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COMMONWEALTH EDISON v. FED. PACIFIC ELECTRIC

May 11, 1962

COMMONWEALTH EDISON COMPANY, COMMONWEALTH EDISON COMPANY OF INDIANA, INC., CENTRAL ILLINOIS ELECTRIC AND GAS CO., NORTHERN INDIANA PUBLIC SERVICE COMPANY AND PUBLIC SERVICE COMPANY OF INDIANA,, INC., PLAINTIFFS,
v.
FEDERAL PACIFIC ELECTRIC COMPANY, GENERAL ELECTRIC COMPANY, I-T-E CIRCUIT BREAKER COMPANY, JOSLYN MFG. AND SUPPLY CO., H.K. PORTER COMPANY, INC., SCHWAGER-WOOD CORPORATION, SOUTHERN STATES EQUIPMENT CORPORATION AND WESTINGHOUSE ELECTRIC CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Robson, District Judge.

Schwager-Wood Corporation,*fn1 one of eight defendants in this two-count treble damage antitrust cause, has moved to quash the return of service on it and to dismiss the cause,*fn2 on the ground it is not subject to service in this District. It is an Oregon corporation, and assertedly transacted no business here and maintained no office in the District.

The affidavit of A.C. Schwager, its president, states the corporation was organized

in Oregon, April 9, 1946, and dissolved November 6, 1959. Its successor corporation is Schwager-Wood Company, Inc. Service was had on William Maxwell Wood, vice president and secretary, on August 9, 1961, in Portland, Oregon.

The affidavit further states that:

    "Schwager-Wood Corporation at all times has
  maintained its offices and manufacturing facilities
  only in Portland, Oregon, and at no time has had any
  such offices or facilities in the State of Illinois.
    "Schwager-Wood Corporation has not ever been
  registered to do business in Illinois and has never
  sought or been obliged to so register. It has not
  done or transacted business in Illinois, has not ever
  based any of its employees, in Illinois and has not
  ever authorized any person in Illinois to accept
  service on its behalf. It has not ever had any
  subsidiary or controlled corporation in Illinois or
  elsewhere. It has not ever had any employees who
  periodically or regularly called on customers or
  prospected in Illinois.
    "Schwager-Wood Corporation has not ever sold
  anything in the State of Illinois * * *."
    "Schwager-Wood Corporation has never been
  controlled by or in any way affiliated with any
  corporation engaged in the manufacture of any
  electrical products.
    "Schwager-Wood Corporation at all times was a
  distinctly `small business.' Its entire operations
  were conducted in and from leased premises consisting
  of an old one-story building * * *. It never employed
  more than approximately 50 to 60 people, including
  all executive, engineering, sales and production
  personnel. In 1958 the last full calendar year of its
  existence, its gross billings for all products
  totaled $2,321,077; its total sales of `power
  switching equipment' for that year amounted to
  $1,887,460, representing approximately 4.3% of the
  total national output during the first half and 4.4%
  during the last half of the year."

The affidavit sets forth six letters in an appendix*fn3 to show the only contractual relationships between Schwager-Wood Corporation and anyone in Illinois, and that the "arrangements" reflected in the letters never produced any sales of its products in Illinois, or any negotiations in Illinois to which it was a party. The correspondence is claimed to show on its face that the persons to whom the letters were addressed were independent contractors, and that Schwager-Wood Corporation had no control or authority whatsoever over these persons except to terminate the agreements, and the power to terminate was the only authority which it ever exercised or attempted to exercise over those persons.

The affidavit points out that the first of the relationships was terminated by it because "The response in the two years * * * does not justify any continuation of expense * * * in promoting our products." The second relationship was terminated because the other party stated he was not getting "the kind of co-operation from your company that I expect and that is necessary to get results. * * *" The writer stated that he had tried many times to contact and procure information from Schwager-Wood Corporation with no success, and concluded his letter by asking for instructions on immediate disposition of the sample switches that he had.

The supplemental affidavit of Mr. Schwager, filed January 4, 1962, also reveals that the business which defendant, Schwager-Wood Corporation, had conducted prior to its dissolution on November 6, 1959, is now conducted by Schwager-Wood Company, Inc., also an Oregon corporation, of which he is president and Mr. William Maxwell Wood is vice president and secretary. He states that there was received between November 6, 1959, and the present time at Portland, Oregon, four unsolicited orders from the Milwaukee, Wisconsin, office of Line Materials Industries, of an aggregate invoice value of $1,812.80, less than 1/12th of 1% of Schwager-Wood's 1960 gross sales; during the same period it also received from the same Company's Melrose Park office, two unsolicited orders totaling $1,268.10 (less than 1/17th of 1% of said gross sales). The shipments were delivered f.o.b. Portland for consignment into the Northern District of Illinois, in accordance with instructions from the Line Materials Industries. He believed the said company to be a subsidiary or division of McGraw-Edison Company, that the Schwager Company itself had no corporate affiliation with McGraw-Edison, or any other electrical manufacturer. He specifically stated that the Schwager Company received no other orders from and made no other shipments to, or for the account of any customer in the Northern District of Illinois.

The pertinent statutes provide:

    "Any person who shall be injured in his business or
  property by reason of anything forbidden in the
  anti-trust laws may sue therefor in any district
  court of the United States in the district in which
  the defendant resides or is found or has an agent,
  without respect to the amount in controversy, and
  shall recover threefold the damages by him sustained,
  and the cost ...

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