The Firestone Tire & Rubber Co. v. Marlboro Cotton Mills

• Decision Date: 05 July 1922
• Docket Number: 1970.
• Citation: 282 F. 811
• Parties: THE FIRESTONE TIRE & RUBBER CO. et al. v. MARLBORO COTTON MILLS.
• Court: U.S. Court of Appeals — Fourth Circuit

282 F. 811

THE FIRESTONE TIRE & RUBBER CO. et al. v. MARLBORO COTTON MILLS.

No. 1970.

United States Court of Appeals, Fourth Circuit.

July 5, 1922

Amos C Miller, of Chicago, Ill., and D. W. Robinson, of Columbia S.C. (Tillett & Guthrie, of Charlotte, N.C., on the brief) for appellants.

D. D McColl, of Bennettsville, S.C. (W. M. Stevenson, of Bennettsville, S.C., on the brief), for appellee.

Before KNAPP and WADDILL, Circuit Judges, and GRONER, District Judge.

GRONER District Judge.

This is an appeal from the District Court for the Eastern District of South Carolina, at Charleston.

The Firestone Tire & Rubber Company, one of the complainants, is a corporation of the state of Ohio, with its principal office at Akron, in that state, where it is engaged in the manufacture of automobile tires and accessories. It will be referred to as the Ohio company.

Firestone Tire & Rubber Company, the other complainant, is a corporation of the state of West Virginia, and is wholly engaged in the business of selling automobile tires and accessories and does no manufacturing. A large majority of its stock is owned by the Ohio corporation. It will be referred to as the West Virginia company. The only difference in the corporate name of the two companies is that in the case of the Ohio company it begins with the word 'The,' which is absent in the case of the other. Marlboro Cotton Mills, the defendant, is a corporation of the state of South Carolina, and will be referred to as the South Carolina company.

The Ohio company, so far as now appears, has never conducted business in South Carolina, and has no office or agent in that state. The West Virginia company maintains branch offices through the Southern States, but none in South Carolina; its business in that state being confined to soliciting orders through agents whom it sends into that state from one of its branch agencies in Georgia or North Carolina.

In November, 1919, the Ohio company entered into a contract with the South Carolina company for the purchase from the latter of 160,000 pounds of cord fabric, to be delivered one-fourth in each of the months of March, April, May, and June, 1920. During these months, it is alleged, the South Carolina company delivered to the Ohio company approximately 67,000 pounds of fabric, and was in default as to the balance. In July, 1920, the Ohio company, the bill charges, electing to consider the contract as still in effect, though not fully performed, notified the South Carolina company that it would accept the fabric then undelivered under the contract at a later date, but that until otherwise notified no immediate deliveries should be made, and that this extension and modification was agreed to and acquiesced in by defendant.

Another contract was made about the same time, between the same was delivered, accepted, and paid for.

In the month of December, 1920, there appears to have been a further exchange of letters between the Ohio company and the South Carolina company, and perhaps a personal interview between the respective heads of those companies; but it is charged in the bill of complaint, and not denied in any of the pleadings now before us, that the arrangement for the extension of time for the completion of the contract first mentioned above, was left undisturbed, but with the understanding that deliveries thereunder were to be subsequently arranged to commence at some mutually satisfactory later date.

Notwithstanding the agreement thus charged to have been made, the South Carolina company, on August 11, 1921, instituted in the court of common pleas of Marlboro county, S.C., an action at law against 'Firestone Tire & Rubber Company,' charging breach of both contracts and damages accruing thereby, amounting to $121,492.05, and in the complaint filed in this action described the defendant as 'a corporation organized and chartered under and according to the laws of one of the states of the American Union. ' Service of process in this action was had by delivering a copy of the summons, on August 13th, to one C. T. Ernest, a traveling salesman of the West Virginia company, who was then temporarily in Bennettsville, S.C., and within the jurisdiction of the court in which the action was pending. He, in turn, forwarded the summons to the branch office of the West Virginia company at Charlotte, N.C., where it was received by one Padgett, a clerk in the employ of that company. Padgett, knowing of no controversy between the West Virginia company and the South Carolina company, and believing that the summons had been illegally served because Ernest, from his point of view, was not the kind of an agent upon whom service could be legally had, failed to bring the action to the attention of the officer in charge of the agency, as a result of which no responsible officer of either the West Virginia company or the Ohio company had any knowledge of the pendency of the action in the South Carolina court, and at the ensuing October term a default judgment was had for $121,492.05 and costs. At some later date of the same term of court supplementary proceedings, under the practice in effect in South Carolina, were begun to have the accounts due the West Virginia Company in South Carolina placed in the hands of a receiver, and by other appropriate proceedings to enforce collection of the judgment. Being thus advised, for the first time, of the judgment and of the proceedings to enforce collection of it, the Ohio company and the West Virginia company filed in the United States District Court at Charleston a bill in equity praying that an injunction might issue to restrain the South Carolina company from enforcing the default judgment against complainants or either of them. On the filing of this bill a temporary restraining order was entered, but at a later date, upon the hearing on bill, affidavits, and exhibits, and motion to dismiss filed by defendant, the South Carolina company, an injunction pendente lite was refused.

The first question which we have to decide on this appeal is Against which of the two Firestone Companies was the default judgment had? The lower court seems to have been in doubt, and not to have determined this question definitely, characterizing the whole proceeding in the state court as one of mingled confusion and uncertainty. A similar doubt appears to exist in the minds of counsel who obtained the judgment, for in the argument in this court they declined to commit themselves as to which corporation they...