United States v. Scophony Corporation

• Decision Date: 30 October 1946
• Citation: 69 F. Supp. 666
• Parties: UNITED STATES v. SCOPHONY CORPORATION of AMERICA et al.
• Court: U.S. District Court — Southern District of New York

69 F. Supp. 666

UNITED STATES v. SCOPHONY CORPORATION of AMERICA et al.

District Court, S. D. New York.

October 30, 1946.

Edwin Foster Blair, of New York City, for defendant Scophony, Limited.

Joseph B. Marker, Sp. Atty., of New York City, for the United States.

Simpson, Thacher & Bartlett, of New York City, for defendants Television Productions, Inc., Paramount Pictures, and Paul Raibourn.

Mudge, Stern, Williams & Tucker, of New York City, for defendants Earl G. Hines and General Precision Equipment Corporation.

Joseph O. Ollier, of New York City, for defendants Arthur Levey and Scophony Corporation of America.

CONGER, District Judge.

The Defendant, Scophony, Limited, moves to quash service of process and dismiss the complaint herein upon the ground that it is a corporation organized under the laws of Great Britain, not subject to the jurisdiction of this Court.

The action is brought pursuant to Section 4 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 4, against five corporate defendants, including the movant, and three individuals to restrain continuing violations of Sections 1 and 2 of the Act, 15 U.S.C.A. §§ 1 and 2. The complaint charges the defendants with combining and conspiring to monopolize and restrain interstate and foreign trade in products, processes, patents and inventions useful in television and allied industries.

Service of process was effected in New York City on December 20, 1945 by leaving a copy of the summons and complaint with defendant Arthur Levey, who is a Director of Scophony, Limited. On April 5, 1946 one W. G. Elcock, also a Director of Scophony, Limited, was served while visiting this country.

Section 12 of the Clayton Act, 15 U.S. C.A. § 22, pursuant to which venue is established and jurisdiction acquired in suits of this type, provides as follows: "Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found." Italics added.

It may be noted that the emphasized portion of the section relating to jurisdiction is concerned here; and the main problem is, therefore, whether the defendant, Scophony, Limited, not being an "inhabitant" of this district, is "found" here.

Although there have been numerous decisions rendered in application of this section, the great majority of them relate to domestic corporations (corporations organized within the United States) rather than alien corporations, as here.

Recently, Judge Leibell of this Court considered the instant problem in a suit analogous to the present one (United States v. United States Alkali Export Association et al., D.C.,),¹ and he held that a British corporation which owned the entire capital stock of an American corporation functioning within the jurisdiction of this Court was "found" here within the meaning of Section 12. He concluded that the activities of the American corporation on behalf of the parent company warranted the finding that the former was merely an "agency subsidiary" of the British company.

In general, a corporation is "found" within a given jurisdiction if it there does business "Of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state or district where service is attempted." Peoples Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 87, 38 S. Ct. 233, 235, 62 L.Ed. 587, Ann.Cas.1918C, 537; United States v. Aluminum Co. of America, D.C.N.Y.1937, 20 F.Supp. 13; Haskell v. Aluminum Co. of America, D. C.Mass.1926, 14 F.2d 864. An examination of the cases indicates that the concept expressed as "found" is identical with the more familiar "doing business."

The affidavit submitted by the Government in opposition to this motion contains a detailed statement of the various activities of movant in this jurisdiction. Much of this activity occurred prior to the signing of the so-called "basic agreements" with the other defendants in 1942.

Defendant Scophony, Limited (hereinafter referred to as "Limited") has its office in the City of London, England. It is in the business of manufacturing and selling television apparatus and is the owner and licensor of inventions purporting to cover, among other things, television reception and transmission systems.

In the Spring of 1939, Limited manufactured and placed on the market in England several commercial television sets. After the outbreak of the war with Germany in September, 1939, the British Broadcasting Corporation stopped the television broadcasts.

In 1940, Limited sent some of its personnel and various television equipment to this country; it maintained an office in New York City from 1940 to 1941; it demonstrated its product here; it leased one of its television sets to a theatre company as a result of which a set was installed in the Rialto Theatre in New York City. In general, Limited was actively engaged in placing its product in the American market, inasmuch as the English market was closed to it because of the war. In those early years, 1940 and 1941, and perhaps for part of 1942, Limited's business here was of such a character that one might very well infer that it had subjected itself to the local jurisdiction and was present here at that time by its duly authorized agents upon whom service of process could be made.

Unless there was a continuity of such activities down to the present, however, such course of conduct is of no aid in the determination of this motion. What we are interested in is the business conduct of this defendant in this jurisdiction at the time process in this action was served upon it or within a reasonable time before that.

There is no question but that these business activities which I have referred to ceased prior to the time this defendant entered into the "basic agreements."

These agreements were executed on July 31, 1942 and August 11, 1942. In substance, they provided for the creation of a new corporation, the Scophony Corporation of America (hereinafter called "SCA"), to which Limited sold all its equipment within the United States, and all its present and future patents. SCA, in turn, gave...