Summary
In Barnett, we reversed a lower court judgment dismissing a personal injury action for want of personal jurisdiction over an interstate railroad which operated only in Texas, Louisiana and Arkansas, though it had an office in New York which solicited freight and passenger service and had authority to issue bills of lading for shipments on its lines.
Summary of this case from Scanapico v. RichmondOpinion
No. 98.
November 29, 1944.
Appeal from District Court of the United States for the Southern District of New York.
Action by Yolanda Barnett against the Texas Pacific Railway Company for damages allegedly caused by refusal of defendant to allow plaintiff to occupy space in a dining car on a train operated by defendant and for damages allegedly caused by conductor of train in attempting to expel plaintiff from the dining car. From a judgment vacating service of process and dismissing the complaint for lack of jurisdiction of the defendant, plaintiff appeals.
Reversed.
The action was begun in the Supreme Court of the State of New York and removed to the court below. Defendant is a railroad organized under an Act of Congress which, as amended in 1923, provides that defendant shall, for purposes of litigation, be deemed a citizen and inhabitant of the State of Texas. Its principal office and its claim department are in Texas. It operates a railroad in interstate commerce in Texas, Louisiana and Arkansas. It does not own, lease or operate any lines of railroad in the State of New York, and no meetings of its directors or officers are there held, nor has it consented to be sued there. It maintains an office in New York, in charge of one Hunt, its Eastern Traffic Manager, who is not an officer or director, the personnel of which consists of Hunt and seven employees. This New York office has nothing to do with stockholders' notices, dividend checks or stock transfers. Through solicitations, the employees of the New York office induce persons to use defendant's railroad for freight and passenger service. The New York office has authority to issue bills of lading for shipments on defendant's lines.
The district judge heard and saw no witnesses. In a deposition, Hunt testified as follows:
"A. We can issue bills of lading for any shipment on our own railroad, but nothing at all to do with New York.
"Q. You say you do issue bills of lading here in New York? A. We issue bills of lading for our own railroad where they originate on our own line.
"Q. Give us an illustration of what you mean? A. Well, if your company was here in New York and you want to ship a car, freight, from New Orleans to Dallas, Texas, or to El Paso, Texas, which is the end of our railroad, as a convenience we can issue a bill of lading and send it to our agent at whatever point it would be, in this instance, it would be New Orleans, of course.
"Q. Now who signs that bill of lading? A. I would sign it.
"Q. You individually? A. Yes, sir. I would sign it `Texas Pacific Railway, per me.'
"Q. How would such a payment be made in such a case? Would you send out a bill or who would send out the bill for the freight? A. Well, ordinarily it would be paid at the other end.
"Q. Are there cases where it is paid in advance? A. Yes, they could pay it in advance. They could give us a check payable to the company at New Orleans as in this particular instance I was just citing.
"Q. There have been instances, have there not, where checks have been paid in New York? A. Oh, yes.
"Q. What happens to those checks? A. We send them down to whatever agent is involved at the point of origination or the destination, as the case may be, or we send it to our treasurer in Dallas, Texas.
"Q. What about passenger service, do you also sell that here? A. The same thing.
"Q. What are the mechanics of selling passenger service? A. Well, if we solicit you for our railroad to El Paso, Texas, say, for the sake of argument, either myself or my associate, or whichever one would call on you or contact you, would ask which railroad you would like to travel from New York to St. Louis or Chicago or New Orleans, as the case may be, and then we in turn would go to that particular railroad at the ticket office and pick up the ticket on established credit, deliver the ticket to you and take the money back to the railroad that we bought the ticket from and lift our credit and just save you the trouble of going to the ticket office, that's all.
"Q. Now, are there also instances where you issue passenger tickets direct from your office? A. Only in exchange. We do not sell any tickets. We would just issue an exchange ticket.
"Q. Describe what you have in mind on that. A. Any railroad that issues what we call an inter-line ticket, that is, for more than one railroad, always has to be consulted before a route is changed because we at the point of origin, which in our case would be somewhere in Texas or Louisiana, could change that ticket in our office if he wanted to go via another route. That is for convenience again to save us from the trouble of going to the New York Central or the Pennsylvania or the Baltimore Ohio and going through all of these details that I have just outlined to you in our handling of tickets out of New York. * * *
"Q. Can you give us a notion of the quantity of freight and passenger service handled by the New York office if you say you have no records? A. No, sir, we have no record. If we know of every car and every passenger that moved we would have to have 25 or 50 people employed.
"Q. Would you say there has been a substantial volume of business? * * * What I mean is the volume of business by the efforts of the New York office. A. That would be impossible to tell you.
"Q. You would say it was a substantial amount of business each year? A. It keeps 8 of us pretty busy.
"Q. You are regularly busy? A. Yes, sir.
"Q. It is continuous work. It is not spasmodic or occasional? A. No, sir.
"Q. Have you any means of knowing how many bills of lading you yourself have issued, say, this year, 1944? A. I wouldn't say a dozen because that would have to be a very unusual case, in all instances somebody on the ground or the point of origin has to load that freight.
"Q. How many would you say were issued in the whole year, 1943, in the New York office? A. Very, very few, only at convenience.
"Q. How many instances would you say there were when freight was paid in advance to the New York office, a dozen or so a year? A. No, sir, it is very unusual because those particular people have established credit through the railroad fraternity which is known as `36 Hours to Pay the Bills.'
"Q. But it has happened within the last year, has it not? A. Well, I can't just recall.
"Q. Now these instances that you speak of, picking up railroad passenger tickets, that happens all the time, doesn't it? A. Yes, sir.
"Q. How often? A. Every day. Two people are assigned to that work.
"Q. Two people who do nothing but that? A. Yes.
"Q. The money for that is always received, in the first instance, by your employee? A. Yes.
"Q. Then that is paid over to the line of origin here? A. Right.
"Q. The division of the rate is not any part of your New York office? You don't retain any part of that money as the Texas Pacific's share of the through rate? A. No, sir.
"Q. That is taken care of by the inter-office? A. Just the same as if you went in the railroad office and bought the ticket direct.
"Q. Have you any notion how many thousands of dollars in railroad fares are collected by your New York office a month? A. No, sir, I have not. It is not as much now as it used to be because people go more directly to the initial lines on account of space. Space is harder to get and the original lines control it.
"Q. Still there are transactions every day? A. Oh, yes.
"Q. You spoke of instances when you exchanged tickets. How often does that happen? A. Well, I would say 4 or 5 times a week.
"Q. Now, is there any cash accompanying such a transaction? A. If there is a difference in the rate from the point of origin, we would collect the difference.
"Q. Now, what would you do with that money? A. Send it to the treasurer in Texas. * * *
"Q. Do you have anything to do with complaints of shippers? A. Well, yes, I receive them.
"Q. Would you have contact with the shippers? A. If we hear about them we will.
"Q. And make efforts to straighten them out? A. Yes.
"Q. Do you ever handle in New York any passenger accommodations that originate on your line? A. Yes, sir.
"Q. Now in that case you keep the money and send it to Dallas? A. We do not have Pullman tickets which go along with the passenger reservations. If we want them we would go to the initial line in New York.
"Q. You misunderstood me. I was talking about passenger accommodations which originate on your line. Say somebody in New York is going down south and he knows he wants to go from New Orleans to Dallas and he comes to you 2 weeks from now and says, `I would like to go to New Orleans from Dallas, will you book me a compartment or whatnot,' you would handle that would you not? A. We would deliver that right to your office.
"Q. You would deliver the railroad ticket and the Pullman accommodations both to the New York prospective passenger right here in his office? A. As a service to you we would either telegraph or write New Orleans that you wanted a compartment on such and such a train and he would issue the tickets and send them to us and we would deliver them to your office and hope that you think that is good service.
"Q. Would those tickets never be issued here in the New York office? A. No, sir, we would get those from whatever point it happens to be. If it was on our railroad we could issue the railroad ticket but not the Pullman.
"Q. You could issue the railroad ticket? A. Yes.
"Q. And that has happened? A. Oh, yes.
"Q. How often? A. Not often, either once or twice a month.
"Q. Now, in all those cases where the transportation issued on the Texas Pacific line, the Texas Pacific Company would, of course, keep the money? A. Yes.
"Q. Would you get that money in cash here in New York? What do you do with the cash? A. I would send my check to the treasurer of the company * * *
"Q. Complaints could arise in connection with such shipments as well as shipments out of New York? A. Yes. And they often do. We would have nothing to do with complaints about shipments out of New York; In other words, I could not tell the Pennsylvania or the New York Central what to do.
"Q. Well, if there was delay in the delivery of freight which the shipper here in New York complained of, even though the shipment originated from the Pennsylvania, you would try to do something about it? A. Sure would.
"Q. And if the Pennsylvania said it isn't our fault we delivered it to you long ago, it is lying somewhere in Louisiana on the way to Texas, then you certainly would get in the picture? A. I certainly would. That is one of the chief things that keeps me busy.
"Q. And the same thing is true of freight going the other way? A. Yes, sir."
Plaintiff, in her complaint, alleges that she is a resident and citizen of New York; that she purchased a first-class railroad ticket from St. Louis, Missouri, to Dallas, Texas, and also Pullman accommodations on the Sunshine Special train of the Missouri Pacific Railroad, and boarded that train on February 10, 1944; that that train was under the operation and control of defendant at 10:30 A.M. on the morning of February 11, 1944; that at that time she entered the diner attached to that train and asked to be served there; that she was conducting herself in a quiet and orderly manner but that the conductor, without any just cause or provocation, in the presence of many persons, and with unnecessary violence, attempted to expel her from the dining-car and in so doing, assaulted plaintiff and addressed her in a loud and boisterous voice; that the assault was committed by the conductor in the course and general scope of his employment by defendant; that at the time the train was in the State of Texas, the laws of which require the separation of white and Negro passengers in dining-cars; that plaintiff is a Negro; that the diner was provided with a curtain for the purpose of separating the white and Negro passengers, and that, although there was vacant space in that portion of the diner set aside for Negro passengers, defendant refused to permit plaintiff to occupy any of that vacant space or to serve her in the diner; and that defendant deprived plaintiff of her equal right to be served in the diner while a passenger on the train.
On the foregoing facts, on motion of defendant, the district court entered an order vacating the service of process on defendant and dismissing the complaint for lack of jurisdiction, on the ground that the defendant is not doing business within the State of New York.
Osmond K. Fraenkel, of New York City, for appellant.
Cravath, Swaine Moore, of New York City (Albert R. Connelly and Frank M. McGarry, both of New York City, of counsel), for appellee.
Before SWAN, CLARK, and FRANK, Circuit Judges.
Defendant contends that the district court correctly held that its decision was compelled by the "solicitation" doctrine of Green v. Chicago, B. Q.R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916. But in International Harvester v. Kentucky, 234 U.S. 579, 586, 34 S.Ct. 944, 58 L.Ed. 1479, the Court referred to the Green case as "extreme." In Hutchinson v. Chase Gilbert, 2 Cir., 45 F.2d 139, 141, this court, per Judge L. Hand, said: "Possibly the maintenance of a regular agency for the solicitation of business will serve without more. The answer made in Green v. C., B. Q.R.R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and People's Tobacco Co. v. American Tobacco Company, 246 U.S. 79, 38 S.Ct. 233, 62 L. Ed. 587, Ann.Cas. 1918C, 537, perhaps becomes somewhat doubtful in the light of International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, and if it still remains true, it readily yields to slight additions." See also Jacobowitz v. Thomson, 2 Cir., 141 F.2d 72. Here there were more than "slight additions", i.e., the actual selling of tickets for transportation on defendant's line and the issuance of bills of lading in New York (to say nothing of the handling of complaints.) It is urged that not many of these acts occurred each year. But those acts were authorized by defendant which put no limit on the number of such acts that its employees might perform. We think that the authorized performance of such acts constitutes doing business in New York, even if the volume of freight and passenger business initiated in New York is not as great as, we may surmise, defendant would like it to be. As plaintiff is a citizen and resident of New York, it cannot be said that the suit is an undue burden on interstate commerce. Cf. Baltimore Ohio R. Co. v. Kepner, 314 U.S. 44, 51, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central R. Co., 315 U.S. 698, 701, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104. Accordingly, on the facts of this case, we decide that defendant was doing business in New York and that it was properly served there by service on Hunt.
The "solicitation" rule was recently criticized severely by Judge Rutledge (now Mr. Justice Rutledge) in Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926. As that case dealt not with a railroad but a commercial business, we cite it not as a precedent but for its general discussion.
Cf. St. Louis, Southwestern R. Co. of Texas v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486, Ann.Cas. 1915B, 77; Missouri, K. T.R. Co. v. Reynolds, 255 U.S. 565, 41 S.Ct. 446, 65 L. Ed. 788.
Defendant suggests that it established its office in New York and its present mode of activity there in reliance upon such precedents as Green v. Chicago, B. Q.R. Co., supra. But International Harvester v. Kentucky, supra, decided in 1914, and Hutchinson v. Chase Gilbert, supra, decided in 1930, gave defendant warning that such precedents were not likely to protect it from such suits as this.
That each such case turns on its own facts, see e.g., International Harvester v. Kentucky, supra.
As to the character and reviewability of the determination of "fact" in such cases, cf. Baumgartner v. United States, 322 U.S. 665, 671, 64 S.Ct. 1240.
Reversed.
I agree with the view of the district judge that the case is controlled by Green v. Chicago, B. Q.R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and Philadelphia Reading Ry. Co. v. McKibbin, 243 U.S. 264, 268, 37 S.Ct. 280, 61 L.Ed. 710.