Southern Paperboard Corporation v. United States

• Decision Date: 26 January 1955
• Citation: 127 F. Supp. 649
• Parties: SOUTHERN PAPERBOARD CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Southern District of New York

127 F. Supp. 649

SOUTHERN PAPERBOARD CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant.

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

January 26, 1955.

Kelley, Drye, Newhall & Maginnes, New York City, for plaintiff. Theodore Pearson, Hewitt A. Conway, New York City, of counsel.

White & Case, New York City, Amici Curiae. Josiah Willard, David Hartfield, Jr., John A. Garvey, Jr., New York City, of counsel.

J. Edward Lumbard, U. S. Atty. for Southern Dist. of N. Y., New York City, for defendant. J. Donald McNamara, Asst. U. S. Atty., New York City, of counsel.

DIMOCK, District Judge.

This is an action by a Delaware corporation to recover internal revenue stamp taxes from the United States.

The United States moves to dismiss the complaint pursuant to Rule 12(b) (3) F.R.C.P., 28 U.S.C., on the ground that the action has been brought in the wrong district. It bases its position upon one of the venue provisions of Title 28 of the United States Code. That provision is section 1402 which provides, in substance, that these actions to recover internal revenue taxes "may be prosecuted only in the judicial district where the plaintiff resides."

The old law was that for venue purposes the residence of a corporation was only in the state and district in which it had been incorporated. Suttle v. Reich Bros. Co., 333 U.S. 163, 68 S.Ct. 587, 92 L.Ed. 614. Plaintiff contends that this rule was changed by the adoption in 1948 of section 1391(c) of Title 28 of the United States Code. That section provides

"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."

Plaintiff contends that since it is doing business in this district, this district must be regarded as its residence for venue purposes.

The Government argues in effect that the clause "and such judicial district shall be regarded as the residence of such corporation for venue purposes" is nothing but a repetition of the first part of subdivision (c) and that the district where a corporation is doing business may be regarded as its residence only for the purpose of fixing the venue of suits brought against it and not for the purpose of fixing the venue of suits brought by it. I do not feel at liberty to attribute to Congress any such tautology. The statute first gives permission to sue a corporation in any district where it is incorporated or licensed or doing business. It then declares that such district shall be regarded as its residence. No one has suggested any reason for that declaration unless it was to give permission to the corporation to sue others in such district in addition to the previously given permission given to others to sue the corporation in any such district.

I therefore conclude that under section 1391(c) a district where a corporation is licensed to do business or is doing business is the proper venue for an action brought by the corporation as well as for an action brought against the corporation. In this conclusion I am supported by the decision of Judge Ryan of this district in Freiday v. Cowdin, 83 F.Supp. 516; Hadden v. Barrow, Wade, Guthrie & Co., D.C.N.D.Ohio, 105 F. Supp. 530; Phillips v. Pope & Talbot, Inc., D.C.S.D.N.Y., 102 F.Supp. 51; Mincy v. Detroit & Cleveland Navigation Co., D.C.S.D.N.Y., 94 F.Supp. 456; Bagner v. Blidberg Rothchild...