The opinion of the court was delivered by: Sullivan, District Judge.
Defendants United Booking Office, Inc., Select Operating
Corporation and Select Theatres Corporation move to dismiss
the complaint or, in lieu thereof, to quash the return of
summons on them upon the grounds that (a) the court lacks
jurisdiction over the person of these defendants, or any of
them, (b) the venue is improper as to these defendants, and
each of them, (c) the process against these defendants was not
properly issuable from this court, and (d) the service of
process was insufficient and void.
The venue and jurisdiction of the court in this action is
governed as to the moving defendants by Section 12 of the
Clayton Act, 15 U.S.C.A. § 22, which reads as follows: "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. Oct. 15, 1914, c. 323,
§ 12, 38 Stat. 736."
The burden of proof of jurisdiction and venue and therefore
of showing that defendants transact business in this district
is upon the plaintiffs. Becker v. Angle, 10 Cir.,
165 F.2d 140.
Plaintiffs rely entirerely upon the recent interpretation by
the Supreme Court of Section 12 of the Clayton Act in United
States v. Scophony, 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091,
which they view as changing previously established rules. The
Scophony case concerned a British corporation which, in the
years prior to World War II, had been engaged in the
manufacture and sale of television apparatus in Great Britain.
When the war broke out, television broadcasting in England was
suspended, and the corporation transferred virtually its
entire activities to New York to exploit the American market.
It opened an office in New York, sent personnel there, began
demonstrations of its products, joined with United States
corporations in manufacturing and selling and exploiting its
television inventions, maintained control over its United
States subsidiaries through complex contractual arrangements
and interlocking directorates, and at the time of suit was
represented in New York by two of its directors, one of whom
was also its principal creditor and mortgagee of all of its
assets, and held a comprehensive power of attorney from the
British directors. His authority was so complete that "for all
relevant purposes," in the words of the court, he "was the
company." On this set of facts the Supreme Court held that the
British corporation was "transacting business" and was "found"
in the Southern District of New York, within the meaning of
Section 12 of the Clayton Act, so that it could be sued and
served there in a civil proceeding under the anti-trust laws.
Plaintiffs rely on the following extract from Mr. Justice
Rutledge's opinion, 333 U.S. at page 810, 68 S.Ct. at page
863, 92 L.Ed. 1091; "* * * 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."
However, defendant asserts that the "practical,
nontechnical, business standard" suggested by Justice Rutledge
in nowise aids plaintiffs' claim that the moving defendants
were "transacting business" in the Northern District of
(I) United Booking Office is a New York corporation which is
engaged in the "booking" of legitimate theatrical productions.
It functions as an intermediary and clearing house between the
producers of theatrical shows and the owners of theatres.
Plaintiffs rely on the fact that one of the theatre owners
for which. United Booking Office acts as booking agent is
Select Lake City Theatre Operating Company, an Illinois
corporation which leases and operates theatres in Chicago. The
officers of Select Lake City in New York arrange, through
United Booking Office, for the renting of the Chicago theatres
to the producers of shows. When the producer and the officers
of Select Lake City have come to an agreement, a contract
between them is signed. United Booking Office has no authority
to bind or contract for Select Lake City Theatre Operating
Company, is not a party to contracts between Select Lake City
and the producers of shows, and does not sign such contracts.
When Select Lake City officers in New York have entered into
such a contract, an employee of United Booking Office, Elias
Weinstock, who handles booking for Select Lake City's theatres
and many others, forwards information about it and a copy of
the contract to Sam P. Gerson, the managing agent of the
Chicago theatres operated by Select Lake City. If any
questions concerning the contract arise during the show's
engagement in Chicago, Gerson may communicate with Weinstock
and Weinstock will thereupon
discuss the matter with the show producer and the officers of
Select Lake City Theatre Operating Company.
The major decisions as to the rental of the Chicago
threatres and the terms thereof are made by the officers of
Select Lake City who are in New York. Weinstock, being in New
York, and in close touch with the officers of Select Lake
City, knows of their decisions and of the rental contracts
which they sign and he sends information and copies to Gerson
Plaintiffs' entire contention that United Booking Office,
Inc., transacts business in Illinois is based upon
correspondence between Mr. Weinstock of that company and Mr.
Gerson of Select Lake City Theatre Operating Company. The
great bulk of this correspondence consists of letters by Mr.
Weinstock concerning and forwarding contracts relating to
future productions and acknowledgments thereof by Mr. Gerson.
However, the correspondence does not indicate that United
Booking Office, Inc., "managed" Select Lake City Theatre
Operating Company. United Booking Office, Inc., is a
corporation located in New York City. It engages in the
booking of theatrical productions for a great many theatres in
all parts of the country whether or not affiliated with Select
Theatres Corporation. Among the many theatres for which it
acts as booking agent are those leased and operated by Select
Lake City Theatre Operating Company.
United Booking Office's activities for all theatres are
necessarily restricted to New York, since substantially all
legitimate stage productions originate there. Inasmuch as the
senior executive officers of Select Lake City Theatre
Operating Company are likewise located in New York, questions
arising between that company and the producers of shows are
generally settled in New York between said officers and the
producers, with United Booking Office and Weinstock
functioning as intermediaries. When a question arises during
the run of a show, Gerson therefore will communicate with
either the officers of Select Lake City Theatre Operating
Company in New York or with Weinstock, knowing that in the
latter event Weinstock will take the matter up with said
officers and the producer of the show, and that he will be
informed of the decisions by Weinstock. Neither United Booking
Office nor Weinstock makes any of such decisions nor has the
power so to do; all such decisions are made by the senior
executive officers of Select Lake City Theatre Operating
Company in New York with whom Weinstock frequently consults.
Consequently United Booking Office, Inc., is not only merely
an agent for Select Lake City Theatre Operating Company but is
in fact an agent without authority to contract for its
principal. The testimony is that neither Weinstock nor any
other employee of United Booking Office, Inc., has any
independent authority or control over Gerson; any possible
implication to the contrary in the correspondence is explained
by the fact that, where Weinstock appears to be instructing
Gerson, he is merely passing on directions he has received
from Gerson's superior officers in Select Lake City Theatre
United Booking Office is a New York corporation, and its
only connection with this district arises from services
performed in New York for an Illinois corporation. As such, it
is not "transacting business" here within either a legal or ...