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LANE v. MAPLE LEAF MILLING CO.

April 22, 1949

LANE
v.
MAPLE LEAF MILLING CO., Limited, et al.



The opinion of the court was delivered by: CONGER

Motion by defendant Maple Leaf Milling Co., Ltd. made pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., to dismiss the complaint for lack of jurisdiction over the person of defendant Maple Leaf Milling Co., Ltd. and quashing the purported service of the summons and complaint on the ground that the moving defendant is a corporation organized under the laws of the Province of Ontario, Canada and is not subject to service within the Southern District of New York and on the further ground that the service of the summons and complaint was not made on anyone authorized to receive service of process for the moving defendant.

It is asserted by the moving defendant and not denied by plaintiff that the cause of action arose in Canada.

There are two corporations here, each having the same name, i.e. Maple Leaf Milling Co., Ltd. (defendant), a Canadian corporation and the other a New York corporation.

 The New York corporation is a wholly owned subsidiary of the Canadian corporation; the New York corporation is a distributor of the Canadian corporation's products. The New York corporation purchases its milling and flour requirements from the Canadian corporation.

 The President of the Canadian corporation is also the President of the New York corporation; he is also a Director of each.

 Each corporation has the same Secretary, who is also a Director of the New York corporation. The Treasurer of the Canadian corporation is also a director of the New York corporation.

 The summons and complaint were served on Henry K. Moore, who is Vice President and Manager of the New York corporation. He is not an officer, director nor employee of the Canadian corporation.

 The issue presented by this motion is rather unique and is somewhat clouded by the exact similarity of the names of the two corporations. Just why the subsidiary corporation bears the same name as its parent has not been made clear to me.

 Plaintiff asserts that the New York corporation was merely a device for circumventing tariff regulations; the moving corporation denies that and states that the New York corporation sells no flour for consumption in New York nor in the United States, but sells only for export and that no duty is levied on flour nor products passing through the United States to foreign countries and that, therefore, the tariff of the United States could have nothing to do with the organization of the New York corporation nor with its operations in selling for export to foreign countries.

 The Canadian corporation manufactures and sells flour, animal and poultry feeds and cereals. Its mills and plants are located in Canada. It claims that it does no business in the United States because of the prohibitive United States tariff on flour, its main product; that there are no shipments of any sort by the Canadian corporation of any goods into the Southern District of New York for sale, use or consumption.

 It is also claimed by defendant, that for certain areas of the world it uses as exclusive distributor of its products the New York corporation, which is engaged in the buying and selling of flour and grain products for sale in the export trade principally in South and Central America, the Caribbean, Africa and Portugal; it is further claimed that the New York corporation is a separate entity and conducts its affairs as such.

 DefendantS motion has raised an issue which has troubled the courts for some time. The decisions are not in accord, yet the general rule is plain and well established. It is the application of the rule which causes the 'rub'.

 The general rule is that the business carried on in this District by a foreign corporation 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 fully authorized officers or agents present within the State or district where service is attempted. People's Tobacco Co., Ltd. v. American Tobacco Co., 246 U.S. 79, 38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C; 537. Each case must be decided on its own merits and on its own state of facts.

 Plaintiff has failed to convince me that the defendant itself carries on any activities in this District. There is nothing in plaintiff's papers to indicate that defendant by itself carries on, does any business of any kind or nature here in this District except that there is the claim that this defendant maintained an office at 80 Broad Street, but this is denied and the uncontradicted assertion is made by defendant that the lease is with the New York corporation and the rent paid by it. Even assuming that this defendant has a branch office there, as shown in Moody's Manual, there is no showing of any activity of the defendant at this office except perhaps occasional visits of the officers of ...


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