Anderson Development Corp. v. Isoreg Corp.

• Decision Date: 26 October 1989
• Citation: 546 N.Y.S.2d 720,154 A.D.2d 859
• Parties: ANDERSON DEVELOPMENT CORPORATION, Appellant, v. ISOREG CORPORATION, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 720

546 N.Y.S.2d 720

154 A.D.2d 859

ANDERSON DEVELOPMENT CORPORATION, Appellant, v. ISOREG CORPORATION, Respondent.

Supreme Court, Appellate Division Third Department.

Oct. 26, 1989.

Peter A. Lynch, Albany, for appellant.

Alan R. Freedman (Michael J. Connolly, of counsel), Albany, for respondent.

Before KANE, J.P., and MIKOLL, YESAWICH, MERCURE and LEVINE, JJ.

MERCURE, Justice.

Appeal from an order of the Supreme Court (Kahn, J.), entered March 1, 1989 in Albany County, which denied plaintiff's motion to dismiss an affirmative defense in the answer.

Plaintiff commenced this action, alleging breach of contract, breach of warranty, fraud and negligence, to recover for damages sustained in connection with defendant's manufacture, sale and delivery to plaintiff of a transformer. Service was effected upon defendant, a Massachusetts corporation, in Massachusetts. Defendant's answer asserted, inter alia, the affirmative defense of lack of jurisdiction. Plaintiff moved to dismiss the defense upon the ground that defendant subjected itself to New York jurisdiction by enteringinto a contract to supply goods in this State (see, CPLR 302[a][1]. Supreme Court denied the motion; plaintiff appeals.

We reverse. It is undisputed that defendant manufactured, sold and shipped the transformer and additional replacement equipment to plaintiff in New York. Under CPLR 302(a)(1), Supreme Court may exercise personal jurisdiction over any nondomiciliary who "transacts any business within the state or contracts anywhere to supply goods or services in the state " (emphasis supplied). The emphasized language was added in 1979 (L.1979, ch. 252, § 1) in order to abrogate the "mere shipment" rule established by prior case law (West Mountain Corp. v. Seasons of Leisure Int., 82 A.D.2d 931, 440 N.Y.S.2d 729) and was proposed to extend New York's long-arm jurisdiction to its constitutional limits (1979 Report of N.Y. Law Rev. Commn., at 1450-1453; see, Island Wholesale Wood Supplies v. Blanchard Inds., 101 A.D.2d 878, 879, 476 N.Y.S.2d 192). Under the current law, New York courts may exercise jurisdiction over a nondomiciliary who contracts outside this State to supply goods or services in New York so long as the cause of action arose out of that contract (see, Lupton Assoc. v. Northeast Plastics, 105 A.D.2d 3, 6, 482 N.Y.S.2d 647).

Plaintiff's purchase contract and defendant's sales order and bill of lading all provide for shipment to New York and defendant collected New York sales tax in connection with the transaction, establishing its knowledge that the equipment was destined for New York. By shipping the goods to New York, defendant not only created a jurisdictional predicate under CPLR 302(a)(1) (see, Drake Am. Corp. v Speakman Co., 144 A.D.2d 529, 530-531, 534 N.Y.S.2d 679; Tonns v. Spiegel's, 90 A.D.2d 548, 549-550, 455 N.Y.S.2d 125; see also, Davidson Pipe Supply Co. v. G.W. Sales, Inc., 685 F.Supp. 332; cf., Paradise Prods. Corp. v. Allmark Equip. Co., 138 A.D.2d 470, 471, 526 N.Y.S.2d 119; Cooperstein v. Pan-Oceanic Mar., 124 A.D.2d 632, 633, 507 N.Y.S.2d 893, lv. denied 69 N.Y.2d 611, 517 N.Y.S.2d 1025, 511 N.E.2d 84; Augsbury Corp. v. Petrokey Corp., 97 A.D.2d 173, 176-177, 470 N.Y.S.2d 787), it also established the constitutionally required "minimum contacts" (International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed.95) and satisfied due process requirements by purposely availing itself of the privilege of conducting activities in New York, invoking the benefits and protections of its laws (Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283; see, McGee v. International Life Ins. Co., 355 U.S. 220, 222-223, 78 S.Ct. 199, 200-201, 2 L.Ed.2d 223; American Natl. Bank & Trust of N.J. v. Alba, 111 A.D.2d 294, 297-298, 489 N.Y.S.2d 285). Defendant's conduct and connection with New York was such that it should have reasonably anticipated being "haled into court" here (World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490; see, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528; 1 Weinstein-Korn-Miller, N.Y.Civ.Prac. p 302.11a).

Finally, recognizing that the jurisdictional significance of delivery terms has been an area of great conflict (see, Island Wholesale Wood Supplies v. Blanchard Inds., 101 A.D.2d 878, 879, 476 N.Y.S.2d 192,...