United States v. Pacific Forwarding Co.

• Citation: 8 F. Supp. 647
• Decision Date: 26 October 1934
• Docket Number: No. 20884.,20884.
• Parties: UNITED STATES v. PACIFIC FORWARDING CO., Limited, et al.
• Court: U.S. District Court — Western District of Washington

8 F. Supp. 647

UNITED STATES v. PACIFIC FORWARDING CO., Limited, et al.

No. 20884.

District Court, W. D. Washington, N. D.

October 26, 1934.

Sam E. Whitaker and Tom DeWolfe, Sp. Assts. to Atty. Gen., and J. Charles Dennis, U. S. Atty., of Seattle, Wash., for the United States.

Eggerman & Rosling, of Seattle, Wash., for defendants.

NETERER, District Judge.

The plaintiff seeks to recover from the defendants for customs duties, internal revenue on and value of liquors fraudulently imported into the United States. The corporate defendants, it is charged, are creatures by charter of the laws of the province of British Columbia, Dominion of Canada, having their principal place of business in Vancouver, except the Brewers & Distillers of Vancouver, Limited, is chartered under the laws of the Dominion of Canada, with principal office in Vancouver.

The individual defendants are residents of British Columbia, Canada, except Samet, who is a resident of this district. George and Henry Reifel were owners, it so appears on trial here, of two hundred thousand shares out of six million and some shares of the Brewers & Distillers of Vancouver, Limited, the holding company of the stock of the other corporate defendants, acquired by consolidation and purchase of various properties and stocks of existing concerns, and stock was held by Henry and George Reifel and four other stockholders under a voting trust agreement which continues for twenty years from creation in 1924.

It is charged that the nominal heads of all the defendant corporations were wholly dominated by Henry and George Reifel and were subject to their control; that a conspiracy was formed by the Reifels and others named, the object of which was to smuggle into the United States liquors and avoid customs duties and internal revenue, as provided by the laws of the United States, and in pursuance thereof did smuggle into the United States $10,000,000 worth of liquors; that the duties thereon are $6,000,000, and the internal revenue $1,250,000.

Service of summons and complaint were made upon Henry and George C. Reifel and Samet in this district, as individuals, and the corporate defendants were served by serving George C. Reifel, as agent of the British Columbia Distillery Company, Limited, Vancouver Brewers & Distillers, Inc., and the Vancouver Breweries, Limited; and by serving Henry Reifel, as officer and agent, with copy of summons and complaint for each of the following defendants: Pacific Forwarding Company, Limited, the Atlantic-Pacific Navigation Company, Limited, the Gulf Investment Company, Limited, the Vancouver Brewers & Distillers, Limited, the Vancouver Breweries, Limited, and the British Columbia Distillery Company, all in this district.

The plaintiff has attached many thousands of dollars worth of liquor, garnisheed much money in banks and other sources of indebtedness.

Under special appearance, the corporate defendants, severally, move to quash the service and discharge the writs of attachment and garnishment; first, because no copies of the complaint were served for the corporate defendants; second, the court is without jurisdiction by law to entertain such writs.

Special appearance as to the Pacific Forwarding Company, Limited, Atlantic-Pacific Navigation Company, Limited, and the Gulf Investment Company, Limited, have been withdrawn.

As to the Brewers & Distillers of Vancouver, Limited, the court must find that it was not doing business in this district or in the United States at the time of service of the summons and complaint, on July 6, 1934. The court is not prepared to say, upon the record in this case, under the allegations of conspiracy, that there is disclosed such a condition as would warrant the court in finding, even though some representatives of the company were in this district conspiring against the laws of the United States, that it was doing business within the intent of the law. It is not contended they were conspiring on the date of service.

I think the British Columbia Distillery Company, Limited, was doing business in this district on the date of service in such manner and to such an extent as to warrant the inference that it was present in this jurisdiction, and that service was made upon the general manager and agent of the company, who was in this jurisdiction on said defendant's business, and also to consider with Hemrich Brewing Company (in which the holding company defendant's stock was the Brewers & Distillers of Vancouver, Limited, holding a large block of stock) the advisability of establishing a distillery or a rectifying plant on this side of the boundary line. I do not think that the first objection, that copy of the complaint was not served, can obtain. While the return of the officer is ambiguous, yet when the return is closely scrutinized, we find that the only ambiguity in the return is that three words were left out of the return. After "a copy of the complaint," there is omitted "for each defendant." The officer who made the service was a holdover from the former administration, and the time for which he was retained has expired, and another man has been appointed; so that no amended return can be made, because the serving officer cannot do an official act now. The court must therefore rely upon other proof as to whether the words "for each defendant," should be supplied.

Every summons and complaint has been traced from the Attorney General's office to the agents of the defendants. I think the affidavits of Mr. Whitaker, who prepared the complaint, his secretary, Mrs. Pete, the clerk of this court who certified the copies of all of the complaints, the delivery of these to Mr. Fraser, who delivered them to Mr. Green, and there, by telephonic direction of Mr. Whitaker, who was in Vancouver, these copies were all checked over by Green in the presence of Fraser. Each set was attached by paper clips, and placed in separate bundles and handed to the deputy United States marshal for service. A copy of the summons and complaint was served on R. Samet, a copy on Henry Reifel, and a copy on George C. Reifel, each receiving a copy of summons and complaint, and, in addition, to Henry Reifel was given a bundle of summonses and complaints for corporate defendants. He received the largest bundle, and George C. Reifel received the smaller bundle. All summonses were to all defendants and summons and complaint, one for each defendant, were thus checked over and each summons and complaint fastened by paper clips and put in bundles, one for Henry Reifel, and one for George C. Reifel; one for Henry Reifel as agent for each corporation he represented, one to George C. Reifel as agent for each corporation he represented, by the serving officer; and one for Samet.

It is conceded that when the papers were served, the defendants were under arrest, and there was much excitement, and when the attorneys who were sent for arrived, attention was given to the criminal matter. The defendants were not much concerned with the civil matter at the time, but were exercised about the criminal arrest, as stated by defendant's attorney at bar.

It is shown that the papers served were laid upon the table by the Reifels after they had been served, that other parties examined the papers. Mr. Henry Reifel stated, and perhaps George, as well, that he wanted a copy of those papers for himself. This also shows that there were more copies than one for each Reifel. When he made his affidavit in Mr. Eggerman's office as having been served one copy of the complaint and one copy of the summons, the statement was based on his request for a copy, after copies for all had been served upon the Reifels, and all laid on the table and were picked up by others.

I am convinced beyond any question of doubt that he was in error, and that George was in error, also, when he stated that they were served only one copy of the summons and one copy of the complaint. They only took one copy of the summons and one copy of the complaint with them, and the others were taken by others after they had laid there after service. I am convinced that the service was regularly made, and that the court, in the furtherance of justice, should say that "for each defendant" should be considered by the court as if inserted in the return. The record thus conclusively shows valid service in this jurisdiction.

Upon the second step, the court's jurisdiction is limited. The court has no inherent power (Ex parte United States, 242 U. S. 27, 37 S. Ct. 72, 61 L. Ed. 129, L. R. A. 1917E, 1178, Ann. Cas. 1917B, 355), and may not proceed in attachment unless the power is given by statute. And garnishment is a statutory remedy. United States v. Bailey (D. C.) 52 F.(2d) 286, 287.

It is admitted at bar that George C. Reifel was the general manager of the British Columbia Distillery Company, Limited.

The record must show valid service and doing business in the state at the time. 18 Fletcher, pp. 418-421. "The jurisdiction * * * does not rest upon a fiction of constructive presence, like `qui facit per alium facit per se.'" Bank of America v. Whitney, 261 U. S. 171, 43 S. Ct. 311, 312, 67 L. Ed. 594. Nor does the Conformity Act (section 726, USCA, title 28) operate to enlarge federal court jurisdiction, but jurisdiction rests upon substantive law. 18 Fletcher on Corporations, 330, etc. The conduct of the corporation in the state must be such as to warrant the inference that it is present, and process must be served on an authorized agent. Philadelphia & R. Ry. Co. v. McKibbin, 243 U. S. 264, 37 S. Ct. 280, 61 L. Ed. 710. The conduct of the defendant corporation clearly shows presence in the state. Nor can a foreign corporation be brought into a state by its agent. Chipman, Limited, v. Thomas B. Jeffery Co., 251 U. S. 373, 40 S. Ct. 172, 64 L. Ed. 314. The affidavits of the defendants are contrary to acknowledged conduct and to the known facts.

That the British Columbia Distillery Company,...