business is in Wilmington. Its books and records are kept in Delaware or Maryland, and its directors' meetings are held in those two states. It has no place of business in New Jersey and none of its officers or directors live there. It has no telephone or employees in that state. It does, however, borrow money from sources in New Jersey. As of August 31, 1952, 12% of its outstanding debts were on long-term loans from a New Jersey corporation, and 2.3% were on a short-term basis from New Jersey sources. Commercial Credit Corporation, a New Jersey corporation, is substantially wholly owned by Commercial Credit Company. Commercial Credit Corporation's operations are separate from those of its parent. It has its own board of directors and staff of officers; it keeps its own set of books and records.
In Civil Action No. 477-52 service on Commercial Credit Company was made by serving Mr. R. S. Johnston, assistant treasurer of Commercial Credit Corporation, who, at no time, was an employee, officer, agent or representative of Commercial Credit Company.
In Civil Action No. 387-52 service on Commercial Credit Company was made by serving Mr. Ed Maciak, an employee of Commercial Credit Corporation, who also was not an employee or representative of Commercial Credit Company.
As in the disposition of the Isbrandtsen motion, the initial issue is whether Commercial Credit Company is doing business in New Jersey so as to be subject to suit in this court. The statement of the law concerning doing business applies equally to these motions.
The fact that Commercial Credit Company owns a New Jersey subsidiary corporation does not of itself constitute doing business, Echeverry v. Kellogg Switchboard & Supply Co., 2 Cir., 1949, 175 F.2d 900.
'The defendant wanted to have business transactions with persons resident in North Carolina, but for reasons satisfactory to itself did not choose to enter the state in its corporate capacity. It might have conducted such business through an independent agency without subjecting itself to the jurisdiction. * * * It preferred to employ a subsidiary corporation. Congress has not provided that a corporation of one state shall be amenable to suit in the federal court for another state in which the plaintiff resides, whenever it employs a subsidiary corporation as the instrumentality for doing business therein. * * * In the case at bar, the identity of interest may have been more complete and the exercise of control over the subsidiary more intimate than in the three cases cited, but that fact has, in the absence of an applicable statute, no legal significance.' Cannon Mfg. Co. v. Cudahy Co., 267 U.S. 333, at pages 336, -37, 45 S. Ct. 250, at page 251, 69 L. Ed. 634.
In addition, the plaintiff and libelants in these cases contend that the fact that 14.37% of Commercial Credit Company's outstanding debts were owed to New Jersey corporations constitutes doing business in New Jersey. Sullivan v. Kilgore Mfg. Co., D.C.E.D.N.Y. 1951, 100 F.Supp. 983 is cited to support this proposition. That case arose out of the same transaction as these, and in that case also Commercial Credit Company moved for an order quashing service on it and dismissing the complaint. It owned all the capital stock of Commercial Credit Corporation, a New York corporation. Service was made, however, upon a vice-president of Commercial Credit Company, who visited banks in the east and middle west for the purpose of effecting loans and who spent one-third of each year in New York City for that purpose. His headquarters was at the office of Commercial Credit Corporation of New York, where his name appeared on the bulletin board and on the door. Commercial Credit Company received 35% of its borrowings from New York City banks. On the basis of these facts the court held that Commercial Credit Company was doing sufficient business in New York to be sued there, and that service upon one of its vice-presidents was proper.
It would seem, however, that the situation which prevailed at an earlier period in the Sullivan case more clearly resembles the situation before this court. At that time plaintiff had served the summons and complaint on a vice president of the New York subsidiary, Commercial Credit Corporation, which bore the same relationship to Commercial Credit Company as does Commercial Credit Corporation of New Jersey in this case. The only activity of Commercial Credit Company in New York of which the court was aware was its ownership of the subsidiary. The court held that on the basis of this fact Commercial Credit Company was not doing business in New York and could not be sued there, Sullivan V. Kilgore Mfg. Co., D.C.E.D.N.Y. 1950, 93 F.Supp. 511.
I am constrained to hold that Commercial Credit Company is not doing business in New Jersey as the only activity which the plaintiffs in these cases ascribe to it in this state is the borrowing of nearly 15% of its debts from New Jersey corporations. By the standards set forth in the International Shoe Company case this is not sufficient to make it reasonable to sue Commercial Credit Company here. Unlike the second Sullivan case, there is no evidence that any of its officers spends substantial time here. In addition, even if it were held that Commercial Credit Company were doing business in New Jersey, service has not been effected on any representative of it in the manner prescribed by Federal Rule 4(d)(3) or by New Jersey Rules 3:4-4(a) and 3:4-4(d). The fact that one of these actions involving Commercial Credit Company is in admiralty does not alter this conclusion, see 2 Benedict on Admiralty Sec. § 280. Consequently the petition of Commercial Credit Company to quash the service of the citation on it and dismiss the libel in the suit of Healing & Son, Inc., v. Kilgore Mfg. Co., Civil Action No. 387-52, against it will be granted, and its motion that the return of service of summons on it be quashed and that the complaint be dismissed as to it in the suit of Mary E. Ackerley, as Administratrix, etc. v. Commercial Credit Company, Civil Action No. 477-52, will be granted also.
Let an order in conformity with this opinion be submitted.