Niles-Bement-Pond Co. v. Iron Molders' Union, Local No. 68

246 F. 851, 1917 U.S. Dist. LEXIS 927
CourtDistrict Court, S.D. Ohio
DecidedOctober 9, 1917
DocketNo. 138
StatusPublished
Cited by7 cases

This text of 246 F. 851 (Niles-Bement-Pond Co. v. Iron Molders' Union, Local No. 68) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Niles-Bement-Pond Co. v. Iron Molders' Union, Local No. 68, 246 F. 851, 1917 U.S. Dist. LEXIS 927 (S.D. Ohio 1917).

Opinion

SATER, District Judge.

The members of the Iron Holders’ Union, Rocal No. 68, numbering about 115, and working for the Niles Tool Company, an Ohio corporation, at Hamilton, Ohio, struck on May 24th. Aside from other orders taken by the Tool Company, it was then under obligation to the plaintiff to fill a number of large contracts for heavy and urgently needed machines, which plaintiff had agreed to deliver at an early date to the United States, and which are required by the United States as war necessities for use in machine shops, ship and naval yards, and naval gun factories. The contracts of that character aggregate about $3,000,000, and, under section 120 of the National Defense Act of june 3, 1916 (39 Stat. 213, c. 134 [Comp. St. 1916, §§ 3115f, 3115g, 3115h]), are given priority over other contracts. It is impracticable for the plaintiff to have manufactured elsewhere the articles which it has sold to the government.

The plaintiffs principal place of business is in New Jersey, under whose laws it is duly organized and incorporated. It owns all of the common stock of the Tool Company and enough of its preferred stock to give it a controlling interest. A large amount of the 'fool Company’s preferred stock is, however, held by various individuals throughout the country. The president and one of the vice presidents of the plaintiff are respectively the president and vice president of the Tool Company. The secretaries of the two companies are different. The plaintiff has nine directors; the Tool Company five, of whom three are directors of the plaintiff company. On February 6, 1900, the plaintiff and the Tool Company entered into a working agreement in which the plaintiff is characterized (improperly, I think) as the Tool Company’s general sales agent, and by which it is to receive a so-called commission of 10 per cent, on the contract price of goods purchased of the plaintiff by any customer or customers and manufactured by the Tool Company, out of which per cent, the plaintiff is to pay all expenses incurred in advertising and effecting sales. About 5 per cent, of the orders taken in Ohio are placed directly with the Tool Company; the residue of its output is produced for the plaintiff. The plaintiff enters into contracts for the delivery of manufactured articles. Whatever profit the 'fool Company makes on contracts sublet to it by plaintiff is, after the allowance of 10 per cent, from plaintiffs contract price, the property of such company. The plaintiff’s president usually fixes the price specified in all contracts made by it, although some of the smaller ones are wrought out in plaintiff’s office without coming to his attention. In fixing such price, the plaintiff necessarily fixes, also, the price the Tool Company will receive for any work which it may do for plaintiff. Both companies are inter[854]*854ested in the adjustment of the strike. The plaintiff demanded of the Tool Company, which has taken no action regarding this suit, the fulfillment of the contracts which plaintiff has placed with it.

[1,2] The defendants claim that in fact the real and substantial plaintiff and party in interest is the Tool Company and not-the plaintiff; that the suit is brought by plaintiff against the Tool Company and its codefendants, all of whom are citizens of Ohio, for the purpose of conferring an apparent jurisdiction on the United States court; that the Tool Company has an interest in the subject-matter of the bill which will properly align it with plaintiff, in consequence of which there appears a controversy on each side of which are citizens of Ohio (Helm v. Zarecor, 222 U. S. 32, 32 Sup. Ct. 10, 56 L. Ed. 77, and cases therein cited); that, within the meaning of section 37 of the Judicial Code, the plaintiff and the Tool Company have attempted improperly and collusively to make a party plaintiff simply for the purpose of creating a case cognizable by a federal court, when in reality the only parties in interest are citizens of Ohio; and that therefore the case must be dismissed for want of jurisdiction. To sustain this contention reliance is had on Southern Investment Realty Co. v. Walker, 211 U. S. 603, 29 Sup. Ct. 211, 53 L. Ed. 346, Miller & Lux v. East Side Canal & Irrigation Co., 211 U. S. 293, 29 Sup. Ct. 111, 53 L. Ed. 189, Lehigh Min. & Mfg. Co. v. Kelly, 160 U. S. 327, 16 Sup. Ct. 307, 40 L. Ed. 444, and Phoenix-Buttes Gold Min. Co. v. Winstead (D. C.) 226 Fed. 855. The instant case, however, in its facts, is unlike any of those above mentioned.

The contract between the plaintiff and the Tool Company characterizes the former as the latter’s general sales agent. Whatever may have been the status of the two companies at the time the contract was made, agency cannot now be imputed to the plaintiff. A sales agent is:

“One who sells goods which another person has delivered to him for that purpose and receives compensation for his services by a commission or otherwise.” Ommen v. Talcott, 188 Fed. 401, 403, 112 C. C. A. 239, 241 (C. C. A. 2).

The goods manufactured by the Tool Company are not delivered to the plaintiff for sale. On the contrary, the plaintiff sells goods to be manufactured and delivered. It then permits the Tool Company, by virtue of its contract with it, to produce for it the goods so to be delivered. The Tool Company is in the nature of, if not in fact, a subsidiary company of the plaintiff. It owns none of the plaintiff’s stock, and cannot control it; but the plaintiff, as the owner of a majority of the stock of the Tool Company, has the mastery and control of that corporation, and may dictate its policy. United States v. Northern Securities Co. (C. C.) 120 Fed. 721, 725, 726; Id., 193 U. S. 197, 326, 24 Sup. Ct. 436, 48 L. Ed. 679. Should the plaintiff permit the Tool Company to manufacture the articles which plaintiff has agreed to’deliver, it receives, not only its established percentage on the contract price, but, as the owner of a majority of the stock of the Tool Company, the greater part also of the profit made by the latter company, if it manufactures the articles at a profit. The Tool Company, however, cannot compel the plaintiff to permit it to manufacture any article which plaintiff has sold and obligated itself to deliver.'

[855]*855In Carroll v. C. & O. Coal Agency Co., 124 Red. 305, 61 C. C. A. 49 (C. C. A. 4), on which this case is bottomed, there was no interlocking of directors, nor did the plaintiff own any of the stock of any of the. defendant companies. In that case the plaintiff was engaged in the business of selling coal and coke. It had contracts with the defendant coal companies by which it was to take and pay for all their product at the mines, to furnish transportation, and to sell the same at prices fixed by the companies, receiving a stipulated sum per ton for its services. By the terms of such contracts the defendant companies were not liable for damages for failing to furnish coal or coke to the plaintiff, where such failure was caused by strikes. In reliance on such contracts, the plaintiff made contracts for the sale of large quantities of coal and coke, which could only be supplied from the mines of the defendant companies.

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Bluebook (online)
246 F. 851, 1917 U.S. Dist. LEXIS 927, Counsel Stack Legal Research, https://law.counselstack.com/opinion/niles-bement-pond-co-v-iron-molders-union-local-no-68-ohsd-1917.