State of Maryland v. Capital Airlines, Inc.

• Decision Date: 11 November 1961
• Citation: 199 F. Supp. 335
• Parties: STATE OF MARYLAND, For the Use of Anne A. MITCHELL, Surviving Spouse of Berton S. Mitchell, deceased, et al., Plaintiffs, v. CAPITAL AIRLINES, INC., Vickers-Armstrongs, Limited, etc., Defendants.
• Court: U.S. District Court — Southern District of New York

199 F. Supp. 335

STATE OF MARYLAND, For the Use of Anne A. MITCHELL, Surviving Spouse of Berton S. Mitchell, deceased, et al., Plaintiffs, v. CAPITAL AIRLINES, INC., Vickers-Armstrongs, Limited, etc., Defendants.

United States District Court S. D. New York.

November 11, 1961.

Speiser, Quinn & O'Brien, by Edward M. O'Brien, New York City, for plaintiffs, Mitchell, Smith, Brophy, Kinkade, Boatright, Potish, Gittinger, Mannix, Jackson and Reed; Jules M. Goldstein, New York City, of counsel.

Mudge, Stern, Baldwin & Todd, New York City, for plaintiff Bouchard; by Donald J. Zoeller, New York City, of counsel.

Higgins & Latto, New York City, for plaintiffs G. C. Cleary and M. D. Cleary; by John V. Higgins, New York City, of counsel.

Theodore E. Wolcott, New York City, for plaintiffs Griffith, Logan, Pollard, Weinstein and Davis.

Haight, Gardner, Poor & Havens, New York City, for defendants Vickers-Armstrongs, Limited, Vickers-Armstrongs, (Aircraft) Limited, Vickers-Armstrongs, Inc.; by William J. Junkerman, L. Anthony Zega, New York City, of counsel.

THOMAS F. MURPHY, District Judge.

These 22 actions arise out of the crash of a Viscount airplane near Chase, Maryland, in May 1959. The plane was owned and operated by Capital Airlines, Inc. (hereafter Capital) and was on a regularly scheduled flight between New York City and Atlanta, Georgia. All aboard perished. These actions for wrongful death under the laws of Maryland followed (the first of the 22 being instituted in this court in August, 1959). Jurisdiction is based on diversity of citizenship. Defendants Capital and Vickers-Armstrongs, Incorporated (hereafter Incorporated) appeared and answered.

Defendants Vickers-Armstrongs, Limited (hereafter Limited) and Vickers-Armstrongs, (Aircraft) Limited (hereafter Aircraft) brought on the instant motions under Rule 12 of the Federal Civil Rules, 28 U.S.C., for an order— 1. Quashing the purported service upon them of the summons and complaint herein and dismissing the complaint against them upon the grounds (a) that the defendants are corporations organized and existing under the laws of Great Britain and Northern Ireland, are not present within this jurisdiction, and are not subject to the jurisdiction of this court; and (b) that they have not been served with process herein for the reason that copies of the summons and complaint have not been delivered to any officer, director or managing agent, or to any other agent authorized to receive service of process on their behalf; or in the alternative, (2) dismissing the complaints as against them upon the ground that they are not doing business in this district, and that as to them venue is improperly laid in this district.

The parties in all of the related cases pending in this court have agreed to be bound by our ruling on these motions to dismiss. Interrogatories, depositions and admissions were filed on this issue and form the basis of our findings.

The questions raised by the moving defendants involve the recurring problem of attempting to determine empirically from the peculiar facts of the case whether an artificial, intangible and abstract creature of the law is amenable to the judicial jurisdiction of the court, in personam. The problem has been discussed ad nauseum, and has produced an abundance of confusion involving the terms, "presence," "found," "doing business" and "reasonableness." We do not profess to have devised any easy method of dissipating the confusion or for making resolution of the question less burdensome, but we are attracted to a fresh approach to the problem insofar as suits of the instant kind, between United States citizens and alien corporations, are concerned. See Green, Federal Jurisdiction in Personam of Corporations and Due Process, 14 Vanderbilt L.Rev., 967 (1961).

There is not present here any question of notice of these suits to the movants, nor of the subject matter jurisdiction of the court. And the claim of undue inconvenience in defending these actions rests upon the possibility that defendants may be required to transport some of their employees here from England as witnesses upon the trial, and negatives the existence of a convenient forum any place in this country. In that respect defendants' situation is the same as that with which plaintiffs would have to contend if they were required to litigate their claims against these alien defendants in England. So essentially, there is involved the question of the moving defendants amenability to the judicial power of the United States Courts, this one in particular.

While defendants press alternate grounds for dismissal, viz., defect of personal jurisdiction and venue, and contend that a finding of their "doing business" in this district is essential to defeat their motion in toto, we find that no proper objection can be raised by them as to venue and that the facts which spell out personal jurisdiction over them likewise bring them within the reach of process.

To satisfy venue in these diversity actions, each must be brought in the district where all plaintiffs reside or in the district where all defendants reside. 28 U.S.C. § 1391(a). No objection as to venue is made by Capital or by Incorporated, because as to them venue is proper. The moving defendants are alien corporations, and as such have no residence in this country and by the express terms of 28 U.S.C. § 1391(d) are suable in any district. See, 1 Moore's Fed.Prac., ¶ 0.142 6 pp. 1508-1513 (2d Ed., 1960); Barrow S. S. Co. v. Kane, 170 U.S. 100, 112, 18 S.Ct. 526, 42 L.Ed. 964; Bator v. Boosey & Hawkes, Ltd., 80 F.Supp. 294, 296 (S.D.N.Y., 1948).

Accordingly, defendants may be sued in any district where valid service can be effected so long as there exists personal jurisdiction over them, and that depends upon whether the movants have certain minimum contacts with this country and district to warrant the assertion of the federal judicial power over the controversies to the extent that under traditional notions of fair play they ought to be personally amenable to that judicial power, and that a judgment in personam against them will be accorded full faith and credit in those jurisdictions where such traditional notions of fair play obtain. Whether the contacts need amount to "doing business" or may be something less (cf. McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223) we need not debate. The contacts of those business corporations are in any event business contacts, and (upon the facts hereafter detailed) we are satisfied that their quality and quantity suffice to hold defendants have personally subjected themselves to the jurisdiction, and further, in this context that the persons whose activities in this state form the predicate for concluding as we do, are pro hoc vice, the managing agents of defendants for service of process. Cf. Bomze v. Nardis Sportswear, Inc., 165 F.2d 33, 37 (2d Cir., 1948). Those persons are, Christopher Clarkson, upon whom process was in fact served, and who well may be called defendants' general agent, and the subsidiary, Incorporated, which too, we consider to be defendants' agent. By virtue of the activities of those two, at least in combination, the movants may be deemed to be present in this jurisdiction even under the test they contend for, that of "doing business."

Limited, organized under the laws of Great Britain and Northern Ireland in 1927, has its registered offices in England. Up to March 11, 1955, it was the sole manufacturer and seller of Viscount airplanes. All manufacturing was and is carried on at Weybridge, Surrey, England. Christopher Clarkson is a British subject residing in New York City since 1952. In that year he began his employment with Limited, at first, part-time, and by 1954 as its sole United States representative whose principal duties involved the sale and promotion of Viscount aircraft in this country. Clarkson was the first to contact defendant Capital during 1952 and 1953 regarding the sale to Capital of Viscounts manufactured by Limited. He attended negotiations with respect thereto, some of which were in London, though, he says, not as an active participant. In June, 1954, Capital entered into a contract with Limited for the purchase of three Viscounts (at approximately $1 million each) with an option to Capital to buy 37 additional Viscounts. In August, 1954, Capital was given a further option to purchase an additional 20 such airplanes, making 60 in all. The options were exercised by Capital and all agreements were reduced to a single contract dated April 15, 1955, between Limited and Capital. This contract provided that Limited would, at the request of Capital, provide and maintain within the United States for a period of ten years, supplies of spare parts sufficient to ensure satisfactory operation of the Viscount aircraft Capital was to purchase. The original contract with the option for the 37 Viscounts had a similar provision as to spare parts. In December, 1954, Limited leased warehouse space from Capital in Virginia to be used for the storage of spare parts.

In January, 1955, Limited organized Incorporated under the laws of Delaware with capital stock of $1,000. Incorporated has its principal place of business in Virginia and is authorized to do business in New York. The business of Incorporated primarily is to supply after-sales-service and spare parts to Viscount operators in this country. It is the sole and exclusive agency and distributor of spare parts for Viscounts in the United States. On January 11, 1955, Incorporated's Board of Directors authorized the company officers to substitute Incorporated for Limited in the warehouse agreement with Capital. That was done, and in January, 1956, Incorporated was authorized by its board to enter into a ten year lease of Capital's warehouse in Virginia.

In December, 1954, Limited organized Aircraft to which it transferred all of its manufacturing and...