Ronson Art Metal Works v. Brown & Bigelow, Inc.

Decision Date30 April 1952
Citation104 F. Supp. 716
PartiesRONSON ART METAL WORKS, Inc. v. BROWN & BIGELOW, Inc.
CourtU.S. District Court — Southern District of New York

Ward, Crosby & Neal, New York City, for plaintiff.

Thomas J. Byrne, New York City, for defendant.

MURPHY, District Judge.

This is a motion by defendant appearing specially to quash service of summons and complaint upon it and to dismiss the complaint. The principal question presented is one of venue: whether plaintiff may bring this action in this judicial district. The complaint alleges two causes of action arising out of alleged infringement by defendant of a patent on a cigarette lighter fuelled by liquefied petroleum gas. The first cause, under the Declaratory Judgment Act, 28 U.S.C.A. § 2201, seeks judgment that defendant's patent is void and not infringed by plaintiff's. The second cause is for infringement by defendant of plaintiff's patent. Plaintiff is a New Jersey corporation and defendant, a Minnesota one.

Because resolution of the question of venue in this action depends upon the character of defendant's activity within and outside this judicial district, an examination of the evidence of such activity in comparative detail might be worthwhile. This evidence is based upon various affidavits: for defendant, from its treasurer and one of its vice-presidents; for plaintiff, from a vice-president, an employee and its counsel. Plaintiff also offers a deposition from defendant's vice-president. Compilation of defendant's activities is shown in margin.1

With respect to the question of venue on the first cause of action under the Declaratory Judgment Act, Congress has provided no special directions. The Declaratory Judgment Act, 28 U.S.C.A. § 2201, is silent on this issue, Webster Co. v. Society for Visual Education, 7 Cir., 83 F. 2d 47. The applicable statute is the general one on venue found in 28 U.S.C.A. § 1391. Magnetic Eng. & Mfg. Co. v. Dings Magnetic Sep. Co. D.C.S.D.N.Y., 86 F.Supp. 13. So far as it applies here, this section provides:

"(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

The statutory test of venue for the first cause of action is then whether the defendant "is doing business" within this judicial district.

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As to the second cause of action based upon the patent laws of the United States for infringement by defendant of the Flamm patent owned by plaintiff, the applicable venue statute is somewhat more specific and provides so far as here relevant, 28 U.S.C.A. § 1400(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."

The statutory test for the second cause of action involves both "acts of infringement and * * * a regular and established place of business" within this judicial district.

We shall consider I the first cause of action under the test of "doing business," and II the second cause under its test, in that order.

I

"Doing business" is a concept which has thus far defied ultimate definition. What has signified doing business for a corporation in a commercial sense has often not been sufficient for certain legal purposes. See 17 Fletcher, Cyclopedia of Corporations 465 (1933); Stevens, Private Corporations 837 (1936); Isaacs, An Analysis of Doing Business, 25 Col.L.Rev. 1018 (1925). The term has frequently been used by legislatures with respect to activities of corporations for various purposes: to determine the basis for exercise of judicial jurisdiction, as it has been used in the instant case; or to determine judicial jurisdiction for effective service of process, which is also involved in this case; or to determine legislative jurisdiction to tax; or to determine whether or not a corporation should register and be subject to corporation statutes of a state other than the one of its incorporation. What constitutes "doing business" for one of these purposes may not be sufficient for another. So, for example, the same corporation which is held to be doing business for service of process may be deemed not doing business under local registration and domestication statutes. State v. Ford Motor Co., 208 S.C. 379, 38 S.E.2d 242. Because connotations of the concept vary with the purpose of its use, some investigation is indicated of the basis of judicial jurisdiction which is the purpose for using "doing business" in the statute involved in this case.

The notion that jurisdiction is synonomous with "the power of a state" to affect various interests (Restatement, Conflict of Laws § 42) has historically caused courts to require the physical presence of a natural person as a basis for the exercise of judicial jurisdiction to render judgments in personam, as distinct from the basis required for judgment in rem. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. And so even temporary presence of a casual nature has come to be sufficient basis for judgment in personam against a natural person consistent with this de facto view of jurisdiction. Restatement, Judgments § 15; Darrah v. Watson, 36 Iowa 116; Peabody v. Hamilton, 106 Mass. 217. Several relaxations of the power concept of jurisdiction in such situations gained rapid and widespread recognition. Domicile might provide sufficient basis for such judgment by a state against its absent resident, Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278; Restatement, Judgments § 16, and to a less well-defined extent, the tie of allegiance or citizenship might suffice without the one of domicile. Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375. But cf. Grubel v. Nassauer, 210 N.Y. 149, 103 N.E. 1113, 52 L.R.A.,N.S., 161. Finally, the mere doing of an act within its boundaries might subject an individual to such jurisdiction of the state without any other relationship to it, at least if the state could prohibit such conduct in the exercise of its police power and thus be deemed to have subjected such individual to its jurisdiction by coercing his implied consent, Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L. Ed. 1091, or perhaps even in the absence of such power to prohibit and where the absent individual's "act" within the state consists of no more than ownership of real property. Cf. Dubin v. City of Philadelphia, 34 Pa. Dist. & Co. R. 61 additional materials collected, Cheatham et al., Cases and Materials on Conflicts of Laws (3d ed. 1951).

But for juristic persons traditional de facto notions of jurisdiction were hardly adequate. An early expression that a corporation "must dwell in the place of its creation, and cannot migrate to another sovereignty," Taney, Ch.J., in Bank of Augusta v. Earle, 13 Pet. 519, 38 U.S. 519 at p. 586, 10 L.Ed. 274, gave rise to one view that jurisdiction in personam could be acquired only in the state of incorporation. Middlebrooks v. Springfield Fire Ins. Co., 14 Conn. 301. And the temporary presence of a corporate official within its boundaries could provide a state with no substitute as a basis for such jurisdiction. Goldey v. Morning News of New Haven, 156 U.S. 518, 15 S.Ct. 559, 39 L.Ed. 517. Nor would sporadic and occasional activity short of continuous dealing by such an official suffice. L. Hand, J., in Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139. And so, unlike natural persons, corporations could not be subjected to in personam judgment outside their domicile by either physical presence or the mere doing of an act. But also unlike natural persons whose ingress and egress to and from states is guaranteed as a privilege and immunity of citizens by the Constitution of the United States, "that invisible, intangible and artificial being, that mere legal entity, a corporation aggregate is certainly not a citizen," Marshall, Ch.J., in Bank of United States v. Deveaux, 5 Cranch 61, 9 U.S. 61, at p. 86, 3 L.Ed. 38, and so might, with constitutional impunity, be altogether excluded by a state. Bank of Augusta v. Earle, supra. This peculiar circumstance made possible the construction of a theory of implied consent of a foreign corporation to be subject to the judicial jurisdiction for in personam judgment of a state into which its agents had been dispatched to carry on its business, since the power to exclude includes the power to exact certain conditions of entry. Lafayette Insurance Co. v. French, 18 How. 404, 59 U.S. 404, 15 L.Ed. 451. For many years then, in personam jurisdiction over a foreign corporation was explained theoretically as activity of its agents abroad either sufficient to imply this fictitious consent, or adequate to find the corporation metaphysically "present." International Harvester Co. v. Com. of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479. The construction of such jurisprudential framework could be avoided only in situations where express consent was given in advance, cf. Washington v. Superior Court, 289 U.S. 361, 53 S.Ct. 624, 77 L.Ed. 1256, and even then controversy over the scope of such consent often called upon the subtleties of implied consent and presence for resolution.

Against this background, defendant contends that it is not doing business within this judicial district so as to provide a basis for an in personam judgment of this Court. Defendant denies neither the sufficiency of volume nor the continuous and systematic nature of its activity within the district. But it is insisted that such activity falls short because, viewed from the substantive law of contracts in terms of offer and acceptance, it is incomplete within this judicial district. Salesmen are neither hired nor fired here: the ultimate act takes place in Minnesota. They, and other personnel...

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