Selbert v. Lancaster Chocolate & Caramel Co.

23 F.2d 233, 1928 U.S. App. LEXIS 3151
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 6, 1928
DocketNo. 4818
StatusPublished
Cited by6 cases

This text of 23 F.2d 233 (Selbert v. Lancaster Chocolate & Caramel Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Selbert v. Lancaster Chocolate & Caramel Co., 23 F.2d 233, 1928 U.S. App. LEXIS 3151 (6th Cir. 1928).

Opinion

PER CURIAM.

The facts are sufficiently stated in the opinion of the District Judge. After consideration of the criticisms made by appellant’s counsel in his printed and oral arguments, we are satisfied that the conclusions of the court below are correct, and we approve and adopt that opinion. To the cases there cited we add the Supreme Court decisions in Philadelphia Co. v. McKibbon, 243 U. S. 264, 268, 37 S. Ct. 280, 61 L. Ed. 710, and James-Dickinson Co. v. Harry, 273 U. S. 119, 122, 47 S. Ct. 308, 71 L. Ed. 569, and we note that this court has repeatedly [234]*234recognized the separate identity, at least for most purposes, of a holding and of a subsidiary corporation, even though the former owns substantially all of the stock of the latter. City of Holland v. Holland Co. (C. C. A.) 257 F. 679, 684; Kardo Co. v. Adams (C. C. A.) 231 F. 960, 968; General Co. v. Lake Store Co. (C. C. A.) 250 F. 160, 165.

The order quashing the service of summons [subpoena] is affirmed. The opinion below follows:

Hiekenlooper, District Judge. The complainant has filed his bill in equity against the Lancaster Chocolate & Caramel Company, a corporation under the laws of Delaware, and William C. Bidlaek, praying that an accounting be ordered between the corporation defendant and the said William C.' Bidlaek, and that it be ascertained the amount of stock and moneys alleged to have been illegally obtained by him, that such preferred stock as has been illegally and fraudulently issued be canceled, and that a judgment be recovered on behalf of said corporation for all moneys so found to be due. Complainant also prays for the appointment of a receiver to hold and administer the assets of said Lancaster Chocolate & Caramel Company, whether'held in its own name or the name of one of its subsidiary corporations, and that such receiver be authorized and directed to bring any necessary actions on behalf of the corporation for the recovery of its assets or the cancellation 'of its capital stock.

.. The Lancaster Chocolate & Caramel Company, appearing specially for the purposes of this motion and for no other purpose, now moves .the. cqurt to quash the service of summons. wíiieH was made by delivering the subpoena ip-,William C. Bidlaek personally, as president óf the defendant company.

The Lancaster Chocolate & Caramel Company appears from the evidence to be a corporation organized under the laws of Delaware, and authorized by its charter, not only to engage in the actual manufacture of candy, its principal plant being located at Lancaster, Pa., but also being authorized to hold the capital stpek of other corporations in like or analogous lines of business. Pursuant to this latter corporate power the Lancaster Chocolate & Caramel Company has acquired all the capital stock of the Reinhart & Newton Company, a eoz’poration organized under the laws of Ohio and having its principal place of business in Cincinnati. The Reinhart & Newton Company holds all the capital stock of the Dolly Varden Chocolate Company, another .Ohiq corporation, with offices at Cincinnati. Mr. Bidlaek is president of all three companies, and four of the five directors of the Lancaster Chocolate & Caramel Company are also directors of the Reinhart & Newton Company and the Dolly Varden Chocolate Company.

In order to constitute a valid sezrvice in the pase at bar it must appear that the defendant corporation, was present and doing business within the territorial jurisdiction of this court. The general rale unquestionably is that such business “must be of a nature warranting the inference that the corporation has subjected itself to the local jurisdiction, and is, by its duly authorized officers or agents, .present within the state or district where service is attempted.” People’s Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537.

Plaintiff contends that the defendant corporation is shown to be thus present within the jurisdiction of this court, and here engaged in the prosecution of its business, upon the argument that one of the purposes, if not the chief purpose, of the defendant corporation was the control, management, and prosecution of the business of the two Ohio subsidiaries; that the court will look through corporate fiction, and that where it is apparent that the foreign corporation is carrying out one of the purposes for which it was organized, and conducting a business here through the mere means or instrumentality of domestic cozporations, the court, regarding substance and not mere matter of form, will hold that the foreign corporation is present and engaged in carrying on its business within this jurisdiction. In support of this contention, the plaintiff cites Chicago, etc., Ry. v. Minneapolis Civic Ass’n, 247 U. S. 490, 500, 501, 38 S. Ct. 553, 62 L. Ed. 1229. In answering this contention, the case of Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S. 333, 336, 45 S. Ct. 250, 251 (69 L. Ed. 634), seems precisely in point:

“That such use of a subsidiary does not necessarily subject the parent corporation to the jurisdiction was settled by Conley v. Mathieson Alkali Works, 190 U. S. 406, 409-411 [23 S. Ct. 728, 47 L. Ed. 1113], Peterson v. Chicago, Rock Island & Pacific Ry. Co., 205 U. S. 364 [27 S. Ct. 513, 51 L. Ed. 841], and People’s Tobacco Co., Ltd., v. American Tobacco Co., 246 U. S. 79, 87 [38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537]. In the ease at bar, the identity of interest may have been more complete, and the exercise of control over the subsidiary more intimate, than in the three cases cited; [235]*235but that fact has, in the absence of an applicable statute, no legal significance. The corporate separation, though, perhaps merely formal, was real. It was not pure fiction. There is here no attempt to hold the defendant liable for an act or omission of its subsidiary or to enforce as against the latter a liability of the defendant. Hence eases concerning substantive rights, like Hart Steel Company v. Railroad Supply Co., 244 U. S. 294 [37 S. Ct. 506, 61 L. Ed. 1148]; Chicago, etc., Ry. Co. v. Minneapolis Civic Association, 247 U. S. 490 [38 S. Ct. 553, 62 L. Ed. 1229]; Gulf Oil Corp. v. Lewellyn, 248 U. S. 71 [39 S. Ct. 35, 63 L. Ed. 133]; and United States v. Lehigh Valley R. R. Co., 254 U. S. 255 [41 S. Ct. 104, 65 L. Ed. 253], have no application.”

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Cite This Page — Counsel Stack

Bluebook (online)
23 F.2d 233, 1928 U.S. App. LEXIS 3151, Counsel Stack Legal Research, https://law.counselstack.com/opinion/selbert-v-lancaster-chocolate-caramel-co-ca6-1928.