The opinion of the court was delivered by: LEVET
The question immediately involved in this action at this juncture is, what statute of limitations of the State of New York is available to the defense herein. It is concededly either a three-year period under Section 49, subdivision 3, or a six-year term under Section 48, subdivision 2 of the New York Civil Practice Act.
The action is for treble damages and injunctive relief under the antitrust laws. The complaint was filed on September 3, 1953. It alleges a combination and conspiracy in violation of the federal antitrust laws commencing sometime in 1946; the complaint also alleges various overt acts constituting an illegal use of defendants' monopoly power committed in 1947 and 1949 and continuously thereafter up to the date of suit.
When the complaint was filed on September 3, 1953, there was no federal statute of limitations governing treble damage actions under the antitrust laws. The uniform four-year statute of limitations now incorporated under the Clayton Act (15 U.S.C.A. § 15b) was not enacted until 1955.
Counsel for plaintiffs and counsel for defendants have agreed that the causes of action herein, if any, arose in Connecticut. Furthermore, under these conditions, the parties conceded that in determining the appropriate period of limitations this court must first look to the law of the forum, to wit, New York.
However, Section 13 of the New York Civil Practice Act (sometimes called the 'borrowing provision') provides:
'Limitation where cause of action arises outside of the state. Where a cause of action arises outside of this state, an action cannot be brought in a court of this state to enforce such cause of action after the expiration of the time limited by the laws either of this state or of the state or country where the cause of action arose, * * *'
This 'borrowing statute' (Section 13 of the New York Civil Practice Act) has been consistently applied when the cause of action arose in another jurisdiction. Seaboard Terminals Corporation v. Standard Oil Co. of New Jersey, D.C.S.D.N.Y., 1938, 24 F.Supp. 1018, affirmed 2 Cir., 1939, 104 F.2d 659; Bertha Building Corporation v. National Theatres Corporation, 2 Cir., 248 F.2d 833; cf. Cope v. Anderson, 1947, 331 U.S. 461, 67 S. Ct. 1340, 91 L. Ed. 1602. There was no claim that any of the plaintiffs come within the saving clause in favor of New York residents.
Hence, we were forced to consider the relevant provisions of Section 8330 of the Statutes of the State of Connecticut, which is as follows:
'Sec. 8330. Defendant's absence from the state to be excluded, when. In computing the time limited in the several cases aforesaid, the time during which the party, against whom there may be any such cause of action, shall be without the state, shall be excluded from the computation.'
A preliminary trial with a jury was held to determine whether the defendants Fruit Dispatch Company and United Fruit Company under said Section 8330 were 'without the state' of Connecticut during the years 1947-1953 (See opinion of this court with respect to certain phases thereof, dated December 5, 1957, D.C., 158 F.Supp. 153).
At the conclusion of this preliminary trial on December 5, 1957, the jury rendered a special verdict by which it was held that both of these corporate defendants, to wit, Fruit Dispatch Company and United Fruit Company, were 'without the state' of Connecticut during the entire six-year period immediately prior to suit, that is, from September 3, 1947 through September 3, 1953. At this trial the defendants stipulated in effect that the defendant John A. Werner was not within the state in the appropriate period. the motion of defendants to set aside this verdict was denied.
Consequently, since the statute of limitations of Connecticut, in which the cause of action arose, is thus tolled by reason of all three defendants being out of the State of Connecticut, the New York Statutes of Limitations control. See American Surety Company of New York v. Gainfort, 2 Cir., 1955, 219 F.2d 111.
Section 48, subdivision 2 of the New York Civil Practice Act provides:
' § 48. Actions to be commenced within six years. The following actions must be commenced within six years after the cause of action has accrued:
'2. An action to recover upon a liability created by statute, except a penalty or forfeiture.'
Section 49, subdivision 3 of the New York Civil Practice Act provides:
' § 49. Actions to be commenced within three years. The following actions must be commenced within three years after the cause of action has accrued:
'3. An action upon a statute for a penalty or forfeiture where the action is given to the person aggrieved or to that person and the people of the state, except where the statute imposing it prescribes a different limitation.'
This, then, is the issue for our decision: Is the period six years under Section 48, subdivision 2, or three years under Section 49, subdivision 3?
The general rule is that this court in interpretation of the New York State rules of limitation must look to the constructions of such rules as determined by the highest court of this state. Bauserman v. Blunt, 1893, 147 U.S. 647, 652, 13 S. Ct. 466, 37 L. Ed. 316; Dibble v. Bellingham Bay Land Co., 1896, 163 U.S. 63, 73, 16 S. Ct. 939, 41 L. Ed. 72.
Therefore, the question of whether the cause of action involved is a cause of action upon a statute for a penalty or forfeiture must be determined by the decisions of the courts of New York. Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., 7 Cir., 1951, 191 F.2d 912, certiorari denied 1952, 342 U.S. 947, 72 S. Ct. 555, 96 L. Ed. 704; Schiffman Bros., Inc., v. Texas Co., 7 Cir., 1952, 196 F.2d 695; Gordon v. Loew's Incorporated, 3 Cir., 1957, 247 F.2d 451.
The New York state courts may, of course, if they so elect, decide to be quided by federal court decisions as to the nature of a cause, especially if based upon federal statutes. See DiBitetto v. Sussman, 2d Dept. 1952, 279 App.Div. 1033, 112 N.Y.S.2d 356; Corcoran v. Nelson Towers Realty Corporation, Sup.N.Y.Co.1942, 42 N.Y.S.2d 265; Drenne v. Mutual Life Ins. Co. of New York, Sup.N.Y.Co.1943, 42 N.Y.S.2d 259.
Title 15 U.S.C.A. § 15 is as follows:
'15. Suits by persons injured; amount of recovery
'Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.'
An analysis of the statutory provisions upon which the plaintiffs sue, clearly indicates that the actual loss sustained by plaintiffs is only a base upon which the sanction of treble damages is superimposed. Thus, the fundamentally penal character of the right of action is evident.
At the time of the passage of the Sherman Act, Senator Hoar of Massachusetts, an eminent member of the Bar, one of the sponsors of the bill in the Senate, said of Section 7 of the Sherman Act:
'* * * This section, which is proposed to be amended, is a section establishing a penalty, threefold damages. Now, you cannot clothe a state court with the authority to enforce a penalty. * * *
'* * * we cannot say that a state court shall be clothed with jurisdiction to enforce a claim for threefold damages suffered, which is purely penal and punitive.' See 21st Cong.Rec., ...