De France v. Supreme Court of New York

• Decision Date: 05 March 1942
• Citation: 41 N.E.2d 65,287 N.Y. 483
• Parties: BANQUE DE FRANCE v. SUPREME COURT OF STATE OF NEW YORK et al.
• Court: New York Court of Appeals Court of Appeals

287 N.Y. 483

41 N.E.2d 65

BANQUE DE FRANCE

v.SUPREME COURT OF STATE OF NEW YORK et al.

Court of Appeals of New York.

March 5, 1942.

Appeal from Supreme Court, Appellate Division, First Department.

Proceeding by Banque de France for an order restraining the Supreme Court of the State of New York or any Justice thereof from hearing a certain cause, involving a constitutional question. From a unanimous order dismissing the petition as a matter of law, 263 App.Div. 703, 31 N.Y.S.2d 660, petitioner appeals.

Affirmed. Mahlon B. Doing and Frederic R. Coudert, both of New York City, for appellant.

John Foster Dulles, Robert E. Houston, Jr., and MacDonald Deming, all of New York City, for Daniel De Gorter et al., respondents.

LEHMAN, Chief Judge.

Banque de France is a corporation organized and existing under the laws of France. In France it conducts its business as the central bank of issue of France and as a commercial bank. Such business as it transacts here is purely incidental to its business in France, but in the course of that business it customarily maintains large bank balances here. Daniel De Gorter and Henri Wild are residents of the State of New york. Claiming that Banque National de Belgique, a corporation organized and existing under the laws of Belgium, has a good cause of action agaisnt Banque de France for breach of contract and that Banque National de Belgique has assigned its cause of action to them, they obtained a warrant of attachment against the property here of Banque de France and levied upon the accounts and property of the Banque de France held by Federal Reserve Bank in New York. After a summons was served by publication upon Banque de France, it appeared specially in order to challenge the jurisdiction of the courts of the State of New York in the action which the assignees of Banque National de Belgique seek to maintain in this state. Its challenge was rejected in the Supreme Court and the order was affirmed by the Appellate Division, which denied leave to appeal to this court. After Banque de France had thus unsuccessfully sought by every available means to induce the court in which the action was brought to refuse to exercise jurisdiction and to dismiss the complaint, it applied to Appellate Division, pursuant to the provisions of article 78 of the Civil Practice Act, for an order prohibiting and restraining the Supreme Court or any justice of the court from entertaining or exercising jurisdiction of the action.

The Appellate Division, 263 App.Div. 703, 31 N.Y.S.2d 660, upon motion of the respondents, dismissed the petition of Banque de France ‘as matter of law and not in the exercise of discretion.’ The petitioner seeks an extraordinary remedy to halt threatened action by a court or judge which the petitioner contends would be a usurpation of power. The General Corporation Law, Consol. Laws, ch. 23, provides that ‘an action against a foreign corporation may be maintained by a resident of the state, or by a domestic corporation, for any cause of action.’ s 224. Transitory causes of action arising outside of the state are within the general jurisdiction of the courts of the state when brought by a resident of the state even though the defendant be a foreign corporation and the plaintiff be the assignee of a person not himself a resident of the state. There are nevertheless limitations upon the general jurisdiction of the courts of this state imposed by the Constitution of the United States. A state may not encroach upon the field where the power of the federal government is exclusive and ‘the general jurisdiction of the courts of a state is confined to the field from which the state itself is not excluded.’ Matter of Baltimore Mail S. S. Co. v. Fawcett, 269 N.Y. 379, 385, 199 N.E. 628, 630, 104 A.L.R. 1068. In that case this court held that in circumstances where compulsion by a state upon a foreign corporation, engaged in foreign or interstate commerce, to submit to suit in its courts upon a transitory cause of action arising in a different jurisdiction would constitute an unreasonable burden and an obstruction of commerce forbidden by the Constitution of the United States, the carrier may be entitled to an order prohibiting the state court from attempting to exercise jurisdiction of the suit. The Banque de France asserts that on that ground it is entitled to such an order for the necessary protection of its constitutional rights.

In all the cases where it has been held that such compulsion is beyond the power of a state and a violation of rights or immunities guaranteed by the Constitution, the foreign corporation has been engaged in commerce as a carrier. The Banque de France asserts that the principle applies wherever such compulsion casts an unreasonable burden upon a foreign corporation engaged in foreign or interstate commerce in any form and is not confined to obstruction of transportation of passengers or goods. Doubtless the power of the Congress of the United States ‘to regulate Commerce with foreign Nations, and among the several States' (U.S.Const., art. I, s 8, cl. 3) extends to foreign and interstate commerce of every kind and is not confined to transportation. Though a foreign corporation engaged in foreign or interstate commerce as carrier or otherwise is not ‘immune from the ordinary process of the courts of a state,’ yet no state may intrude upon the field assigned by the Constitution to the federal government. At least in theory, state laws which unreasonably obstruct and unduly burden interstate commerce in any form may violate the commerce clause of the Constitution. Davis v. Farmers' Co-operative Equity Co., 262 U.S. 312, 316, 43 S.Ct. 556, 558, 67 L.Ed. 996. The principle upon which the petitioner relies is general; yet when that principle is invoked to support the contention that in a particular case a...