Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ABRAMS v. BENDIX HOME APPLIANCES

March 13, 1951

ABRAMS et al.
v.
BENDIX HOME APPLIANCES, Inc.



The opinion of the court was delivered by: WEINFELD

In this action to prevent and restrain alleged violation by defendant of the antitrust laws and to recover treble damages thereunder, both jurisdiction and venue are predicated on Section 12 of the Clayton Act, 15 U.S.C.A. § 22. *fn1"

Service of the summons and complaint was made upon an officer of defendant at its principal place of business, South Bend, Indiana, following which defendant moved (1) to quash the service of process and to dismiss for lack of jurisdiction of the person; and (2) to dismiss for improper venue. The matter originally came on before District Judge Samuel H. Kaufman, who denied the motion to quash and to dismiss for lack of jurisdiction and also denied the motion to dismiss for improper venue but without prejudice to a renewal after plaintiff completed the taking of depositions on such issue. 91 F.Supp. 633. These examinations have since been completed and the defendant now renews its motion.

The question is whether the 'venue privilege' under Section 12 of the Clayton Act entitles plaintiff to prosecute this action in this district. This latter section has two functions in antitrust suits against corporations: (1) To determine where process may be served; and (2) to fix the venue. Since venue may be had not only in the judicial district whereof the corporate defendant is an inhabitant 'but also in any district wherein it may be found or transacts business' the issue is whether the defendant at the time of the service of process transacted business in the Southern District of New York.

 Section 12 of the Clayton Act is an enlargement of jurisdiction granted under Section 7 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 15, which restricted suits to the district in which the defendant 'resides or is found' and so controlled both the place of service of process and venue. United States v. Scophony Corporation of America, 333 U.S. 795, 804, 68 S. Ct. 855, 92 L. Ed. 1091. The Supreme Court held that the expression 'transacts business' in Section 12 was intended to broaden the choice of forum available to plaintiffs in antitrust actions in contrast to the narrower concepts enunciated in earlier cases which construed the word 'found'. Thus, venue is proper when in the ordinary sense the defendant engages in any substantial business operations and the test of venue is the 'practical, everyday business or commercial concept of doing or carrying on business 'of any substantial character". United States v. Scophony Corporation of America, supra, 333 U.S. at page 807, 68 S. Ct. at page 862; Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S. Ct. 400, 71 L. Ed. 684. The purpose of the Congress in enlarging venue was to relieve 'persons injured through corporate violations of the antitrust laws from the 'often insuperable obstacle' of resorting to distant forums for redress of wrongs done in the places of their business or residence. A foreign corporation no longer could come to a district, perpetrate there the injuries outlawed, and then by retreating or even without retreating to its headquarters defeat or delay the retribution due.' United States v. Scophony Corporation of America, supra, 333 U.S. at page 808, 68 S. Ct. at page 862. The instant application must be considered in the light of the Congressional intent, as declared by the Supreme Court, to extend jurisdiction under Section 12.

 As indicated in the Eastman and Scophony cases, venue may be proper in a district, although the corporation may not be subject to service of process there. It follows that the standard to be applied in determining whether a corporation 'transacts business' for the purposes of venue under Section 12 is more liberal than that used in deciding the validity of service. As some of the cases phrase it, 'The quantum of business which must be transacted by a corporation' to support venue in an antitrust suit 'is less than the 'doing business' necessary to sustain the service of process in other cases.' Windsor Theatre Co. v. Loew's Inc., D.C., 79 F.Supp. 871, 873; Jeffrey-Nichols Motor Co. V. Hupp Motor Car Corp., 1 Cir., 46 F.2d 623.

 In cases of this type precedents do not necessarily control and each case must be governed by its own peculiar set of facts. Echeverry v. Kellogg Switchboard & Supply Co., 2 Cir., 175 F.2d 900. The Court has examined the voluminous papers submitted on the present application, those offered on the prior motion before Judge Kaufman which were incorporated by reference by the parties, as well as the extensive testimony taken upon the depositions, from which the following facts appear:

 Defendant Bendix Home Appliances, Inc., a manufacturer of household appliances, is a corporation organized under the laws of Delaware, having its main office and principal place of business in South Bend, Indiana, branch offices in Chicago, Pittsburgh, Detroit, Cincinnati, and a branch office and factory in Clyde, Ohio.

 Bendix sells its products only to independent wholesalers (referred to as distributors) throughout the country and not to dealers or the general public. The only exception to this general policy is that in the four states where it maintains branch offices it acts as wholesaler or distributor, making direct sales to dealers. The distributors, in turn, sell to dealers from whom the ultimate consumer makes his purchase of Bendix appliances. The defendant has no dealings with retailers (except in the four states referred to above); dealers have never been under franchise or contract with it. Bruno-New York, Inc. is the exclusive distributor in this district and as such it franchises its own dealers. The defendant contends that all contracts with distributors are executed at South Bend, Indiana, and such sales are completed there or in Clyde, Ohio, title passing to the distributor upon delivery to the carrier. However, actual sales in a district are not essential for a finding that business is transacted there. Jeffrey-Nichols Motor Co. v. Hupp Motor Car Corp., supra.

 The defendant in summation of its position urges that it has no office, no factory, no warehouse, no sales representative, no telephone and no office directory listing, no real estate, no other tangible property, no corporate records and no books of account in this district; that it is not licensed to do business here, pays no franchise tax, has designated no agent to receive process here, that the company solicits no orders and makes no sales, maintains no repair facilities, engages no personnel in the district. At most, it urges, employees with wide territory to cover occasionally or sporadically pass through this district in the course of their travels. Hence, it concludes that no proper venue may be based upon such 'very tenuous' and 'completely circumscribed activities'.

 As against defendant's summary of its position, the plaintiffs counter with the following:

 Bendix, for the past several years, has maintained four bank accounts in the Southern District of New York. Although one of these is presently inactive, the remaining three, in defendant's own language, 'have at all times been active accounts, each involving the drawing of hundreds of checks annually totaling several hundreds of thousands of dollars.' Bendix employs a rotating system whereby for two week periods all obligations wherever incurred and wherever payable are met by checks drawn exclusively on one bank, and it concedes that under this procedure one account in this district is used for all such payments, 'regardless of who the payee was or where he was located.'

 Bendix participates in an arrangement with one of these banks whereby the latter finances the purchase of defendant's products by Telecoin Corporation, the exclusive distributor of Bendix' commercial, as distinguished from consumer, appliances. Under this contract, Bendix, in consideration for the extension of credit to Telecoin, is committed to repurchase the machines from the bank in the event of a default by Telecoin.

 During the past two years the defendant has made purchases from twenty-seven suppliers in the State of New York, eight of whom are located in this district. Payments are sometimes made from an account here, depending upon which account of defendant is currently being used for such purposes. One of several registration and transfer agents for the company's securities is located within this district.

 The Eastern Sales Manager, whose territory includes New York, was here on Bendix' business on two to three days of each month from January through August 1950, with the exception of July, when he was in this district on one day. These visits entailed conferences with distributors with respect to policy, production, advertising, and, according to the testimony of Bruno's President, 'any general subject * * * pertinent to our operation.' Like discussions have been held between Bruno and an assistant to this officer. It is undisputed that Bendix' Field Service Supervisor spends five working days per month in New York City, although what portion of his time is spent within this district is unspecified. His duties have been described as 'a service to the distributors, to see that they understand the methods and are properly carrying them out'. Defendant's Service Manager visits this district but only sporadically for a ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.