Miller v. Bethlehem Steel Corporation
| Decision Date | 22 December 1960 |
| Docket Number | Civ. A. No. 1013. |
| Citation | 189 F. Supp. 916 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | Meredith W. MILLER, Plaintiff, v. BETHLEHEM STEEL CORPORATION, a Corporation, and Island Creek Coal Company, a Corporation, Defendants. |
John J. Lane, Lane & Preiser, Charleston, W. Va., for plaintiff.
W. G. Stathers, Stathers & Cantrall, Clarksburg, W. Va., for defendant Bethlehem Steel Corp.
John E. Jenkins, Jr., Jenkins & Jenkins, Huntington, W. Va., for defendant Island Creek Coal Co.
This is an action wherein negligence is alleged against two defendants. By agreement of the parties, the question of whether Bethlehem Steel Company is the agent of defendant Bethlehem Steel Corporation has been submitted to the court in lieu of a jury. The parties have agreed that this question be submitted for decision on the deposition of B. D. Broeker, a director and Secretary of Bethlehem Steel Corporation, and Secretary of Bethlehem Steel Company, and have further agreed that if such agency does not exist, there would be no diversity of citizenship, and Bethlehem Steel Corporation would be dismissed for lack of jurisdiction.
The complaint, as now amended, alleges that Bethlehem Steel Company is the duly authorized agent of Bethlehem Steel Corporation, and that Bethlehem Steel Corporation and Bethlehem Steel Company are one and the same, with the corporate distinction therein being a fiction. Bethlehem Steel Corporation denied both these allegations in its answer to the second amended complaint, and thus issue was joined on the question of agency. The main facts relied upon by plaintiff to prove his allegations are:
1. Bethlehem Steel Corporation, a Delaware Corporation, owns all of the capital stock of Bethlehem Steel Company, a Pennsylvania Corporation.
2. Eighteen officers of Bethlehem Steel Corporation are also officers of Bethlehem Steel Company. (Bethlehem Steel Company has seventeen officers who are not officers of Bethlehem Steel Corporation.)
3. There are thirteen directors of Bethlehem Steel Corporation who are also directors of Bethlehem Steel Company. (Bethlehem Steel Corporation has six directors who are not directors of Bethlehem Steel Company.)
4. Of the officers who are not officers of both the Corporation and the Company, all must report to Mr. Martin, President of both Corporation and Company, and Mr. Homer, Chairman of both.
5. The Corporation operates no physical property.
6. The Company is the principal subsidiary of the Corporation, and accounts for fifty to seventy per cent of the Corporation's income.
7. Business between the Corporation and the Company involves only book charges, there being no transfer of actual cash.
8. The management of the Company is in the hands of Mr. Homer as Chairman, and Mr. Martin as President.
It is the finding of this Court that the above facts do not constitute sufficient evidence to allow a determination that the corporate entity of Bethlehem Steel Company is a fiction and so should be disregarded, or that Bethlehem Steel Company is the agent of Bethlehem Steel Corporation. Those facts show merely an opportunity for control by the parent company. They are offset by other facts tending to show that no actual control is exercised. These other facts are:
1. Corporation and Company do not share office space.
2. Directors meetings for the Company and Corporation take place at different times and places.
3. The Corporation does not participate in Company business activities.
4. Contracts entered into by the Company, and moneys expended by the Company, do not need Corporation approval.
5. The hiring and firing of key personnel of the Company is not controlled or subject to the approval of the Corporation.
6. The formal legal requirements of the Corporation and the Company are maintained.
7. The Corporation does not participate in the negotiations or signing of any collective bargaining agreement concerning employees of the Company's Lebanon plant.
8. The Corporation does not attempt to set Company policy with respect to quality, quantity, or selling price of the Company's product or with respect to the purchase of labor, materials or supplies.
9. The transactions of the Company are not supervised by the Corporation, or carried on the books of the Corporation.
10. Neither the Corporation or the Company treat the property of the other as its own.
There are other indications that the opportunity for control which the Corporation possesses has not been used, but the factors listed above show that actual control of the Company by the Corporation is non-existent. In the case of Atwater & Co., Inc. v. Fall River Pocahontas Collieries Co. et al., 119 W. Va. 549, 195 S.E. 99, 104, the late Judge Riley discussed this situation. Because of the excellent reasoning found in that opinion, and the application of the logic to the case at hand, it is felt that a rather lengthy quote from Judge Riley's opinion would not be amiss.
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