Source: https://supreme.justia.com/cases/federal/us/267/333/
Timestamp: 2019-04-25 04:39:53+00:00

Document:
Justia › US Law › US Case Law › US Supreme Court › Volume 267 › Cannon Mfg. Co. v. Cudahy Packing Co.
1. Defendant, a Maine corporation, marketed its products in North Carolina through a subsidiary, an Alabama corporation which it completely dominated through stock ownership and otherwise, but a distinct corporate entity which did not act as the defendant's agent, but bought the defendant's goods and sold them to dealers to be shipped directly from the defendant.
(a) That the defendant corporation did not thereby do business in North Carolina so as to be present there and suable in the federal court. P. 267 U. S. 334.
(b) That the concentration of the Alabama corporation's stock in the defendant's single ownership and the legal consequences of this under the Alabama law did not have the effect of rendering its business in North Carolina the business of.the defendant for purposes of jurisdiction. P. 267 U. S. 337.
Appeal from a judgment dismissing an action on contract for want of jurisdiction over the defendant corporation.
"summons and complaint to Cudahy Packing Company of Alabama, agent of defendant, Frank H. Ross, to whom papers were delivered, being process agent of Cudahy Company of Alabama."
The district court, concluding upon the evidence that the defendant was not present in North Carolina, entered a final judgment dismissing the action. 292 F. 169. The case is here under § 238 of the Judicial Code, the question of jurisdiction having been duly certified.
as to warrant the inference that it was present there. Bank of America v. Whitney Central National Bank, 261 U. S. 171. In order to show that it was, the plaintiff undertook to establish identity pro hac vice between the defendant and the Alabama corporation. The Alabama corporation, which has an office in North Carolina, is the instrumentality employed to market Cudahy products within the state; but it does not do so as defendant's agent. It buys from the defendant and sells to dealers. In fulfillment of such contracts to sell, goods packed by the defendant in Iowa are shipped direct to dealers, and from them the Alabama corporation collects the purchase price. Through ownership of the entire capital stock and otherwise, the defendant dominates the Alabama corporation, immediately and completely, and exercises control both commercially and financially in substantially the same way, and mainly through the same individuals, as it does over those selling branches or departments of its business not separately incorporated which are established to market the Cudahy products in other states. The existence of the Alabama company as a distinct corporate entity is, however, in all respects observed. Its books are kept separate. All transactions between the two corporations are represented by appropriate entries in their respective books in the same way as if the two were wholly independent corporations. This corporate separation from the general Cudahy business was doubtless adopted solely to secure to the defendant some advantage under the local laws.
Ry. Co. v. McKibbin, 243 U. S. 264. The obstacle insisted upon is that the court lacked jurisdiction because the defendant, a foreign corporation, was not within the state. No question of the constitutional powers of the state, or of the federal government, is directly presented. The claim that jurisdiction exists is not rested upon the provisions of any state statute or upon any local practice dealing with the subject. The resistance to the assumption of jurisdiction is not urged on the ground that to subject the defendant to suit in North Carolina would be an illegal interference with interstate commerce. Compare International Harvester Co. v. Kentucky, 234 U. S. 579, 234 U. S. 587-589. The question is simply whether the corporate separation carefully maintained must be ignored in determining the existence of jurisdiction.
more intimate, than in the three cases cited, but that fact has, in the absence of an applicable statute, no legal significance. The corporate separation, though perhaps merely formal, was real. It was not pure fiction. There is here no attempt to hold the defendant liable for an act or omission of its subsidiary, or to enforce as against the latter a liability of the defendant. Hence, cases concerning substantive rights, like Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, Chicago, etc., Ry. Co. v. Minneapolis Civic Association, 247 U. S. 490, Gulf Oil Corp. v. Lewellyn, 248 U. S. 71, and United States v. Lehigh Valley R. Co., 254 U. S. 255, have no application.
forfeiture in a judicial proceeding by the state, or that thereby its status was reduced from a corporation de jure to one de facto. But whatever might be other legal consequences of the concentration, we cannot say that, for purposes of jurisdiction, the business of the Alabama corporation in North Carolina became the business of the defendant.

References: v. 
 § 238
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.