ABKCO Industries, Inc. v. Lennon

Decision Date08 June 1976
Citation52 A.D.2d 435,384 N.Y.S.2d 781
PartiesABKCO INDUSTRIES, INC., Plaintiff-Respondent, v. John LENNON et al., Defendants-Appellants, and Python Music Publishing Co., Inc., et al., Defendants. ABKCO INDUSTRIES, INC., Plaintiff-Respondent, v. APPLE CORPS LTD. et al., Defendants-Appellants (two cases). ABKCO INDUSTRIES, INC., Plaintiff-Respondent, v. John LENNON et al., Defendants-Appellants, and Paul McCartney et al., Defendants.
CourtNew York Supreme Court — Appellate Division

Max Freund, New York City, of counsel (Peter F. Nadel, Robert W. Gottlieb and Stephen L. Ratner, New York City, with him on the brief; Rosenman, Colin, Freund, Lewis & Cohen, New York City, attys.) for plaintiff-respondent.

Owen McGivern, New York City, of counsel (Benjamin Vinar, Robert L. Magielnicki and John W. Wall, New York City, with him on the brief; Eastman & Eastman, attys. and Donovan, Leisure, Newton & Irvine, New York City, of counsel), for defendant-appellant Paul McCartney.

Peter K. Leisure, New York City, of counsel (Robert S. Lipton and George Kahale, III, New York City, with him on the brief; Curtis, Mallet-Prevost, Colt & Molse, New York City, attys.), for defendant-appellant Michael B. Boreham.

Richard W. Hulbert, New York City, of counsel (Cleary, Gottlieb, Steen & Hamilton, New York City, attys.), for defendants-appellants other than McCartney and Boreham.

Reavis & McGrath, New York City, of counsel to defendant Starkey on the issue of In personam jurisdiction.

Before KUPFERMAN, J.P., and MURPHY, LUPIANO, SILVERMAN and NUNEZ, JJ.

NUNEZ, Justice.

In two actions (hereinafter referred to as the 1973 action and the 1974 action) by ABKCO Industries, Inc., a theatrical manager, against its former clients, the Beatles, and their related companies, appeals are taken from six orders. In 1969 plaintiff entered into a management contract in London, England with three of the Beatles (other than McCartney) and the Beatles group of companies. McCartney, charging that the agreements with plaintiff wasted partnership assets, commenced proceedings in England to dissolve the Beatles partnership. After the termination of the management agreement, the plaintiff began a spate of actions in New York and California to recover sums loaned to the Beatles and their companies. On November 1, 1973, some months following the last of plaintiff's suits, the Beatles, except McCartney, and fourteen of their companies sued plaintiff and its President, Alan B. Klein, in England alleging the management contract had been induced by misrepresentations and breach of fiduciary duty.

On November 8, 1973, the 1973 action was commenced against six New York and three California corporations affiliated with the Beatles and against all of the individual Beatles, the wife of one of them and ten John Does. For John Doe No. 1 the plaintiff substituted Michael Boreham, an English solicitor, representing the Beatles other than McCartney, serving him in December, 1974, when he came to New York to confer with the Beatles' New York attorneys in reference to the English litigation and the defense of the 1973 action. That action alleges 42 counts. As to defendants other than Boreham, I.e., John Doe No. 1, and McCartney, the plaintiff seeks judgment for commissions owing and to accrue in the future, for repayment of loans and for the compensation in Quantum meruit. Nearly nineteen million dollars is thereby sought. Count 42 against all defendants sounds in conspiracy, with overtones of the tort of inducing breach of contract and fraud and seeks an additional thirty-four million dollars including ten million dollars in punitive damages.

In the 1974 action, plaintiff brought suit against the Beatles' English companies seeking four and one half million dollars. Quasi in rem jurisdiction over six corporations in the two actions was obtained by attachment of assets belonging to these corporations. The defendants moved to dismiss the action for Forum non conveniens, insufficiency, lack of personal jurisdiction, and lack of subject matter jurisdiction over the English corporate defendants. The issue of personal jurisdiction was referred to Dean Joseph McLaughlin, Referee, two found that while defendant Apple Corps Ltd. does no business in New York, nonetheless, personal jurisdiction was acquired because Apple Corps Ltd. acted through its alter egos, two subsidiary corporations which the Referee treated as mere departments of Apple Corps Ltd. Dean McLaughlin found that jurisdiction over Starkey (better known as Ringo Starr), who was served in England where he resides, could not be obtained under CPLR Section 302 since the cause of action does not arise out of the business Starkey may be doing in New York. However, Justice Markowitz found that Starkey does do business in New York 'pervasively, unmistakably, undeniably, continuously and substantially' and that jurisdiction was obtained pursuant to CPLR Section 301.

With respect to Starkey CPLR Section 301 provides: 'A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore.' The Second Prelimina Report of the Advisory Committee on Practice and Procedure (Leg.Doc. (1958) No. 13, p. 38) states that the proposed section is designed to make it clear that neither CPLR Section 305 nor any similar provision supersedes or operates as a limitation upon acquisition of jurisdiction as previously permitted by law and judicial decision or as permitted by this article or any future provision. The report (Id. at p. 37) further states that one of the objectives of the drafters of the CPLR is to make it possible for a litigant in the New York Courts to take full advantage of the state's constitutional power over persons and things. In Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915 (1917) jurisdiction over a foreign corporation was sustained even though the cause of action did not arise in the business transacted in New York, because the corporation was 'doing business' in New York. Starkey's composing activities, which he has exploited in the United States through attorneys and accountants whom he has retained in New York on a continuing basis, constitute doing business in New York. We reject the assertion that CPLR Section 301 has preserved the provision contained in Civil Practice Act Section 229--b limiting the exercise of jurisdiction over non-resident individuals doing business in New York to claims arising from such business in the state. We reject also the assertion that CPLR Section 302(a)(1) limits Section 301 to causes of action arising out of the business being done in New York (thereby rendering Section 301 redundant when applied to individuals doing business), and hold that where jurisdiction over an individual is obtained independent of CPLR Section 302 because the individual was 'doing business' in New York, jurisdiction will also attach with respect to causes of action which did not arise in New York.

Jurisdiction over Apple Corps, Ltd., which does no business in New York, was acquired by service on its subsidiary in New York, the alter ego of the parent through which it acted, Public Administrator v. Royal Bank of Canada, 19 N.Y.2d 127, 278 N.Y.S.2d 378, 224 N.E.2d 877 (1967). Furthermore, the test for doing business in New York under BCL Section 1314(b)(5) where both parties are foreign corporations is the same as under Section 301 (see Fremay Inc. v. Modern Plastic Machinery Corp., 15 A.D.2d 235, 222 N.Y.S.2d 694 (1st Dep't, 1961)).

We now consider, and reject, the contention that the actions should be dismissed on the ground of Forum non conveniens. Substantial nexus with New York exists. Plaintiff was to perform in New York most of its managerial and promotional activities on behalf of the Beatles and the Beatles derive most of their income from New York. The voluminous records plaintiff requires to prove its claims are in New York; plaintiff would incur expenses so large, including cassation of its business located in New York, in pursuing the action in England that it might be required to abandon the action; and the judicial effort in the New York actions already exceeds that present in Mirabella v. Banco Inc., 43 A.D.2d 489, 352 N.Y.S.2d 640 (1st Dep't, 1974) where we held dismissal for Forum non conveniens would not be justifiable where substantial pretrial disclosure had been effected here, despite the existence of other factors which support dismissal by application of the doctrine. Silver v. Great American Insurance, 29 N.Y.2d 356, 328...

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