Ware-Kramer Tobacco Co. v. American Tobacco Co.

• Decision Date: 08 March 1910
• Docket Number: 558.
• Parties: WARE-KRAMER TOBACCO CO. v. AMERICAN TOBACCO CO. et al.
• Court: U.S. Court of Appeals — Fourth Circuit

178 F. 117

WARE-KRAMER TOBACCO CO. v. AMERICAN TOBACCO CO. et al.

No. 558.

United States Circuit Court, E.D. North Carolina.

March 8, 1910

F. A Daniels, C. C. Daniels, and F. A. Woodard, for plaintiff.

Aycock & Winston, Junius Parker, and F. L. Fuller, for defendants.

CONNOR District Judge.

It appears upon the face of the complaint: that the plaintiff is a corporation, chartered and organized under and pursuant to the laws of the state of Virginia, having its principal office in the city of Norfolk in said state. That the defendant American Tobacco Company is a corporation chartered and organized under and pursuant to the laws of the state of New Jersey, having a branch office in the city of Durham, in the Eastern district of North Carolina, with a resident agent upon whom process in said district may be served. The defendant Wells-Whitehead Tobacco Company is a corporation chartered and organized under and pursuant to the laws of the state of North Carolina, having its principal office in the town of Wilson in said district.

The action is brought against the defendants jointly, and the complaint, complying with the provisions of the Code of Procedure of North Carolina, sets forth, separately, two causes of action. In the first it is alleged: That the plaintiff is, and has been for several years, in its own right and as the successor of a formerly existing corporation, engaged in the manufacture and sale of cigarettes, selling them in the state of Virginia and other states of the Union and in foreign countries, thereby engaging in interstate and foreign trade and commerce. That while so engaged in business, the defendant corporation in violation of the provisions of the act of Congress of July 2 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies' (26 Stat. 210, c. 647 (U.S. Comp. St. 1901, p. 3202; 7 Fed.Stat.Ann.p. 345)), entered into and formed an unlawful combination and conspiracy to create and did, pursuant thereto, create, a monopoly, the purpose and effect of which was to control and monopolize certain branches of the tobacco business and trade between the states and with foreign countries. The allegations upon which plaintiff bases its right to sue are full and specific. It complies with the requirements of the act in that respect. Wheeler-Stenzell Co. v. Nat. Window Glass Ass'n, 152 F. 864, 81 C.C.A. 658, 10 L.R.A. (N.S.) 972; Loewe v. Lawler, 208 U.S. 274, 28 Sup.Ct. 301, 52 L.Ed. 488. That, by reason of such unlawful combination, and the acts of defendants pursuant thereto, plaintiff sustained injury to its property and business in the sum of $400,000. Pursuant to the provisions of section 7 of the act, judgment is demanded for treble damages-- $1,200,000. The statute is expressly referred to in the complaint and made the basis of the first cause of action.

In the second cause of action the averments in regard to the character and citizenship of the parties are repeated. Omitting matter not material to the decision of the question now under consideration, the plaintiff alleges: That, at the dates set out, it was engaged in the manufacture of cigarettes, etc. That it was engaged in trade and commerce between the states and with foreign nations. 'That the defendants conspired, combined, confederated, and agreed to and with each other, and other persons, firms, and corporations, their officers, agents, and employes, to injure and destroy the business of plaintiff, and in furtherance thereof, etc., adopted' certain means and methods, all of which are fully set forth. Plaintiff further alleges: 'That with intent to impede, impair, injure, and destroy the business of plaintiff, the defendants maliciously, wantonly, willfully, oppressively, and wickedly, through their officers and agents, acting within the scope of their employment, and by direction of, and with the approval of, the defendants, committed the wrongs herein set forth, whereby the business and property of plaintiff has been greatly impaired and injured to its damage, to wit, in the sum of $1,000,000. Wherefore plaintiff prays judgment against the defendants for the sum of $1,000,000 as punitive or vindictive damages, etc.'

The defendant American Tobacco Company entered a special appearance for the purpose of filing a motion and special demurrer to the plaintiff's second cause of action, for that, as appears upon the face of the complaint, the plaintiff is a citizen and resident of the state of Virginia, and the defendant is a resident and citizen of the state of New Jersey.

The contention of the defendant American Tobacco Company is founded upon the proposition that, while it is conceded that, as to the first cause of action brought under the Sherman anti-trust act, the seventh section of which provides that any person injured in his business or property by any other person, or corporation, by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any Circuit Court of the United States in the district in which the defendant resides, or is found, the action is properly brought in this court. That, in respect to the second cause of action in which plaintiff seeks to recover punitive, or vindictive, damages for alleged injuries to its business, it can be sued only in the district in which it is 'an inhabitant.' To sustain this contention, it relies upon the provisions of the act of 1887, amended by the act of 1888 (Act March 3, 1887, c. 373, 24 Stat. 552, as amended by Act Aug. 13, 1888, c. 866, 25 Stat. 433 (U.S. Comp. St. 1901, p. 508; 4 Fed.St.Ann. 265)). By this act, jurisdiction is conferred upon the Circuit Courts of the United States, where the jurisdictional sum is involved, between citizens of different states; but it is expressly provided:

'That no civil suit shall be brought before either of said courts against any person, by any original process or proceeding, in any other district than that whereof he is an inhabitant; but when the jurisdiction is founded only on the fact that the action is between citizens of different states, suits shall be brought only in the district of the residence of either the plaintiff or the defendant.'

It is conceded that, as to the defendant Wells-Whitehead Tobacco Company being incorporated and residing in the Eastern district of North Carolina, the action is properly brought. The question of venue may be raised, either by motion to set aside the service of process, or by special demurrer, when a special appearance is made for that purpose only and before pleading to the merits. Southern Pac. Ry. v. Denton, 146 U.S. 206, 13 Sup.Ct. 44, 36 L.Ed. 942; Cent. Ry. Co. v. Pinkney, 149 U.S. 194, 13 Sup.Ct. 859, 37 L.Ed. 699; Street's Fed. Eq. Prac. Sec. 390. The right to raise the question of venue is waived by pleading to the merits or by filing a general demurrer. Street's Fed. Eq. Prac. Sec. 387. It is well settled that a corporation is, within the provisions of the act, a citizen and an inhabitant of the state in which it is incorporated, although it may carry on business, have property, and maintain agents for service of process in other states.

Shaw v. Quincy Mining Co., 145 U.S. 444, 12 Sup.Ct. 935, 36 L.Ed. 768; So. Pac. Co. v. Denton, 146 U.S. 202, 13 Sup.Ct. 44, 36 L.Ed. 942; In re Keasbey, 160 U.S. 221, 16 Sup.Ct. 273, 40 L.Ed. 402; Macon Grocery Co. v. Atlantic Coast Line Ry., 215 U.S. 501, 30 Sup.Ct. 184, 54 L.Ed. . . . .

It is clear, therefore, that for violations of the anti-trust act the defendant may be sued in any district in which 'it is found,' and that it 'is found' wherever there is some agent or representative upon whom service of process may be made. For a cause of action growing out of a breach of duty, or tort, the jurisdiction of which is not otherwise provided for, a corporation can be sued in the Circuit Court only in the district whereof it is 'an inhabitant'; that is, where it is incorporated. It is clear that the second cause of action sets forth a common-law tort-- malicious injury to plaintiff's business. The two causes of action are separate and distinct, founded and dependent upon distinct and, in many essential respects, different principles. It is recognized by the pleader that, while, for the wrongs set forth as the basis of the first cause of action, he relies upon the language of the statute, alleges specific, actual damages to the plaintiff's property and business and demands the statutory measure of recovery, in the second cause of action he properly alleges that the wrongs of which he complains were committed maliciously, willfully, wickedly, etc., and for this he demands punitive, or vindictive, damages. It is manifest that, for the matters and things set forth in the second cause of action, the plaintiff must find his right to invoke the jurisdiction of the Circuit Court of the United States, in the act of 1887-88, because of the diversity of citizenship between defendant and itself, and that, in seeking defendant for the purpose of suing, it is, by the express provisions of the act, compelled to go to the district of which it is 'an inhabitant,' or sue in the district of its own residence, unless defendant waives its privilege and consents to be sued in some other district. The plaintiff has sued in a district of which neither the defendant, nor itself, is an inhabitant, and defendant, in the appropriate way, raises the objection to the venue. Does the fact that it is sued jointly with the Wells-Whitehead Company, an inhabitant of this district, for a wrong alleged to have been committed jointly, deprive it of the right to make the objection?

In Strawbridge v. Curtiss, 3 Cranch, 267, 2 L.Ed. 435, Chief Justice Marshall said:

'Each distinct interest shall be represented by

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