specified in schedule B attached to the agreement less credit for unsold copies of magazines returned to Curtis Circulation Company. To receive the credit for unsold copies, the wholesaler must return to Curtis Circulation Company within 45 days of their respective off-sale dates either the complete front cover or title heading of each unsold copy. Wholesaler is to destroy or mutilate to the extent that they can only be resold as waste paper all copies of magazines, the front covers or title headings of which are returned to Curtis Circulation Company for credit as unsold copies.

"(3) Wholesaler agrees to use its best efforts to promote the sale of the magazines listed in schedule B attached to the agreements. The wholesaler is not to display or sell, or authorize any retail dealer to display or sell, any issues of the magazines listed in schedule B prior to the respective authorized sales dates

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