Somportex Limited v. Philadelphia Chewing Gum Corp.

• Decision Date: 02 October 1970
• Docket Number: Civ. A. No. 69-1519.
• Citation: 318 F. Supp. 161
• Parties: SOMPORTEX LIMITED v. PHILADELPHIA CHEWING GUM CORP. v. BREWSTER LEEDS & CO., Inc. and M. S. International, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

318 F. Supp. 161

SOMPORTEX LIMITED v. PHILADELPHIA CHEWING GUM CORP. v. BREWSTER LEEDS & CO., Inc. and M. S. International, Inc.

Civ. A. No. 69-1519.

United States District Court, E. D. Pennsylvania.

October 2, 1970.

James J. McCabe, Jr., Philadelphia, Pa., for plaintiff.

Marvin Comisky, Philadelphia, Pa., for defendant.

OPINION AND ORDER

JOHN W. LORD, Jr., Chief Judge.

Before the Court in the above-captioned case is plaintiff's motion for summary judgment. The case presents an interesting and somewhat unique situation involving the enforceability of a foreign judgment which was acquired in England by the plaintiff, Somportex, Ltd. Counsel for both plaintiff and defendant have ably briefed and argued their respective positions.

A summary of the somewhat complex factual background will be helpful. In May 1967, plaintiff, a British Corporation, instituted suit against the defendant, Philadelphia Chewing Gum Corporation, an American Corporation, for an alleged breach of contract. It obtained leave of the Queen's Bench Division of the High Court of Justice in England to issue a writ of summons against the defendant and to serve notice on defendant at its offices in Havertown, Pennsylvania. After receipt of this notice, consultation with its American counsel, who in turn consulted a British firm of solicitors, defendant, on August 9, 1967, entered a conditional appearance in England. This action was taken without prejudice to an application to set aside the writ.¹ On August 18, 1967, within the permissible time period, defendant sought an order having the writ and the service of the writ set aside for lack of jurisdiction. In its summons, the defendant alleged that there was no contract between the parties, or alternatively, that if there was an agreement, it was not made in Great Britain, nor by an agent of the defendant who traded or resided in England, nor by its terms or implication was to be governed by English law.² Due to the summer recess no hearing was set until November 13, 1967. During this three month period, defendant changed its strategy and, not wishing to do anything which might result in its submitting to the English court's jurisdiction, decided to withdraw its appearance altogether. The first summons to come before the master was defendant's summons to have the writ set aside. In accord with its new plan of action, defendant did not pursue this summons and the master, by default, dismissed it. However, the master further ordered that the order not be drawn up for seven days so as to allow defendant the opportunity to withdraw its appearance. On November 17, 1967, the defendant, alleging that its conditional entrance of appearance was based on mistake, applied to the court to allow it to withdraw.³. This request was granted by the master on November 27, 1967, which order also set aside the November 13th order dismissing the defendant's summons. On January 17, 1968, Judge Milmo of the Queen's Bench Division dismissed plaintiff's appeal from the master's order. Plaintiff appealed this decision to the Court of Appeal of the Supreme Court of Judicature. The two judges of that court who initially heard the appeal were unable to agree upon a result. Thereafter, on February 27, 1968, the court, this time composed of three judges, unanimously reversed the Queen's Bench and master's decision and held that defendant's conditional appearance was not entered by mistake but rather was "a wise course of action deliberately decided on by eminent firms in England and the United States after consultation." Somportex, Ltd. v. Philadelphia Chewing Corp., 1968 3 All E.R. 26, 29. The court therefore ordered the appearance to stand, as well as the original November 13th order of the master which dismissed the defendant's summons which sought to have the writ and its extraterritorial service set aside. The court, however, did grant the defendant an extension of time within which it could appeal the master's order of November 13th which was given in default. At this juncture defendant took no further steps in England except to have its British solicitors withdraw from the case. On May 28, 1968, Somportex filed in the English court a "Statement of Claim" setting forth the alleged cause of action against the defendant for breach of contract. This statement, along with a letter from Somportex's solicitors explaining the posture of the case, was served on the defendant at its Havertown offices. The defendant acknowledged receipt of these papers but took no further steps to defend the action. This course of action resulted in a default judgment being granted against the defendant. On July 1, 1969, plaintiff instituted suit in this Court to enforce the default judgment obtained in England.⁴

As the Court noted earlier, this factual background has resulted in a rather unique situation. Most problems relating to the enforcement of foreign money judgments arise out of one of two fact situations. The first situation arises where the defendant, even though he has notice that a suit has been instituted against him in the foreign country, takes no action to defend the suit in that country. In this situation, the foreign court would find jurisdiction and enter a default judgment on the merits. Thereafter, when the successful plaintiff attempted to enforce this judgment in the United States, it is clear that the defendant would be able to collaterally attack the finding of jurisdiction by the rendering court. This would necessitate an examination by the enforcing court of the underlying facts which allegedly supported the finding of jurisdiction. Transposed to the facts of the instant case, if defendant, Philadelphia Chewing Gum, had taken no steps whatsoever to defend the suit in England, and a default judgment on the merits was entered against it, the defendant would be entitled to collaterally attack this judgment in Somportex's present action designed to enforce the English judgment in this Court.

The second situation is where the defendant enters an appearance in the foreign court which is designed solely to attack the court's jurisdiction, litigates the issue, loses and then takes no further action to defend the merits of the case. The foreign court, having determined that jurisdiction existed would then continue with the merits and enter a default judgment. When the plaintiff attempted to enforce the judgment in the United States, there is some question whether or not a United States court would look beyond the judgment to the already litigated issue of jurisdiction. If the judgment were that of a sister state, rather than a foreign judgment, then the requested court could not relitigate the issue of jurisdiction. Sherrer v. Sherrer, 334 U.S. 343, 68 S. Ct. 1087, 1097, 92 L.Ed. 1429 (1948). The Restatement (Second) of Conflict of Laws § 98 & Comments c and d calls for the recognition and enforcement of a foreign judgment in these circumstances. Utilizing the Restatement approach and applying these facts to our case if the defendant had litigated the issue of jurisdiction, i. e. was there a contract that was to be governed by English law, this Court would not reexamine that determination.

The fact situation in the instant case presents a different situation. Unlike the first situation, the defendant has taken some action in England. Philadelphia Chewing Gum entered a conditional appearance, which after final litigation on the question of whether the appearance was entered by mistake, has since become a general appearance.⁵ However, unlike the second situation, the defendant has not litigated the underlying jurisdictional basis for the suit. Therefore the Court is confronted with a situation which falls somewhere between the more usual situations.

The issue of whether or not a foreign judgment will be enforced by a federal district court, having jurisdiction by means of diversity, is governed by the law of the state where the federal court is located. Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Svenska Handelsbanken v. Carlson, 258 F.Supp. 448 (D.Mass.1966). Therefore the instant case is controlled by Pennsylvania law under which it is clear that the basis for enforcing foreign money judgments is comity, not full faith and credit. Christoff Estate, 411 Pa. 419, 192 A.2d 737 (1963), cert. denied 375 U.S. 965, 84 S.Ct. 483, 11 L.Ed.2d 414 (1964); Commonwealth ex rel. Thompson v. Yarnell, 313 Pa. 244, 169 A. 370 (1933). While comity is a nebulous term and the incantation of the term by itself sheds little light on the subject, the Supreme Court, in the landmark case of Hilton v. Guyot, 159 U.S. 113, 16 S. Ct. 139, 40 L.Ed. 95 (1895), has defined it as "neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Id. at pp. 163-164, 16 S.Ct. at p. 143. The Supreme Court of Pennsylvania further quoted the Hilton decision:

"* * * When an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens * * * and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless some special

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