410 F.2d 106 (2nd Cir. 1968), 137, Minichiello v. Rosenberg
| Citation | 410 F.2d 106 |
| Party Name | Marie MINICHIELLO, as Executrix of the Estate of Thomas Minichiello, and Marie Minichiello, Appellees, v. Oliver ROSENBERG, Appellant. Elwin W. STEVENS, on behalf of his son, Dennis J. Stevens, an infant overfourteen years of age, and Elwin W. Stevens, individually, Appellees, v. Stephen H. TYNG, Sr. and Stephen H. Tyng, Jr., Appellants. |
| Case Date | December 12, 1968 |
| Court | United States Courts of Appeals, U.S. Court of Appeals — Second Circuit |
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Argued Oct. 9, 1968.
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James M. Marsh, Philadelphia, Pa. (James M. Marsh, Philadelphia, Pa., D. Bruce Crew, III, Elmira, N.Y., La Brum & Doak, Philadelphia, Pa., and Donovan, Graner, Davidson & Burns, Elmira, N.Y., of counsel), for appellant Oliver Rosenberg.
Henry Valent (Valent, Callanan & Ruger, Watkins Glen, N.Y.), for appellees Marie Minichiello, as Executrix etc. and Marie Minichiello.
Bender, Hesson, Ford & Grogan, Albany, N.Y., submitted brief for appellants Stephen H. Tyng, Sr. and Stephen H. Tyng, Jr.
Irving I. Waxman, Albany, N.Y., submitted brief for appellees Elwin W. Stevens, on behalf of his son etc. and Elwin W. Stevens.
Before FRIENDLY, ANDERSON and FEINBERG, Circuit Judges.
FRIENDLY, Circuit Judge:
These two appeals are from orders denying motions to dismiss complaints of New York residents in automobile accident actions against nonresident defendants wherein jurisdiction was predicated on attachment of the defendants' interests in liability insurance policies issued by companies doing business in New York, CPLR §§ 5201, 6202. They require us to consider the constitutionality of the procedure sanctioned by the New York Court of Appeals in the much discussed case of Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 (1966), as elaborated in Simpson v. Loehmann, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 234 N.E.2d 669 (1967), notion for reargument denied, 21 N.Y.2d 990, 290 N.Y.S.2d 914, 238 N.E.2d 319 (1968). See also Victor v. Lyon Associates, Inc., Hanover Ins. Co., Appellant, 21 N.Y.2d 695, 287 N.Y.S.2d 424, 234 N.E.2d 459 (1967), appeal dismissed for want of a substantial federal question, 392 U.S. 8, 89 S.Ct. 44, 21 L.Ed.2d 8 (1968).
Marie Minichiello, a resident of New York, brought suit in the Supreme Court of New York for Schuyler County, in her own right and as executrix of her husband Thomas, to recover $205,050 for injuries to Thomas, for his death, for injuries to herself, and for damage to their car in an accident near Harrisburg, Pa., allegedly caused by the negligence of the defendant Rosenberg, a resident of Pennsylvania. An order of attachment was served at an office in New York on Allstate Insurance Co., which had issued to Rosenberg in Pennsylvania a policy insuring against liability in an amount less than the recovery sought. Rosenberg removed the action to the District Court for the Western District of New York and there sought an order dismissing the complaint on the ground that the procedure sanctioned by Seider v. Roth violated the Federal Constitution. Judge Burke denied the motion 1 but
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later made the certificate required by 28 U.S.C. § 1292(b). Since the problem was of obvious importance and the decision ran counter to Judge Croake's in Podolsky v. Devinney, 281 F.Supp. 488 (S.D.N.Y.1968), we granted leave to appeal.
Elwin W. Stevens, a resident of New York, brought suit in the Supreme Court for Rensselaer County on his own behalf and as guardian for his son Dennis against Stephen Tyng, Sr., and Stephen Tyng, Jr., residents of Massachusetts, to recover $200,350 for injury to Dennis, loss of Dennis' services, and damage to a motor scooter sustained at Orleans, Massachusetts, as a result of the alleged negligence of Tyng, Jr., in driving a car owned by his father. Plaintiff attached a policy insuring against liability in the amount of $100,000 for any person and $300,000 for any accident issued outside New York by American Motorists Insurance Co., which does business in New York. Defendants removed the action to the District Court for the Northern District of New York and moved, inter alia, to dismiss the complaint for want of jurisdiction. Judge Ryan, sitting in the Northern District by designation, denied the motion 2 but, recognizing the contrary decision in Podolsky, made the certificate specified in 28 U.S.C. § 1292(b). Since the issue was identical with that already argued in Minichiello v. Rosenberg, we granted leave to appeal, with the case to be submitted on briefs.
Seider v. Roth was an action by New York residents against Lemiux, a Canadian, for injuries suffered in an automobile accident in Vermont. 3 Plaintiffs attached in New York a liability policy issued to Lemiux in Canada by Hartford Accident and Indemnity Co., which does business in New York. The Court of Appeals, speaking through Chief Judge Desmond, treated the problem solely as one of statutory construction, namely, whether 'as soon as the accident occurred there was imposed on Hartford a contractual obligation which should be considered a 'debt' within the meaning of CPLR 5201 and 6202.' The court answered this in the affirmative. Neither the majority opinion nor the dissent by Judge Burke, in which Judges Bergan and Scileppi concurred, adverted to constitutional doubts.
Seider v. Roth received a poor press from the commentators. See, e.g., Reese, The Expanding Scope of Jurisdiction over Non-Residents-- New York Goes Wild, 35 Ins. Counsel J. 118 (1968); Comment, Attachment of 'Obligations'-- A New Chapter in Long-Arm Jurisdiction, 16 Buffalo L.Rev. 769 (1967); Comment, Garnishment of Intangibles: Contingent Obligations and the Interstate Corporation, 67 Colum.L.Rev. 550 (1970); Note, Seider v. Roth: The Constitutional Phase, 43 St. John's L.Rev. 58 (1968); Comment, Quasi in Rem Jurisdiction Based on Insurer's Obligations, 19 Stan.L.Rev. 654 (1967); and a number of comments by Professor David Siegel of St. John's University School of Law, one antedating the Court of Appeals' decision, which have appeared in the annual supplements to CPLR § 5201 in McKinney's Consolidated Laws of New York. In Simpson v. Loehmann, supra, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 234 N.E.2d 669, the court was asked to reconsider Seider v. Roth not only as going beyond the New York attachment statutes but as offending the due process clause of the Fourteenth Amendment, imposing an undue burden on interstate commerce in insurance, and impairing the obligations of the policy. The court reaffirmed its earlier ruling. While only Judges Burke and Scileppi dissented
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from this, Judges Breitel 4 and Bergan concurred solely 'on constraint of Seider v. Roth,' saying that 'only a major reappraisal by the court, rather than the accident of a change in its composition, would justify the overruling of that precedent,' which, however, they severely criticized 'if only, perhaps, to hasten the day of its overruling or its annulment by legislation.'
On the constitutional claims, Chief Judge Fuld, writing for himself and Judge Van Voorhis, summarily disposed of the interstate commerce and impairment of contract obligation arguments, 21 N.Y.2d at 309 n. 2, 287 N.Y.S.2d at 635 n. 2, 234 N.E.2d at 670 n. 2. He then pointed out that under modern views the sufficiency of a basis for jurisdiction depends on 'a practical appraisal of the situation of the various parties rather than an emphasis upon somewhat magical and medieval concepts of presence and power.' 21 N.Y.2d at 311, 287 N.Y.S.2d at 637, 234 N.E.2d at 672. He stressed the insurer's control of the litigation and that 'where the plaintiff is a resident of the forum state and the insurer is present in and regulated by it, the State has a substantial and continuing relation with the controversy.' Judge Keating, concurring, reasoned that New York could validly enact a direct action statute in favor of its residents for out-of-state accidents and that there was 'no policy reason for not holding that service of process on the real party defendant-- the insurer--is sufficient to compel it to defend in this State, provided it transacts business here and is thus subject to the jurisdiction of our courts.' 21 N.Y.2d at 312-314, 287 N.Y.S.2d at 638, 234 N.E.2d at 673. Judges Breitel and Bergan found it unnecessary to deal with the constitutional issues since, on their view, 'if the court was right in the Seider case, then there is no constitutional question,' 21 N.Y.2d at 316, 287 N.Y.S.2d at 642, 234 N.E.2d at 675. Judges Burke and Scileppi thought Seider was of doubtful constitutionality on any of the bases asserted in its support.
Although Judge Keating's opinion in Simpson v. Loehmann is more explicit than Chief Judge Fuld's on this score, it is reasonably clear that the Court of Appeals regards Seider v. Roth as in effect a judicially created direct action statute. The insurer doing business in New York is considered the real party in interest and the nonresident insured is viewed simply as a conduit, who has to be named as a defendant in order to provide a conceptual basis for getting at the insurer. See 1968 Commentary to CPLR § 5201, paras. 88, 89. It is thus useful to address ourselves in the first instance to Judge Keating's premise that New York could constitutionally provide for a direct action against an insurer doing business in New York by a New York resident with respect to an injury suffered elsewhere. If that premise should fail, Seider would almost certainly fall with it. If it stands we must then examine whether Seider may still be vulnerable because, unlike a true direct action statute, it involves the nonresident insured as a party defendant.
In Watson v. Employers Liability Assurance Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74 (1954), the Supreme Court sustained Louisiana's direct action statute, which overrode contrary provisions in liability policies issued by insurers doing business in that...
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