Terry Carpenter, Limited v. Ideal Cement Co.

• Decision Date: 09 January 1954
• Docket Number: Civ. A. No. 16-53 to 20-53.
• Citation: 117 F. Supp. 441
• Parties: TERRY CARPENTER, Limited v. IDEAL CEMENT CO. et al. CARR & NEFF LUMBER CO. v. IDEAL CEMENT CO. et al. L. W. COX & CO. v. IDEAL CEMENT CO. et al. WAITE LUMBER CO. v. IDEAL CEMENT CO. et al. PLATTE VALLEY CEMENT TILE MFG. CO. v. IDEAL CEMENT CO. et al.
• Court: U.S. District Court — District of Nebraska

117 F. Supp. 441

TERRY CARPENTER, Limited v. IDEAL CEMENT CO. et al.

CARR & NEFF LUMBER CO. v. IDEAL CEMENT CO. et al.

L. W. COX & CO. v. IDEAL CEMENT CO. et al.

WAITE LUMBER CO. v. IDEAL CEMENT CO. et al.

PLATTE VALLEY CEMENT TILE MFG. CO. v. IDEAL CEMENT CO. et al.

Civ. A. Nos. 16-53 to 20-53.

United States District Court D. of Nebraska, Omaha Division.

January 9, 1954.

Matthews, Kelley, Fitzgerald & Delehant, Omaha, Neb., Lyle F. O'Rourke, and Arnold, Fortas & Porter and Walton Hamilton, Washington, D. C., for plaintiffs.

Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., Lewis, Grant & Davis, Denver, Colo., for Ideal Cement Co. James G. McIntosh, North Platte, Neb., Loomis, Lazear & Wilson, Cheyenne, Wyo., for Monolith Portland Cement Co.

DONOHOE, Chief Judge.

These actions were instituted by plaintiffs under the anti-trust laws, 15 U.S. C.A. § 1 et seq., against the Ideal Cement Company, Colorado Portland Division, The Monolith Portland Cement Company, a corporation, and the Portland Cement Association. There are now pending several motions which the court has carefully considered and herein rules upon.

1. Service of Process upon Monolith Portland Cement Company. On the third day of August, 1950, a deputy United States Marshal for this district served the Monolith Portland Cement Company by serving a summons and a copy of the complaint to one Frank A. Wells at Scottsbluff, Nebraska. On August 22, 1950, the attorney for Monolith Portland Cement Company filed a motion to quash this service of process on the following grounds: 1) The Monolith Portland Cement Company is not engaged in business in Nebraska; and 2) Frank A. Wells is not an agent of any character authorized by appointment or by law to receive service of process, or upon whom service may be made. On April 6, 1953, the defendant, Monolith Portland Cement Company, filed an amended and consolidated motion by which it reiterated its objection to the service of process and in addition moved to dismiss the action against it on the ground that venue was not laid in the proper district and that the complaint fails to state a claim upon which relief can be granted. The court, having taken evidence relating to the issues of process and venue makes the following special

Findings of Fact.

The Monolith Portland Cement Company, the defendant herein, was incorporated under the laws of Nevada in 1920. Some six years later a related corporation, The Monolith Portland Midwest Company was incorporated in the same state. For facility of expression the first corporation will be referred to as the defendant and the second corporation as Midwest.

Neither the defendant nor Midwest is authorized to do business in Nebraska. Neither had, at any time material to this action, bank accounts or property in this state; nor did they have any officers, directors or transfer agents here. The defendant did not even have any employees in Nebraska; and Midwest had only one, a salesman by the name of Frank A. Wells.

The defendant has a cement manufacturing plant at Monolith, California. Although the bulk of its product is sold in California it does make shipments to Arizona and Nevada. Midwest has a cement manufacturing plant at Laramie, Wyoming, and distributes its products in Wyoming, New Mexico, Nebraska and Colorado. The defendant does not sell in the territory of Midwest, and Midwest does not sell in the territory of the defendant.

During the period in question the directors of the defendant were: Coy Burnett, W. D. Burnett, C. T. West, Kingsbury Burnett, E. R. Durfee, I. M. Jameson and Alfred Black; the officers of the defendant were: Coy Burnett, president; W. D. Burnett, vice president; C. T. West, vice president; Kingsbury Burnett, assistant to the president; E. R. Durfee, secretary-treasurer and Pat Carmichael, assistant treasurer. The directors of Midwest were: Coy Burnett, W. D. Burnett and E. R. Durfee. The officers of Midwest were: Coy Burnett, president; W. D. Burnett, vice president; S. W. Russell, vice president; Kingsbury Burnett, assistant to the president; E. R. Durfee, secretary-treasurer and Pat Carmichael, assistant treasurer. It should be noted that S. W. Russell, vice president of Midwest, is the only officer of Midwest that is not also an officer of the defendant. Mr. Russell runs the Denver office of Midwest and is in charge of distribution of that company's products. Although he proceeds on his own initiative with little direction, he was required to report to his superiors, Coy Burnett and W. D. Burnett, who have authority to control his activities.

The capital stock of Midwest consists of 300,000 shares of authorized preferred stock, having a par value of ten dollars per share. 136,000 shares are presently outstanding in the names of 2,000 shareholders. The common stock was authorized in the amount of 350,000 shares, no par value. There are 300,000 shares issued and outstanding in the name of the defendant. Each share of preferred and each share of common entitles its holder to one vote; and these voting rights are noncumulative. Coy Burnett holds 1,479 shares of the preferred stock. The Jameson Corporation held 39,000 shares of preferred in 1946, and now holds 40,000 shares. It should be mentioned that Mrs. Jameson, who is a director of the defendant, is president of the Jameson Corporation; and Alfred Black, who is on the board of directors of the defendant, is secretary of the Jameson Corporation. Mrs. Jameson also holds 5,500 shares of preferred in her own name.

The defendant and Midwest have separate Articles of Incorporation and By-Laws. The two corporations hold their meetings at separate times and keep separate minutes. The defendant's meetings are held monthly, while Midwest holds only annual meetings and special meetings called by its president approximately four times a year. Meetings are held at the executive offices, 643 Olive Street, Los Angeles, California. This building is owned by the defendant but occupied jointly by the defendant and Midwest. The same is true of the general offices located on San Fernando Road in Los Angeles. The defendant charges Midwest a fixed fee for rental and over-head costs in connection with the operation of these offices.

There is considerable overlapping of personnel employed by the two corporations at their home offices. Mr. Erb is the assistant secretary for both corporations. In addition to him, there are fifteen employees who work for, and are paid by, both corporations. Forty employees work exclusively for the defendant and only two or three work exclusively for Midwest.

Both corporations use the same accounting office. However they keep separate accounts. Receipts of income by the two corporations are deposited in separate accounts in Security First National Bank in Los Angeles, California, and expenses of the two corporations are withdrawn from their separate accounts in that bank. All inter corporate loans are evidenced by properly executed notes.

The expenses of Midwest are paid in three different ways.

1) There is a small revolving fund of $200 kept in the Denver office and used to pay expenses of a petty nature there.

2) There is a revolving fund of $10,000 to meet the payroll and a revolving fund of $4,000 to meet the expenses of operating the manufacturing plant at Laramie, Wyoming.

3) All other expenses of Midwest are paid by requisition transmitted through the Los Angeles accounting office.

The revolving funds are replenished by the Los Angeles accounting office with money drawn from Midwest's separate account in the Security First National Bank. Other expenses, e. g., the salaries of personnel at the Denver office, paid by the accounting office for Midwest, are drawn from the same account.

All accounting is done in the Los Angeles offices. The procedure followed in connection with Midwest is substantially this: Orders are solicited in the four states and the orders are sent to Denver, Colorado. A few unsolicited orders from dealers are sent to Laramie, Wyoming. Orders received at Denver, whether by letter, telegram or telephone, are then submitted to the plant at Laramie for shipment. After shipment is made the invoice is sent from the Denver office direct to the customer; and in almost all cases the customer will make a remittance to the Denver office. Remittance is most often received in the form of a check. The Denver office attaches a posting slip to the check and forwards it to the general accounting offices in Los Angeles. The accounts receivable clerk there makes the appropriate book entries and the check is then endorsed on behalf of Midwest and deposited to its separate account in the Los Angeles bank. At the end of the month the accounting office in Los Angeles sends a statement directly to the customer.

Mr. Frank A. Wells is employed by Midwest as a salesman. He contacts customers, solicits business and occasionally attempts to collect a delinquent account in his territory which includes the western part of Nebraska, northeastern Colorado and eastern Wyoming. His compensation, consisting of salary and expenses, is paid by a check drawn on the Security National Bank at Los Angeles and paid to him by the Denver office. He reports to S. W. Russell, head of Midwest's office at Denver, and does not do any work for the defendant. Nor does he report to, nor get instructions directly from, anyone in Los Angeles. All his instructions come from Mr. Russell or Mr. Russell's assistant, Mr. McCallin, both of whom are located at the Denver office.

Mr. Wells solicited cement orders from the plaintiffs. Cement was sold to plaintiffs and delivered through interstate commerce from Laramie, Wyoming, to Scottsbluff, Nebraska. In some instances at least plaintiffs made payment by check naming the defendant as payee. These checks, however, were endorsed by Midwest and deposited to its account in the Security First National Bank of Los Angeles.

Mr. Wells was not closely...