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Magyar v. American Telephone and Telegraph Co.

Decided: May 19, 1965.

JOSEPH J. MAGYAR, JR. AND RUTH T. MAGYAR, PLAINTIFFS,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, A CORPORATION OF THE STATE OF NEW YORK, ET AL., DEFENDANTS



Bennett, J.c.c. (temporarily assigned).

Bennett

[88 NJSuper Page 20] This is a motion by defendant Bell Telephone Company of Pennsylvania, which challenges the validity of service of process upon their corporation by registered mail, return receipt requested, pursuant to R.R. 4:4-4(d); and by personal service upon the registered agent of American Telephone and Telegraph, a New York corporation, authorized to do business in the State of New Jersey. Defendant Bell Telephone Company of Pennsylvania,

maintains that neither method of service was validly effected.

Plaintiff Ruth T. Magyar was involved in an automobile accident on or about March 10, 1964 on U.S. Route 1 going towards Philadelphia, in Falls Township, Bucks County, Pennsylvania. She was severely injured by a vehicle driven by Edna A. DeNicola, who, it is alleged, was an agent, servant or employee of the Bell Telephone Company of Pennsylvania.

This court is asked to determine whether the presence of American Telephone and Telegraph Company in New Jersey, and its relationship to Bell Telephone Company of Pennsylvania, as enumerated in the affidavits, constitute the type of relationship or activity required to constitute "minimum contact" within the contemplation of prior decisional law. This court will also comment on whether there has been other activity which would subject defendant Bell Telephone Company of Pennsylvania, in personam, to the jurisdiction of this court without offending "traditional notions of fair play and substantial justice."

Relying on Hoagland v. Springer, 75 N.J. Super. 560 (App. Div. 1962), affirmed 39 N.J. 32 (1962), plaintiff's main thesis attempts to establish that American Telephone and Telegraph Company and Bell Telephone Company of Pennsylvania are integral parts of an economic network comprising the "Bell System" which consists of American Telephone and Telegraph and its main telephone subsidiaries. Substantially, she maintains that Bell Telephone Company of Pennsylvania cannot exist without American Telephone and Telegraph Company, and that personal service upon the parent, American Telephone and Telegraph, is, in effect, service upon the subsidiary Bell Telephone of Pennsylvania.

Plaintiff's affidavits reveal that American Telephone and Telegraph Company owns 100% of Bell Telephone Company of Pennsylvania's stock, and that substantial advertising is done for the "Bell System." Utilizing the annual reports of American Telephone and Telegraph Company and Bell Telephone

Company of Pennsylvania, she attempts to show other indicia of cohesion by reference within those reports to a consolidated balance sheet, an outstanding advance from American Telephone and Telegraph Company to Bell Telephone Company of Pennsylvania, and miscellaneous data on the entire "Bell System," such as total gains in telephones, lines, income, employee benefits, incentive programs, total costs of operation and expenditures of the entire system. Reference is also made by plaintiff to a director of the Bell Telephone Company of Pennsylvania who also serves as an executive vice-president of American Telephone and Telegraph Company.

Defendant Bell Telephone Company of Pennsylvania discloses that it is incorporated in the Commonwealth of Pennsylvania and has its own board of directors and corporate officers. It maintains no office, agent or service to conduct any business in the State of New Jersey. It does not solicit any business from New Jersey residents. The company owns no equipment, buildings or real estate in New Jersey, nor does it have any bank accounts in this State.

Can it factually and realistically be contended that American Telephone and Telegraph Company so dominates the activities of the Bell Telephone Company of Pennsylvania or that the Bell Telephone Company of Pennsylvania is an alter ego, created to fulfill its needs?

In Hoagland v. Springer, supra, defendant Cummins Diesel Michigan, Inc. authorized the New Jersey distributor to repair a diesel truck engine it had previously sold and installed in Michigan. Defendant was one of 50 independent distributors of an Indiana manufacturer. Working under distributor-ship arrangements involving close ties with the manufacturer and cooperation among distributors, defendant frequently exchanged needed parts with its New Jersey counterpart, and the latter was occasionally authorized to service engines sold by defendant. The engine exploded on the New Jersey Turnpike and the driver of the truck was injured. He instituted an action for damages against defendant and others in New

Jersey, with process being made on Cummins Diesel Michigan, Inc. by registered mail. Upon challenge of its jurisdiction, the court concluded that the economic realities of the arrangement among the manufacturer and the distributors yielded "one, cohesive, economic unit" in the pursuit of business profits, and supported the assertion of jurisdiction over the Michigan defendant. As the court remarked:

"We cannot disregard the economic realities of the situation exposed by the record in this case. Indiana and its distributors form one, cohesive, economic unit. In the pursuit of business profits and their general economic well-being they are all concerned with the successful selling and servicing of Indiana's products, but for whose existence neither the mother ...


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