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July 13, 1936


The opinion of the court was delivered by: GALSTON

GALSTON, District Judge.

The defendant appears specially and seeks to have set aside the service of summons and complaint made upon one Frank C. Taylor at No. 270 Madison Avenue, New York City.

The action was begun in the New York Supreme Court for the County of Nassau and removed to this court on the petition of the defendant on the ground of diversity of citizenship. Two questions are presented by this motion:

 1. Was the defendant, a foreign corporation, organized and existing under and by virtue of the laws of the state of New Jersey, having filed no certificate of authority to do business in the state of New York, and carrying on no part of its newspaper publishing business in this state, doing business within the state of New York?

 2. Was the service upon Frank C. Taylor valid?

 From the affidavits in support of the motion it appears that Taylor was employed by the defendant as an advertising salesman or solicitor. He was not an officer or director of the company, and his duties consisted only of soliciting orders for display advertising in the defendant's newspaper, the Newark Evening News. He also had routine supervision of a staff of advertising salesmen or solicitors who were employed by the defendant and who were likewise engaged in soliciting orders for display advertising from advertisers in New York City. He and his staff occupied desk space in the offices of O'Mara & Ormsbee at 270 Madison avenue, New York City. His authority was limited. He could neither employ nor discharge his assistants. He did not fix their compensation nor have anything to do with the payment thereof, nor with the payment of the rent for the desk space occupied by himself and his assistants, nor with the payment of the charges for the telephones at his disposal.His compensation was paid directly by the Evening News Publishing Company.

 The orders which were solicited and obtained were taken subject to the approval of the advertising manager of the newspaper at the home office in Newark, N.J. He rendered no bills nor did he make any collections for this advertising. All bills were sent from Newark, N.J., and paid at Newark, N.J., except that occasional applications were made to him or his assistants for classified advertising in the newspaper. Such advertising was subject to the approval of the advertising manager and payment thereof was made in cash which was remitted to Newark.

 The affidavit of William L. Morgan, the secretary of the defendant, shows in addition to the foregoing that the defendant had no bank account in the state of New York, conducted no meetings of directors or stockholders in this state; that any retail sales of defendant's newspapers were made, not by the defendant, but by individual distributors, such as the Union News Company, and all deliveries were made directly from its office in Newark. This affidavit also states that Taylor has no authority to enter into any contract of any nature for the defendant and has no authority to determine any question of policy.

 From the affidavit of Patrick M. Feeney, advertising manager of the newspaper, it appears, in addition, that at times orders for advertising in the defendant's newspaper received from Taylor and his assistants were rejected.

 The opposing affidavits disclose that a telephone operator in the office of the defendant at Newark told Louis D. Lapp, an attorney associated with plaintiff's attorney, that Taylor was the manager of the New York office and took care of all its affairs, including advertising. Not much weight can be given to this averment. The Lapp affidavit does disclose that the Newark Evening News has been listed in the directories of the New York Telephone Company since 1912; also, that in the issues of the newspaper published from 1905 on, reference is made to a New York office of the defendant. It also appears that the newspaper published its own advertisement setting forth its large volume of advertising at the foot of which appears the legend, "Frank C. Taylor, New York local representative, 270 Madison Ave., New York."

 The affidavit of Matt Goldstein, plaintiff's attorney, alleges that the defendant's newspaper enjoys a wide sale in the city of New York, but there is no allegation as to who makes such sale.

 The affidavit of Barbarisi discloses that in the building directory at 270 Madison avenue there is a listing "Newark Evening News, Room 1804," and on the door of that room the legend appears, "Newark Evening News, Frank C. Taylor."

 From the foregoing it would appear that the facts are not substantially in dispute except as to the hearsay matter recited in the Lapp affidavit. On the one hand, then, we have a showing of limited authority in respect to the scope of Taylor's duties and authority, and on the other hand an alleged holding out of authority to represent the defendant.

 If the authorities cannot be harmonized in respect to the solution of the two questions presented by this motion, at least this much can be stated, that to determine whether the corporation was "doing business" the facts in each case must be carefully scrutinized and weighed. This was said in People's Tobacco Company, Ltd., v. American Tobacco Company, 246 U.S. 79, 38 S. Ct. 233, 235, 62 L. Ed. 587, Ann.Cas.1918C, 537: "The question as to what constitutes the doing of business in such wise as to make the corporation subject to service to make the corporation subject to service of process has been frequently discussed in the opinions of this court, and we shall enter upon no amplification of what has been said. Each case depends upon its own facts. The general rule deducible from all our decisions is that the business must be 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 ...

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