Certiorari Denied March 27, 1972. See 92 S.Ct. 1294.
OPINION OF THE COURT
ALDISERT, Circuit Judge.
Several interesting questions are presented in this appeal from the district court's order, 318 F.Supp. 161, granting summary judgment to enforce a default judgment entered by an English court. To resolve them, a complete recitation of the procedural history of this case is necessary.
This case has its genesis in a transaction between appellant, Philadelphia Chewing Gum Corporation, and Somportex Limited, a British corporation, which was to merchandise appellant's wares in Great Britain under the trade name "Tarzan Bubble Gum." According to the facts as alleged by appellant, there was a proposal which involved the participation of Brewster Leeds and Co., Inc., and M. S. International, Inc., third-party defendants in the court below. Brewster made certain arrangements with Somportex to furnish gum manufactured by Philadelphia; M. S. International, as agent for the licensor of the trade name "Tarzan," was to furnish the
Somportex filed an action against Philadelphia for breach of contract in the Queen's Bench Division of the High Court of England. Notice of the issuance of a Writ of Summons was served, in accordance with the rules and with the leave of the High Court, upon Philadelphia at its registered address in Havertown, Pennsylvania, on May 15, 1967. The extraterritorial service was based on the English version of long-arm statutes utilized by many American states.
On August 9, 1967, the English solicitors entered a "conditional appearance to the Writ" and filed a motion to set aside the Writ of Summons.
Thereafter, Philadelphia made a calculated decision: it decided to do nothing. It neither asked for an extension of time
Somportex then filed a Statement of Claim which was duly served in accordance with English Court rules. In addition, by separate letter, it informed Philadelphia of the significance and effect of the pleading, the procedural posture of the case, and its intended course of action.
Philadelphia persisted in its course of inaction; it failed to file a defense. Somportex obtained a default judgment against it in the Queen's Bench Division of the High Court of Justice in England for the sum of £ 39,562.10.10 (approximately $94,000.00). The award reflected some $45,000.00 for loss of profit; $46,000.00 for loss of good will and $2,500.00 for costs, including attorneys' fees.
Thereafter, Somportex filed a diversity action in the court below, seeking to enforce the foreign judgment, and attached to the complaint a certified transcript of the English proceeding. The district court granted two motions which gave rise to this appeal: it dismissed the third-party complaints for failure to state a proper claim under F.R.C.P. 14; and it granted plaintiff's motion for summary judgment, F.R.C.P. 56(a).
We will quickly dispose of the third-party matter. We perceive our scope of review to be limited to an inquiry whether the district court abused its discretion in refusing impleader.
Appellant presents a cluster of contentions supporting its major thesis that we should not extend hospitality to the English judgment. First, it contends, and we agree, that because our jurisdiction is based solely on diversity, "the law to be applied . . . is the law of the state," in this case, Pennsylvania law. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Svenska Handelsbanken v. Carlson, 258 F.Supp. 448 (D.Mass.1966).
Pennsylvania distinguishes between judgments obtained in the courts of her sister states, which are entitled to full faith and credit, and those of foreign courts, which are subject to principles of comity. In re Christoff's Estate, 411 Pa. 419, 192 A.2d 737, cert. denied, 375 U.S. 965, 84 S.Ct. 483, 11 L.Ed.2d 414 (1964).
Comity is a recognition which one nation extends within its own territory to the legislative, executive, or judicial acts of another. It is not a rule of law, but one of practice, convenience, and expediency. Although more than mere courtesy and accommodation, comity does not achieve the force of an imperative or obligation. Rather, it is a nation's expression of understanding which demonstrates due regard both to international duty and convenience and to the rights of persons protected by its own laws. Comity should be withheld only when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect.
Thus, the court in Christoff, supra, 192 A.2d at 739, acknowledged the governing standard enunciated in Hilton v. Guyot, supra, 159 U.S. at 205, 16 S.Ct. at 159:
It is by this standard, therefore, that appellant's arguments must be measured.
Appellant's contention that the district court failed to make an independent examination of the factual and legal basis of the jurisdiction of the English Court at once argues too much and says too little. The reality is that the court did examine the legal basis of asserted jurisdiction and decided the issue adversely to appellant.
Indeed, we do not believe it was necessary for the court below to reach the question of whether the factual complex of the contractual dispute permitted extraterritorial service under the English long-arm statute. In its opinion denying leave of defense counsel to withdraw, the Court of Appeal specifically gave Philadelphia the opportunity to have the factual issue tested before the courts; moreover, Philadelphia was allocated additional time to do just that. Lord Denning said: ". . . They can argue that matter out at a later stage if they should so wish." Three months went by with no activity forth-coming and then, as described by the district court, "[d]uring this three month period, defendant changed its strategy and, not wishing to do anything which might result in its submitting to the English Court's jurisdiction, decided to withdraw its appearance altogether." Under these circumstances, we hold that defendant cannot choose its forum to test the factual basis of jurisdiction. It was given, and it waived, the opportunity of making the adequate presentation in the English Court.
Additionally, appellant attacks the English practice wherein a conditional
Thus, we will not disturb the English Court's adjudication. That the English judgment was obtained by appellant's default instead of through an adversary proceeding does not dilute its efficacy. In the absence of fraud or collusion, a default judgment is as conclusive an adjudication between the parties as when rendered after answer and complete contest in the open courtroom.
English law permits recovery, as compensatory damages in breach of contract, of items reflecting loss of good will and costs, including attorneys' fees. These two items formed substantial portions of the English judgment. Because they are not recoverable under Pennsylvania law,
Somportex Limited v. Philadelphia Chewing Gum Corp., 318 F.Supp. 161, 169 (E.D.Pa.1970).
Finally, appellant contends that since "it maintains no office or employee in England and transacts no business within the country" there were no insufficient contacts there to meet the due process tests of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1965). It argues that, at best, "the only contact Philadelphia had with England was the negotiations allegedly conducted by an independent New York exporter by letter,
For the reasons heretofore rehearsed we will not disturb the English Court's adjudication of jurisdiction; we have deemed as irrelevant the default nature of the judgment; we have concluded that the English compensatory damage items do not offend Pennsylvania public policy; and hold that the English procedure comports with our standards of due process.
In sum, we find that the English proceedings met all the tests enunciated in Christoff, supra. We are not persuaded that appellant met its burden of showing that the British "decree is so palpably tainted by fraud or prejudice as to outrage our sense of justice, or [that] the process of the foreign tribunal was invoked to achieve a result contrary to our laws of public policy or to circumvent our laws or public policy." Christoff, supra, 192 A.2d at 739.
The judgment of the district court will be affirmed.
Cf., the Pennsylvania Statute authorizing service on a foreign corporation, which provides:
15 Pa.Stat.Ann. § 2011, subd. C.
Pennsylvania decisional law has generously interpreted its long-arm statute. See state cases summarized in Siders v. Upper Mississippi Towing Corp., 423 F.2d 535 (3rd Cir. 1970).
Wright, Federal Courts, § 76, at 333.
Somportex Limited v. Philadelphia Chewing Gum Corp., 318 F.Supp. 161, 168 (E.D.Pa.1970).
283 U.S. at 525-526, 51 S.Ct. at 518.
The Baldwin principle was reaffirmed in Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 11 L.Ed.2d 186 (1963). See also, American Surety Co. v. Baldwin, 287 U.S. 156, 166, 53 S.Ct. 98, 101, 77 L.Ed. 231 (1932), in which Mr. Justice Brandeis stated that "the principles of res judicata apply to questions of jurisdiction as well as to other issues."
It can also be said that appellant may be estopped from advancing this argument before this court. Scarano v. Central R. Co. of New Jersey, 203 F.2d 510 (3rd Cir. 1953). In the district court, its counsel stated:
Throughout the limited number of cases which have permitted a collateral attack on a default judgment entered in another court runs the recurring theme of "fraud" or "excusable neglect." Butner v. Neustadter, 324 F.2d 783 (9th Cir. 1963); cf., Bass v. Hoagland, 172 F.2d 205 (5th Cir. 1949). See Carrington, Civil Procedure, "Default Judgments," pp. 786-90.