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MCCARLEY v. FOSTER-MILBURN CO.

October 19, 1950

MCARLEY
v.
FOSTER-MILBURN CO. et al.



The opinion of the court was delivered by: KNIGHT

This is a motion directing the defendants to Show Cause 'why an order should not be made reopening the trial of plaintiff's motion to transfer this action from the Western District of New York to the Northern Division of the Southern District of California.'

Earlier a motion was made by the plaintiff to transfer this suit as aforesaid. This was granted by the Court, 89 F.Supp. 643, was reversed on appeal, Foster-Milburn Co. v. Knight, 2 Cir., 181 F.2d 949, and subsequently, when a motion was made in the Appellate Court for a rehearing, the Court denied 'without prejudice to any further proceedings in the District Court.' Hence follows this present motion.

 It appears from the plaintiff's moving papers that subsequent to the original motion to remove the cause, and subsequent to the decision of the Appellate Court, plaintiff discovered an individual named Obergfel whom it claims was a representative and agent of the defendant Westwood Pharmacal Corporation in the State of California and that, therefore the defendants were doing business in the State of California and service of process could be made in that state.

 The defendant, Westwood Pharmacal Corporation, (hereinafter called 'Westwood') is a subsidiary of the defendant, Foster-Milburn Company. Each is a separate corporation, Westwood from time to time purchased certain products from Foster-Milburn for sale to the medical profession only. Such products include the so-called product 'Westsal'. In April, 1946, Obergfel Bros. entered into a contract with Westwood under which they were to sell 'Westsal' to the medical profession. This was negotiated personally and executed by Dolph Obergfel. Shortly after the execution of the contract, Dolph Obergfel took over the interests of Obergfel Bros., and thereafter till the termination of the contract, that sole interest continued. Westwood had no arrangement with Obergfel other than that which was set out in the contract, and he was in no way interested in any other sales of its products. During the periods in question, Obergfel was selling the products of various other companies. Obergfel had the sole and exclusive contract to sell products advertised to physicians only.

 This motion is based on four affidavits: two by plaintiff's attorneys, one by an investigator; one by Obergfel. The attorney's affidavits are largely hearsay statements, save reference to lack of any knowledge of Obergfel. The investigator's affidavit is to the effect he could not find who sold 'Westsal'. Obergfel's affidavit connects up with a previous one.

 The Foster-Milburn Company is a large medicine manufacturing company, and during the continuance of the Westwood-Obergfel contract, sold its lay products throughout California, but it did not sell directly to the medical profession. In October, 1948, the Westwood-Obergfel contract was terminated, and after that time Obergfel made all remittances directly to Foster-Milburn Company. The sales of Foster-Milburn Company, however, were sold, under invoices stating that 'title to all merchandise passes to the purchaser at point of shipment', which point was Buffalo, New York.

 The first question to be answered is whether Obergfel under the contract was an 'agent' of Westwood and whether his transactions constituted 'doing business' by the defendant Westwood in the State of California or whether Obergfel was merely 'a factor'.

 These facts are established to the satisfaction of the Court:

 The contract between Obergfel and Westwood, drawn up by Obergfel, and under which they operated, contained this clause: 'It is understood and agreed by both parties that the distributor is an independent contractor.'

 Orders for the product 'Westsal' were sent by Obergfel from California, the product shipped by Westwood and warehoused by Obergfel in California.

 Obergfel solicited all orders, sold in his own name, incurred all expenses, made all collections and, after deducting his commissions, remitted the balance to Westwood. Westwood in no way contacted the purchasers.

 Obergfel and Westwood continued their relationship under the contract until October or November, 1948, when Westwood notified Obergfel that the contract was terminated. This termination was acquiesced in by Obergfel and following that Obergfel purchased all of the product 'Westsal' from defendant, Foster-Milburn Company, and paid for these purchases to Foster-Milburn Company. The purchases were paid for when ordered, and the invoices bore the notation 'Title to all merchandise passes to the purchaser at point of shipment.'

 An attempt is made to show that Westwood was 'doing business' or was 'present in California. Largely from the fact that Oclassen, an employee of Westwood, attended a convention of physicians in San Francisco in company with Obergfel and had something to do with the display of the product 'Westsal' on exhibition there. The Court is asked to so hold. No sales were made there and none solicited. This employee was a Research Director for Westwood, and Obergfel called him 'Manager of Research'. The evidence does not sustain the claim that this employee had any right to exercise any authority over Obergfel. Obergfel testified that this employee did not represent to prospective purchasers what the employee's position was and made no representation that Obergfel was an agent of Westwood.

 In three separate suits recently brought in California by as many individuals on action against these defendants and involving alleged causes of action arising out of the sale of this product 'Westsal', orders were granted quashing and setting aside service of summonses. In one action service was made on Obergfel and in the two ...


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