Riverbank Laboratories v. Hardwood Products Corp.

PETITIONER:Riverbank Laboratories
RESPONDENT:Hardwood Products Corp.
LOCATION:

DOCKET NO.: 66
DECIDED BY: Warren Court (1955-1956)
LOWER COURT:

ARGUED: Jan 16, 1956
DECIDED: Apr 02, 1956

Facts of the case

Question

  • Oral Argument – January 16, 1956 (Part 2)
  • Audio Transcription for Oral Argument – January 16, 1956 (Part 2) in Riverbank Laboratories v. Hardwood Products Corp.

    Audio Transcription for Oral Argument – January 16, 1956 (Part 1) in Riverbank Laboratories v. Hardwood Products Corp.

    Maurice Rosenfield:

    This case, which is here on certiorari to the Seventh Circuit, involves a Wisconsin corporation’s defense to a diversity suit of Chicago on the ground that it was not doing business there.

    The exact issue, which this creates on this Court, is whether this defense is to be tested on the merits by state law under the Erie rule or whether it is governed by the principles announced by this Court in the International Shoe case, or whether it’s is governed by 1404 (a) of the Judicial Code enacted in 1948.

    The action wanted to enjoin a common law tort.

    The infringement of the name Riverbank is applied to acoustical doors.

    The key facts bearing on the question of doing business are these.

    The defendant is a Wisconsin corporation with its home office at Neenah, Wisconsin.

    It has maintained a Chicago office for 30 years.

    Its acoustical division, which is called as acoustical department, is headquartered at Chicago.

    The acoustical — the acoustical department of Chicago solicited business in Illinois and throughout the country, and supervised other agents located elsewhere.

    Sales manuals and literature went from the department headquarters of Chicago all over the country.

    The Chicago headquarters of the acoustical department was responsible for sales everywhere.

    The agent in charge of the Chicago office knew more about acoustics than the chief executives of the company.

    His compensation reflected his special contributions to the development of the company’s product.

    Shipments by the defendant into Illinois amounted to over $500,000 a year and into the Chicago area about $100,000, but it is true that the sales blanks here are used by the defendant, had a clause printed on the back requiring all orders to be accepted at the home office.

    On consideration of these facts, the District Court overruled the motion to dismiss, proceeded to the merits and granted an injunction.

    It was appealed to the Court of Appeals.

    The case was brief and argued on the merits.

    The defendant, however, preserved this jurisdictional point and persuaded the Court to that effect, holding the lower court lack jurisdiction it reversed for dismissal.

    Its decision was based entirely on an Illinois rule that when orders are solicited subject to acceptance at a home office, the corporation is not doing business and is not suable.

    A couple of preliminary points to put this issue in contest, first, this case, raises no question of venue under the federal venue statute.

    Our opponents characterized the case as raising a question of venue under Section 1391 (c) of the Judicial Code.

    If the Court accepts that characterization of the case, it must reverse it because venue may be satisfied in one of two ways, then you can be laid, either where all the plaintiffs reside or where the defendant resides.

    There is one plaintiff here and that plaintiff resided in the district — in the division where the case was brought.

    Since, therefore, a venue was satisfied under 1391 (a).

    There is no occasion at all to look to 1391 (c).

    The second preliminary issue is this, the defendant pleads for trial at Neenah, Wisconsin under the laws of Wisconsin.

    This is a misleading statement of the alternative.

    The alternative was not and never was trialed in the state court of Wisconsin.

    The alternative to trial in the District Court of Chicago was trialed in the federal court at Milwaukee.

    Neenah happens to be in the Milwaukee federal district, the southern district of Wisconsin, 90 miles from Chicago, and it would have been one of these two federal courts.

    Maurice Rosenfield:

    More than that, both of them obviously are within the Seventh Circuit, so that this case, if the decision holds, must go back to another federal court within the same circuit only to — only to return to that Circuit for decision on the merits, and it must go to that Court on the merits since it’s important enough to be here.

    It will be important enough to either side to take it to the Court of Appeals for decision on the merits.

    This has deeper implications though, just then that the parties have been subjected to expense in delay in the federal judicial system to inconvenience and burdens.

    A deeper significance is that it points out exactly what the issue is on the business.

    Not doing business defense is raised in diversity cases.

    The issue is in what the federal district does at fair administration of justice permit this case to be tried.

    That’s all that’s involved when it is in — when the issue was raised in a — in a diversity case.

    Now, when the issue arises in the state court, it’s really a bad issue too, no matter how perverse a plaintiff’s judgment may have been in selecting his forum.

    No court has ever been known to dismiss him on the merits.

    The object of the decision obviously is to get the case tried on the merits in some other place, a more preferred forum.

    Now, this Court has exercised control over state excess in this field.

    That is when the States go too far in taking these cases against corporations.

    It has always exercised control over the States under the Due Process Clause for 63 years from St. Clair against Cox in 1882, 160 U.S. to the International Shoe case in 1945.

    This control was in jurisprudential terms involving the nature of corporate personality presence, whether a corporation was present or could be present outside of the State which created it.

    In 1945, this Court reconsidered the entire matter, reevaluated the principles and changed the due process test to one of fairness, decency, substantial justice, stating that what is required is a balancing of convenience, an estimate of inconvenience and this meant an evaluation to both sides, not just the corporate defendant, but in the evaluation of the plaintiff’s position as well as the defendant’s position.

    In the new terms of the International Shoe case, the control device was indistinguishable from a doctrine of forum non-convenience.

    Felix Frankfurter:

    Could this case have been brought in — in an Illinois state court?

    Maurice Rosenfield:

    Could this case have been brought in an Illinois state court?

    Yes, sir, it could.

    Felix Frankfurter:

    Well, the — I don’t understand.

    If there was — if it was not waived into this, according to Illinois law, as expounded by the Court of Appeals by your (Inaudible), your Court of Appeals, how would it be doing business?

    How would it be — how can it be the basis of the — well, I understood the proceeding of Illinois court.

    Maurice Rosenfield:

    Mr. Justice Frankfurter, there hasn’t been a decision in the state court of Illinois on this question since the International Shoe case in 1945, all of the decisions.

    Felix Frankfurter:

    What’s the latest?

    We’ve just heard this morning for the case of 1910 is controlling so far as the federal courts are concerned you’re going to find out what state law is.

    Maurice Rosenfield:

    But this is a question of due process of law.

    The State — all of the state court of Illinois, all of the decisions of the state court of Illinois are in federal due process of law under the Fourteenth Amendment.

    Felix Frankfurter:

    I’m — I’m trying to elicit from you what I do not know at all.

    I know no knowledge of it, except what I read in this opinion of the case.

    Maurice Rosenfield:

    Yes, sir.

    Felix Frankfurter:

    That’s my reading as to what my understand is.

    Maurice Rosenfield:

    Yes, sir.

    Felix Frankfurter:

    I want to know why, not as a forecast of what you would think the Illinois Supreme Court will do by — by reason of the International Shoe case, but what the Court of Appeals, your Court of Appeals has acquaint authority to pronounce that Illinois law said in the Illinois law when they wrote this opinion.

    Maurice Rosenfield:

    They said that Illinois law is that a corporation which solicits orders subject to the acceptance of its home office is not doing business in Illinois —

    Felix Frankfurter:

    Now, I —

    Maurice Rosenfield:

    — basing it on Illinois decisions which preceded International Shoe.

    Felix Frankfurter:

    I put my question to you again.

    Maurice Rosenfield:

    Yes sir.

    Felix Frankfurter:

    On the basis of what the Court of Appeals concedes to be the law of Illinois, could this sue just prevail, assuming you could prevail on the merits?

    Could this — could the Illinois court have jurisdiction according to what the Court of Appeals concede to be Illinois law?

    Maurice Rosenfield:

    According to what —

    Felix Frankfurter:

    (Voice Overlap) —

    Maurice Rosenfield:

    No.

    Felix Frankfurter:

    That if something of that was, the view of the Illinois for the Court of Appeals regarding what the Illinois law is, isn’t that true?

    Maurice Rosenfield:

    Whether there’s any law — whether there’s any Illinois law at all on doing business.

    There is no Illinois law on doing business.

    Felix Frankfurter:

    What if — by meaning there is no Illinois law, meaning, you couldn’t go to a decision of the Illinois Supreme Court as finding —

    Maurice Rosenfield:

    No.

    Felix Frankfurter:

    — is that it?

    Maurice Rosenfield:

    No, I mean, if there was — that the Illinois decisions are federal – are decisions on federal constitutional law.

    They are decisions on due process of law since this Court exercised for 63 years, control over the — over Illinois as well as the other states.

    Felix Frankfurter:

    What you’re saying is, if I follow you, that there is Illinois law which — which said in the past by the decision of the Court that a defendant in the position of this defendant and the circumstances like under these circumstances would bar suit in the Illinois state court because of the overriding authority of the — of this Court regarding due process.

    Maurice Rosenfield:

    That is right, sir.

    Felix Frankfurter:

    What you say is that that ground of non-jurisdiction has been cut from under, has been removed.

    Maurice Rosenfield:

    Cut from under them totally —

    Felix Frankfurter:

    All right.

    Maurice Rosenfield:

    — by decision —

    Felix Frankfurter:

    Therefore, you have to find out what Illinois law is within the control of Illinois.

    Illionius on the subject as we all know that decisions are mountainous of multitudeness and there — every which way, and there is a local law as well as the federal law, is that true?

    Maurice Rosenfield:

    No, sir.

    Maurice Rosenfield:

    There is no —

    Felix Frankfurter:

    I’m not talking about Illinois.

    I’m talking my general knowledge of law tells me.

    Take New York about which I know.

    Take New York.

    New York, apart from any question of what the — the due process was required had its own law of what doing businesses.

    Maurice Rosenfield:

    I would suggest, sir, that New York never had its own law of doing business.

    Felix Frankfurter:

    Well, we’re not concerned whether it did or it didn’t.

    We’re not concerned with it because this is Illinois law.

    Maurice Rosenfield:

    Well, I would suggest that Illinois had — never had any law of doing business.

    Felix Frankfurter:

    And you say the Supreme Court of — then you say the Court of Appeals is wrong in saying this is Illinois law.

    Maurice Rosenfield:

    It is not only wrong in saying this is Illinois law.

    It’s wrong in saying that there’s any such thing the state law of doing business.

    All there has ever been is federal constitutional law.

    Felix Frankfurter:

    But —

    Maurice Rosenfield:

    By the referring — by referring to Illinois —

    Felix Frankfurter:

    Why do you have to take on the bigger burden that you’ve got?

    If you are right, if you are right — I know lawyers like to do it and judges sometimes.

    If you are right and the Court of Appeals said this is Illinois law, and Illinois law was based on a decision and decision of this Court, and this Court has eaten its past decisions then this isn’t Illinois law and that’s predicated.

    You don’t have to go on —

    Maurice Rosenfield:

    That argument is made —

    Felix Frankfurter:

    — a problem of whether it’s Erie-Tompkins or not.

    Maurice Rosenfield:

    That argument is made in the brief.

    Felix Frankfurter:

    Well, but isn’t that your first argument not your last argument.

    Maurice Rosenfield:

    That the Court misapplied Illinois law?

    That —

    Felix Frankfurter:

    Why do you have to —

    Maurice Rosenfield:

    — it — it referred to — it referred to a dead law.

    Felix Frankfurter:

    Why do we have to take on this not easy question for me?

    Maurice Rosenfield:

    It is possible.

    Maurice Rosenfield:

    It is — it is possible, Mr. Justice Frankfurter.

    Felix Frankfurter:

    Why do you have to take on if what you say that the Court of Appeals said that Illinois isn’t Illinois law?

    It was an end of the matter, isn’t that true?

    Maurice Rosenfield:

    Yes, it is possible, Mr. Justice Frankfurter, to dispose of the case on that ground.

    If this Court — if the Court of Appeals based its view of Illinois law and dead law.

    Dead law made dead by the decision of this Court in the International Shoe case.

    Harold Burton:

    But the very fact that it interpreted that law as of today meant that the Court of Appeals felt that that is still the law today, did it not?

    Maurice Rosenfield:

    It mechanically applied.

    Harold Burton:

    Well, it —

    Maurice Rosenfield:

    It mechanically applied decisions of the —

    Harold Burton:

    Mechanically, it did announce it from the bench.

    Maurice Rosenfield:

    Yes, but it just looked to decisions preceding the International Shoe case.

    Harold Burton:

    And said there’s some —

    Maurice Rosenfield:

    Mechanically applied them without looking — without reevaluating, without noticing that the underlying policy considerations had been fully reevaluated by this Court, without noticing furthermore that — that the Supreme Court of Illinois has several times announced that it is following the Supreme Court decisions, that it’s its duty to change the — its own decisions to fit, to follow the decisions of the United States Supreme Court.

    Felix Frankfurter:

    — between a state court, may on a problem of this — or to say, “We haven’t got a voice of our own.

    We just have to echo what the Supreme Court of the United States tells us,” —

    Maurice Rosenfield:

    Yes, sir.

    Felix Frankfurter:

    — lead to it juristically speaking or a state court may say, “Whether we are or aren’t heard by the Due Process Clause as interpreted by the Supreme Court, this is our state law.”

    Now, you can deny to that, do you?

    You say that that —

    Maurice Rosenfield:

    Yes, sir.

    Illinois has done the former.

    It has not — it is said that we follow the Supreme Court decisions in this field and he quote, “The decisions in this state as the due process of law under the Fourteenth —

    Where — where are you reading from?

    Maurice Rosenfield:

    I’m reading from page 14 and 15 of my brief, sir, “The decisions of this State as to due process of law under the Fourteenth Federal Amendment must be controlled by the decisions of the federal courts, rather than by the decisions of our own or other state courts.”

    It is our duty under the law to overrule if necessary even our own decisions, and follow the rule laid down by the Federal Supreme Court in matters of this kind.

    Felix Frankfurter:

    That was —

    Stanley Reed:

    Mr. Rosenfield, how — how did this question arise?

    Maurice Rosenfield:

    The question arose through a motion of the defendant corporation to dismiss the — the suit.

    Stanley Reed:

    Is there any written reply of yours to that?

    Maurice Rosenfield:

    Yes, there was a written reply in their affidavits.

    There were depositions, testimony.

    Stanley Reed:

    Where is your – where is your written reply?

    Maurice Rosenfield:

    There are — there are depositions.

    The depositions of their — their —

    Stanley Reed:

    No, no, they filed a motion to dismiss on the ground that they —

    Maurice Rosenfield:

    They were not doing business.

    Stanley Reed:

    — that they were not before the Court.

    Maurice Rosenfield:

    They were not doing business.

    Stanley Reed:

    Whatever words they used, I don’t know.

    Maurice Rosenfield:

    They filed a motion to dismiss on the ground that they were not doing business.

    Stanley Reed:

    Well now, what — what did you file in the Court in answer to that?

    Maurice Rosenfield:

    We took the depositions of —

    Stanley Reed:

    Well, did you file nothing?

    Maurice Rosenfield:

    We filed these depositions in the Court.

    Stanley Reed:

    Well, that’s evidence.

    Maurice Rosenfield:

    Yes.

    Stanley Reed:

    Did you take any procedural step in answer?

    Did you file an answer to the motion that they file?

    Maurice Rosenfield:

    Just the depositions of their officers and employees.

    Stanley Reed:

    Showing certain facts?

    Maurice Rosenfield:

    Showing all the facts on the nature of their activities in the State of Illinois.

    Yes, sir.

    Stanley Reed:

    And then, did you file a brief?

    Maurice Rosenfield:

    A brief was filed and the — the matter was argued before the District Judge.

    Stanley Reed:

    And you raised what sort of a question then?

    How would you raise this question?

    How did you raise it?

    Maurice Rosenfield:

    By arguing that the defendant was doing business in the State of Illinois.

    Stanley Reed:

    You didn’t — you didn’t say —

    Maurice Rosenfield:

    And that it was controlled by International Shoe case.

    Stanley Reed:

    You — you didn’t say to — that the position of the defendant would be contrary to the Constitution of the United States?

    Maurice Rosenfield:

    The Court agreed with us.

    The District Judge agreed with us, sir, that the defendant was doing business under the International Shoe test and dismissed — and denied the motion, preceded to the merits.

    Felix Frankfurter:

    Your deposition in filing your deposition, you were acting on the assumption that if you could bring yourself on an — on allegations of facts, on allegations of facts, to your legal argument, on allegation of the fact that International Shoe, that International Shoe took care of it?

    Maurice Rosenfield:

    Precisely, sir.

    Felix Frankfurter:

    And the Court said in effect, “As we have interpreted the Illinois cases, under Illinois cases, you were not doing business and paid no attention.”

    This is your argument that Illinois cases rested on the construction of the Due Process Clause of this Court and they paid no attention to the latest in answer to this Court as to what is doing business within the Due Process Clause in the International Shoe, that’s your case.

    Maurice Rosenfield:

    It is, sir.

    The District Judge — you were speaking of them, the District Judge who overruled the defense?

    Felix Frankfurter:

    Yes.

    Harold Burton:

    Mr. Rosenfield, you’re familiar with our case at Perkins against 18/09

    Maurice Rosenfield:

    Yes, I am, Mr. Justice Burton.

    Harold Burton:

    Well, in that case, wasn’t it the fact that there, the Ohio Court — the Ohio Courts in their old decisions had felt bound by the old federal court decisions without paying attention to the International Shoe?

    And then, the current Supreme Court of Ohio felt still bound by it, and we said they were not bound by those — those old decisions but they had a leeway to either accept or not accept in the light of the International Shoe case and send it back to them to decide.

    Well now —

    Maurice Rosenfield:

    Yes, sir.

    Harold Burton:

    — haven’t we the same case here except it’s already been decided by the Court of Appeals?

    Maurice Rosenfield:

    They decided.

    That case went back to the Supreme Court of Ohio which decided to take the case.

    That case did not involve an Ohio plaintiff, an Ohio citizen, in order that it involved a cause of action arising out of Ohio.

    Nevertheless, that Court on remand to it took the case, decided to take the case.

    It recognized that this defendant was doing business within your test of the International Shoe case.

    Harold Burton:

    Well, but the point that I’m making is what we did in that case was to send it back to them to decide what they would do in the old cases in the light of the International Shoe case.

    And here, that’s already been done hasn’t it by the Court of Appeals of the Seventh Circuit?

    They’ve looked at the old cases and they’ve looked at the International Shoe case.

    They must be familiar with it in the Seventh Circuit and they say, “That’s still the law of the Illinois.”

    Maurice Rosenfield:

    But they didn’t even consider the International Shoe case.

    Harold Burton:

    Well, but they knew it.

    Maurice Rosenfield:

    They didn’t – they didn’t even look at the International Shoe case, refused to hear argument on the International Shoe case, simply referred to the Illinois decisions preceding the International Shoe case, thus, bringing the bare all the dead law, all the law that you dented in the International Shoe case.

    Harold Burton:

    Well —

    Stanley Reed:

    But in the International Shoe case, the International Shoe Company was taken into the State and they raised a question that it was contrary to the Federal Constitution for such a denial of due process as to make them come where they’ve never been.

    Maurice Rosenfield:

    The question is always —

    Stanley Reed:

    That’s the very present situation from what you have here, is it?

    Maurice Rosenfield:

    The question is always one of federal constitutional law.

    That’s the only — that’s the question that has ever been in this — in these cases.

    Stanley Reed:

    That whether a person is doing business in the State —

    Maurice Rosenfield:

    It raises —

    Stanley Reed:

    — as a matter of federal constitutional law?

    Maurice Rosenfield:

    Exactly.

    There is no state policy to deny its own citizens’ access to its own courts.

    Not only has no state ever done this on grounds of state policy, but it’s unthinkable that any state would deny its own citizens’ access to its own courts.

    All that has happened here is that the Supreme Court of the United States has been controlling state action on this field under the Due Process Clause, and it has done so since 1882, first, in jurisprudential terms, later in terms of fairness, and in — a forum non-convenience approach.

    The forum non-convenience, the definition, the test established in the International Shoe case is identical to a background of forum non-convenience.

    And now, and simultaneously with this Court’s change of the test, Congress codified forum non-convenience under 1404 (a) of the Judicial Code.

    And the question arises as to why this question is not covered in it’s entirety in the federal court system by 1404 (a) of the Judicial Code.

    Felix Frankfurter:

    Mr. Rosenfield, I — I sent for Bull against Boston & Maine but until I get a chance to read it myself.

    Would you tell me the part where that case play in your argument because in Canvas Fabricators case to which the Court of Appeals merely affirmed has having disposed of these questions.

    They rely mainly on Bull against Boston & Maine.

    Now, the Bull against Boston & Maine do what Mr. Justice Burton has suggested, namely, although it didn’t have to, a State is limited by the Due Process Clause but it may have a narrower line towards them, then the due process draw the line —

    Maurice Rosenfield:

    Do you mean —

    Felix Frankfurter:

    — but it can’t – a State can’t allow the suit where a person isn’t amenable to judicial process according to due process law.

    But a State may go on a narrower line and Due Process Clause is required.

    Maurice Rosenfield:

    Do you think, sir, that any state would, as a matter of its own policy, deny its own citizens’ access to its courts?

    Felix Frankfurter:

    (Inaudible) you happily — if — if you happily not draw the line, and therefore, hasn’t been with many cases which I have, you wouldn’t put any limits to the diversity of view the courts might face.

    Maurice Rosenfield:

    Sir, we have read every case since — every state case since International Shoe.

    And not one case — not one state case since International Shoe has any state court deliberately chosen a narrower rule than it may take —

    Felix Frankfurter:

    We’re trying to go (Inaudible)

    What I want to know is I think it’s susceptible of objective proof, namely, has Illinois given any evidence that it determined what is doing business, otherwise then, by what is — by what itself it is compelled to decide in view of this Court’s decision.

    Maurice Rosenfield:

    Illinois is —

    Felix Frankfurter:

    I think that requires a critical review of Illinois cases.

    Maurice Rosenfield:

    That was a critical reading, a very simple reading and a very easy answer that the Court of Appeals didn’t do, and the Illinois decisions make it very clear that this is only a question of federal due process of law.

    May I suggest, Mr. Justice Frankfurter, that in addition to the case you — the Bull case, that you also look at Pembleton against Illinois Commercial Men’s Association relied on the Bull case.

    Felix Frankfurter:

    What is the citation?

    Maurice Rosenfield:

    289 Illinois 99, 107 to 108 or 124 North Eastern 355 — 359.

    Now, there’s a quote form that case on page 14 and — pages 14 and 15 of our brief, “Whether the Illinois Supreme Court makes it perfectly obvious that its decision rest on federal due process of law.”

    Felix Frankfurter:

    Well, I’m looking at the – an older case.

    They all go back — a good many of them go back which follows (Inaudible), does it, 37 U.S. and that’s what this case is, Booz against Texas & Pacific Railway Company, is that right?

    Do you remember?

    Maurice Rosenfield:

    I don’t remember the Burroughs case.

    There are so many due process cases.

    The leading one, the one that started the chain in — in the Supreme Court of United Stated is St. Clair against Cox.

    Felix Frankfurter:

    Well, that’s one of the old ones throughout.

    Maurice Rosenfield:

    Now, there is also a new Illinois statute, Mr. Justice, that we have brought to your attention past since this case in which the Illinois courts — the Illinois statute is designed to go as far as the — your decision in International Shoe case were permitted to go.

    That analysis is on page 22 of the record.

    Felix Frankfurter:

    You have only two minutes left and you haven’t merely reached the — the sensitive question on which you’d like this Court to pronounce.

    So, I’d like to ask you this question.

    Maurice Rosenfield:

    Yes, sir.

    Felix Frankfurter:

    Namely, assume that Illinois says, “We follow the — we have to follow the Supreme Court of the United States for all this time (Inaudible) the United States now becomes more liberal as we phrased then.

    It allows a suit even where — on a subtle merely solicit business but we think that is menarche as the basis of opening our Court.

    Suppose that’s Illinois law.

    Suppose they say, “We don’t have to be as restrictive as prior decisions report the basis but we think it’s pretty good.”

    Anyhow, we shall follow that as a local law.

    Can you entertain that hypothesis?

    I can entertain it.

    I find it difficult to believe that any state would deny its own citizens’ access to —

    (Voice Overlap) —

    Maurice Rosenfield:

    But I will entertain that hypothesis.

    Yes, sir.

    All right.

    Maurice Rosenfield:

    My question then is a — a diversity case hearing in (Inaudible) this is Illinois.

    Does that Illinois rule control that diversity litigation or is a plaintiff like you in a position to say, “No, we’re in the federal court.”

    According to the Supreme Court’s decision it is enough that we’ve got the exact circumstances in the International Shoe, and therefore, it’s going to debar.

    That’s the real question you want to raise it.

    Felix Frankfurter:

    Yes.

    Now —

    Maurice Rosenfield:

    Yes, sir.

    Felix Frankfurter:

    — think of that point.

    Maurice Rosenfield:

    That point I would say that what Illinois has done is announce a rule of forum non-convenience, announce its version of a rule of forum non-convenience.

    Since under the rule you mentioned, Mr. Justice, it is not dismissing on the merits, but deciding where this case ought to be tried within — within the judicial system.

    That is the idea of forum non-convenience.

    The federal courts have their own view of forum non-convenience as codified in 1404 (a), regulating the same question.

    There is no difference in test.

    The test is one of fairness, decency, justice.

    I assume Illinois’ rule of forum non-convenience would be in those terms, convenient to the parties and witness — witnesses.

    That is the rule.

    That is the — that is exactly what is served by 1404 (a) of the Judicial Code.

    Felix Frankfurter:

    What would you say — what would you say to what this Court has said to become pretty debarred of what Erie-Tompkins mean if you — to be drawn out of the state court.

    You can’t stay in the federal court or the State out of which you would be going on.

    Maurice Rosenfield:

    But when you have said that you’ve — you’ve done it in cases dealing with discrimination between a residence and non-residence, accidental results depending upon diversity.

    These cases always involve diversity conditions.

    There is no element of discrimination, whatever, and there is no — and that has nothing to do with the merits of the case.

    Felix Frankfurter:

    Well, except – except of Illinois plaintiffs suing this alleged in of what they infringed as unfair competition.

    Maurice Rosenfield:

    Yes.

    Yes, sir.

    Felix Frankfurter:

    And an Illinois person doing an Illinois corporation couldn’t do it.

    Maurice Rosenfield:

    Not because —

    Felix Frankfurter:

    (Voice Overlap) what the out-of-state, the out-of-state plaintiff having advantage of the in-state plaintiff, would be denied.

    Maurice Rosenfield:

    This always involved diversity conditions between a local citizen and a foreign corporation.

    Now, when you have both elements —

    Felix Frankfurter:

    One must —

    Maurice Rosenfield:

    Well, if you have — if you have a — a non-resident plaintiff and a non-resident corporation, you have an order to give a different question.

    You have there a question, a real question of forum non-convenience.

    Is Illinois the proper forum here?

    Did the cause of action arise here?

    Neither the parties are Illinois citizens.

    That is a pure question of forum non-convenience.

    That’s not what we have here at all.

    Felix Frankfurter:

    New York doesn’t have —

    Maurice Rosenfield:

    We have a contest here.

    We have a contest here of an Illinois citizen against the foreign corporation, and I am suggesting that the case of an — of a state citizen against the foreign corporation is an easy one for state policy, that no state would ever deny its own citizens access to its courts.

    Stanley Reed:

    Well, this — this Illinois citizen could go to the State of the residence of the foreign corporation —

    Maurice Rosenfield:

    It could.

    Stanley Reed:

    — and be in federal court?

    Maurice Rosenfield:

    It could, sir.

    Stanley Reed:

    Why should this go just as much as the foreign corporation should come to him?

    Maurice Rosenfield:

    Because when a foreign — you mean you’re raising the question of a distinction with — to the Woods case?

    Stanley Reed:

    There’s no — there’s no distinction.

    Maurice Rosenfield:

    In the Woods case, at least there was a high probability that the local citizen as a defendant was not suable anywhere else.

    This — in this particular case, we know if a foreign corporation is suable at least that it’s domicile and perhaps other places as well.

    Furthermore, there was a strong policy involved.

    In the – in the Woods case, the strong policy was the policing of the state qualification laws.

    There was no strong policy here.

    There is no state policy at all to leading, to throwing out an – a local citizens in the State’s own courts.

    Stanley Reed:

    How — how do you distinguish the Ragan case?

    Maurice Rosenfield:

    The Ragan case related to the cause of action.

    The Ragan case was tied in substantively to the length of the cause of action.

    There’s nothing substantive here.

    No state has ever been known to dismiss one of these cases with — with prejudice around the merits.

    Earl Warren:

    Mr. Rosenfield, your time has expired, but your entire time was taken up answering questions.

    Earl Warren:

    If you should like five minutes more to summarize, you may — you may do so.

    Hugo L. Black:

    Would you mind now stating, if you don’t mind, the facts on which you say there was sufficient context in the State under the federal rule to justify the trial in this case?

    Maurice Rosenfield:

    Mr. Justice, this case involved a trade name, which was used and created in the State of Illinois, that’s the plaintiff side of it.

    The defendant used this trade name in an — in an acoustical department.

    These were — the trade names were used as related to acoustical doors.

    The acoustical department, the defendant’s business was headquartered in Illinois.

    That was its main headquarters.

    It solicited business from those headquarters throughout the country, not only in Illinois, but everywhere.

    Sales manuals and literature went from this office all over the country.

    The representative of the company in charge of that office knew more about acoustics.

    Hugo L. Black:

    Where was that, in Illinois?

    Maurice Rosenfield:

    In Illinois, yes, sir.

    Hugo L. Black:

    But what is the argument that it was not —

    Maurice Rosenfield:

    The argument is —

    Hugo L. Black:

    — “present” in Illinois —

    Maurice Rosenfield:

    The argument is based —

    Hugo L. Black:

    — so as to justify a suit against him?

    Maurice Rosenfield:

    The argument, sir, is based entirely on the point that the sales blanks, the sales orders had a provision on the reverse side requiring acceptance at the home office.

    This is a trivial thing.

    It’s — it’s a routine clause found in stationary — found in blanks that are purchasable in stationary stores any place which illustrates the manipulability of this kind of a defense that is —

    Hugo L. Black:

    Between the agents, what did it have in Illinois?

    Maurice Rosenfield:

    It had an office with — as I remember it, one agent in charge, perhaps several other employees.

    Hugo L. Black:

    Did they live in Illinois?

    Maurice Rosenfield:

    They lived in Illinois.

    Hugo L. Black:

    They worked from that office?

    Maurice Rosenfield:

    They worked from that office.

    Hugo L. Black:

    Out in the State of Illinois?

    Maurice Rosenfield:

    Out in the State of Illinois and everywhere, not just soliciting orders in Illinois but everywhere.

    They were the acoustical department of this business.

    And where so —

    Hugo L. Black:

    And you say that was the headquarters of the (Voice Overlap) —

    Maurice Rosenfield:

    The headquarters of the acoustical department and this whole problem involved —

    Hugo L. Black:

    Nationally?

    Maurice Rosenfield:

    I beg your pardon?

    Nationally —

    Hugo L. Black:

    Nationally, that was the headquarters?

    Maurice Rosenfield:

    — the headquarters.

    Hugo L. Black:

    The evidence showed that?

    Maurice Rosenfield:

    The evidence shows that.

    May I point to page 149 of the record?

    Earl Warren:

    The literature of the company shows that did it not?

    Maurice Rosenfield:

    The literature of the company itself.

    If you will look at the bottom of page 149, sir, you’ll observe from the bottom of page 149, the acoustical department is noted, is located at 75 East Wacker, Chicago, Illinois.

    Hugo L. Black:

    Is there any dispute about that that they denied that that was the truth, the statement of (Voice Overlap) —

    Maurice Rosenfield:

    There has been no denial that’s the truth.

    It’s brought out in the depositions.

    Hugo L. Black:

    So that you have this company which is the national headquarters in Chicago, Illinois.

    Maurice Rosenfield:

    The — the headquarters of its acoustical department —

    Hugo L. Black:

    Of the —

    Maurice Rosenfield:

    — its acoustical division.

    Hugo L. Black:

    — acoustical department?

    Maurice Rosenfield:

    Now, the acoustical division is not —

    Hugo L. Black:

    And you have — you have a lawsuit about the acoustical department?

    Maurice Rosenfield:

    It’s — that’s exactly what the lawsuit —

    Hugo L. Black:

    And the Court has nevertheless held it was not doing business there?

    Where does it say it was doing business?

    Maurice Rosenfield:

    At Neenah, Wisconsin, its home office.

    Stanley Reed:

    Where — where did you first raise this federal question, in the Court of Appeals?

    Maurice Rosenfield:

    The District Court overruled —

    Stanley Reed:

    (Voice Overlap) —

    Maurice Rosenfield:

    Yes, the District Court overruled the motion in its entirety.

    Stanley Reed:

    Yes.

    Maurice Rosenfield:

    The Court of Appeals reversed on Illinois grounds.

    Stanley Reed:

    And you raised it —

    Maurice Rosenfield:

    We raised it.

    Stanley Reed:

    — when you came here?

    Maurice Rosenfield:

    Yes, sir.

    And the Illinois court — the Illinois Court of Appeals is on record —

    Stanley Reed:

    It wasn’t — it wasn’t argued in the Illinois’ court?

    Maurice Rosenfield:

    It was — the whole point, the whole issue of doing business was a minor issue in the briefs before the Illinois Supreme Court.

    And the Illinois Supreme Court was on —

    Stanley Reed:

    (Inaudible)

    Maurice Rosenfield:

    That before the Circuit Court of Appeals.

    Stanley Reed:

    What it had been?

    Because you were out, weren’t you?

    Maurice Rosenfield:

    No, we were in.

    The District Court had agreed with us.

    Stanley Reed:

    Oh, the District Court agreed with you?

    Maurice Rosenfield:

    Agreed and has overruled the defense.

    Stanley Reed:

    It first came up in the Court of Appeals?

    Maurice Rosenfield:

    That is right, sir.

    Felix Frankfurter:

    Mr. Rosenfield, I — I don’t want to be pressing you but I must act before this hypothesis that you’re wiling intellectually to entertain but might be difficult, in fact, to agree.

    Now, if Illinois, if Illinois make the rule which was generated by the constitutional decisions of this Court, the local law, assume that was a local law, then we reach now to the question of whether that’s Erie-Tompkins or whether —

    Maurice Rosenfield:

    Yields to 1404.

    Felix Frankfurter:

    Yes.

    Do you remember the case — do you recall a case of this Court, People against Commissioner or the other way around in which this Court said that — what the Court of Appeals says is Illinois law, is Illinois law as far as making decisions?

    Maurice Rosenfield:

    Yes.

    Felix Frankfurter:

    Now, what do you say if – if I obedient to decision of this Court says, “Well, that is (Inaudible) to know more about their divorce of Illinois law.

    And therefore, I must be obedient to what they tell me is Illinois law.”

    Maurice Rosenfield:

    Well, may I point out to you —

    Felix Frankfurter:

    How do you get me out of that problem?

    Maurice Rosenfield:

    It is more, sir, than a question of Illinois law.

    It is a question of technique under the Erie rule.

    That is, do you, under the Erie rule, mechanically look to any decisions of the State of Illinois?

    Is there no craftsmanship, no technique involved?

    Just an examination in the state law, find the case, and if it not been changed by the Supreme Court of Illinois and regardless of its grounds, you follow it.

    That is not only a question of the application of Illinois law.

    It is also a question of technique under the Erie rule.

    Felix Frankfurter:

    Will you forgive me for saying I think I understand your argument but how did it help to get me out of the box?

    Maurice Rosenfield:

    Well, isn’t it — the Court of Appeals didn’t do that at all.

    It didn’t evaluate.

    It didn’t evaluate Illinois decisions.

    Felix Frankfurter:

    It said — but it said that the latest in all those pleadings to this case is Bull & Company and Boston & Maine.

    So, does that mean you suggest you thought of Bull & Company and see whether I can, in good conscience, interpret that decision to be an expression of Illinois law under influence and uncontrolled by a federal law?

    And if it is and it is a federal law, and if it isn’t then you suggest for some reason or rather in connection to both the Court of Appeals didn’t pay no attention to International Shoe?

    Maurice Rosenfield:

    It stopped with a decision of the Illinois — of the Illinois court which I thought was applicable without evaluating how the Illinois courts would decide the question today.

    Thank you, sir.

    I thank you.

    Earl Warren:

    Mr. Fox.

    David A. Fox:

    May it please the Court.

    I do not care to dwell on the factual situation, but Mr. Justice Black has inquired concerning the situation in Illinois and the matter of this defendant’s activity there.

    It is true that a piece of literature which is in exhibit and which is in the record designates the Chicago office of the defendant as the acoustical department.

    But the record is unusually complete in this matter.

    Unusually complete whereas question of this sort is raised on a preliminary motion and the record shows what the activity was actually in Illinois.

    They had an agent, a Mr. Hydeman, who was the agent who solicited orders to be forwarded to Neenah, to be filled there.

    In connection with that, he sold all the products of this defendant company, both acoustical doors and a great deal of wood mill work beyond the acoustical doors.

    Hugo L. Black:

    Suppose some — suppose some of them were sold in Missouri and some in Montana, I don’t know what states it reached, and some in New Mexico.

    Would it go back to the Chicago office?

    David A. Fox:

    As an actual process of the manner of soliciting this business, contractors, builders, owners of projects, which require building materials, were persuaded to include such doors in their specifications.

    And ordinarily, the salesman didn’t get an order.

    David A. Fox:

    The orders were placed directly with Neenah, Wisconsin.

    Once the person with responsibility it was to repair the specification, had decided to introduce that product into the plan.

    And as a matter of fact, we didn’t use any printed form and it didn’t say anything on the back of it because we didn’t have any — all of the orders were placed on stationary that the customer furnished.

    His order —

    Hugo L. Black:

    Well, what did the —

    David A. Fox:

    — or they purchased order.

    Hugo L. Black:

    What did the Chicago acoustical department do?

    David A. Fox:

    As far as the Chicago acoustical department did, it solicited orders for both acoustical doors and for all kind of doors.

    Hugo L. Black:

    Where?

    David A. Fox:

    In the State of Illinois and over a considerable territory.

    Hugo L. Black:

    And where?

    David A. Fox:

    And over a considerable territory —

    Hugo L. Black:

    What territory?

    David A. Fox:

    It extended as far down as Texas.

    The territory varied at times and as far east as New England.

    Hugo L. Black:

    Well, then —

    David A. Fox:

    And —

    Hugo L. Black:

    Then, it was in charge of the — or the company of sending out to get business in all those states, probably 25?

    David A. Fox:

    I would say that it might have reached that number at times.

    It was a part of a total territory which was served by other agents of the company as well.

    And as far as being a — an acoustical department, it was from the standpoint of solicitation of business only.

    We did — there was no manufacturing facility, no stock of goods, no facility —

    Hugo L. Black:

    But what they had is the solicitation department for the acoustical department?

    David A. Fox:

    No, indeed.

    This man was a subordinate employee.

    There was a sales manager or there was an executive officer of the company that supervised that activity at Neenah.

    So that the — because the origination of this designation in the literature of this acoustical department was that we had a subordinate here who became, as Mr. Rosenfield had told you, quite well advised in acoustical matters.

    He knew more than his superiors did in certain phases of that.

    The —

    Earl Warren:

    How long had he been —

    David A. Fox:

    He’d been merely —

    Earl Warren:

    — in that capacity?

    David A. Fox:

    He’d been in — he had been with the defendant company for 30 years more or less, approximately.

    Hugo L. Black:

    Where was he doing business?

    David A. Fox:

    Pardon?

    Hugo L. Black:

    Where was he doing business?

    David A. Fox:

    As far as the business that he did was concerned, it was done in Chicago, obviously.

    Hugo L. Black:

    Is that where he live?

    David A. Fox:

    He lived in Chicago.

    Hugo L. Black:

    And he’s directed and required him to be there by the company?

    David A. Fox:

    Yes.

    That’s —

    Hugo L. Black:

    And all the business he did for the company he did there?

    David A. Fox:

    Yes.

    Hugo L. Black:

    And in part of his business was to solicit business in about 25 states?

    David A. Fox:

    Yes.

    Hugo L. Black:

    Do you say that is not sufficient context under what Washington did?

    David A. Fox:

    No, indeed, Your Honor.

    I would say that if the Illinois rule was coincident with the International Shoe case, it wouldn’t be the slightest question and I wouldn’t be here today —

    Hugo L. Black:

    (Voice Overlap) —

    David A. Fox:

    — arguing this matter.

    Hugo L. Black:

    You claim that —

    David A. Fox:

    And I think —

    Hugo L. Black:

    — Illinois has a rule of its own and you rest on that?

    David A. Fox:

    I — that I —

    Hugo L. Black:

    You do not rest on the fact that they were not present within the meaning of the Washington case?

    David A. Fox:

    No, indeed.

    Felix Frankfurter:

    You say — do I infer that if the International Shoe case governed and there was doing business?

    David A. Fox:

    There was adequate presence under International Shoe —

    Felix Frankfurter:

    Maybe your position —

    David A. Fox:

    — and I dont’t argue the point at all.

    Felix Frankfurter:

    — maybe your is that Illinois has a local rule narrowly than International Shoe will permit.

    David A. Fox:

    Precisely.

    Felix Frankfurter:

    And what is your — what is — how would you document that?

    How would you – what are the cases that you involve for that statement?

    David A. Fox:

    The Bull case and the Burroughs case.

    And there, Your Honor asked a question which I believe should be answered here, what is the most recent?

    1931 is the answer to that question.

    Now, although there is a great deal of water under the bridges since 1931 as we’ve heard mentioned here today, there isn’t —

    Felix Frankfurter:

    Including — including International Shoe?

    David A. Fox:

    Including International Shoe and International Shoe such what I call the floor and then they indicates that the ceiling is some finite and perceptible distance above the floor if the State chooses to put the ceiling there.

    Now, I believe the State of Illinois has not chosen to press that ceiling against the floor that there is a perceptible and a substantial space.

    Felix Frankfurter:

    And that’s your position implies as it is or carries with it your test for the establishment that those Illinois cases did not depend on what they call was the requirement of due process and expounded by this Court.

    David A. Fox:

    I think that’s right.

    And I think that the answer to that is that the Illinois cases and the place where the language occurs which Mr. Rosenfield has mentioned as in this Pembleton versus Illinois Commercial Men’s case I believe.

    And there, if a problem that was before that court was whether, not the State of Illinois but I believe it was a State in Nebraska had gone below the floor, so to speak, that was then defined in the decisions of this Court.

    Sherman Minton:

    Didn’t the question —

    David A. Fox:

    It wasn’t — pardon.

    Sherman Minton:

    Pardon.

    Go ahead.

    David A. Fox:

    I said the peculiarity of that decision was that you had an Illinois court interpreting a Nebraska law.

    And it pointed out —

    Stanley Reed:

    You’re talking about International Shoe?

    David A. Fox:

    No, this is Pembleton versus Illinois Commercial Men’s case.

    It was pointed out there that the State of Illinois and Nebraska too had to give heat to this lower limit which there I refer to as the floor.

    And it was that that was referred to and not the opposite because the question in that case was whether a judgment obtained in the State of Nebraska could be enforced in the State of Illinois where the jurisdictional facts did not satisfy that then existing recognized requirements as to due process.

    Felix Frankfurter:

    But why if a state goes beyond what you have to call the floor, why would it be bothering to say that it must give heat to the floor when it goes deep, can go beyond it and does go beyond it?

    What’s the relevance in these Illinois cases?

    Are there reference to the compulsive duty to follow this Court if they don’t have to follow defies having a ceiling above of them.

    David A. Fox:

    I was trying to – perhaps, I did not make a claim that that language which occurs in those Illinois decisions when they were attempting to locate the floor, not the ceiling.

    David A. Fox:

    They were coping with the question of whether a state had gone beyond what was permissible under the Constitution to take jurisdiction of a defendant.

    That’s the point I was attempting to make, is that you cannot apply that language too freely to the question of whether the State might choose to have a gap between the two requirements.

    Felix Frankfurter:

    I have no doubt it would, myself, speaking for myself.

    I have no doubt it could.

    I have difficulty, however, in trying to explain state cases which could go beyond riding in an atmosphere which indicates that they must be awfully observant not to go beyond.

    David A. Fox:

    Well, I am not able to add logic and reason to any such observation if it was made.

    I — I would say that the State can go beyond, and that they have practically all of them gone beyond.

    There’s very few who have not on this question of doing business, and I would say this.

    Hugo L. Black:

    Have you — those cases cited which specifically state that they’re going better than they think they have to be in the brief?

    David A. Fox:

    No, indeed.This is a —

    Felix Frankfurter:

    (Voice Overlap) —

    David A. Fox:

    This is a theoretical argument.

    I do not know the decision, Mr. Justice Black that holds such a thing.

    Felix Frankfurter:

    The International Shoe is very – merely 10 years old.

    David A. Fox:

    1948.

    Sherman Minton:

    Well, isn’t the question here whether or not the federal court has jurisdiction of you personally?

    David A. Fox:

    I would say no.

    It was not a question of jurisdiction.

    Sherman Minton:

    What is it?

    David A. Fox:

    It’s a question of venue and there isn’t —

    Sherman Minton:

    Is that a question of venue?

    David A. Fox:

    Yes.

    Sherman Minton:

    Is that a question — is that a question of Illinois law?

    David A. Fox:

    It’s a question of federal statute and I wish to point out that this matter is brought here.

    Sherman Minton:

    If it’s a question of venue, it must be a procedural question.

    Certainly, Erie versus Tompkins wouldn’t apply to that.

    David A. Fox:

    I would say that it’s an affirmative —

    Sherman Minton:

    And that the federal law would —

    David A. Fox:

    — affirmative question if it’s procedural without that aspect that would be true, but we have a section of the statute to be construed and I’m in complete disagreement with my opponent here as to the applicable statute.

    I say it is Section 1391 (c) and that Section states, “A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business.

    David A. Fox:

    And such judicial district shall be regarded as the residence of such corporation for venue purposes.”

    Now, the federal jurisdiction in diversity situations as well in — as in federal question cases, being founded as it is on the Constitution is such that if Congress had so intended, it had the power to grant nationwide jurisdiction of all classes of litigants to each and every District Court, Federal District Court.

    Now, Congress saw fit to specify the geographical locations of term of residents or litigants where these cases should be brought, and it would be to deny the scope and effect of this broad federal jurisdictional power, rather than to strengthen it to say that Congress didn’t have the right to make that decision.

    And in this instance, we have a section of the statute which is directly applicable that says, “A corporation can be sued where it’s incorporated,” and that is directly a question of state law as to be ascertained in that fashion only where it is licensed to do business, which is also a question of state law to be ascertained and like other or where it is doing the business.

    And at the time of the enactment of that section of the statute which is a part of the Judicial Code, which came into being in 1948, and I believe Mr. Justice Frankfurter and Mr. Justice Douglas were on the Committee, conferred the connection with that thing, and no doubt perhaps even gave attention to this particular part of the enactment.

    The phrase, “doing business” had a very definite specific technical meaning, which had been acquired in the light of these state rules.

    Now, let’s say the state rules had been abducted under a misapprehension —

    Earl Warren:

    What was that — what was that special meaning, “doing business?”

    What was that special meaning?

    David A. Fox:

    It meant that degree of activity which each individual state decided without contravening the due process requirements of the Constitution was sufficient for their purposes to take jurisdiction of a formed corporation.

    Earl Warren:

    Now, what — what direct authority do you have on that point?

    David A. Fox:

    The only authority I have on the point is through a reason.

    Here was a phrase having the existing technical meaning throughout the bar and throughout the decisions relating to the subject.

    In 1948, where this carefully worked over provision of the Judicial Code employs it.

    There had been no comprehensive revision of the code since 1911, and a great deal of attention was applied in bringing that up to the best standards possible, and Congress drew on every source available and had a great deal of assistance.

    Now, I have been able to find nothing in a way that debate would indicate that, but certainly, we come here now and say, “Is there a superimpose on this rule?”

    Is there a superimpose over the rules of the states, a broad general definition of doing business?

    I say no.

    If Congress had meant and had intended that a corporation, a foreign corporation under the circumstances such as we have here was to be subject to jurisdiction of the federal courts from the basis of the test of International Shoe, it would have been a very simple matter to say so in the legislation.

    Earl Warren:

    How would they have said that in your opinion?

    David A. Fox:

    Prior to 1948, there was somewhat of an enigma in the law.

    Corporations had not been mentioned at all in connection with this type of legislation.

    Everything was phrased in terms of natural persons and everything was made dependent upon the decision of law which had been developed and first granted a corporation, the equivalent of citizenship.

    Finally, it had been elaborated into the question of residents and finding to the question of whether it could migrate.

    Now, if we are to search for a meaning for the phrase, I’d say we have to take it against that background.

    And the background had fully evolved then, had developed a meaning for the term which is specific in each state and quite definite there.

    Now, as I say, need we investigate under what misapprehension the State may have adapted the rule if the rule is satisfactory to the State?

    And many very advantageous provisions no doubt are in the law and are retained in the law today in spite of the fact that their origin might be open to some criticisms such as been made here in this question.

    Felix Frankfurter:

    To what extent —

    Earl Warren:

    We’ll — we’ll recess now.

    Earl Warren:

    That’s half an answer to my question though.