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RANDOLPH LABS., INC. v. SPECIALTIES DEV. CORP.

October 31, 1945

RANDOLPH LABORATORIES, Inc.,
v.
SPECIALTIES DEVELOPMENT CORPORATION et al.



The opinion of the court was delivered by: MEANEY

The defendants have moved to dismiss this action as to defendant Walter Kidde & Company, Incorporated, under the provisions of Federal Rules of Civil Procedure, Rules 12(b)(3) and 12(b)(6), 28 U.S.C.A.following section 723c. They also seek an order striking the allegations in paragraph V of the complaint under Rule 12(f).

The action was instituted by plaintiff, Randolph Laboratories, Incorporated, a corporation of the State of Illinois, against defendants Specialties Development Corporation, a corporation of the State of New Jersey, and Walter Kidde & Company, Incorporated, a corporation existing under the laws of the State of New York. The plaintiff seeks a declaratory judgment of invalidity and noninfringement by plaintiff of Minor Patent No. 1,760,274 and prays for injunctive relief. In addition, the complaint asserts charges of unfair competition against both defendants.

 Defendant alleges first, that this court has no jurisdiction as to defendant Walter Kidde & Company, Incorporated, under the provisions of Judicial Code, Section 51, 28 U.S.C.A. § 112. This action is brought under Section 274d of the Judicial Code, 28 U.S.C.A. § 400, which gives to the courts of the United States, in case of actual controversy, the power to declare rights and other legal relations of interested parties. The section is silent as to the question of venue of cases brought under the Act. It follows that section 51 of the Judicial Code, 28 U.S.C.A. § 112, applies, Webster Co. v. Society for Visual Education, Inc., 7 Cir., 83 F.2d 47; Hall v. United States, D.C., 10 F.Supp. 739. Judicial Code, section 51, 28 U.S.C.A. § 112, provides in part as follows: ' * * * No civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.'

 Since this case arises under the patent laws, it is within the jurisdictional limits of the District Court generally. Defendant Walter Kidde & Company, Incorporated, maintains a factory and offices in the State of New Jersey, and is licensed to do business in this State, having a principal office and a designated registered agent in compliance with the laws of the State of New Jersey.

 The defendant on this motion, however, denies the right of the District Court of this district to entertain this case as to defendant Walter Kidde & Company, Incorporated, on the grounds that said defendant is not an inhabitant of this district within the contemplation of this statute. Plaintiff, conversely, asserts that jurisdiction is properly invoked on the ground that since defendant Walter Kidde & Company, Incorporated, is authorized to do business in New Jersey by compliance with New Jersey Revised Statutes 14:15-3, N.J.S.A. 14:15-3, under which statute defendant has designated an agent upon whom service of process may be made, such compliance constitutes a 'waiver' by defendant of this section as above set forth.

 The pertinent portions of the New Jersey Statutes, N.J.S.A. 14:4-2 and N.J.S.A. 14:15-3 provide that: 'Every corporation of this state, and every foreign corporation authorized to transact business in this state, shall maintain a principal office in this state and an agent in charge thereof upon whom process against the corporation may be served' and that 'Every foreign corporation, except banking, insurance, ferry and railroad corporations, before transacting any business in this state, shall file in the office of the secretary of state * * * a statement * * * setting forth (among other things) * * *

 'c. The principal office of the corporation in this state and the name and place of abode of an agent upon whom process against such corporation may be served * * * .'

 This precise question was determined by this court in Da Cunha v. Grasselli Chemical Co., 46 F.Supp. 28, 29, where it was then stated:

 'While not so broad as the statutes in some other states, the New Jersey statute makes it clearly evident that, preliminary to authorization to transact business in New Jersey, is the appointment of an agent in charge of the principal office of the corporation in the State, upon whom process against the corporation may be served. There is no qualification upon this obligation.

 'The United States Supreme Court in the case of Neirbo v. Bethlehem Shipbuilding Corp., 308 U.S.165. 60 S. Ct. 153, 84 L. Ed. 167, 128 A.L.R. 1437, decided that designation of an agent in a state for service of process constituted consent to be sued in the federal courts of that state, and is tantamount to a waiver of the privilege accorded by Section 51 above referred to. Previous to that decision, various districts decided the question variously. The Neirbo case is dispositive.'

 Under the facts existent in the present case, defendant Walter Kidde & Company, Incorporated, must be held to have consented to be sued in the courts of New Jersey, federal as well as state. Service of process upon said defendant under such circumstances satisfies the requirements of section 51 of the Judicial Code, 28 U.S.C.A. § 112, and this Court possesses the challenged jurisdiction.

 Defendant next urges upon the Court the contention that this suit must be dismissed as to defendant Walter Kidde & Company, Incorporated, under the provisions of Civil Procedure Rule 12(b)(6), on the ground that the complaint on its face fails to state a claim against said defendant upon which relief can be granted.

 Paragraph III of the complaint alleges that letters patent No. 1,760,274 for Fire Extinguisher were issued on application of Henry R. Minor, assignor to Walter Kidde & Company, 'and transferred to Specialties Development Corporation, defendants herein, and as plaintiff is informed and believes, are now owned by the said defendants either jointly or separately.'

 Paragraph IV of the complaint asserts that defendant Specialties Development Corporation is wholly owned by defendant Walter Kidde & Company, Incorporated, and all of the officers and directors of said Specialties Development Corporation are employees or directors of Walter Kidde & Company, Incorporated. The same paragraph further asserts that the office of Specialties Development is located in a branch plant of the Walter Kidde Company, that the assets and liabilities of Specialties Development Corporation are publicly consolidated in the statements of Walter Kidde & Company, Incorporated. And further, paragraph IV alleges 'The Minor patent No. 1,760,274 was issued to Walter ...


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