and corporate reports. It performs no services for its parent.
Plaintiffs' entire contention with respect to Select
Theatres Corporation rests upon a few letters written to
Gerson by Messrs. Mallam, Whittaker and Rosenfeld on the
stationery of Select Theatres Corporation. Plaintiffs assert
that these three individuals were in fact "the actual
operators" of the Chicago theatres, and instructed Gerson as
to the "day to day business" thereof.
Mallam performs the work of countup — the purely accounting
job of checking tickets for tax payments — for a great many
theatres. Among these are the theatres operated by Select Lake
City Theatre Operating Company, and his entire correspondence
with Select Lake City is devoted to letters relating to the
transmission by that company of tickets to Mallam for this
purpose and inquiries concerning the same.
The Whittaker correspondence, with the exception of two
letters relating to an insurance inspection under a group
policy, relates to an arrangement whereby envelopes for
tickets would be furnished the various Chicago theatres, with
payment to be made for the advertising material printed
thereon. It appears that Whittaker is obtaining and
transmitting information at the direction of the executives of
Select Lake City Theatre Operating Company.
The same comments apply to the Rosenfeld correspondents.
This consists of letters between Rosenfeld and Gerson
inquiring as to the best prices at which carpets and uniforms
could be obtained, or as to the delivery dates of carpeting,
and to the renovation of the Shubert Theatre lobby. Mr.
Rosenfeld's letter to Mr. Gerson with reference to the latter
states that J. J. Shubert (President of Select Lake City
Theatre Operating Company) has told Rosenfeld he does not wish
to do the Shubert lobby, and suggests that Gerson discuss the
situation with Mr. Shubert if he wishes.
Contrary to plaintiffs' claim that the directions given in
the correspondence "relate to the day-to-day business of the
theatres," the correspondence on which plaintiffs rely
actually concerns only a few minor items of business and
contains no instructions or directions. Although Messrs.
Mallam, Whittaker and Rosenfeld perform some services for
Select Lake City Theatre Operating Company, they do not have
authority to contract for said company without approval of its
officers, nor any authority over the personnel or operations
of said company.
The sole basis for plaintiffs' claim that it transacts
business in Illinois is that its letterhead was used in
correspondence concerning some matter relating to the
operations of Select Lake City Theatre Operating Company. By
no "practical, nontechnical, business" or other standard would
this constitute "transacting business" in Illinois so as to
subject Select Theatres Corporation to suit in this
Select Operating Corporation is also a New York corporation
having its principal place of business in New York City. It
does not maintain an office or telephone listing in this
district, nor is it licensed to do business as a foreign
corporation in the State of Illinois.
(III) Select Operating Corporation is also a subsidiary of
Select Theatres Corporation, the parent of Select Lake City
Theatre Operating Company. The corporations are again entirely
separate and separately maintained.
Plaintiffs stress the fact that letters written to Gerson by
Waters, the treasurer of Select Lake City Theatre Operating
Company, are written on the stationery of Select Operating
Corporation and are signed Select Operating Corporation, by
John P. Waters, Treasurer. Waters is the Treasurer of Select
Lake City Theatre Operating Company and as such is Gerson's
senior officer. Waters testified that he writes from forty to
fifty letters a day and that until the matter was brought up
during this litigation, he never paid any attention to the
stationery or the particular form of signature used on his
letters. This is the situation of the officer of two companies
writing one company with reference to its business on the
letterhead of the other company. Such usage, and the form of
signature, would not constitute "transacting business" under
either a legal or
a "practical, nontechnical, business" interpretation of the
term. Select Operating Corporation is a New York corporation,
whose only connections with Select Lake City Theatre Operating
Company arise from the fact that both are subsidiaries of the
same company and that personnel of Select Operating
Corporation sometimes renders assistance to the Chicago staff
of Select Lake City.
In conclusion, the sole basis for plaintiffs' claim that the
moving defendants transact business here is that they "manage"
belect Lake City Theatre Operating Company, and plaintiffs
attempt to sustain this claim by referring to correspendence
on the letterheads of said companies therewith. Out of this
correspondence only two types of letters containing any orders
or directions to the local management of Select Lake City
Theatre Operating Company were produced — those in which a
representative of said company's booking agent transmits
directions of the executive officers of Select Lake City
Theatre Operating Company, and those in which Mr. Waters, an
executive officer of Select Lake City Theatre Operating
Company, gives instructions to his subordinates. Neither
evidences that any of the defendants manages Select Lake City
Theatre Operating Company. This leaves to support plaintiffs'
claim only the use by persons in New York of letterheads of New
York corporations in correspondence with Select Lake City
Theatre Operating Company. However, usage of such stationery
does not constitute transacting business in this state.
In Winkler-Koch Engineering Co. v. Universal Oil Prod. Co.,
D.C., 70 F. Supp. 77, a motion to dismiss was sustained under
circumstances more favorable to the plaintiff than here. The
local subsidiary in that case performed services essential to
the defendant's overall production and distribution program,
defendant's name was listed in the local telephone
directories, the subsidiary's employees solicited customers
for the defendant, forwarded orders for products thereto,
accumulated information therefor, and participated in the
defendant's pension plan. The court, finding that the
corporations were in fact separate, as here, ruled that the
substantial connections between the defendant and its local
subsidiary did not constitute a transaction of business by the
defendant within the district.
A dismissal of this action will not work a hardship on the
plaintiffs in view of the fact that they have already filed a
complaint against the moving defendants in the Southern
District of New York.
I have concluded that plaintiffs have failed to sustain
their burden of proving the jurisdiction of this court. I am
of the opinion that the defendants did not "transact business"
in this district within Section 12 of the Clayton Act. The
action should therefore be dismissed as to each of the moving
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