14 N.Y.2d 281, Simonson v. International Bank

Citation:14 N.Y.2d 281, 251 N.Y.S.2d 433
Party Name:Simonson v. International Bank
Case Date:June 04, 1964
Court:New York Court of Appeals

Page 281

14 N.Y.2d 281

251 N.Y.S.2d 433

Albert C. SIMONSON, Appellant,


INTERNATIONAL BANK, Also Known as International Bank of Washington, Respondent, et al., Defendants.

New York Court of Appeals

June 4, 1964.

Page 282

[251 N.Y.S.2d 435] Barry Golomb, New York City, for appellant.

Page 283

Emanuel Becker, New York City, for respondent.

Page 284

FULD, Judge.

The primary question presented by this appeal is whether the provisions of the new CPLR (§ 302), effective September 1, 1963, and the principles embodied therein, enlarging the bases for acquiring personal jurisdiction over foreign corporations and nonresident persons, have retroactive application to previously instituted actions.

This action, to recover damages for breach of a joint venture agreement, alleged in the complaint to have been made in New York in 1955, was instituted in the Supreme Court in 1960. The plaintiff is a Connecticut resident who formerly resided in New York, the defendant International Bank, an Arizona corporation with its principal offices in Washington, D. C. Service of the summons and complaint was made on a director of the defendant in New York. Asserting that it has no office or other facilities in this State, and that it does no business now and has never engaged in any business activity of any kind here, the defendant moved for an order setting aside service of the summons and complaint and dismissing the complaint on the ground that it is not subject to the jurisdiction of our State courts. Special Term granted the motion in August, 1960, the Appellate Division unanimously affirmed the resulting order in March of 1962 and we granted leave to appeal in May, 1963 all prior to the effective date of the CPLR.

Beyond the bare allegation in the complaint that the contract in suit was 'made' in New York, 1 the record is devoid of any factual showing in support of that allegation or of the plaintiff's submission that there is sufficient nexus between this State and the defendant foreign corporation, or the transaction in suit, to render such defendant amenable to the process of our State courts.

Page 285

We may briefly dispose of the plaintiff's reliance on former section 225 of the General Corporation Law (now Business Corporation Law, Consol.Laws, c. 4, § 1314, subd. (b)), delineating the classes of cases including an 'action * * * brought to recover damages for the breach of a contract made within the state' (subd. 1) in which our courts may entertain an action by a nonresident against a foreign corporation. That section, reflecting this State's policy against lending its courts to the resolution of disputes between nonresident parties (cf. Matter of Banque de France v. Supreme Ct., 287 N.Y. 483, 486, 41 N.E.2d 65, 66; Murnan v. Wabash Ry. Co., 246 N.Y. 244, 158 N.E. 508, 54 A.L.R. 1522), was designed solely to block out an area of subject-matter [251 N.Y.S.2d 436] jurisdiction in which our courts are made available for suits, otherwise properly brought, against a foreign corporation. (See, e. g., Swift & Co. v. Obcanska Zalozna v. Karline, 245 N.Y. 570, 157 N.E. 861; Robinson v. Oceanic Steam Nav. Co., 112 N.Y. 315, 322-323, 19 N.E. 625, 626-627, 2 L.R.A. 636; Cala v. Luis De Ridder Ltda., 17 A.D.2d 729, 232 N.Y.S.2d 284.) That section 225 was never intended to measure the permissible reach of the courts' in personam jurisdiction over foreign corporations is plainly evidenced by the Legislature's juxtaposition of that section with its companion section 224 (now Business Corporation Law, § 1314, subd. (a)), which sanctions the maintenance of any action by a resident against a foreign corporation. In short, both sections presuppose that the particular foreign corporation is otherwise subject to the jurisdiction of our State courts. (See Gregonis v. Philadelphia & Reading Coal & Iron Co., 235 N.Y. 152, 158, 139 N.E. 223, 225, 32 A.L.R. 1.)

Under our decisional law prior to the adoption of the CPLR, a foreign corporation, not authorized to do business in this State, was held amenable to local suit only if it was engaged in such a continuous and systematic course of 'doing business' here as to warrant a finding of its 'presence' in this jurisdiction. (See, e. g., Miller v. Surf Properties, Inc., 4 N.Y.2d 475, 176 N.Y.S.2d 318, 151 N.E.2d 874; Elish v. St. Louis Southwestern Ry. Co., 305 N.Y. 267, 112 N.E.2d 842; Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915.) It is clear that, at the time this action was brought, the defendant bank was not so engaged. The 'doing business' test was initially dictated by the due process requirements of the Federal Constitution as formerly interpreted by the United States Supreme Court. (See Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372;

Page 286

Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 268, 37 S.Ct. 280, 61 L.Ed. 710; International Harvester Co...

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