Strout v. United Shoe Machinery Co.

• Decision Date: 30 March 1912
• Docket Number: 203 (C.C. 855).
• Citation: 195 F. 313
• Parties: STROUT v. UNITED SHOE MACHINERY CO. et al.
• Court: U.S. District Court — District of Massachusetts

195 F. 313

STROUT v. UNITED SHOE MACHINERY CO. et al.

No. 203 (C.C. 855).

United States District Court, D. Massachusetts.

March 30, 1912

Whipple Sears & Ogden and Dunbar & Rackemann, for plaintiff.

Coolidge & Hight, W. H. Coolidge, and C. A. Hight, specially, for defendants.

HALE District Judge.

This case now comes before the court upon the United Shoe Machinery Company's motion to dismiss, because it appears upon the face of the record that the court has no jurisdiction; and upon the plea in abatement of all the defendants, raising the contention that the plaintiff is without capacity to sue in this jurisdiction.

1. In the motion to dismiss, the United Shoe Machinery Company urges that the court has no jurisdiction of the case, for the reason, appearing upon the face of the record, that the plaintiff is a citizen of the state of Maine, and the United Shoe Machinery Company, defendant, is a corporation organized and existing under the laws of the state of New Jersey; and neither the plaintiff nor defendant is a citizen of the state of Massachusetts.

The writ shows that the plaintiff is 'Charles A. Strout, as he is the duly appointed trustee of the Goddu Sons Metal Fastening Company and a citizen of the state of Maine.'

'United Shoe Machinery Company, a corporation duly organized under the laws of the state of New Jersey, and a citizen of the state of New Jersey, having an office and its principal place of business in Boston, in the commonwealth of Massachusetts and found in the district of Massachusetts.

'Sidney W. Winslow, of Orleans in the county of Barnstable commonwealth of Massachusetts.

'George W. Brown and Edward P. Hurd, both of Newton in the county of Middlesex, commonwealth of Massachusetts.

'Said Winslow, Brown, and Hurd being severally citizens of the commonwealth of Massachusetts, in the district of Massachusetts.'

The amount of damages claimed is $2,000,000.

The court, then, has before it a citizen of Maine suing a citizen of New Jersey in a civil action, brought in the Circuit Court of the United States for the District of Massachusetts. The obvious contention is raised by defendant that in any ordinary civil action a citizen of New Jersey cannot be called to answer a suit by a citizen of the state of Maine in the United States Court for the District of Massachusetts. The plaintiff does not controvert this suggestion, but says that the action is brought under the Sherman Anti-Trust Statute, the Act of July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901. p. 3200), and that the declaration clearly presents a cause of action under section 7 of that act, which provides as follows:

'Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act may sue therefor in any Circuit Court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover three-fold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.'

It will be seen that, under this section, without respect to the amount in controversy, such action may be brought in the district in which the defendant resides or is found. And it is not denied that the defendants in the case at bar are found in the district of Massachusetts. It is contended, however, that the declaration does not clearly show that the action is brought under the Sherman Anti-Trust Act; that it does not sufficiently appear by the writ and declaration that the case is confined to an action under this statute; that therefore the jurisdiction of the court does not affirmatively appear; and that, where threefold damages are sought by virtue of the statute, the declaration must state a case clearly and unequivocally authorized by the law. The substance of the declaration is stated sufficiently for the purposes of this case in the summary given by the defendant, as follows:

'That the Goddu Sons Metal Fastening Company was organized under the laws of the state of Maine as a corporation in 1897, for the purpose of manufacturing and dealing in shoe machinery. That it acquired certain patents pertaining to shoe machinery, and made preparation to place on the market throughout the United States machines constructed under its patents. That the defendant the United Shoe Machinery Company was organized on February 7, 1899, under the laws of the state of New Jersey. That since its organization it has been engaged in the manufacture of, and dealing in, shoe machinery throughout the United States and in foreign countries. That upon the organization of the United Shoe Machinery Company, the defendant Winslow became, and ever since has continued to be, its president, a director, and member of the executive committee. That the defendant Brown became its treasurer, a director, and member of the executive committee, and the defendant Hurd became assistant treasurer, a director, and member of the executive committee. That these individual defendants down to the present time have continued to exercise the management and control of the business affairs of the corporation.

'That the United Shoe Machinery Company was formed with the idea of suppressing and eliminating competition. That shortly after the formation of the company, the individual defendants, or some of them, entered into negotiations with certain stockholders of the Goddu Sons Metal Fastening Company for the purchase of their stock by the United Shoe Machinery Company. That as a result of the negotiations the United Shoe Machinery Company purchased a majority of the stock of the Goddu Company, thereby acquiring control and management of the corporation. That the United Shoe Machinery Company caused to be elected as officers of the Goddu Company its own president, the defendant Winslow, as president of the Goddu Company; its own treasurer, the defendant Brown, as treasurer of the Goddu Company; and a part of its own directors, including the defendant Hurd, as the entire board of directors of the Goddu Company. That the persons so elected have continued to be the officers of the Goddu Company. That in pursuance of the plan and purpose to suppress and eliminate competition, and to support and protect the monopoly of the United Shoe Machinery Company, the United Shoe Machinery Company and the individual defendants, in combination and conspiracy in restraint of trade and commerce among the several states and with foreign nations, have controlled the management of the Goddu Company, not for the purpose of carrying on and developing the business of said company, but for the purpose of preventing the said company from doing business, thereby destroying the competition of said company. That they have declined to cause the company to make any use of its patents, or permit it to do business, and have continuously prevented it from engaging in business so that the assets of the company have remained idle and become wasted, and the patents and patent rights are about to expire and have become practically worthless. That by these means the plan of the United Shoe Machinery Company and the individual defendants has been effected and accomplished, in that the competition of the Goddu Company has been destroyed and the monopoly of the United Shoe Machinery Company sustained. That thereby the Goddu Company has been greatly injured in its business and property, in that its patents, patent rights, and other assets have been rendered worthless. Wherefore the plaintiff is entitled to recover from the defendant threefold the damages by him sustained, and also the costs of this suit, including a reasonable attorney's fee.'

It is contended that this is not a declaration unmistakably under the Sherman Act; that this act is not referred to; and the presumption is that the cause is without the jurisdiction of the federal courts, unless the contrary affirmatively appears; but that the case must be treated as one based upon diversity of citizenship; and that therefore it must be dismissed as to the United Shoe Machinery Company. Upon examination of the declaration, it is found that there is not a word in it expressly stating that the action is brought under the Sherman Anti-Trust Act. There is no mention of the act, or reference to it, in distinct terms. It is not even stated that the defendant became liable by force of the act. But it does appear from the declaration that the defendant company was formed with the plan of suppressing competition, and of maintaining a monopoly of the shoe machinery business; that in pursuance of such plan, the defendant acted in combination and conspiracy in restraint of plaintiff's trade; that the trade to be restrained was interstate; that certain things were done by the defendants to attain such restraint of the plaintiff's trade; and that thereby the competition of the plaintiff company has been destroyed, the monopoly of the defendant company sustained, and the plaintiff's property and business injured. I see no need of restating the whole of the declaration. A fair reading of it leaves no doubt that the action was brought under section 7 of the Sherman Act. No question can be left in the mind of the court that the pleader intended to state a case under that section. This is so clear that I cannot think it necessary to label the declaration as one brought under the provisions of the Sherman Act. The allegations make it plain that the action is clearly founded upon that act, and upon that alone, and that no common-law remedy, or other remedy of any kind, is sought.

The doctrine of the federal courts is unquestionably that in matters of pleading inferences from equivocal and...