The opinion of the court was delivered by: Parsons, District Judge.
This is an action for breach of a contract of sale.
Jurisdiction is based upon diversity of citizenship. The matter
comes before the Court for ruling on defendants' motion to
transfer this cause to the United States District Court for the
Northern District of Texas, or, in the alternative, to quash
service of process and dismiss the action.
Defendants seek to transfer this cause to a District Court in
Texas, under 28 U.S.C. § 1406(a), on the ground that venue is
improper in this forum because defendants are not "doing
business" in Chicago, Illinois. Section 1391(c) of Title 28,
United States Code, provides that a corporation may be sued
in any district in which it is incorporated, licensed to do
business or is doing business. Section 1391(a) provides that
where, as here, jurisdiction is based solely upon diversity of
citizenship, venue is proper where all plaintiffs or all
defendants reside. Since plaintiff corporation is a resident of
Illinois (being incorporated in, and having its principal place
of business in Illinois), venue would appear proper under §
1391(a). Defendants argue, however, that the term "may" in §
1391(c) means "must", not "may", and that § 1391(c) must read
as a limitation upon, rather than a supplement to, § 1391(a).
No cases have been cited for this unique position, which is
contrary to the language, policy, intention and good sense of
the general venue provisions. To adopt defendants' argument
would, in effect, change the disjunctive "or" in § 1391(a) to
the conjunctive "and". Such a result appears neither intended
nor desired by the drafters of the statute. I conclude, as a
matter of law, that § 1391(c) is not to be read as a limitation
upon § 1391(a). Accordingly, I find that venue is proper under
As an alternative ground, defendants move for transfer of this
cause under 28 U.S.C. § 1404(a) on the ground of forum non
conveniens. In determining
whether this action should be transferred under 28 U.S.C. § 1404
(a), it is not necessary to decide initially whether this
Court has personal jurisdiction over defendants. United States
v. Berkowitz, 328 F.2d 358 (3d Cir. 1964). The salutary purpose
of § 1404(a) is to permit lawsuits to be tried in the most
convenient forum in the Federal system. To effectuate that end,
a court should interpret liberally the change of venue
provisions which were designed to "[remove] whatever obstacles
may impede an expeditious and orderly adjudication of cases and
controversies on their merits." See, Goldlawr, Inc. v. Heiman,
369 U.S. 463, 466-467, 82 S.Ct. 913, 916, 8 L.Ed.2d 39 (1962).
It is clear that this action "might have been brought" in the
United States District Court for the Northern District of
Texas. Hoffman v. Blaski, 363 U.S. 335, 80 S.Ct. 1084, 4
L.Ed.2d 1254 (1960). Indeed an almost identical action is
presently pending in that district, brought by defendants
herein against plaintiff for declaratory judgment with respect
to the same controversy which is the subject matter of this
The Court is confronted with the question whether transfer of
this cause to the Federal Court in Texas would be "[f]or the
convenience of parties and witnesses, and in the interests of
justice." In ruling upon a motion to transfer under § 1404(a),
a Federal District Judge is vested with broad discretionary
power. Parsons v. Chesapeake & Ohio Ry. Co., 375 U.S. 71, 84
S.Ct. 185, 11 L.Ed.2d 137 (1963).
The Texas action was filed a month before the instant cause
commenced. Color Technique, Inc., has not claimed in the
declaratory judgment action that Texas is not a convenient
forum for litigating this controversy. Upon transfer of the
instant cause to Texas, it would probably be consolidated under
Rule 42(a) F.R. Civ.P. with the related action presently
In addition, the Bill of Sale, attached to the complaint, and
upon which this action is based, explicitly provides that it is
to be construed pursuant to the laws of Texas. Said Bill of
Sale and documents dated October 1, 1963, attached to the
complaint, are both to be performed, by their terms, in Texas,
and, accordingly, are governed by Texas law. Since Federal
Courts in diversity cases apply the law of the state in which
they sit, Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct.
817, 82 L.Ed. 1188 (1938), Judges in the Northern District of
Texas would seem to be much more familiar with Texas law than
would those in Chicago, Illinois.
Furthermore, the individual defendant Wallace resides in Texas
and has no contact with Chicago, Illinois. Similarly, defendant
corporation is incorporated in Texas, has its principal place
of business in Texas, and is not "doing business" in Illinois.
Any importance that might attach to the fact that negotiations
leading up to the contract of sale in controversy were
conducted in Chicago is overshadowed by the express contractual
provision regarding the application of Texas law.
Finally, it appears that important witnesses and documentary
evidence are located in Texas. Of course, a court, in ruling
upon a motion to transfer before an answer has been filed, is
unable to determine with certainty all of the issues in
dispute, nor can or should it attempt to assess the proof of
either side or to predetermine the merits of the case.
Nevertheless, the Court must determine, in a preliminary
inquiry, whether the interests of the parties, witnesses, and
justice are best served by a transfer of the case. Based upon
all of the facts and circumstances of record, I am of the
opinion that the requirements of § 1404(a) have been met, and
that this action should be transferred to the United States
District Court for the Northern District of Texas.
It is ordered that the instant cause be, and the same hereby
is, transferred to the United States District Court for the
Northern District of Texas.
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