248 F.

2d 833

BERTHA BUILDING CORPORATION, Plaintiff-Appellant,

v.
NATIONAL THEATRES CORPORATION, DefendantAppellee.
GUMBINER THEATRICAL ENTERPRISES, Inc., PlaintiffAppellant,
v.
NATIONAL THEATRES CORPORATION, DefendantAppellee.
No. 329.
No. 330.
Docket 24253.
Docket 24254.

United States Court of Appeals Second Circuit.

Argued May 9, 1957.
Decided September 10, 1957.
On Rehearing November 7, 1957.

Boris Kostelanetz, New York City (Corcoran, Kostelanetz & Gladstone,

Arthur Karger, Theodore E. Gladstone, and Francis J. Mulderig, New
York City, on the brief), for appellants.
Frederick W. R. Pride, New York City (John F. Caskey, Dwight, Royall,
Harris, Koegel & Caskey, Charles F. Young and Stanley Godofsky, New
York City, on the brief), for appellee.
Before HAND, CHASE and HINCKS, Circuit Judges.
HINCKS, Circuit Judge.

These are appeals by the plaintiffs from judgments of Judge Galston,

dismissing the complaints in two actions to recover treble damages under the
Sherman Act, 15 U.S.C.A. 1-7, 15 note. The only question presented is
whether the actions were barred by the Statute of Limitations. In that
connection, the crucial question is this: Was it proper for the judge instead of a
jury to decide whether the defendant could have been sued in the Southern
District of California between July 20, 1935 and July 20, 1938? This is critical
because upon it depends the question whether the actions were barred by the
Statute of Limitations when they were commenced in the Eastern District of
New York on September 5, 1951; and why this is true appears from the
following facts.
2

The Sherman Act, even after its amendment by the Clayton Act in 1914, deals
with the Statute of Limitations only in 5 of the second Act, 15 U.S. C.A. 16,
which provides that the period during which a suit in equity, brought by the
United States, shall be pending shall toll the running of the statute as to "every
private right of action * * based * * * on any matter complained of in said suit."
Concededly such a suit was pending from July 20, 1938, until September 5,
1951, when these actions were begun. Except for this the law of New York
controlled, and 48(2) of the Civil Practice Act of that state fixes six years as
the period of limitation for an action "to recover upon a liability created by
statute." Were this the only relevant section, the action of Gumbiner Co., in
which the alleged damages were all suffered before Dec. 8, 1931, would have
been barred in spite of 5 of the Clayton Act, but the action of the Bertha
Building Corporation in which the damages did not end before July 4, 1935,
would not have been. However, 13 of the New York Civil Practice Act
provides that when a claim "arises outside of this state, an action cannot be
brought in a court of this state to enforce" it "after the expiration of the time
limited" by the law of the state where the claim arose, and since the claims at
bar arose in California, the law of that state controls: i. e., 351 of the
California Code of Civil Procedure. This provides that, if the obligor of a
liability is "out of the State" when it "accrues * * * the time of his absence is
not part of the time limited for the commencement of the action." It is the
defendant's position that it was not "out of the State" during the three years (the
period of limitation in California), before July 20, 1938, because during all that
time the plaintiffs could have sued it in the Southern District of California. If
this was an issue properly tried to a judge, instead of to a jury, we all agree that
Judge Galston's findings were not "clearly erroneous," so that at long last the
outcome turns upon the answer to the crucial question posed in the opening
paragraph of this opinion.

If the issue were one of whether the venue in each, or either, of the instant suits
was proper we should agree that no jury question was presented; for it is clear

that a judge may take that issue from a jury when it arises at a trial and decide
it himself just as he might have done had it been raised before trial. But though
decision as to whether these suits are barred by the statute depends upon
whether National could have been sued by these plaintiffs in California before
the California statute of limitations had run, and so comes down to a question of
venue in respect to each of such supposititious suits, the critical issue in the
instant actions remains whether the statute bars the suits. That issue is not to be
treated as merely one of venue. A determination of this defense has a reach and
a finality not inhering in any decision as to venue. For if the defense of the
statutory bar is sustained, the resulting judgment of dismissal operates as a final
adjudication of the merits of the controversy: a decision as to venue, however,
of course leaves the plaintiff free thereafter to seek an adjudication on the
merits of his claim. Fed.Rules Civ. Proc. rule 41(b), 28 U.S.C.A.
4

Inherent in that issue is the resolution of disputed questions of fact in volving

decision as to the credibility of witnesses and the need to weigh the evidence of
National to the effect that it was doing business in the Southern District of
California, now that it is to its advantage to take such a position, against its
repeated allegations to the contrary in prior suits brought against it when it was
to its advantage to take a stand diametrically opposed to what it is now
attempting to prove. And it should not be forgotten that decision must be made
in the light of fact findings as to many matters peculiarly within the knowledge
of those in charge of the affairs of National during the critical period; and an to
many occurrences which may seem to have chameleonic attributes when
interpreted, or explained.

The burden is, of course, on National to establish its affirmative defense of the
limitation statute. Pieczonka v. Pullman Co., 2 Cir., 102 F.2d 432. And when
the plaintiff has made out a prima facie case of absence from the jurisdiction
the burden is on the defendant to show that such absence has not tolled the
running of the statute. Banister v. Solomon, 2 Cir., 126 F.2d 740.

Antitrust suits like these are triable as of right by jury if a party demands one.
Ring v. Spina, 2 Cir., 166 F.2d 546. And if National's affirmative defense based
on the statute of limitations tendered genuine issues of fact, they were also as of
right triable by jury. Jelliffe v. Thaw, 2 Cir., 67 F.2d 880; Chambliss v.
Simmons, 5 Cir., 165 F. 419. Applicable, to be sure, is the rule that when the
evidence is so one-sided that reasonable men would not differ as to the facts
proved, the judge may take the issue from the jury, but we do not regard the
evidence in this record in that category even without the admissions of
National. However that may be, its admissions that it did no business in
California and had no agents there during the relevant period should, we think,

make it perfectly clear that there were genuine issues of fact which could not
properly be taken from the jury: that it was erroneous to refer such issues to
Judge Galston for trial without a jury.
7

We would hold further that the dismissal below cannot be sustained as one
properly ordered on the pleadings. This was an alternative ground on which the
order appealed from was based.

Apparently Judge Galston thought that proof that National prior to 1938 was a
member of a conspiracy which was injuring the plaintiffs within California
(proof essential to a recovery) would necessarily mean that National was
"transacting business" in California within the meaning of 12 of the Clayton
Act and hence was entitled to prevail in its defense of the statute of limitations.
In other words, he apparently thought that a fact essential to the proof of the
claim also proved a defense to the claim. That analysis has indeed a superficial
plausibility.

Admittedly, it is hard to see how a finding that National was not transacting
business in California (without such a finding the plaintiffs cannot escape the
defense of the statute) can square with a finding that National was part of a
conspiracy which caused injury to the plaintiffs in California (without which no
recovery can be had on the complaint). However, the apparent conflict between
those findings can perhaps be solved by ascertaining which of the numerous
alleged co-conspirators are proven to be such, if any, and the relationship which
exists between each of them and the plaintiffs. Not until this is done, do the
cases interpreting 12 of the Clayton Act [15 U.S.C.A. 22] become relevant.
The most recent Supreme Court discussion of this problem occurs in dictum in
Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed.
106, where Justice Frankfurter dissenting on another point observes that coconspirators "as such" are not "agents" for purposes of venue.

10

We cannot bring ourselves to accept the suggestion in Giusti v. Pyrotechnic

Industries, 9 Cir., 156 F.2d 351, that because of the presence within the
jurisdiction of one co-conspirator all foreign corporations which are alleged to
be co-conspirations are amenable to process. We think such doctrine inherently
unsound and in conflict with the later pronouncement in Bankers Life, supra.
The best discussion of the problem is in Independent Productions Corporation
v. Loew's Inc., D.C.S.D.N.Y.1957, 148 F. Supp. 460. We agree fully with the
rationale and holding of Judge McGohey's opinion in that case. Thus it is
conceivable that the proofs may be such that a finding that National had no
agents in California and acting independently had transacted no business there,
and thus has not sustained its statutory defense, is not necessarily in conflict

with a finding that it conspired with others to cause injury to the plaintiffs in
California. The validity of a plaintiff's verdict, if one shall be returned, cannot
be assessed until all the evidence is in.
11

Reversed and remanded for a jury trial of the issue raised by the defendant's
plea.

12

HAND, Circuit Judge (dissenting).

13

If these plaintiffs had sued the defendant within the period from July 20, 1935
and July 20, 1938, and the defendant had moved to dismiss the actions, as it did
move on several other occasions, although the judge who heard the motion
might have himself decided all issues of fact, he would have been free in his
discretion to refer them to a jury, either upon a trial of that issue alone, or of the
whole case. Rule 12(b) of the Federal Rules of Civil Procedure provides that
among the defenses that a defendant may raise by motion is "improper venue,"
and Rule 43(e) provides that on any motion the court may hear the matter on
affidavits, or "may direct that the matter be heard wholly or partly on oral
testimony or depositions"; and there can be no doubt that this provision is
constitutional. In a case depending upon the party's residence, the Supreme
Court said: "* * while the court might have submitted the question to the jury,
it was not bound to do so; the parties having adduced their testimony, pro and
con, it was the privilege of the court, if it saw fit, to dispose of the issue upon
the testimony which was fully heard upon that subject." Gilbert v. David, 235
U.S. 561, 568, 35 S.Ct. 164, 166, 59 L.Ed. 360. Earlier in Wetmore v. Rymer,
169 U.S. 115, 121, 18 S.Ct. 293, 296, 42 L.Ed. 682, where jurisdiction
depended upon the amount in controversy, it said: "* * it would appear to have
been the intention of Congress to leave the mode of raising and trying such
issues to the discretion of the trial judge." See also Lehigh Valley Coal Co. v.
Washko, 2 Cir., 231 F. 42, 46. However, although the judge in an action during
the critical period would have been free to dispense with a jury, I do not see
how we can say that he would have done so, and, since the defendant has the
burden of proof on the issue of the statute of limitations, it failed to prove that
the issue whether the defendant was "transacting business" in California would
have been tried to a judge. I agree, therefore, with my brothers that Judge
Rayfiel's order was wrong. Hence it follows that, if on the evidence before
Judge Galston, a jury in an action brought in California might have found that
the defendant had not "transacted business" in that state, the plaintiffs at bar
were entitled to a verdict.

14

However, it seems to me that as on the evidence here at bar Judge Galston

would have been bound to direct a verdict for the defendant if the case had been

tried to a jury, Judge Rayfiel's error is immaterial. In short, I think that the
defendant proved beyond dispute that it had been "transacting business" in
California throughout the critical period. It will be necessary as a preliminary to
deal with the plaintiffs' agreement that, regardless of whether the defendant had
in fact been "transacting business," its denials that it had been in at least ten
actions brought against it in both state and federal courts constituted a "judicial
estoppel" against its present contradictory position. It is of course true that upon
the trial in the actions at bar any statements made by the defendant in its
pleadings and affidavits in other actions were competent evidence in favor of
the plaintiffs; but I can find no warrant for the theory that they created a
"judicial estoppel," except suggestions in one or two law reviews. Moreover,
since such a doctrine is plainly contrary to the underlying basis of the whole
doctrine of estoppel by judgment it is plainly without foundation. Judgment by
estoppel is not designed as a moral sanction against inconsistency: it does not
visit penalties upon those who take one position today and deny it tomorrow; it
is designed only to prevent a party who has, or has not, prevailed upon an issue
in an earlier action to vex the same antagonist with the same dispute in a later
one. The plaintiffs cite Houghton v. Thomas, 220 App.Div. 415, 221 N.Y.S.
630, to the contrary, but Mack, the party against whom the estoppel there
prevailed, although not a party to the earlier action, had been the attorney of one
of the parties, which the court held to be the equivalent itself a very doubtful
extension of the doctrine.
15

The only issue therefore is whether the evidence before Judge Galston was in
enough conflict to entitle the plaintiffs to a trial by jury. That makes it
necessary to decide what 12 of the AntiTrust Act means by "transacting
business." Section 7, 15 U.S.C.A. 15 note had allowed an action to be brought
in any district in which the "defendant resides or is found" and in the case of
corporations this became "often an insuperable obstacle" to any remedy.
Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 374, 47
S.Ct. 400, 403, 71 L.Ed. 684. The Supreme Court there held that in 12
Congress added the clause, "transacts business," in order to assist the
enforcement of the act by ridding actions of the web of refined decisions that
had been woven about the word "found." It made no attempt, however, to state
in general terms what constituted "transacting business" beyond saying (273
U.S. at page 373, 47 S.Ct. at page 403), that a corporation did so in any district
"if in fact, in the ordinary and usual sense, it `transacts business' therein of any
substantial character." However, the Court discussed the issue at length in
United States v. Scophony Corporation, 333 U.S. 795, 807, 808, 68 S.Ct. 855,
862, 92 L.Ed. 1091. In that case the defendant, a foreign corporation, had, as
here, "transacted business" by means of a subsidiary corporation whose
conduct it reserved the right to supervise and regulate. It is true that the issue

was whether that made the defendant "found" within the district where it was
sued, but since the Court held that it did, a fortiori, it was a ruling that the
defendant had been "transacting business" there. Therefore, it seems to me that
we can, and indeed must, take what was said as an authoritative gloss upon
12. The Court declared that the statute meant the "practical, everyday business
or commercial concept of doing or carrying on business `of any substantial
character'"; and that the amendment had substituted "practical, business
conceptions" in place of "the previous hair-splitting legal technicalities
encrusted upon the `found' `present' `carrying-on-business' sequence."
16

Judge Galston made very detailed findings that are too long and too many, to
quote, but I append numbers 10, 11 and 12, because these succinctly state the
facts that appear to me to be controlling. The plaintiffs object that these
improperly imputed to the defendant such or the described activities as took
place after the organization of a corporation, which the findings speak of as
"Agency": a wholly owned subsidiary whose officers were "in the main" the
defendant's officers. I rely upon the following language in United States v.
Scophony Corporation, supra, 333 U.S. at pages 814, 815, 68 S.Ct. at page 865,
which seems to me to make "Agency's" business "business transacted" by the
defendant: "The contracts created controls in Scophony, and in the American
interests as well, which taken in conjunction with the stock controls called for
continuing exercise of supervision over and intervention in American
Scophony's affairs. We need not decide whether, in view of the agreements'
continuing and persuasive effects, they could be considered as sufficing in
themselves to make Scophony `found' within the New York district. Whether
so or not, they set the pattern for a regular and continuing program of patent
exploitation requiring, as we have said, Scophony's constant supervision and
intervention."

17

I cannot see why this language does not apply almost literally, mutatis
mutandis, to the contract of December 2, 1935, between the defendant and
"Agency" along with which the defendant assigned to "Agency" the contract of
Skouras Brothers of June 13. Of course it is true that a jury might not have
believed the testimony offered by the defendant as to what was done under
these contracts, although they did not put in any evidence to contradict it.
Moreover, there might be a difficulty, if there had been no evidence that
"Agency" had ever acted under the contract. However, that the plaintiffs may
not assert, for it would cut the ground from under the complaints, which are
based upon acts of the defendant after the contracts had been made. Hence, if
the jury disbelieved the testimony of the defendant's witnesses as to what they
had done, they must assume that other persons committed the wrongs charged
in the complaints, and yet that they did not do so in performance of the contract

with "Agency," for that contract, if once in effect, set up a "program" of

"constant supervision and intervention"; and made the defendant "transact
business." Surely we are not warranted in treating seriously such a web of
dialectical fantasy.
18

The only evidence that the plaintiffs produced was the defendant's repeated
assertions that it did not do any business in California, and had no agents there.
Although, as I have said, these were indeed admissible against it, they
amounted to no more than statements of the legal result of whatever the
defendant had done, and they raised no issue as to the authority vested in the
Skouras Brothers by the contract of June 13, 1935, and in "Agency" thereafter.
Any conduct in California in performance of those contracts ipso facto made
the defendant "transact business" in that state, no matter how often the
defendant chose to deny that that had been the legal effect of what was done. I
need not therefore answer the argument that all parties to a conspiracy are not
mutual agents in the sense that what any one of them does is a "transaction of
business" of all the rest.

19

In conclusion it seems to me worth while to observe that, although the result of

my brothers' reasoning will indeed require the defendant to defend on the
merits actions arising under the AntiTrust Acts, toward which the Supreme
Court, especially of late, has shown particular favor, it does so at the expense of
a precedent of the greatest value to large corporations doing a wide interstate
business. I cannot see why, if what we are deciding is right, a corporation by
doing its local business through subsidiary corporations over whom it retains
supervisory control, will not compel those whom it may damage to sue in some
district where it can be "found," as distinct from any one in which it "transacts
business." If so, the whole purpose of the amendment to 12 will be defeated.

APPENDIX
20

"10. National Agency Corporation, a wholly-owned subsidiary of National, is a

Delaware corporation which was organized in 1935. The name of this company
was changed to National Theatres Amusement Co., Inc., and it was referred to
at the trial by both names. It is referred to in these findings as `Agency.'
Agency was organized to render certain services and perform certain activities
for National, which prior to the organization of Agency had been rendered and
performed by National. Agency qualified to do business in New York in
February, 1936, and in California in August, 1942. The same individuals were,
in the main, the officers of National and of Agency. The two companies
occupied the same premises.

21

"11. Agency entered into a contract with National on December 2, 1935, under
which Agency agreed to perform extensive services for National and its
subsidiaries. Under that contract Agency agreed to keep National fully
informed of all matters relating to the affairs and business of National and its
subsidiaries, including, with respect to the operating subsidiaries, the daily
results of theatre operations, profits and losses, cash position, nature of the
properties owned and changes therein and the general corporate set-up of all
such subsidiaries. Agency agreed to maintain National's books of account and
furnish other accounting services such as preparation of statistical information,
tax returns and similar matters. National agreed to pay Agency $3,000 per week
for the services rendered to and for it. Throughout all of the period from the
date of the contract in 1935 until the institution of these actions in 1951,
Agency performed services for National and its subsidiaries as provided in that
contract. Such services were performed in California and in New York and
elsewhere.

22

"12. The contract of June 13, 1935, between the Skouras brothers and National
was assigned to Agency on December 2, 1933. The assignment provided that
National, however, retained all its rights under its contract with the Managers.
The assignment contained the following provision: "`It is understood that
notwithstanding such assignment to you, we retain all our rights and privileges
under said contract, including, without limitation, the right to terminate the
same, and that by such assignment you receive only the rights to the services of
the Managers above referred to and the right to enforce performance thereof in
any way not inconsistent with our rights in such connection * * *.'

23

"Under the employment contracts with the Skouras brothers, National paid
their salaries until Agency was formed. After the organization of Agency, the
fixed salaries were paid by that company pursuant to the assignment from
National to Agency, but the portion of their compensation which was based
upon the profits of National was paid by National. The payments made by
Agency were made by it as the agent for National and for all purposes here
were the same as though made directly by National."

On Petition for Rehearing

24

PER CURIAM.

25

By its petition for rehearing the defendant, National, persuades us to amplify

and modify our original opinion and decision.

26

We are unmoved by the petitioner's contention that we were wrong in asserting

that a dismissal based upon a defense of the statute of limitations is an
adjudication on the merits. Warner v. Buffalo Drydock Co., 2 Cir., 67 F.2d 540,
which is cited in support of that contention, we think is distinguishable. And
moreover, it has been superseded by the clear mandate of Rule 41(b) of the
Federal Rules of Civil Procedure, 28 U.S. C.A. which in its last sentence
directly contradicts the holding of the Warner case. Although under the rule in
a proper situation the District Judge may specify that his order be without
prejudice, Judge Galston did not so qualify his order of dismissal.

27

We think, however, that National is right when it now urges that we failed to
consider the impact of the New York statute of limitations on the Gumbiner
cause of action. The Bertha cause of action arose in 1935 which was within six
years of the Paramount action. United States v. Paramount Pictures, D.C., 85
F.Supp. 881. Thus as to Bertha the six-year New York statute, Civil Practice
Act, 48(2), could not possibly have run and the crucial question was whether
the three-year California statute had run, as we correctly stated in the opening
paragraph of our original opinion. However, in the Gumbiner case there was
another question equally crucial, viz., whether the New York statute of
limitations had run. For the Gumbiner cause of action accrued on December 8,
1931. Thus if the New York statute was not tolled by National's absence, the
Gumbiner action was barred here in December, 1937. Section 13 of the New
York Civil Practice Act1 is alternative in operation: if the statute has run either
in California or in New York the suit is barred here.

28

Gumbiner argues that the New York law should determine whether in fact the
statute has been tolled. From this premise it asserts that under state law,
although National may have been amenable to process in New York, the statute
was nevertheless tolled during that period. This argument derives from an
analogy to an individual debtor who has hidden out in an obscure part of the
state under an assumed name. If a creditor can find him, such a debtor is
amenable to process: but while he is thus hiding the statute of limitations is
tolled. Gumbiner thus concludes that even if National was amenable to process
in New York, its presence was not open and notorious and on that account the
statute was tolled during the relevant period.

29

Even if New York law does determine tolling (a proposition we need not decide
in this case), this argument is fallacious. For the tolling statute (C.P.A. 19)2
during the relevant period had a subdivision (2), which declared, "Nor does this
section apply while a foreign corporation has had or shall have one or more
officers in the state on whom a summons for such corporation may be served."

On the record in this case that section was applicable: National did have
officers in the state. Gumbiner would read in a further requirement of open and
notorious conduct. But all of the New York cases cited in support of this
proposition are concerned with individual defendants, most of whom have just
entered the state or have just returned to it. Not one case applies an "open and
notorious" requirement to a foreign corporation otherwise amenable to process
throughout the statutory period. Indeed, in Mack v. Mendels, 249 N.Y. 356,
164 N.E. 248, 61 A.L.R. 386, Judge Lehman admonishes the courts construing
C. P. A. 19 to read it as the Legislature wrote it and not to imply further
requirements.
30

Gumbiner further urges that National was not amenable to process in New York
under either federal or state standards. We disagree. A careful review of the
evidence before Judge Galston on the question of whether the New York
statute was tolled has convinced us that, if the facts had been heard by a jury,
Judge Galston would have been required to set aside a plaintiff's verdict on this
issue. Even though the jury might have disbelieved every one of defendant's
witnesses, the documentary evidence recited in Judge Galston's findings was
overwhelming.3 Regardless of which standard is applied it is irrefutable that
National was amenable to process in New York during the relevant period.
United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091;
Pomeroy v. Hocking Valley R. Co., 218 N. Y. 530, 113 N.E. 504; see, also,
Chaplin v. Selznick, 293 N.Y. 529, 58 N.E.2d 719.

31

We now hold, therefore, that the Gumbiner action, since the New York statute
was not tolled by National's absence from New York or by its unpublicized
activity in New York, is barred and that the District Court's dismissal of that
action must be affirmed.

32

However, the majority of the court adheres to its holding that since the question
of tolling in California presents substantial fact questions the Bertha case must
be reversed and remanded for trial by jury on the limitations question.

33

Petition granted and our previous decision is modified to provide

34

As to the Gumbiner case, affirmed;

35

As to the Bertha case, reversed and remanded.

36

Circuit Judge HAND again votes to affirm both judgments for the reasons
stated in his earlier opinion and without passing on the opinion now rendered in

the Gumbiner appeal.

Notes:
1

Section 13 in pertinent part reads as follows:

"Where a cause of action arises outside of this state, an action cannot be
brought in a court of this state to enforce such cause of action after expiration of
the time limited by the laws either of this state or of the state or country where
the cause of action arose, for bringing an action upon the cause of action * * *."

The main paragraph of 19 in its present form reads:

"If, when the cause of action accrues against a person, he is without the state,
the action may be commenced, within the time limited therefor, after his
coming into or return to the state. If, after a cause of action has accrued against
a person, he departs from the state and remains continuously absent therefrom
for the space of four months or more, or if, without the knowledge of the
person entitled to maintain the action, he resides within the state under a false
name, the time of his absence or of such residence within the state under such
false name is not a part of the time limited for the commencement of the
action."

The following findings of Judge Galston were based solely on a stipulation and
on evidence corroborated by documentary evidence
"32. National's Board of Directors held all of its meetings in New York and
transacted its business there from 1930 to June, 1936. From June, 1936, to
January, 1944, the Board met in Jersey City, New Jersey. After January, 1944,
corporate meetings were again held in New York. All meetings of National's
Executive Committee were held in New York during the existence of such
Committee, i.e., from December 5, 1934, to January 3, 1936.
"33. National's agent, Agency, maintained an office from June, 1936, until the
date these actions were begun at 444 West 56th Street, N.Y., in space rented
from Twentieth Century-Fox. All officers of Agency had their offices at that
address from that time until Agency opened an office in Los Angeles in August,
1942. The Board of Directors of Agency met weekly in New York.
"34. From the date of its organization to the date of the institution of these

actions, Agency performed substantial and continuous agency services for

National and National's subsidiaries in New York. Agency maintained the
payroll for its own and National's employees, kept National's books of account
and performed in New York extensive supervisory, advisory, operating and
managerial activities and services for National and its subsidiaries which it had
agreed to perform under its contract of December 2, 1935, with National.
"37. National continuously maintained a bank account or accounts in New York
from 1930 throughout the period here involved. Its main account was with The
Chase National Bank of the City of New York and that bank was National's
principal banker. National also had accounts with the Commercial National
Bank and Trust Company, The Marine Midland Trust Company and the
Guaranty Trust Company of New York.
"38. National borrowed money from time to time in New York from New York
banks. In 1930 National borrowed a total of $19,350,000 from The Chase
National Bank in three loans. In 1931 it borrowed $15,000,000 from The Chase
National Bank. In 1932 National arranged for substantial loans for its
California subsidiaries from The Chase National Bank and unconditionally
guaranteed payment of these loans. National hypothecated its assets with the
bank in order to borrow money. As a result of those loans The Chase Bank was
National's largest creditor until November, 1934, when it acquired 58 per cent
of the stock of National in exchange for the indebtedness owed to it by National
and National's subsidiaries.
"39. In October, 1934, National, in New York, issued debentures in the amount
of $5,270,000 to Fox Film Corporation, dated as of March 4, 1933, to reflect
National's indebtedness to Fox Film Corporation. The Empire Trust Company
of New York was trustee under the trust indenture. Those debentures were
exchanged for stock of National in the reorganization of November 14, 1934.
"40. In 1935 a line of credit in the amount of $750,000 was established with the
Commercial National Bank & Trust Company of New York. Loans from that
bank were negotiated in 1935 and 1937.
"41. From 1930 throughout the period here involved the dividends which
National received from its subsidiaries were received by it in New York and the
dividends paid by National were paid in New York. National had substantial
assets.
"42. National itself paid no utility charges directly to any utility company. It

paid a regular charge, however, to its parent Twentieth Century-Fox Film

Corporation for services such as utilities, office space and the like. From and
after June, 1936, payments for these facilities were made by Agency.
"43. National itself did not have a telephone listing prior to the summer of
1935. Thereafter it was listed in the Manhattan telephone directory as "National
Theatres Corporation, see National Theatres Agency Corporation." Prior to
1935 it had used the telephone facilities of Twentieth Century-Fox without a
listing and all calls came in through the Twentieth Century-Fox switchboard.
Charges for the use of these telephone facilities were included in the regular
amounts paid by National to Twentieth Century Fox."
In addition, several contracts are in the record which list 444 W. 56 St., New
York City, as National's office address and the address to which notices may be
sent. In a "Consent of Guarantor" defendant is stated to have an office and place
of business in New York City.