Petroleum Financial Corp. v. Stone

• Decision Date: 30 September 1953
• Citation: 116 F. Supp. 426
• Parties: PETROLEUM FINANCIAL CORP. v. STONE et al.
• Court: U.S. District Court — Southern District of New York

116 F. Supp. 426

PETROLEUM FINANCIAL CORP. v. STONE et al.

United States District Court, S. D. New York.

September 30, 1953.

Thaddeus G. Benton, New York City, for plaintiff.

Duke & Landis, New York City, for defendants.

DIMOCK, District Judge.

Plaintiff moves for a rehearing on that part of my decision of August 17, 1953 denying its motion to vacate the order, D.C., 111 F.Supp. 351, setting aside the service of the summons on two of the defendants in this case and dismissing the action as to them and, if I do not change my views on the question of service, that this action be transferred to the United States District Court for the Southern District of Texas. Counsel for defendants oppose this motion.

The question of the sufficiency of service involved in the motion for rehearing has been ruled upon twice and I will not grant any further hearing.

On the question of transfer to Texas, defendants' position seems to be that this court lacks power to grant this relief since it has not obtained jurisdiction over defendants. Plaintiff, however, urges that a transfer can be made under section 1404(a) of Title 28 U.S.C. and the question arises whether a district court can effect a transfer in a diversity of citizenship case under that statutory provision where a complaint has been filed but service upon the defendants has been vacated and it appears that service cannot be effected so as to give that court jurisdiction in personam over the defendants.

The Supreme Court has said in passing "§ 1404(a) of the Code deals with the right to transfer an action properly brought." (Italics mine.) Ex parte Collett, 337 U.S. 55, 60, 69 S.Ct. 944, 947, 959, 93 L.Ed. 1207. It has been held that a transfer to another district cannot be effected where the District Court cannot obtain jurisdiction over the person of the defendant. Fistel v. Beaver Trust Co., D.C.S.D.N.Y., 94 F.Supp. 974; see McDaniel v. Drotman, D.C.W.D.Ky., 103 F. Supp. 643. Likewise, there is authority negating the power of a district court to transfer a case to another district where the district court lacks jurisdiction over the subject matter of the action: First Nat. Bank of Chicago v. United Air Lines, 7 Cir., 190 F.2d 493, 496, reversed on other grounds 342 U.S. 396, 72 S.Ct. 421, 96 L.Ed. 441, involving, however, 28 U.S.C. § 1406(a); Burns v. Chubb, D.C.E.D.Pa., 99 F.Supp. 581, but quaere whether the defect there was not one of venue, so as to be susceptible of treatment under 28 U.S.C. § 1406(a), rather than jurisdictional. Finally where a case commenced in a state court was removed to the wrong federal district court, that court held that it obtained no jurisdiction over the action and therefore it lacked power to transfer the case to the federal district court to which the action should have been removed. Scarmardo v. Mooring, D.C.S.D.Tex., 89 F.Supp. 936.

The only authority I find indicating a different conclusion is Schiller v. MitClip Co., 2 Cir., 180 F.2d 654. There, where plaintiff objected to the transfer of his action under 28 U.S.C. § 1406(a), the Court of Appeals dismissed the appeal from the order of transfer and denied on the merits a petition for mandamus to compel revocation of the transfer. The action was against an individual defendant and a corporate defendant but it had abated as to the individual defendant who was a non-resident because of failure to serve him within the time required by local rule. With respect to the corporate defendant, the court stated that jurisdiction in personam could not be obtained over it. Although the question of the propriety of the transfer was brought before the Court of Appeals by plaintiff and the record on appeal indicates that defendant argued in support of the transfer, the effect of the Court's decision was to approve a transfer made in a case where there was no personal jurisdiction over the defendants and the action was before the District Court only by virtue of the complaint filed. The court did say that it felt that plaintiff had no ground for complaint since he could have avoided the transfer by moving voluntarily to dismiss his claim which it suggested would have been required by defendant's motion to dismiss. Such a dismissal, however, would have deprived plaintiff of a direct review by appeal of the granting of defendant's motion to dismiss. Thus, if the District Court lacked power to transfer the case, the Court of Appeals would have been required to reverse the order of the District Court or grant the petition for mandamus and leave for a later appeal an order dismissing the action.

Perhaps that case can be distinguished on the ground that the action was brought, at least as to one of the causes of action, under the anti-trust laws. It appears that service upon the defendant corporation was made upon it in the state of its incorporation. By virtue of section 12 of the Clayton Act, 15 U.S.C. § 22, there are no territorial limits upon service of the corporate defendant in a private anti-trust action, Newmark v. Abeel, D.C.S.D.N.Y., 102 F. Supp. 993; see Paramount Pictures v. Rodney, 3 Cir., 186 F.2d 111, 115, certiorari denied 340 U.S. 953, 71 S.Ct. 572, 95 L.Ed. 687. Thus, the corporate defendant at least was amenable to the process of the District Court and therefore the District Court could have obtained personal jurisdiction over the corporate defendant. The defect in the action would have been improper venue, since the defendant corporation was not "found" within the judicial district of the District Court below, rather than lack of jurisdiction over the...