Staley, Adams and Max Rosenn, Circuit Judges.
MAX ROSENN, Circuit Judge.
The appellant in this case, Pocono Investment Properties, has appealed from an order of the district court, 316 F. Supp. 379, dismissing their action with prejudice.
Prior to the commencement of this federal suit based on diversity jurisdiction, a state court suit had been voluntarily discontinued under Rule 229*fn1 of the Pennsylvania Rules of Civil Procedure, 12 P.S. Appendix, after a decision on a preliminary objection adverse to the plaintiff. Believing the discontinuance was without prejudice assignees of the state court plaintiff instituted this action in federal court, but the district judge barred the action, holding the issues decided in the state court were res judicata.
In February 1969 proceedings in the Court of Common Pleas of Philadelphia County were begun by Pocono Investment Properties, Inc., a Pennsylvania corporation, against Block Land, Inc., Poplar Ridge Corporation, and Fred Frankel. The defendants were all Pennsylvania residents. The state complaint alleged breach of a contract under which plaintiff was to sell on behalf of defendants certain undeveloped land in Pennsylvania. Pocono alleged that it had been given the exclusive right to sell the land throughout the United States for a brokerage commission of 40% of the "Net Sales Price."*fn2 The complaint stated that the defendants had failed to comply with various state regulations for the installment sale of real estate, breaching the agreement. Defendants had allegedly further breached the agreement by selling the land themselves, and as a consequence, the state court action asked for several forms of relief. The plaintiff requested equitable relief to enjoin the defendants from mortgaging or conveying the property without first paying the plaintiff its brokerage commission of 40% and an accounting from the defendants from the date of the agreement for the amounts to which the plaintiff was purportedly entitled.
Defendants raised several preliminary objections but the state court dealt only with demurrer, sustaining defendants' preliminary objections 1(b) and 1(c).
The state trial judge's order provided that:
Preliminary Objections 1(b) and (c) of defendants to plaintiffs' complaint are sustained, with leave to the plaintiff within thirty (30) days, to plead facts averring that at the times referred to in the said complaint, the plaintiff, in compliance with the Real Estate Brokers' License Act of 1929, as amended, was a duly licensed real estate broker in the Commonwealth of Pennsylvania. Upon failure of the plaintiff to so amend his complaint, the complaint is dismissed.
The common pleas court went on to state that it construed the facts in such a way that Pocono Investment Properties, Inc., was doing business in Pennsylvania and therefore under the Act had to register with the appropriate licensing authorities before being able to maintain an action on a real estate brokerage contract in a Pennsylvania court.*fn3
Relying apparently on Rule 229(a) of the Pennsylvania Rules of Civil Procedure and prior to the running of the thirty day period, the plaintiff's attorney voluntarily terminated the state suit by sending the prothonotary an order to mark the suit voluntarily discontinued without prejudice. The suit was so marked.
Subsequently a new suit was brought in the District Court for the Eastern District of Pennsylvania in diversity. Along with several minor changes from the state complaint, it had one significant difference: the plaintiff was now the joint venturer, Pocono Investment Properties, whose two partners, Sun Sales Corp. and Spartan Steel Sales Corp., were both New York corporations. The joint venture had been reassigned the rights under the contract after the dismissal of the state court action, with the result that the real parties in interest were once again facing each other.
The new complaint further asserted that:
Plaintiff, Pocono Investment Properties, through its joint venturer, Spartan Steel Sales Corporation, and its agents and employees, was licensed to sell real estate in the states of New York, ...