Toledo Computing Scale Co. v. Computing Scale Co.

• Decision Date: 20 January 1906
• Docket Number: 1,439.
• Citation: 142 F. 919
• Parties: TOLEDO COMPUTING SCALE CO. v. COMPUTING SCALE CO.
• Court: U.S. Court of Appeals — Sixth Circuit

142 F. 919

TOLEDO COMPUTING SCALE CO. v. COMPUTING SCALE CO.

No. 1,439.

United States Court of Appeals, Sixth Circuit.

January 20, 1906

Clarence Brown, for appellant.

J. W Warrington and J. A. McMahon, for appellee.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS Circuit Judge.

This cause here on appeal from an order of the Circuit Court granting an injunction pendente lite upon a bill filed by the appellee for the purpose of restraining the appellant from embarrassing and injuring its business by the publication and dissemination of circulars charging that a certain scale called a Butcher's Computing Scale, manufactured and sold by the complainant, was a false and dishonest scale, and was made and sold by the complainant for the purpose of enabling the user to deceive and defraud the public by giving false weight, that is to say, not so much as the purchaser would suppose he was buying. This bill also charged that the defendant by its agents made like representations to intending buyers of such scales, and to those who had already bought them of the complainant, and urged the latter to desist from their use, and to return them to the complainant and recover the purchase price when paid or to resist payment when it had not been paid, offering assistance in any legal controversies that might arise from such action; and further represented that the persons using those scales were liable to arrest and punishment therefor. Affidavits in support of the bill were filed. Upon notice of a motion for a preliminary injunction, the defendant appeared and filed an answer, supported by affidavits, in opposition thereto. The answer is lengthy, containing many averments of alleged facts tending to establish the main defense, which was that the charges contained in the circulars and in the representations of its agents were true. Some minor charges made by the bill were denied, but the principal controversy which we are now required to consider and determine is the issue joined on the main defense above stated.

There are, however, two preliminary questions raised by the appellant which should first be disposed of.

1. The 'Toledo Computing Scale Company' is a New Jersey corporation having its principal office at Toledo in the Northern district of Ohio. The 'Computing Scale Company' is an Ohio corporation whose principal office is at Dayton, in the Southern district of the same state. Original process was served by the marshal on J. Knoop as managing agent of the defendant at Cincinnati. A subpoena was also served on the defendant at Toledo, but as that was not in the district where the suit was pending, it is not relied upon as valid service. Section 5043 of the Revised Statutes of Ohio reads as follows:

'When the defendant is a foreign corporation, having a managing agent in this state, the service may be upon such agent.'

The defendant moved on affidavits to dismiss the cause upon the group that Knoop was not a 'managing agent' of the corporation. By consent of counsel, depositions of several persons were taken bearing on this question. The following is a summary of the facts which found by the court upon this issue, and of some further facts which also appear in the record. Sales of the defendant's scales were made by commission agents. A large extent of territory including cities in Ohio, Michigan, Indiana, and, apparently, Kentucky were in charge of one, Dusseau, as supervising agent, who was paid by a commission. This territory was divided up into districts for each of which s salesman was appointed by the supervising agent subject to the approval of the company. Knoop was one of such appointees and his district included the counties of Hamilton (in which is Cincinnati) and Clermont, in Ohio, and Boone, Campbell, and Kenton, in Kentucky. The salesmen canvass their territory for buyers, sell and make contracts for the sale of scales in accordance with prices and terms of payment prescribed by the company, deliver the scales to the purchaser, receive the purchase price in money or notes, and forward the same directly to the company, and receive a commission thereon of 30 per cent., which is remitted to them by the company by check' make requisitions on the company for scales, and keep on hand as many as in their judgment the trade may require; take orders for repairs, collect debts from customers, and are held responsible for bad debts to the extent of 5 per cent. of their commission; they also circulate advertising matter, and do anything else in the conduct of the business required of them by the company. If sales are made in their territory by the supervising agent or the company, they receive the commission therefor. The supervising agent provides an office or storeroom where the scales are kept and business is transacted by the salesmen. At the office there is a sign: 'Toledo Computing Scale.' The rent for the office is paid by the supervising agent but this expense is covered by the commission which he receives. The defendant was carrying on a large business at Cincinnati and other places in the district and had no other representative there except salesmen of whom Knoop was the chief in the territory assigned to him. All scales for that territory were consigned to him, and he became responsible for them and for the prices received for them whether actually sold by him or his helpers. He also kept his company advised of the doings of its competitor, the complainant, in his district. Upon these facts the court held that Knoop was a managing agent within the meaning of the Ohio statute above quoted as construed by the Supreme Court of that state, referring to American Express Co. v. Johnson, 17 Ohio St. 641, and Railroad Co. v. Transportation Co., 32 Ohio St. 135. The court properly held that the statute of the state might be adopted as a guide for making service of process in such cases, and that its construction by the Supreme Court of Ohio was to be accepted as correct. While service of a subpoena from a Federal court in equity upon a nonresident corporation cannot be controlled by state statutes, yet, when there is no applicable provision of a federal statute the procedure of the state statutes may be followed, if deemed reasonable and adapted to the purpose. Mutual Life Ins. Co. v. Spratley, 172 U.S. 602610, 19 Sup.Ct. 308, 43 L.Ed. 569; Mutual Reserve Association v. Phelps, 190 U.S. 147, 23 Sup.Ct. 707, 47 L.Ed. 987; Board of Trade v. Hammond Elevator Co., 198 U.S. 424, 25 Sup.Ct. 740, 49 L.Ed. 1111. Referring to the case of United States v. Bell Telephone Co. (C.C.) 29 F. 17, Judge Thompson, who sat in the court below, said:

'These cases (meaning the Ohio cases just cited), were not referred to by Judge Jackson in the Telephone Case, nor had he occasion to refer to them, because the facts in that case did not call for a construction of section 5043, but, on the contrary showed conclusively that the Telephone company had no agent within the jurisdiction of the court. His definition of a managing agent was obiter in respect to the case before him.'

The Ohio Supreme Court evidently intended to give a liberal interpretation to the statute to facilitate the obtaining of jurisdiction over foreign corporations doing business in the state, and held that one who chiefly represented the corporation in a locality where it was doing business was its managing agent there. And indeed a construction of this statute which restricted the meaning to one who was a general manager would very much limit its utility.

As was said by Mr. Justice Gray in Barrow Steamship Co. v. Kane, 170 U.S. 100, 106, 18 Sup.Ct. 526, 528, 42 L.Ed. 964:

'The constant tendency of judicial decisions in modern times has been in the direction of putting corporations upon the same footing as natural persons in regard to the jurisdiction of suits by or against them.'

But it is enough to say that we think the circuit court did not err in following the motion to dismiss.

2. It is further contended that this suit being a suit in equity, ought not to be entertained, because there exists an adequate remedy in an action at law for the recovery of damages. We greatly doubt whether the legal remedy would be adequate. It would be difficult to estimate the damages arising from the destruction or serious impairment of one's business, and the better, more efficient and certain remedy would be an injunction restraining the defendant from perpetrating the wrong. Besides the injury complained of is a continuing injury and would involve the necessity for a multitude of suits. But if this objection were maintainable it should have been taken in limine, before answering to the merits. 1 Dan.Ch.Pl.& Pr. (4th Ed.) 550, note; Reynes v. Dumont, 130 U.S. 354, 395, 9 Sup.Ct. 486, 32 L.Ed. 934; Kilbourn v. Sunderland, 130 U.S. 505, 9 Sup.Ct. 594, 32 L.Ed. 1005; Brown v. Lake Superior Iron Co., 134 U.S. 530, 10 Sup.Ct. 604, 33 L.Ed. 1021; Perego v. Dodge, 163 U.S. 160, 16 Sup.Ct. 971, 41 L.Ed. 113; Reynolds v. Watkins, 60 F. 824, 9 C.C.A. 273; McConnell v. Prov. Sav. Life Assur. Soc., 69 F. 115, 16 C.C.A. 172; Elder v. McClaskey, 70 F. 529, 554, 555, 17 C.C.A. 251.

The right to a trial by jury when there is a suitable remedy at law in confirmed by Rev. St. Sec. 723 (U.S. Comp. St. 1901 p. 583). This, of course, does not preclude the court from raising the objection if the case made by the bill is plainly unsuitable for the exercise of the jurisdiction of a court of equity. But no one can, as it seems to use, doubt that the remedy by injunction is, at least, suitable to the facts of such a case as this, if the complainant is entitled to any relief whatever. We are therefore to decide the case upon its merits. The appellant contends that the complainant did not...