In re A & W Publishers, Inc., 84 Civ. 2261 (ADS).
| Decision Date | 31 May 1984 |
| Docket Number | No. 84 Civ. 2261 (ADS).,84 Civ. 2261 (ADS). |
| Citation | 39 BR 666 |
| Parties | In re A & W PUBLISHERS, INC., Debtor. A & W PUBLISHERS, INC., Plaintiff, v. BISON BOOKS LIMITED, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Arthur Ohringer, Edward Tessler, Carrie Teitcher, Andrew DeNatale, Strook & Strook & Lavan, New York City, for A & W Publishers, Inc.
Robert J. Ciovacco, Bases, Lawrence, Ciovacco & Walsh, Garden City, N.Y., for Bison Books Ltd.
The appellant Bison Books, Ltd., a British corporation, appeals from a Bankruptcy Court's exercise of jurisdiction over it, arguing that the ruling violates due process and also was based on improper service. The Bankruptcy Court awarded judgment against appellant for $95,375.35, finding that the bankrupt had made preferential transfers to appellant pursuant to a settlement agreement which the law required be set aside.
Appellant publishes books for sale in Britain and for export. It alleged below that, as of January 1, 1983, it had discontinued all sales to the United States. Prior to that time, appellee A & W purchased books for resale in the United States "primarily" through telephonic and written communications. A & W failed to pay for the books and, after negotiations "also primarily through telephonic and written correspondence," Appellant's Brief at 3, the parties reached a settlement on February 3, 1983. The settlement agreement provided for a schedule of payments by A & W to be made to Bison "at its office in Greenwich Connecticut" or by wire transfer "to Bison's bank account number 011 900 571" at a Connecticut bank. Settlement Agreement (Exhibit A to Answer in Opposition to Motion to Dismiss) ¶ 2(a). A & W was also required to deliver an auditor's certificate to Bison "at its office in Greenwich, Connecticut." Id. ¶ 2(b). In addition, the agreement annexed invoices from Bison to A & W showing Bison's business address in Connecticut, designated a New York attorney to hold a confession of judgment from A & W for Bison's benefit for enforcement in the event of default, and stated that New York law would govern its provisions. Id. ¶¶ 3, 7.
A & W made several payments pursuant to this agreement before June 3, 1983, when it filed a petition for reorganization with the Bankruptcy Court. Appellee attempted to serve appellant with a copy of a summons and complaint by leaving them with an employee of the American corporation designated in the settlement agreement to receive appellee's payments. The complaint sought to recover $78,613.13 as preferential transfers and $11,450.00 as profit due appellee on an unauthorized post-petition transfer. Appellant Bison Ltd. appeared, and was appointed to the Creditors' Committee of A & W. One of its directors, Sidney Mayer, listed Bison's business address on the Appointment of Committee of Unsecured Creditors as 17 Sherwood Place, Greenwich, Ct. 06830. Instead of answering, appellant moved to dismiss, arguing lack of jurisdiction and improper service. Appellee contended service was adequate, but nevertheless served Mr. Mayer personally at a Creditors Committee meeting on December 1, 1983. See Answer in Opposition to Motion to Dismiss, ¶ 7. The Bankruptcy Judge denied Bison Ltd.'s motion and entered a default judgment against it for the full amount claimed, plus interest, or $95,375.35. At Bison Ltd.'s request execution on the judgment was stayed on condition that it post a bond for $100,000. No bond has yet been posted, however.
Appellant correctly contends that a minimum-contacts test applies in bankruptcy to protect foreign corporations against being subjected to jurisdiction in this country without due process of law. See In re Fotochrome, Inc., 377 F.Supp. 26, 29 (E.D.N.Y.1974) (), aff'd, 517 F.2d 512 (2d Cir.1975); cf. Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326, 1340 (2d Cir.1972) (Friendly, C.J.) (...
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