Antonana v. Ore Steamship Corporation

• Decision Date: 19 September 1956
• Citation: 144 F. Supp. 486
• Parties: Manuel ANTONANA, Plaintiff, v. ORE STEAMSHIP CORPORATION and Ore Navigation Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

144 F. Supp. 486

Manuel ANTONANA, Plaintiff, v. ORE STEAMSHIP CORPORATION and Ore Navigation Corporation, Defendants.

United States District Court S. D. New York.

September 19, 1956.

George J. Engelman, New York City, for plaintiff.

Mendes & Mount, New York City, for Ore S. S. Corp., Daniel Huttenbrauch, New York City, of counsel.

PALMIERI, District Judge.

This is a seaman's action for damages under the Jones Act, 46 U.S.C.A. § 688, and for maintenance and cure. The plaintiff is presently hospitalized in New York. He commenced this action on December 29, 1955 by serving the New York Secretary of State, who was designated as statutory agent pursuant to General Corporation Law, McK.Consol. Laws, c. 23, § 216 for receiving service of process.¹ The defendant Ore Steamship Corporation has moved to set aside service of the summons and to dismiss the complaint against it on the ground that as a dissolved Delaware corporation, no longer doing business in New York, it was not subject to suit in this jurisdiction on a cause of action which arose outside the state. Thus, the defendant argues, section 216 is not applicable.

The affidavits of the parties establish that the injury for which this action is brought occurred in July, 1953, while plaintiff was aboard ship at or near Maryland in the employ of the defendant Ore Steamship Corporation. The contract of employment had been made in Baltimore. At the time, however, the Ore Steamship Corporation maintained offices at 25 Broadway, New York City, where it was licensed to do business under New York law. Plaintiff's affidavit states that when he applied, after his accident, for maintenance and cure in the Baltimore office, he was advised that that office dealt with employment only and that he should direct his application to the New York office. Thereupon, he went to the New York office and was paid an undisclosed amount, apparently for what was then due him. Subsequently, on December 21, 1953, the Ore Steamship Corporation executed and filed a surrender of its authority to do business in New York pursuant to section 216 of the General Corporation Law. On December 28, 1953, it filed a certificate of dissolution in the office of the Secretary of State of Delaware.

The court of the district in which the defendant employer resides or in which his principal office is located has jurisdiction of actions under the Jones Act. 38 Stat. 1185 (1915), as amended, 41 Stat. 1007 (1920), 46 U.S. C. 688 (1952), 46 U.S.C.A. § 688. Since the defendant is neither doing business nor incorporated in New York, Smith v. Hydro Gas Co. of West Florida, 5 Cir., 157 F.2d 809, certiorari denied, 1946, 330 U.S. 844, 67 S.Ct. 1084, 91 L.Ed. 1289, this provision is not directly applicable. Maitland v. C. D. Mallory & Co., D.C.S.D. N.Y. 1941, 40 F.Supp. 522 (provision applicable to dissolved as well as active corporations); see Note, Doing Business as a Test of Venue and Jurisdiction over Foreign Corporations in the Federal Courts, 56 Col.L.Rev. 394, 412-13 (1956). However, it is possible for defendant to waive his rights under this venue requirement and consent to be sued. Panama R. Co. v. Johnson, 1924, 264 U.S. 375, 44 S.Ct. 391, 68 L.Ed. 748. Proof that the defendant consented to be sued in the courts of this state for claims such as the one here, would establish a waiver of the governing federal venue provision. Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 309 U.S. 4, 60 S.Ct. 215, 84 L.Ed. 537, rehearing denied, 1940, 309 U.S. 693, 60 S.Ct. 465, 84 L.Ed. 1034; Neirbo Co. v. Bethlehem Shipbuilding Corp., 1939, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167; Arney v. Central Electric & Gas Co., D.C.D.Minn. 1946, 66 F.Supp. 401; Beard v. Continental Oil Co., D.C.E.D.La.1941, 42 F. Supp. 310; Bennett v. Standard Oil Co. of New Jersey, D.C.D.Md. 1940, 33 F. Supp. 871. Plaintiff contends that defendant gave such consent by complying with section 216 of the General Corporation Law upon surrender of its authority to do business in New York. Concededly, the statute imports by its terms consent to be sued in the New York courts. The scope of that consent, and specifically, whether it extends to the present action, is at issue here.

Section 216 provides that upon surrendering authority to do business in New York, a corporation must consent that:

"process against it in an action or proceeding upon any liability or obligation incurred within this state before the filing of the certificate of surrender of authority, after the filing thereof, may be served upon the secretary of state." New York General Corporation Law, McK.Consol. Laws, c. 23, § 216(1) (e). See also § 216(2).

Defendant contends that the consent to be sued expressed therein is confined to causes of action arising within the State of New York. The causes of action which so arise, the defendant suggests, are determined by the same inquiry which determines choice of the applicable law in conflicts of laws. Since the plaintiff incurred his injuries in question outside the state, and since the obligation to pay damages, if any, was incident to an employment contract signed in Maryland, defendant argues that any waiver of its venue privilege inferable from conceded compliance with section 216 does not extend to the present action.

It has been held that where federal venue is predicated upon waiver through compliance with state law the scope of the consent is circumscribed by the terms of the statute. See North Butte Mining Co. v. Tripp, 9 Cir., 1942, 128 F.2d 588. And the statute should be construed with reference to its interpretation by the courts of the state in question. Sunshine v. Southland Cotton Oil Co., D.C.W.D.La.1947, 74 F.Supp. 228; Arney v. Central Electric & Gas Co., D.C.D.Minn.1946, 66 F.Supp. 401; see Note, Doing Business as a Test of Venue and Jurisdiction over Foreign Corporations in the Federal Courts, 56 Col. L.Rev. 394, 396 (1956). The New York courts have never interpreted the disputed clause of section 216(1) (e) in a case precisely of this nature.² Interpretation of section 216(1) (e) in the state courts, as well as in this Circuit, has been concerned primarily with stockholders' derivative suits predicated upon misconduct which occurred outside the state. Uniformly, these cases have held that the place where the wrongful acts occur is immaterial. The stockholders' suits are based upon the failure of the corporations to take measure against the wrongdoers. Therefore, the actions fall within section 216(1) (e) as long as the corporations could have enforced their rights against the wrongdoers in the courts of this state. Spielberger v. Textron Incorporated, 2 Cir., 1949, 172 F.2d 85; Thorne v. Brand, 1938, 277 N.Y. 212, 14 N.E.2d 42; Devlin v. Webster, Sup. 1946, 188 Misc. 891, 66 N.Y.S.2d 464, affirmed 1st Dept.1947, 272 App.Div. 793, 71 N.Y.S.2d 706; Lissauer v. Brown, Sup., 86 N.Y.S.2d 35, affirmed 1st Dept. 1941, 262 App.Div. 723, 28 N.Y.S.2d 722; Druckerman v. Harbord, Sup.1940, 174 Misc. 1077, 22 N.Y.S.2d 595.

Defendant would seek to negate the inference from these derivative suit cases of a liberal interpretation, quite distinct from ordinary conflicts of laws doctrine, of "liability or obligation incurred within this state" by relying on a 1920 case decided by the Appellate Division involving a corporation which had surrendered its authority to do business in this state. Hexter v. Day-Elder Motors Corp., 1st Dept.1920, 192 App.Div. 394, 182 N.Y.S. 717. In this case, the court dismissed an action for breach of a contract for New York employment on the ground that the contract had not been made in this state. The statutory authority for this result, however, did not seem to be what is now section 216(1) (e) and the third sentence of section 216 (2), which refer to liabilities incurred within the state, but rather to what is now the second sentence of section 216 (a), which states that surrender of authority to do business shall not affect any right of action upon any contract made by the corporation in the state. See footnote 1.

This argument by defendant appears to have little force. A different statutory provision was involved in the Hexter case, and the derivative suit cases coming after this decision suggest that it is now obsolete.³ Moreover, a recent case has come to a conclusion completely inconsistent with that of the Hexter case. Carlton Properties, Inc., v. 328 Properties, Inc., Sup.1955, 208 Misc. 776, 143 N.Y.S.2d 140. Here a New York corporation assigned intangibles and realty to a Nevada corporation, the assignments being made in Nevada. The plaintiff, a third corporation, alleged that the assignments were fraudulent against it and proceeded in New York against the Nevada corporation by serving the New York Secretary of State. The Nevada corporation, pursuant to section 216, had surrendered its authority to do business in New York subsequent to the assignments. The court held that the place where the contract was made was irrelevant in determining the propriety of suit under section 216. The crucial factor, at least where the plaintiff was a local resident, was that the corporation was doing business in New York at the time the transactions occurred and would have been subject to suit in New York courts at the time the liability arose. See also Sunbury Wire Rope Mfg. Co. v. United States Steel Corp., D.C.E.D.Pa.1955, 18 F.R.D. 13, 15 note 5 reversed on other grounds, 3 Cir., 1956, 230 F.2d 511.

The Carlton case represents the most recent holding on the point in issue and appears to be in accord with the derivative suit decisions of the Federal and State Courts in New York. The 1920 decision, the Hexter case, was the ruling not of the state's highest court but of the intermediate Appellate Division and seems out of line with the recent New York trend. Since the New York cases suggest the answer, without clearly providing a definition of what is meant by "liability incurred within the state,...