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AQUASCUTUM OF LONDON, INC. v. S/S AMERICAN CHAMPIO

May 27, 1969

AQUASCUTUM OF LONDON, INC., and Rodex of London, Ltd., Plaintiffs,
v.
S/S AMERICAN CHAMPION, her engines, etc., United States Lines, Inc., and W. Wingate & Johnston, Ltd., Defendants


Pollack, District Judge.


The opinion of the court was delivered by: POLLACK

POLLACK, District Judge.

Defendant W. Wingate & Johnston, Ltd. (hereinafter "Wingate") seeks dismissal of the complaint for lack of jurisdiction over the person, Rule 12(b)(2), and for insufficiency of service of process, Rule 12(b)(5), Fed.R.Civ.P. *fn1"

 This action arises out of an alleged shortage in a shipment of 78 cartons containing wearing apparel that was carried on the S/S AMERICAN CHAMPION in a 20-foot shipping container from London to New York. The owners of the wearing apparel sue the ship, in rem, United States Lines, the shipowner, and Wingate, the London freight forwarder which arranged the shipment. Service of process, evidently pursuant to Rule 4(d)(3), Fed.R.Civ.P., was purportedly effected on Wingate by delivering a copy of the summons and complaint to 11 Broadway, New York City, at the offices of Penson & Co., Inc., a New York customs broker.

 1. Service of process.

 A federal district court will exercise jurisdiction over a foreign corporation in an ordinary diversity case only when that would be done, under constitutionally valid legislation, by a state court in the state where the federal district court sits. Arrowsmith v. United Press International, 320 F.2d 219, 6 A.L.R.3d 1072 (2d Cir.1963). The applicable statute is therefore New York CPLR ยง 301.

 Section 301 incorporates the prior New York decisional law as the test for the exercise of personal jurisdiction over a foreign corporation; and that test is whether in fact that corporation "is here, not occasionally or casually, but with a fair measure of permanence and continuity * * *." Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915 (1917). This is commonly known as the "doing business" or "presence" test; and as the New York Court of Appeals has observed:

 
What constitutes "doing business" in order to render a foreign corporation amenable to process is not susceptible of exact delineation. Each case must be decided on its own facts * * *. La Belle Creole Int., S.A. v. Attorney-General, 10 N.Y.2d 192, 197, 219 N.Y.S.2d 1, 5, 176 N.E.2d 705, 708 (1961).

 The facts presented on the pending motion are taken from the depositions of Penson & Co., World Warehouse, Inc., Belgian Lines, Inc., and United States Lines, Inc. and from the affidavit of Edward Cave Easter, a director of W. Wingate & Johnston, Ltd.

 Wingate and Penson & Co. are wholly separate business entities, having no overlap of employees, officers, directors, or shareholders. Penson & Co. has no authority to enter into any kind of agreement binding Wingate; nor is it authorized to accept service of process for Wingate. Wingate and Penson & Co. have no contractual relations, either written or oral; and if Penson & Co. is employed as a customs broker on a shipment forwarded by Wingate, it is employed and paid by the owner of the shipment, not by Wingate.

 In 1934, Penson & Co. incorporated a concern known as "Wingate & Johnston, Inc.", under the laws of the State of New York. With the exception of paying an annual franchise tax to preserve its existence and listing itself in the New York telephone directory at the number and address of Penson & Co., Wingate & Johnston, Inc. is and has always been a paper corporation, totally dormant. *fn2" It was formed without prior consultation with Wingate; it has no relation whatever to Wingate; and it has never been used for any purpose by Wingate.

 Therefore, at the very least, service of the summons and complaint on Wingate by delivery to the offices of Penson & Co. must fail under Rule 4(d)(3), Fed.R.Civ.P., since by no stretch of the imagination can the latter be said to be a "managing or general agent" for Wingate. Kirkland v. Sapphire Int. Touring, Ltd., 262 F. Supp. 309, 314 (S.D.N.Y.1966); Klishewich v. Mediterranean Agencies, Inc., 42 F.R.D. 624 (E.D.N.Y.1966).

 2. Amenability to jurisdiction - Doing Business.

 Plaintiffs, in their memorandum of law in opposition to this motion, assert that Wingate is present and doing business within New York. The facts do not bear out this contention.

 W. Wingate & Johnston, Ltd. is a corporation organized and existing under the laws of Great Britain, with its principal place of business in London. Wingate has not qualified to do business in any state of the United States. No shareholders, directors, or officers of Wingate are citizens or residents of the United States. Wingate maintains no office or place of business in the United States. *fn3" Wingate neither leases nor owns any real or personal property in the United States; and it has no bank accounts in the United States. There is no one in the United States ...


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