A British corporation with its principal place of business in
London engaged in the Southern District of New York in various but
continuing efforts to conserve and exploit its television
inventions and patents. This was done through a series of complex
contractual arrangements made with certain American corporations,
and involved the British company's constant intervention and
supervision. The company was represented in the New York district
by two of its directors, one of whom held a comprehensive power of
attorney to protect its interests in the United States.
Held: the company was "transacting business" and was
"found" in the Southern District of New York, within the meaning of
§ 12 of the Clayton Act, so that it could be sued and served there
in a civil proceeding charging violations of §§ 1 and 2 of the
Sherman Act. Pp.
333 U. S.
796-818.
(a) The venue provision of § 12 of the Clayton Act permitting
suit in any district wherein a corporation "transacts business" is
met by the carrying on of business "of any substantial character."
Practical, nontechnical business or commercial standards are to be
applied in determining whether the requirement is satisfied. P.
333 U. S.
810.
(b) Section 12 of the Clayton Act is not to be construed in a
manner to bring back the obstacles to enforcement of antitrust
policies and remedies which it was enacted to eliminate. In this
case, the determination whether the British corporation was "found"
within the Southern District of New York so that it could be served
there is not to be made by atomizing the enterprise into minute
parts or events, in disregard of the unity and continuity of the
whole course of conduct. P.
333 U. S.
817.
69 F.
Supp. 666 reversed.
In a civil proceeding brought in the Southern District of New
York under § 12 of the Clayton Act and charging violations of §§ 1
and 2 of the Sherman Act, the District
Page 333 U. S. 796
Court quashed service of process and dismissed the complaint as
to a British corporation having its principal place of business in
London.
69 F.
Supp. 666. On direct appeal to this Court,
reversed and
remanded, p.
333 U. S.
818.
MR. JUSTICE RUTLEDGE delivered the opinion of the Court.
The appellee Scophony, Limited, is a British corporation which
has its offices and principal place of business in London, England.
The question is whether that company "transacted business" and was
"found" within the Southern District of New York under § 12 of the
Clayton Act, [
Footnote 1] so
that it could be sued and served there in a civil proceeding
charging violation of §§ 1 and 2 of the Sherman Act. 26 Stat. 209,
50 Stat. 693, 15 U.S.C. §§ 1, 2. The violations stated were that
Scophony and the other defendants [
Footnote 2] had monopolized, attempted to monopolize, and
conspired to restrain and monopolize interstate and
Page 333 U. S. 797
foreign commerce in products, patents, and inventions useful in
television and allied industries. The cause is here on direct
appeal [
Footnote 3] from an
order of the District Court granting Scophony's motion to quash the
service of process and dismiss the complaint as to it.
69 F.
Supp. 666.
Scophony manufactures and sells television apparatus, and is the
owner and licensor of inventions and patents covering television
reception and transmission. [
Footnote 4] With the outbreak of the European War in 1939,
the British Broadcasting Corporation stopped television
broadcasting. Consequently it became impossible for Scophony to
continue in the commercial development, manufacture and sale of
television equipment in England. It therefore sent personnel to the
United States, opened an office in New York City, and began
demonstrations of its product and other activities preliminary to
establishing a manufacturing and selling business in this
country.
Late in 1941, Scophony found itself in financial distress, in
part because of restrictions imposed by the British Government on
the export of currency. It became imperative that new capital from
American sources be found for the enterprise. Accordingly, Arthur
Levey, a director
Page 333 U. S. 798
of Scophony and one of its founders, undertook negotiations in
New York with American motion picture and televisions interests,
including Paramount and General Precision. They culminated in the
execution of three interlacing contracts, the so-called master
agreement of July, 1942, and two supplemental agreements of August
11, 1942. Copies of the latter had been attached to the master
agreement, which provided for their later execution, and they when
executed in effect carried out its terms. The alleged violations of
the Sherman Act center around these agreements.
The master agreement was executed by Scophony, William George
Elcock, as mortgagee of all of Scophony's assets, General
Precision, and Productions, the latter a wholly owned subsidiary of
Paramount. It provided for the formation of a new Delaware
corporation, American Scophony, with an authorized capital stock of
1,000 Class "A" shares and a like number of Class "B" shares.
Scophony and individuals interested in it [
Footnote 5] were to be given the Class "A" shares.
Under the agreement, ownership of those shares conferred the right
to elect three of American Scophony's five directors and its
president, vice-president, and treasurer. The Class "B" shares were
allotted to General Precision and Productions. By virtue of such
ownership, those two corporations were entitled to name the
remaining two directors and the secretary and assistant secretary
of American Scophony. Levy was named in the agreement as the
president and a director of the new corporation.
The master agreement set forth the general desire of the parties
to promote the utilization of the Scophony inventions "particularly
in the United States of America
Page 333 U. S. 799
and generally in the Western Hemisphere." It then stated that
American Scophony had been organized "as a means therefor."
Scophony agreed to transfer all its television equipment then in
the United States to American Scophony, and to enter into the first
supplemental agreement. Scophony, with the other parties, also
undertook to cause American Scophony to enter into both
supplemental agreements. For the "B" stock in American Scophony and
other rights acquired, General Precision and Productions agreed to
enter into the second supplemental agreement and to pay specified
sums in cash to Scophony or for its benefit in liquidation of
listed obligations.
Pursuant to the master agreement's terms, the first supplemental
agreement was executed by Scophony, Elcock, as mortgagee of its
assets, and American Scophony; the other, by American Scophony,
General Precision, and Productions. For present purposes, it is
necessary to set forth only the general effect of the agreements,
taken together. Scophony transferred to American Scophony not only
all of its equipment in the United States, but also all patents and
other interests in the Scophony inventions within the Western
Hemisphere. General Precision and Productions were granted
exclusive licenses under American Scophony's patents. They agreed
to pay royalties on the products produced under the licenses, and
American Scophony undertook to transmit fifty percent of such
royalties to Scophony. American Scophony gave Scophony an exclusive
sublicense for the Eastern Hemisphere on a royalty basis under all
patents licensed to American Scophony by General Precision and
Productions. Provision was also made for the interchange of
technical data and information respecting the Scophony inventions.
Finally, it was agreed that Scophony would not market any product
involving the Scophony inventions
Page 333 U. S. 800
in the Western Hemisphere, and that General Precision and
Productions would not export any such product to the Eastern
Hemisphere. [
Footnote 6]
This rather complex plan soon fell of its own weight. Starting
in 1943, an impasse developed in the affairs of American Scophony.
It stemmed from the failure and unwillingness of General Precision
and Productions to exploit the Scophony inventions themselves, and
their refusal to modify the agreements to permit the licensing of
other American firms under the inventions. Several manufacturers
expressed an interest in obtaining licenses. But, in each instance,
the directors representing the American interests holding the Class
"B" shares were unwilling to approve the necessary modifications in
the existing arrangements. In July, 1945, the directors
representing the "B" interests resigned. This made it impossible
for American Scophony to transact business, since charter and bylaw
provisions adopted pursuant to the master and supplemental
agreements required the presence of at least one Class "B" director
for a quorum. Adding to the difficulties were American Scophony's
shortage of funds and the apparent reluctance of the American
interests to cooperate in efforts to place American Scophony on
firmer financial footing. American Scophony's affairs were further
complicated by the institution of the present antitrust proceeding
on December 18, 1945.
Levey kept Scophony advised of developments in the dispute
between the "A" and "B" factions, and otherwise
Page 333 U. S. 801
made progress reports to Scophony on its interests in the United
States. As the impasse heightened, other individuals were
authorized by Scophony to act in its behalf in the United States.
[
Footnote 7] Service of process
as to Scophony was made first on Levey in New York City on December
20, 1945. [
Footnote 8]
On April 5, 1946, a summons and a copy of the complaint directed
to Scophony were also served on Elcock in New York City. He was a
dominant figure in Scophony. He arrived in this country in March,
1946, with the mission of investigating and ending the impasse and
disposing of Scophony's interest in American Scophony. Elock not
only was mortgagee of Scophony's assets by virtue of having made a
large loan to the company. He was also its financial comptroller,
and a member of its board. At the time of service on him, he held a
comprehensive power of attorney, irrevocable until March, 1947,
giving him complete power to act with regard to Scophony's
interests in the United States, including those in American
Scophony. [
Footnote 9]
The District Court, in granting the motion to quash service and
dismiss the complaint as to Scophony, held
Page 333 U. S. 802
that it was not "found" in the Southern District of New York
within the meaning of § 12. The court rejected the contention that
Scophony was within the jurisdiction by reason of the activities of
its agents. It concluded that none of those activities related to
Scophony's ordinary business of manufacturing, selling, and
licensing television apparatus, but all were confined to protecting
Scophony's interest in American Scophony. It also found that the
conduct of American Scophony did not serve to bring Scophony within
the jurisdiction.
69 F.
Supp. 666.
I
Section 12 of the Clayton Act has two functions, first, to fix
the venue for antitrust suits against corporations; second, to
determine where process in such suits may be served. Venue may be
had "not only in the judicial district whereof it is an inhabitant,
but also in any district wherein it may be found
or transacts
business." And all process may be served "in the district of
which it is an inhabitant, or wherever it may be found." (Emphasis
added.)
A plain and literal reading of the section's words gives it
deceptively simple appearance. The source of trouble lies in the
use of verbs descriptive of the behavior of human beings to
describe that of entities characterized by Chief Justice Marshall
as "artificial . . invisible, intangible, and existing only in
contemplation of law."
Dartmouth College v.
Woodward, 4 Wheat. 518. [
Footnote 10]
Page 333 U. S. 803
The process of translating group or institutional relations in
terms of individual ones, and so keeping them distinct from the
nongroup relations of the people whose group rights are thus
integrated, is perennial, not only because the law's norm is so
much the individual man, but also because the continuing evolution
of institutions more and more compels fitting them into
individualistically conceived legal patterns. Perhaps in no other
field have the vagaries of this process been exemplified more or
more often than in the determination of matters of jurisdiction,
venue, and liability to service of process in our federal system.
[
Footnote 11] It has gone on
from
Bank v. Deveaux,
5 Cranch 61, and
Baptist Association v. Hart's
Executors, 4 Wheat. 1, to
International Shoe
Co. v. Washington, 326 U. S. 310, and
now this case. [
Footnote
12]
The translation, or rather the necessity for it, permeates every
significant word of § 12, not wholly excluding "or transacts
business." If the statutory slate were clean, one might readily
conclude that the words "inhabitant" and "found" would have the
same meaning for locating both
Page 333 U. S. 804
venue and the proper place for serving process. But, even so,
each of those terms and indeed the term "transacts business" would
have to be given specific content actually descriptive of corporate
events taking place within specified areas. Because all corporate
action must be vicarious, that content could be determined only by
an act of judgment which selects and attributes to the corporation,
from the mass of activity done or purporting to be done on its
behalf, those acts of individuals which are relevant for the
particular statutory purposes and policies in hand.
The statutory slate, however, is neither entirely new nor clean.
Both legislative and judicial hands have written upon it. The
writing is meandering, unclear in part, and partly erased. But it
cannot be disregarded. What is legible must furnish guidance to
decision. We deal here with a problem of statutory construction,
not one of constitutional import. [
Footnote 13] Nor do we have any question of the exercise
of Congress' power to its farthest limit. The issue is simply how
far Congress meant to go, and, specifically, whether it intended to
create venue and liability to service of process through the
occurrence within a district of the kinds of acts done here on
Scophony's behalf.
Section 12 of the Clayton Act is an enlargement of § 7 of the
Sherman Anti-Trust Act.
Eastman Kodak Co. v. Southern Photo
Materials Co., 273 U. S. 359. The
earlier statute
Page 333 U. S. 805
provided for suit in the district in which the defendant for
suit in the district in which the defendant "resides or is found."
26 Stat. 210. That wording controlled for both venue and fixing the
places for service of process.
We do not stop to review the decisions construing § 7 and
similar statutes,
cf. Suttle v. Reich Bros.Const. Co.,
333 U. S. 163;
see International Shoe Co. v. Washington, supra, at
326 U. S.
317-319, except to refer to
People's Tobacco Co. v.
American Tobacco Co., 246 U. S. 79.
There, the foreign corporation was sued in a district in which it
did not "reside." Because the Court found that the company had
withdrawn from the state in which the district was located, and had
revoked the authority of its principal agents there, it held that
he defendant was not "found" in the district, although certain
corporate activities continued.
The conventional rationalization applied equated "found" in
sequence to "presence," to "doing business by its agents there," to
"of a character warranting inference of subjection to the local
jurisdiction." [
Footnote 14]
The facts that the company continued to advertise its goods in the
state and district, to make interstate sales to jobbers there, to
send in drummers who solicited retail orders to be turned over to
the jobbers, and, finally, to own stock in local subsidiaries were
held not to constitute the sort of "doing business" warranting the
inference of subjection to the local jurisdiction for the statute's
purposes.
International Harvester Co. v. Kentucky,
234 U. S. 579, was
narrowly distinguished. 246 U.S. at
246 U. S.
87.
Page 333 U. S. 806
The suit in the
People's Tobacco case was begun in
1912, but the decision was not rendered until 1918. Meanwhile, in
1914, Congress had enacted the Clayton Act, including § 12. The
following year, the
Eastman case,
supra, was
begun in the Northern District of Georgia. Process issued, and was
served under § 12 on the defendant, a New York corporation at its
principal place of business in Rochester. In 1927, this Court
sustained both the venue and the service as against objections that
§ 12 had not broadened § 7 of the Sherman Act, but merely made
explicit what had been decided under it. [
Footnote 15]
The argument was certainly plausible, but for the fact that it
made the addition of "or transacts business" to "inhabitant" and
"found" in § 12 redundant and meaningless. The Court refused to
accept the argument, because doing so would have defeated the plain
remedial purpose of § 12. [
Footnote 16] That section was enacted, it held, to
enlarge the jurisdiction given by § 7 of the Sherman Act
Page 333 U. S. 807
over corporations by adding those words,
"so as to establish the venue of such a suit not only, as
theretofore, in a district in which the corporation resides or is
'found,' but also in any district in which it 'transacts business'
-- although neither residing nor 'found' therein -- in which case
the process may be issued to and served in a district in which the
corporation either resides or is 'found.'"
273 U.S. at
273 U. S. 372.
[
Footnote 17]
This construction gave the words "transacts business" a much
broader meaning for establishing venue than the concept of
"carrying on business" denoted by "found" under the preexisting
statute and decisions. The scope of the addition was indicated by
the statement
"that a corporation is engaged in transacting business in a
district . . .
if, in fact, in the ordinary and usual
sense, it 'transacts business' therein
of any substantial
character."
Id. 273 U.S. at
273 U. S. 373.
(Emphasis added.)
In other words, for venue purposes, the Court sloughed off the
highly technical distinctions theretofore glossed upon "found" for
filling that term with particularized meaning, or emptying it,
under the translation of "carrying on business." In their stead, it
substituted the practical and broader business conception of
engaging in any substantial business operations.
Cf. Frene v.
Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511;
International Shoe Co. v. Washington, supra. Refinements
such as previously were made under the "mere solicitation" and
"solicitation plus" criteria,
cf. Frene v. Louisville Cement
Co., supra, and like those drawn,
e.g., between the
People's Tobacco and
International Harvester
cases,
supra, were no longer determinative. The practical,
everyday business or commercial concept of doing or carrying on
business "of any substantial character" became the test of
venue.
Page 333 U. S. 808
Applying it, the Court stated that "manifestly" the Eastman
Company was not "present" in the Georgia district under the earlier
tests of § 7 of the Sherman Act, either for the purpose of venue or
as being amenable to service of process. 273 U.S. at
273 U. S. 371.
It thus aligned the case under those tests with the
People's
Tobacco decision, rather than the
International
Harvester one. But, under the broader room given by § 12,
venue was held to have been established. [
Footnote 18]
Thus, by substituting practical business conceptions for the
previous hairsplitting legal technicalities encrusted upon the
"found" - "present" - "carrying on business" sequence, the Court
yielded to and made effective Congress' remedial purpose. Thereby
it relieved persons injured through corporate violations of the
antitrust laws from the "often insuperable obstacle" of resorting
to distant forums for redress of wrongs done in the places of their
business or residence. A foreign corporation no longer could come
to a district, perpetrate there the injuries outlawed, and then, by
retreating, or even without retreating, [
Footnote 19] to its headquarters, defeat or delay the
retribution due.
Page 333 U. S. 809
With venue established under the new and broader approach, the
Eastman case presented no problem regarding the service of
process, except possibly for the ruling that process might run to
another district than the one in which suit was brought. 273 U.S.
at
273 U. S. 374.
For, by whatever test, whether of the old § 7 or the new § 12, the
service was good. As we have noted, the process had been directed
to and served in the district where the Eastman Company was an
"inhabitant." [
Footnote 20]
There was therefore no necessity for ruling upon the meaning of
"found" as relating to any other district. Any such ruling
necessarily could be no more than dictum, since no such issue was
presented by the facts.
Nevertheless, for service of process, § 12 had specified "the
district of which it is an inhabitant, or wherever it may be found"
without adding "or transacts business," as was done in the venue
clause. Accordingly, the Court took account of this difference and
went on to indicate that, for purposes of liability to service, the
section merely carried forward the preexisting law, so that, in
some situations, service in a district would not be valid even
though venue were clearly established under § 12. [
Footnote 21]
Page 333 U. S. 810
But, regardless of the pronouncement's effect, the decision, by
resolving the venue problem, substantially removed the serious
obstacles and practical immunities to suit which had grown up under
§ 7 of the Sherman Act in by far the larger number of antitrust
cases --
i.e., for those not involving companies
incorporated outside the United States. In them, the fact that
service may be dubious in the district of suit, and can be assured
only by causing process to run to another district, as in the
Eastman case, presents no such obstacle to bringing and
maintaining the suit as existed prior to § 12. The necessity, if it
is that, for directing process to another district creates, at
most, some slight inconvenience and additional expense.
II
In this case, however, we deal with a company incorporated
outside the United States. But there can be no question of the
existence of "jurisdiction," in the sense of venue under § 12, over
Scophony in the Southern District of New York. To say that, on the
facts presented Scophony transacted no business "of any substantial
character" there during the period covered by institution of the
suit and the times of serving process would be to disregard the
practical, nontechnical, business standard supplied by "or
transacts business" in the venue provision. It would be also to
ignore the fact that Scophony, then and there, was carrying on
largely, if not exclusively, the only business in which it could
engage at the time.
Scophony's operations in New York were a continuous course of
business before and throughout the period in question here. They
consisted in strenuous efforts not simply to save an American
"investment," as is urged, but to salvage and resuscitate
Scophony's whole enterprise from the disasters brought upon it by
the war. As with
Page 333 U. S. 811
such efforts generally, changes in method and immediate
objective took place as each one tried in turn failed to work out.
But those changes brought none in ultimate objective -- namely, to
find a mode of saving and profitably exploiting the Scophony
inventions, and none in the intensity or continuity with which that
object was pursued in New York.
First was the phase of attempting to set up in this country as
manufacturer and seller of television equipment. When that failed,
the company turned to licensing and exploiting its patents by other
means. This was done through the complicated arrangements for what,
practically, if not also technically, was a joint adventure with
other companies. That project was carried out not merely through
corporate forms and arrangements, but by contracts binding the
participating companies to the common enterprise, as well as the
special medium of executing it, American Scophony. In this, each
corporate participant had its special functions, controls, and
restrictions, created, in part, by share ownership in American
Scophony, but also, in important respects, by contract both beyond
the stock controls, and dictating their character. [
Footnote 22] Finally, as the affairs of the
keystone of the structure,
Page 333 U. S. 812
American Scophony, came to and continued in stalemate, the
immediate objective shifted once more, to getting out of the trap.
Again the shift was in direct and constant pursuit of Scophony's
primary and continuing object -- to find a way to save and to
exploit its patents.
This is a story of business in trouble, even desperate. We may
have sympathy for the company's plight. But it does not follow that
such continuing, intensive activities to save the business and put
it on a normal course, even though shifting as they did in the
successive winds that blew, did not constitute "transacting
business" of "any substantial character." Nor can we say that any
of the major shifts in tacking toward the ultimate end stopped or
interrupted the course of the company's business activity. At no
time was the drive toward achieving its basic objects
suspended.
Appellee would avoid this view and its consequences by taking an
entirely different conception of what took place. It emphasizes
that Scophony's corporate objects, as stated in its charter, were
to manufacture and sell television equipment. Hence it concludes
that, when all New York activity directly pointing to that end
ceased, and was followed by the phase of seeking to exploit the
patents through the arrangements centering around American
Scophony, the British company ceased to be engaged in promoting its
corporate objects, and thus in carrying on or doing business in New
York for the relevant statutory purposes. From then on, it is
claimed, Scophony became concerned solely with creating and
protecting an "investment" -- namely, in American Scophony's
shares. Nor did Scophony resume the doing of business when that
effort also failed, and the final stage of seeking to break the
impasse arrived, because manufacturing and sale of equipment were
not revived.
To this view of the sequence of events appellee then seeks to
apply this Court's decisions interpreting "found"
Page 333 U. S. 813
under § 7 and similar requirements in application to
manufacturing and selling companies, [
Footnote 23] and also the like
Eastman dictum
concerning § 12. In doing this, it seeks especially to invalidate
the service by casting up from those decisions a checklist of
specific, and often minor, incidents of that sort of business done
or not done as relevant to whether business is being carried on,
and then matching against the list Scophony's New York activities
as of the times of service. [
Footnote 24]
Obviously this view of the facts and of the determinative legal
approach is at wide variance from the ones we have taken in dealing
with the question of venue. But we do not find it necessary, in
order to reject it for purposes of sustaining the service, to
consider whether the process clause of § 12 should be given scope
beyond that indicated by the
Eastman dictum. For, in any
event, we think that appellee and the District Court have
misconceived the effects of the facts and of the decisions on which
they rely for determining the validity of the service in this
case.
Certainly appellee's conclusionary premise cannot be accepted --
that its sole authorized or actual business was manufacturing and
selling equipment -- or, therefore, the
Page 333 U. S. 814
further one that no other activity on its behalf could
constitute doing or engaging in business. Indeed, it was authorized
to take out, hold, and exploit television patents, and doing this
was certainly as much part of its business as manufacturing and
selling the equipment they covered. There is nothing to show that
Scophony was restricted by its charter or otherwise to exploiting
its patents exclusively by direct manufacture and sale. When,
therefore, after that method had failed, the company chose another,
it was not ceasing to do business. That consequence did not follow
merely because it discontinued the activities incident to
continuing the discarded method.
The alternative one chosen was not a matter simply of licensing
patents to others, for active exploitation by them. Nor was it only
a casual act or acts of contracting. The whole framework of this
phase of the New York activities was dictated by the master and
supplemental agreements. These were not mere licensing
arrangements, nor did they make Scophony nothing more than a
shareholder for investment purposes, with only such a shareholder's
voting rights and control in American Scophony. The contracts
created controls in Scophony, and in the American interests as
well, which, taken in conjunction with the stock controls, called
for continuing exercise of supervision over and intervention in
American Scophony's affairs. [
Footnote 25] We need not decide whether, in view of the
agreements' continuing and pervasive effects, they could be
considered as sufficing in themselves to make Scophony "found"
within the New York district. [
Footnote 26]
Page 333 U. S. 815
Whether so or not, they set the pattern for a regular and
continuing program of patent exploitation requiring, as we have
said, Scophony's constant supervision and intervention.
That necessity was shown, among other ways, by the contractual
provisions for interchange of data and information, and further by
the fact that there was sustained interchange of correspondence
between Levey and Scophony devoted to Scophony's affairs and
interests in this country. Levey kept Scophony informed fully of
all that went on here, and, in turn, received and carried out its
instructions respecting American Scophony's affairs and its
own.
In all this, he was not acting merely as an officer of American
Scophony. Rather he was also Scophony's director and
representative, authorized to act in its behalf and interest.
Indeed, it was as Scophony's representative that he was named as
president of American Scophony. His position was a dual one. He was
not a mere shareholder's or investor's agent seeking information
about that corporation's affairs for purposes of dealing with the
stock. His functions and activities were much broader, and related
to Scophony's interests as much as to American Scophony's.
Scophony's New York activities therefore were not confined to
negotiation and execution of the agreements. Neither were they
concerned only with mere stock ownership or "investment," as is
urged, nor were they simply occasional acts of contracting, like
those in the decisions appellee cites.
Moreover, other individuals carried on for Scophony in
continuing efforts [
Footnote
27] to resolve the impasse. Apart
Page 333 U. S. 816
from what was done by others, Elcock came to New York with
unrestricted and irrevocable power to act on Scophony's behalf.
Indeed, it might almost be said in view of his triple position as
mortgagee, corporate officer, and attorney-in-fact, that, for all
relevant purposes at this phase of Scophony's activity, he was the
company. The stalemate put Scophony's affairs in this country at a
standstill, along with those of American Scophony. And Scophony's
efforts to extricate itself were both strenuous and continuous.
Those efforts were not cessation of engaging in business. They
were directed entirely to warding off that fate. Their object was
not to liquidate, it was to resuscitate, the business of Scophony.
and, as in all previous stages, put it on a normal course again. In
doing all this, Scophony was engaging in business constantly and
continuously, not retiring from it or interrupting it.
Cf.
Connecticut Mutual Life Insurance Co. v. Spratley,
172 U. S. 602;
Pennsylvania Lumbermen's Insurance Co. v. Meyer,
197 U. S. 407;
St. Louis Southwestern R. Co. v. Alexander, 227 U.
S. 218. The interruptions were only in particular phases
of its authorized adventure, not in the continuity, intensity, or
totality of the adventure itself.
In sum, we have no such situation as was presented in the
manufacturing and selling cases on which appellee relies. They
concerned entirely different facts and enterprises. In none was
there a shifting from a course of business in pursuit of one
corporate object or objects --
viz., manufacturing and
selling -- to another continuing mode of achieving a basic
corporate objective, namely, the exploiting of patents by complex
working arrangements partaking practically of the character of a
common enterprise with others and requiring constant supervision
and intervention beyond normal exercise of shareholders' rights by
the participating companies' representatives
qua such.
Page 333 U. S. 817
We know of no decision which has held or indicated that, on such
facts, the process clause of § 12 is not adequate to confer power
to make valid service. Such a continuing and far-reaching
enterprise is not to be governed in this respect by rules evolved
with reference to the very different businesses and activities of
manufacturing and selling. Nor, what comes to the same thing, is
the determination to be made for such an enterprise by atomizing it
into minute parts or events, in disregard of the actual unity and
continuity of the whole course of conduct, by the process sometimes
applied in borderline cases involving manufacturing and selling
activities.
For present purposes, those decisions may be left untouched for
the facts and situations in which they have arisen and to which
they have been applied. But there could be no valid object in
expanding their pulverizing approach to situations as different and
distinct as this one, comprehended within neither their rulings nor
their effects. More especially would such an extension be
inappropriate when it is recalled that § 12 governs venue and
service in antitrust suits against corporations. For, in cases
against companies incorporated outside the United States, that
extension would bring back all the obstacles to enforcement of
antitrust policies and remedies which existed for domestic
corporations before § 12 was enacted to give relief from those
obstacles. Even though venue were clearly established, as here, the
extension often would make valid service impossible, since process
could not be issued to run for such corporations to the foreign
countries of which they are "inhabitants." We are unwilling to
construe § 12 in a manner to bring back the evils it abolished, for
situations not foreclosed by prior decisions, and thus to defeat
its policy, together with that of the antitrust laws, so as to make
another amendment necessary.
Page 333 U. S. 818
We think that Scophony not only was "transacting business" of a
substantial character in the New York district at the times of
service, so as to establish venue there, but also, on the sum of
the facts regarding its activities, was "found" there within the
meaning of the service of process clause of § 12. Of course, such a
ruling presents no conceivable element of offense to "traditional
notions of fair play and substantial justice."
See
International Shoe Co. v. Washington, supra, at
326 U. S. 316;
cf. Hutchinson v. Chase & Gilbert, 45 F.2d 139,
141.
It remains only to say that we do not stop to consider whether,
as is argued, Levey's authority to act for Scophony had expired or
been revoked at the time service was made by delivery of process to
him. For when service was made by delivery to Elcock, he had
unrevoked and irrevocable authority to act in Scophony's behalf in
the New York district, and that service was valid to confer
personal jurisdiction over Scophony.
Accordingly, the judgment is reversed, and the cause is remanded
to the District Court for further proceedings in conformity with
this opinion.
Reversed and remanded.
MR. JUSTICE JACKSON concurs in the result.
[
Footnote 1]
"SEC. 12. That any suit, action, or proceeding under the
antitrust laws against a corporation may be brought not only in the
judicial district whereof it is an inhabitant, but also in any
district wherein it may be found or transacts business, and all
process in such cases may be served in the district of which it is
an inhabitant, or wherever it may be found."
38 Stat. 736, 15 U.S.C. § 22.
[
Footnote 2]
The suit was instituted against Scophony, Limited (designated in
this opinion as "Scophony"), Scophony Corporation of America
(designated "American Scophony"), General Precision Equipment
Corporation (designated "General Precision"), Television
Productions, Inc. (designated "Productions"), Paramount Pictures,
Inc. (designated "Paramount"), and three individual defendants,
Arthur Levey and the presidents of General Precision and
Productions. The corporations, except Scophony, are incorporated in
the United States.
[
Footnote 3]
Pursuant to § 2 of the Expediting Act of February 11, 1903, 32
Stat. 823, 15 U.S.C. § 29, and § 238 of the Judicial Code, 43 Stat.
938, 28 U.S.C. § 345.
[
Footnote 4]
The inventions and patents in the main relate to two systems of
television transmission and reception, one known as the
"supersonic" system and the other as the "skiatron" system. We
shall at times refer to the present and future patents, processes,
designs, technical data, etc., relating to these two systems as the
Scophony inventions.
A third system, the cathode-fluorescent system, was developed
early in this century, and is the principal method of television
transmission and reception used in the United States today.
[
Footnote 5]
An agreement of February 4, 1943, amended the original agreement
so as to give two-thirds of the "A" shares to Scophony, the
remainder to individuals.
[
Footnote 6]
The complaint alleged that the effects of the agreements and
understandings were to create a territorial division of the
manufacture and sale of television products, assigning the Eastern
Hemisphere to Scophony and the Western Hemisphere to General
Precision and Productions; to suppress and restrain competition in
the manufacture and sale of television equipment, both in the
domestic and in the export markets, and to give General Precision
and Productions monopoly power over the Scophony inventions which
enabled them to suppress their exploitation and deprive others of
their use.
[
Footnote 7]
These included, at various times, two American attorneys, a
member of the British Parliament, and an English officer.
[
Footnote 8]
Levey immediately informed Scophony in England of this action,
and advised it to designate appropriate counsel. On December 21,
1945, he sent a copy of the complaint to Scophony by airmail.
[
Footnote 9]
The power of attorney set forth Scophony's desire to appoint
Elcock to act "and bind the Company in all or any matters affecting
the Company's interests in the United States. . . ." It then
authorized Elcock to institute and prosecute all proceedings
necessary to conserve Scophony's interests; to defend or compromise
any suits brought against Scophony; to settle accounts; to engage
or dismiss subagents; to borrow money; to dispose of any and all of
Scophony's property and interests in the United States, and
"generally to represent the Company in the United States of America
in all matters in any way affecting or pertaining to the Company. .
. ."
[
Footnote 10]
More than once, Marshall had difficulty in transferring to
corporations or other institutions legal conceptions and relations
shaped in nomenclature and in fact from normative evolution in
relation to persons of flesh and blood.
See, e.g., 9 U. S. Deveaux,
5 Cranch 61, where he was unable to adapt the concept of corporate
"inhabitancy," applied in decisions he cited, for fitting the
corporation into the constitutional scheme of diversity
jurisdiction. His individualistic solution brought difficulties
which lasted for decades.
See Henderson, The Position of
Foreign Corporations in American Constitutional Law 50-76; Harris,
A Corporation As a Citizen, 1 Va.L.Rev. 507.
Cf. 17 U.
S. Hart's Executors, 4 Wheat. 1.
[
Footnote 11]
See, e.g., Cahill, Jurisdiction over Foreign
Corporations and Individuals Who Carry on Business within the
Territory, 30 Harv.L.Rev. 676; Scott, Jurisdiction over
Nonresidents Doing Business within a State, 32 Harv.L.Rev. 871;
Bullington, Jurisdiction over Foreign Corporations, 6 N.C.L.Rev.
147; Note, What Constitutes Doing Business by a Foreign Corporation
for Purposes of Jurisdiction, 29 Col.L.Rev. 187.
[
Footnote 12]
The very federalism of our structure magnifies the problem by
multiplying state and other governmental boundaries across which
corporate activity runs with the greatest freedom. The problem
arises on constitutional, as well as statutory and common law,
levels.
Cf. International Shoe Co. v. Washington,
326 U. S. 310;
Puerto Rico v. Russell & Co., 288 U.
S. 476.
[
Footnote 13]
Appellee makes no suggestion of a constitutional issue. The
Government, however, suggests that, in view of our recent decision
in
International Shoe Co. v. Washington, 326 U.
S. 310, which was concerned with the jurisdiction of a
state over a foreign corporation for purposes of suit and service
of process, and in view of aspects of similarly between that
problem and the one now presented, we extend to this case and to §
12 the criteria there formulated and applied. There is no necessity
for doing so. The facts of the two cases are considerably
different, and, as we have said, we are not concerned here with
finding the utmost reach of Congress' power.
[
Footnote 14]
The Court said:
"The general rule deducible from all our decisions is that the
business must be of such nature and character as to warrant 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.
Philadelphia & Reading Ry. Co. v. McKibbin,
243 U. S.
264;
St. Louis Southwestern Ry. Co. v.
Alexander, 227 U. S. 218,
227 U. S.
226."
246 U.S.
79,
246 U. S.
87.
[
Footnote 15]
Counsel for the defendant equated the words "inhabitant" and
"found" of § 12 to "resides or is found" of § 7 of the Sherman Act.
They then went on to argue that the addition of "or transacts
business" in the venue clause of § 12 did not broaden the section,
but merely made explicit what the Court had already decided under
the earlier statute. 273 U.S. at 36 [argument of counsel --
omitted]. This because "or transacts business" was said to be
nothing more than "carrying on business," which was the content the
Court had given to "is found" in § 7 by the
People's
Tobacco case and others.
[
Footnote 16]
Rather, the Court said, the section supplements
"the remedial provision of the Anti-Trust Act for the redress of
injuries resulting from illegal restraints upon interstate trade,
by relieving the injured person from the necessity of resorting for
the redress of wrongs committed by a nonresident corporation, to a
district, however distant, in which it resides or may be 'found' --
often an insuperable obstacle -- and enabling him to institute the
suit in a district, frequently that of his own residence, in which
the corporation
in fact transacts business, and bring it
before the court by the service of process in a district in which
it resides or may be 'found.'"
273 U. S. 273 U.S.
359,
273 U. S. 373.
(Emphasis added.)
[
Footnote 17]
See also note
16
[
Footnote 18]
The concrete facts held to sustain the venue were that the
Eastman Company was engaged
"not only in selling and shipping its goods to dealers within
the Georgia district, but also in soliciting orders therein through
its salesmen and promoting the demand for its goods through its
demonstrators for the purpose of increasing its sales. . . ."
273 U.S. at
273 U. S.
374.
The Court also expressly stated that, in contrast to prior
limitations, the company was
"nonetheless engaged in transacting business . . . because of
the fact that such business may be entirely interstate in character
and be transacted by agents who do not reside within the
district,"
referring in this connection to International
Harvester Co.
v. Kentucky, 234 U. S. 579,
234 U. S. 587,
and
Davis v. Farmers' Cooperative Equity Co., 262 U.
S. 312,
262 U. S. 316.
273 U. S. 273 U.S.
359,
273 U. S.
373.
[
Footnote 19]
I.e., by artful arrangement of agents' authority, or of
their comings and goings, or of the geography of minute incidents
in contracting.
Cf. People's Tobacco Co. v. American Tobacco
Co., 246 U. S. 79. Such
artifice saw its day end for creating substantive liability through
a course of dealing contrary to the antitrust statutes, but without
thereby also creating venue to enforce it, with the advent of §
12.
[
Footnote 20]
As has been stated, the company was incorporated in New York,
and had its principal office and place of business in
Rochester.
[
Footnote 21]
Although difference of that sort may appear to be generally
incongruous, since ordinarily it would seem that susceptibility to
suit in a district should be accompanied by amenability to process
there, such things, of course, are for Congress' determination as
matters of policy relating to the scope and correlation, or lack of
it, of venue and service provisions. There is certainly no
constitutional requirement that the two be coextensive. And, to
support the dictum, if it were now necessary to rule on the matter,
considerations beyond the verbal difference to which the Eastman
opinion pointed might be stated.
[
Footnote 22]
E.g., the hemispheric division of territories between
the British and American interests; the exclusive licensing
agreements which prevented Scophony from granting licenses to
interested American companies, and the arrangements for the
interchange of technical information were contractual, not charter,
limitations on corporate powers. The particular corporate medium
used, American Scophony, and the refinements in its charter and
bylaws giving General Precision and Productions an effective veto
power over its operations were themselves aspects of the
contractual undertakings embodied in the master agreement and the
two supplemental agreements. The master agreement also designated
the persons to become officers and directors of American Scophony,
as representatives of both the British and the American
interests.
[
Footnote 23]
E.g., Cannon Mfg. Co. v. Cudahy Packing Co.,
267 U. S. 333;
Consolidated Textile Corp. v. Gregory, 289 U. S.
85;
People's Tobacco Co. v. American Tobacco
Co., 246 U. S. 79.
[
Footnote 24]
The catalogue emphasizes things not being done as of the dates
of service --
e.g., maintaining an office, warehouse or
place of business; owning realty or other physical property;
keeping a staff of employees; having agents "other than counsel in
this case and . . . Elcock;" keeping a telephone or a listing;
making sales; conducting research; soliciting orders.
Correspondingly appellee atomizes the things then being done into
separate disconnected events --
viz., stock ownership (in
American Scophony); contracting with American Scophony and the
other corporations for transfer and licensing of patents;
activities to protect Scophony's American "interests" by resolving
the impasse.
[
Footnote 25]
See note 22
supra. Indeed, the contracts shaped the nature of the
corporate distribution of powers and voting rights, so as to make
them conform to the overall character and objects of the larger
common enterprise. The charter and bylaw provisions of American
Scophony therefore not only were governed by the contractual
arrangements, but carried them into execution.
[
Footnote 26]
Especially in view of the fact that § 12 fixes venue and the
places for serving process in antitrust suits, there would seem to
be sound basis for differentiating the execution of agreements so
all-pervasive and far-reaching in their effects upon the statutory
policies from run-of-mine casual or intermittent sales of
commodities by a manufacturing or selling company, for the
section's purposes.
[
Footnote 27]
See note 7
MR. JUSTICE FRANKFURTER, concurring.
I deem it appropriate to state why I concur merely in the
Court's result.
The only question in this case is whether Scophony limited, a
British corporation, which has its offices and principal place of
business in London, may be made a party defendant in a suit by the
United States for violation of the Sherman Law pending in the
Southern District of New York. The corporation may be brought into
court in that District if its activities there satisfy the
requirements of § 12 of the Clayton Act. According to
Page 333 U. S. 819
this provision, Scophony Limited is properly a party defendant
in this suit only if, by virtue of its activities, it is "found or
transacts business" in the Southern District of New York, and it
may be served in that District if it is "found" there.
Whether a corporation "transacts business" in a particular
district is a question of fact in its ordinary untechnical meaning.
The answer turns on an appraisal of the unique circumstances of a
particular situation. And a corporation can be "found" anywhere,
whenever the needs of law make it appropriate to attribute location
to a corporation, only if activities on its behalf that are more
than episodic are carried on by its agents in a particular place.
This again presents a question of fact turning on the unique
circumstances of a particular situation, to be ascertained as such
questions of fact are every day decided by judges.
What was done in the Southern District of New York on behalf of
Scophony Limited, as detailed in the Court's opinion, establishes
that the corporation was there transacting business and was found
there in the only sense in which a corporation ever "transacts
business" or is "found." Accordingly, Scophony Limited was amenable
to suit and service in the District within the requirements of § 12
of the Clayton Act.
To reach this result, however, I do not find it necessary to
open up difficult and subtle problems regarding the law's attitude
toward corporations. I abstain from joining the Court's opinion not
because I am in disagreement with what is said, but because I am
not prepared to agree. And I am not prepared to agree because I do
not wish to forecast, which agreement would entail, the bearing of
the Court's discussion upon situations not now before us but as to
which such theoretical discussion is bound to be influential. Law,
no doubt, is concerned with "practical and substantial rights, not
to maintain theories."
Page 333 U. S. 820
Davis v. Mills, 194 U. S. 451,
194 U. S. 457.
But theories often determine rights. Since I do not know where the
opinion in this case will take me in the future, I prefer to reach
its destination by the much shorter route of recognizing that a
corporation as such never transacts business, and is never found
anywhere, but does "transact business" and is "found" somewhere by
attribution to the corporation of what human beings do for it. No
doubt legal reasoning must be on its guard not to oversimplify.
Dangers also lurk in overcomplicating.
From earliest times, the law has enforced rights and exacted
liabilities by utilizing a corporate concept -- by recognizing,
that is, juristic persons other than human beings. The theories by
which this mode of legal operation has developed, has been
justified, qualified, and defined, are the subject matter of a very
sizable library. The historic roots of a particular society,
economic pressures, philosophic notions, all have had their share
in the law's response to the ways of men in carrying on their
affairs through what is now the familiar device of the corporation.
Law has also responded to religious needs in recognizing juristic
persons other than human beings. Thus, in the Hindu law, an idol
has standing in court to enforce its rights.
See e.g., Pramatha
Nath Mullick v. Pradyumna Kumar Mullick, 52 L.R.I.A. 245
(1925). Attribution of legal rights and duties to a juristic person
other than man is necessarily a metaphorical process. And none the
worse for it. No doubt, "metaphors in law are to be narrowly
watched," Cardozo, J., in
Berkey v. Third Avenue R. Co.,
244 N.Y. 84, 94, 155 N.E. 58, 61. But all instruments of thought
should be narrowly watched lest they be abused and fail in their
service to reason.