Sperry Products v. Association of American RR

• Decision Date: 14 December 1942
• Docket Number: No. 82.,82.
• Citation: 132 F.2d 408
• Parties: SPERRY PRODUCTS, Inc., v. ASSOCIATION OF AMERICAN RAILROADS et al.
• Court: U.S. Court of Appeals — Second Circuit

132 F.2d 408 (1942)

SPERRY PRODUCTS, Inc., v. ASSOCIATION OF AMERICAN RAILROADS et al.

No. 82.

Circuit Court of Appeals, Second Circuit.

December 14, 1942.

Stephen H. Philbin, of New York City (Henry R. Ashton, John B. Cuningham, both of New York City, and Joseph H. Lipschutz, of Hoboken, N. J., of counsel), for appellant.

L. B. Mann, of Chicago, Ill. (George E. Middleton, and Robert C. Brown, Jr., of Chicago, Ill., of counsel), for appellees.

Louis J. Carruthers, of New York City, for defendant Long Island R. Co.

Clive C. Handy, of New York City, for defendant New York Cent. R. Co. and F. E. Williamson.

Before L. HAND, CHASE, and FRANK, Circuit Judges.

L. HAND, Circuit Judge.

The plaintiff appeals from a judgment of the District Court for the Southern District of New York dismissing its complaint for the infringement of a patent on the ground that the action had been brought in the wrong district. The only issue is whether that is true. The defendants are three: an unincorporated association — the Association of American Railroads —, the Long Island Railroad Company, and F. E. Williamson, the president of the New York Central Railroad Company and a director of the Association. There were originally a number of other defendants, but although the complaint was dismissed as to them also, the plaintiff does not press an appeal from that part of the judgment. The complaint alleges that the Association infringes the patent, without saying where; that it and the other two defendants are "inhabitants" of; and that the two other defendants have a principal office and place of business in, the Southern District of New York. Finally, it alleges that the two defendants other than the Association, "as representatives or director of defendant Association and its members * * * are infringing." The defendants moved summarily to dismiss the complaint, one of the supporting affidavits containing a letter sent to all railroads which are members of the association, a part of which we quote in the margin.¹ Annexed to the papers was the charter of the Association and another document describing its functions, from which it appeared that the members were 200 or more railroads whose common interests it was organized to supervise and protect. Some of its regular activities take place in New York, some in Chicago; the charter says that its "principal office" is in Washington, but the place where its principal activities go on does not appear, nor does the complaint say anything on that subject. The action is based upon the theory first, that the Association is an "inhabitant" of all places of which any of its members is an "inhabitant"; and second, that if that is not true, the action may be treated as a class suit under Rule 23(a) (3), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and may be brought wherever any member of the class can be sued; finally, that in any event it lies against the Long Island Railroad Company and Williamson, individually.

Before the decision in United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 42 S.Ct. 570, 66 L.Ed. 975, 27 A. L.R. 762, an unincorporated association could not be sued in a federal court unless all the members were joined, or unless the court were willing to treat the action as a class suit, the limitations of which then as now were by no means well defined. That case laid it down that such associations could be sued as such, and that execution upon the judgment would go against their collective funds. Rule 17(b) now covers the same ground. However, neither the decision nor the rule made any change in the nature of the liability, which at common law in cases of tort was that of the members severally. Indeed, that was almost inevitable unless a new jural person were created on whom to impose a collective liability. This the court recognized in United Mine Workers v. Coronado Coal Co., supra, 259 U.S. 344, 390, 42 S.Ct. 570, 66 L.Ed. 975, 27 A.L.R. 762; and it is the general law (Pandolfo v. Bank of Benson, 9 Cir., 273 F. 48); as it is the law of partnership (Castle v. Bullard, 23 How. 172, 16 L.Ed. 424; McIntyre v. Kavanaugh, 242 U.S. 138, 37 S.Ct. 38, 61 L.Ed. 205; Matter of Peck, 206 N.Y. 55, 99 N.E. 258, 41 L. R.A.,N.S., 1223, Ann.Cas.1914A, 798) to which the common law assimilated an unincorporated association. Moreover, in the matter of jurisdiction over the subject matter, an unincorporated association is disregarded: when for example jurisdiction depends upon diversity of citizenship, it is the citizenship of the members alone which counts. Levering & Garrigues Co. v. Morrin, 2 Cir., 61 F.2d 115. Thus, for most purposes the law still looks at such associations as mere aggregations of individuals. Since, however, for the purpose of suit it has come to regard them as jural entities, we can see no reason why that doctrine should not be applied consistently to other procedural incidents than service of process, and venue is one of such incidents. Certainly that promotes simplicity, and simplicity was one of the conveniences which induced the original change. Therefore in construing § 48, Jud.Code, 28 U.S. C.A. § 109, in its application to an unincorporated association it seems inevitable that we should attribute an "inhabitancy" to it as though it were a single jural person and not an aggregate.

It is not altogether clear a priori how to attribute location to a collective venture even after one has called it a jural person. In the case of a corporation, courts for long evaded the difficulty by saying that it was located in the state of its incorporation within whose borders it was confined. Bank of Augusta v. Earl, 13 Pet. 519, 10 L.Ed. 274. It finally became evident, however, that this resulted in too much injustice to be tolerable, and eventually there was evolved the concept that a corporation could be "present" outside its state, that fact being determined by the extent of its local activities. Green v. Chicago, Burlington & Quincy R. Co., 205 U. S. 530, 27 S.Ct. 595, 51 L.Ed. 916; International Harvester Company v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479; Philadelphia & Reading R. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710. Obviously the same situation arises whenever we are to determine the location of an unincorporated association, except that in its case there is no territory in which we can by a fiction say that it is inevitably present. As to such an association the test must always be what it is for a corporation outside the state of its incorporation. Indeed it is troublesome to see in what other way one can attribute location to such an association at all. It does not violate common understanding to think of a common venture or enterprise as having spatial position wherever any part of those activities take place by which it is realized. That is a practicable test and it is really the only practicable test. To say that it exists wherever any of its members are is plainly untenable, for they all have their individual activities which are altogether alien to the enterprise. To say that the enterprise exists wherever and whenever any of the members think about it would be childish. There remains, so far as we can see, only what we have suggested; and we hold that the defendant Association was present wherever any substantial part of its activities were continuously carried on. Among those places was the Southern District of New York.

But that does not mean that the Association is an "inhabitant" of all such places within the meaning of § 48, for it is clear that the section was passed to avoid precisely that result. Until its enactment a patentee could sue an infringer wherever he could catch him, and in the case of a corporation that meant wherever it was "present" as determined by the test just mentioned. Moreover, the...