Aquascutum of London, Inc. v. SS American Champion

• Decision Date: 27 March 1970
• Docket Number: 492 and 493,No. 491,Dockets 34083-5.,491
• Citation: 426 F.2d 205
• Parties: AQUASCUTUM OF LONDON, INC. and Rodex of London, Ltd., Plaintiffs-Appellants, v. S.S. AMERICAN CHAMPION, her engines, etc.; United States Lines, Inc., Defendant, and W. Wingate & Johnston, Ltd., Defendant-Appellee. METASCO, INC., Plaintiff-Appellant, v. S.S. AMERICAN CHIEFTAIN, her engines, etc.; United States Lines, Inc., Defendant, and W. Wingate & Johnston, Ltd., Defendant-Appellee. METASCO, INC., Plaintiff-Appellant, v. S.S. RUBENS, her engines, etc., Compagnie Maritime Belge (Lloyd Royal) S.A., Agency Maritime International S.C., Belgian Lines, Inc. and N. V. Arement Deppe S.A., Inc., Defendants, and W. Wingate & Johnston, Ltd., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

426 F.2d 205 (1970)

AQUASCUTUM OF LONDON, INC. and Rodex of London, Ltd., Plaintiffs-Appellants, v. S.S. AMERICAN CHAMPION, her engines, etc.; United States Lines, Inc., Defendant, and W. Wingate & Johnston, Ltd., Defendant-Appellee.

METASCO, INC., Plaintiff-Appellant, v. S.S. AMERICAN CHIEFTAIN, her engines, etc.; United States Lines, Inc., Defendant, and W. Wingate & Johnston, Ltd., Defendant-Appellee.

METASCO, INC., Plaintiff-Appellant, v. S.S. RUBENS, her engines, etc., Compagnie Maritime Belge (Lloyd Royal) S.A., Agency Maritime International S.C., Belgian Lines, Inc. and N. V. Arement Deppe S.A., Inc., Defendants, and W. Wingate & Johnston, Ltd., Defendant-Appellee.

Nos. 491, 492 and 493, Dockets 34083-5.

United States Court of Appeals, Second Circuit.

Argued January 22, 1970.

Decided March 27, 1970.

COPYRIGHT MATERIAL OMITTED

Andrew R. Colmant, New York City (Hill, Rivkins, Warburton, McGowan & Carey, and Leo P. Cappelletti, New York City, of counsel), for plaintiffs-appellants.

Wells D. Burgess, New York City (White & Case, New York City, of counsel), for defendant-appellee, W. Wingate & Johnston, Ltd.

Before MOORE, FRIENDLY and HAYS, Circuit Judges.

FRIENDLY, Circuit Judge.

In these three appeals from an order of the District Court for the Southern District of New York dismissing complaints in admiralty for want of personal jurisdiction, we are called upon to determine the applicability of New York's long-arm statute, CPLR § 302, and of its general "doing business" statute, CPLR § 301, to a London-based English corporation offering different types of freight service.

In Nos. 34083 and 34085, the American Champion and Rubens cases, the plaintiffs allege that certain goods in good order and condition were delivered to W. Wingate & Johnston, Ltd. (hereafter W&J) in London for shipment to plaintiffs in New York. W&J issued forwarder's bills of lading showing that delivery was to be made to plaintiffs in New York and bearing the legend "For particulars of delivery apply with this bill of lading to World Warehouse Corp. World." One copy of each bill was given to the shipper, who mailed it to the consignee, and one copy was mailed by W&J to World. The shipments, along with goods of other shippers, were consolidated in containers owned by the shipping lines which would carry the cargo and released by them to W&J. W&J then sealed the containers with seals supplied to it by World and delivered them to the carriers, taking in return ocean bills of lading listing the contents of the containers and designating the ultimate recipients and their customs brokers — Penson & Co. in the case of plaintiffs' shipments. These bills of lading, showing W&J as shipper and World as consignee, were mailed to World in New York. When the time came for delivery of the goods in New York, it was discovered that the seals on the containers had been broken and that some of plaintiffs' goods were missing.

The facts of No. 34084, the American Chieftain case, vary in significant respects. The goods delivered to W&J in London were enough to fill an entire container. Although W&J packed the goods in the container and delivered it to the carrier, it did not itself issue a bill of lading. The carrier's bill of lading showed W&J as shipper and plaintiff Metasco, a New York corporation, as consignee, with delivery to be made in Boston. W&J mailed the bill to Metasco in New York. Again shortages were discovered at the time of delivery. In all three cases, W&J's services were arranged and paid for in London.¹

Shipment of goods of various shippers in a container requires someone to break the seal of the container and handle the merchandise at the port of destination. For this purpose W&J employs World and two other companies in the New York area. World, which also works for other forwarders, charges W&J for its services, which include moving the container from the pier to World's bonded warehouse, stripping the container, returning it to the carrier, and delivering the goods to the consignees.

The relations between W&J and Penson & Co. have lasted from 30 to 40 years. Each recommends the other as customs broker but since brokers are selected and paid by the importer, neither has power to appoint the other to that position. Penson has incorporated a name-holding company called Wingate & Johnston, Ltd., for which it has maintained a telephone listing at its own address in New York City, but the company is inactive and there is scant basis in the record for an inference that W&J directed or approved the establishment of the corporation. Penson also gives leads to W&J with respect to American importers who might be interested in using W&J's services in England. W&J employees visit New York and other points in the United States two or three times a year to exploit leads and solicit business generally.

In all three cases service of process on W&J was purportedly effected by delivering a copy of the summons and complaint to the offices of Penson & Co. in New York City. W&J moved under F.R. Civ.P. 12(b) (2) to dismiss the complaints as against it for lack of jurisdiction over the person and under F.R. Civ.P. 12(b) (5) to vacate the service of process as insufficient. Plaintiffs submitted opposing affidavits, which, although arguing that the service was in all respects valid, requested, in the alternative, leave to serve process upon World as W&J's managing or general agent, see F.R.Civ.P. 4(d) (3), or on W&J in England under F.R.Civ.P. 4(d) (7) and CPLR § 313, which authorizes extraterritorial service of process on foreign corporations either "doing business" in New York or subject to the New York long-arm statute, CPLR § 302(a). In all three cases the court directed the entry of final judgment quashing the service of process and dismissing the complaints as against W&J and making appropriate recitals under F.R.Civ.P. 54(b). This appeal followed.

I.

It can scarcely be doubted that a British ocean carrier delivering cargo in New York would come within CPLR § 302(a) (1) as a non-domiciliary who "transacts any business within the state" and would thus be subject to suit for breach of the contract of carriage. While we have been cited to no New York decision expressly so holding, prior decisions by this court and the district courts applying New York law strongly suggest such a result. Agrashell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 588 (2 Cir. 1965); Ingravallo v. Pool Shipping Co., 247 F.Supp. 394, 401-402 (E.D. N.Y.1965). The conclusion follows from the recognition by the Court of Appeals that the design of § 302 was to take advantage of the opportunity, afforded by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), to assert jurisdiction over a non-resident defendant who "has engaged in some purposeful activity in this State in connection with the matter in suit." Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y. 2d 443, 457, 261 N.Y.S.2d 8, 18, 209 N.E. 2d 68, 75, cert. denied, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d 158 (1965). This conclusion is reinforced by the recent decision in Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506, upholding jurisdiction under § 302(a) (1) in an action for breach of contract against a California resident who had made successful bids at a New York art auction as a result of an arrangement whereby an open telephone line was maintained between him in California and an employee of Parke-Bernet in New York, who relayed his bids to the auctioneer.² A carrier who brings goods into the state stands quite differently from a shipper in another state or a foreign country, Kramer v. Vogl, 17 N.Y.2d 27, 267 N.Y.S.2d 900, 215 N.E.2d 159 (1966).

We see no sufficient basis for reaching a different result with respect to W&J in the American Champion and Rubens cases. The contrary ruling of the district court appears to have been predicated, to borrow language used by the Supreme Court twenty years ago, "on a failure to distinguish between two very different kinds of `forwarders.'" Chicago, Milwaukee, St. P. & P. R.R. v. Acme Fast Freight, Inc., 336 U.S. 465, 484, 69 S.Ct. 692, 701, 93 L.Ed. 817 (1949). The Court explained the distinction as follows:

The term was originally applied to persons who arrange for the transportation by common carrier of the shipper\'s goods. The forwarder did not necessarily consolidate the individual consignments into carload lots, and its duties, as agent of the shipper, went no farther than procuring transportation by carrier and handling the details of shipment. Forwarders of this type charged fees for their services, which the shipper paid in addition to the freight charges of the carrier utilized for the actual transportation.

Later, a different type of forwarding service was offered. This forwarder picked up the less than carload shipment at the shipper\'s place of business and engaged to deliver it safely at its ultimate destination. The freight forwarder charged a rate covering the entire transportation and made its profit by consolidating the shipment with others in carload quantities to take advantage of the spread between carload and l.c.l. rates. It held itself out not merely to arrange with common carriers for the transportation of the goods, but rather to deliver them safely to the consignee. The shipper seldom if ever knew which carrier would be utilized in the carriage of his shipment.

The second type of forwarder occupies a dual role. While with respect to the carrier who physically conducts the transportation he is a shipper, Great Northern Ry. v. O'Connor, 232 U.S. 508, 514, 34 S.Ct. 380, 58 L.Ed. 703 (1914), with respect to the true shipper he is a carrier. Chicago, Milwaukee, St. P. & P. R.R. v. Acme Fast Freight, Inc., supra, 336 U.S. at 485, 69 S.Ct. 692. In the American Champion an...