La Belle Creole Intern., S. A. v. Attorney-General

• Decision Date: 07 July 1961
• Docket Number: ATTORNEY-GENERAL
• Citation: 10 N.Y.2d 192,176 N.E.2d 705,219 N.Y.S.2d 1
• Parties: , 176 N.E.2d 705 In the Matter of LA BELLE CREOLE INTERNATIONAL, S. A., Respondent, v.of the State of New York, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 1

219 N.Y.S.2d 1

10 N.Y.2d 192, 176 N.E.2d 705

In the Matter of LA BELLE CREOLE INTERNATIONAL, S. A., Respondent, v. ATTORNEY-GENERAL of the State of New York, Appellant.

Court of Appeals of New York.

July 7, 1961.

Louis J. Lefkowitz, Atty. Gen., in pro. per. (George C. Mantzoros, New York City, Paxton Blair, Albany, and Samuel A. Hirshowitz, New York City, of counsel), for Attorney-General of the State of New York, appellant.

William M. Ivler, New York City, for respondent.

FULD, Judge.

La Belle Creole International, S. A., the petitioner herein, brought this proceeding to vacate a subpoena duces tecum served upon its president by the Attorney-General, commanding it to testify and produce its records and books. The court at Special Term denied the motion and the Appellate Division reversed and directed that the subpoena be vacated. In this court, the petitioner advances two contentions and it is to them alone that we direct our attention first, that the subpoena is unconstitutionally vague and indefinite and, second, that, being a foreign corporation not doing business in this State, it is not subject to the service of process.

The petitioner, a Panamanian corporation with its principal place of business in Haiti, is in the business of providing a service for the placing of orders for liquor by residents of this country traveling abroad and of arranging for the delivery of the liquor to their homes duty free. A New York corporation, Intramerica Export, Inc., with offices in New York City, pursuant to agreement with the petitioner, places advertisements in local newspapers, informing the public of the petitioner's 'duty-free liquor service' and upon request it supplies order kits to prospective purchasers for use outside the United States. ¹ One who desires to purchase liquor mails his order form to the petitioner at an address in Switzerland and the petitioner places the order in Europe for the account of such purchaser. After notice is sent to the United States Customs Service, the liquor is sent to the purchaser's home, payment being made either in Switzerland or Puerto Rico.

On November 1, 1960, the Attorney-General served a subpoena upon the petitioner's president at a New York City hotel, requiring the petitioner to give testimony 'in an inquiry by the Attorney General to determine whether an application should be made or an action instituted * * * (pursuant to an Executive Law provision) to enjoin (the petitioner) from the commission of persistently fraudulent or illegal acts' and directing the production of corporate books and records from Jannary 1, 1960 'to date'. As indicated, the petitioner moved to vacate the subpoena and, in support of its position, urged that the subpoena is defective and void in that it fails to show what matters are in fact under investigation or in what manner the requested documents are relevant and material to such investigation and that, in any event, it is not amenable to process since it is a foreign corporation not doing business in this State.

In our view, the subpoena is valid. It was issued pursuant to subdivision 12 of section 63 of the Executive Law, Consol.Laws, c. 18, which recites that, 'Whenever any person shall engage in repeated fraudulent or illegal acts * * * in the carrying on, conducting or transaction of business, the attorney-general may apply * * * for an order enjoining the continuance of such business activity'. In connection with the application, the statute authorizes the Attorney-General to take proof and to issue subpoenas requiring the person involved to attend and produce books, as provided in section 406 of the Civil Practice Act. See Dunham v. Ottinger, 243 N.Y. 423, 154 N.E. 298.

While the Attorney-General should perhaps have 'followed the preferable practice of disclosing on the face of the subpoena the relevancy of the examination sought to some inquiry within his province', his failure to do so does not thereby render the subpoena void. Dawn Operators, Inc. v. Lyon, 283 App.Div. 358, 361, 128 N.Y.S.2d 317, 321, motion for leave to appeal denied 306 N.Y. 977, 119 N.E.2d 609; see, also, Manning v. Valente, 297 N.Y. 681, 77 N.E.2d 3, affirming 272 App.Div. 358, 361, 72 N.Y.S.2d 88, 92. And, upon a preliminary motion, such as the present, to contest 'the obligation of the writ', he need only show that the records and books which he seeks bear 'a reasonable relation to the subject-matter under investigation and to the public purpose to be achieved.' Carlisle v. Bennett, 268 N.Y. 212, 217, 197 N.E. 220, 222. He does not, it is true, have 'arbitrary and unbridled discretion as to the scope of his investigation' (Carlisle v. Bennett, 268 N.Y 212, 217, 197 N.E. 220, 222, supra), but, unless the subpoena calls for 'documents which are utterly irrelevant to any proper inquiry' (Dairymen's League Co-op. Ass'n v. Murtagh, 274 App.Div. 591, 595, 84 N.Y.S.2d 749, 754, affirmed 299 N.Y. 634, 86 N.E.2d 509) or its 'futility * * * to uncover anything legitimate is inevitable or obvious', the courts will be slow to strike it down. Matter of Edge Ho Holding Corp., 256 N.Y. 374, 382, 176 N.E. 537, 539; see, also, Broadway Maintenance Corp. v. Grumet, 9 N.Y.2d 719, 214 N.Y.S.2d 339; Matter of Joint Legislative Committee (Teachers Union), 285 N.Y. 1, 9, 32 N.E.2d 769, 771. As this court stated in the Edge Ho Holding Corp. case (256 N.Y. at pages 381-382, 176 N.E. at page 539), 'Investigation will be paralyzed if arguments as to materiality or relevance, however appropriate at the hearing, are to be transferred upon a doubtful showing to the stage of a preliminary contest as to the obligation of the writ.'

We have no doubt that the information sought by the Attorney-General was relevant to his inquiry. He was empowered to investigate allegedly illegal acts in the conduct of business in New York. The petitioner was engaged in a business which the Attorney-General contends was subject to regulation under the Alcoholic Beverage Control Law, Consol.Laws, c. 3-b. Whatever the ultimate outcome, there can be no doubt that its books and records were material and pertinent in an investigation whose purpose was to ascertain whether or not it was carrying on its affairs in compliance with the relevant provision of that statute. The circumstance that the subpoena seeks books which cover a 10-month period does not render it so broad or onerous as to justify a charge that the Attorney-General was embarking 'upon any roving course for the purpose of generally prying into the affairs of any person.' Dunham v. Ottinger, 243 N.Y. 423, 433, 154 N.E. 298, 300, supra.

The more interesting and provocative question stems from the circumstance that the petitioner is a foreign corporation. It is argued that it is not doing business in this State and, hence, not subject to the service of the subpoena.

What constitutes 'doing business' in order to render a foreign corporation amenable to process is not susceptible of exact delineation. Each case must be decided on its own facts having in mind the nature of the action or proceeding involved. To justify a civil suit against it and to satisfy due process requirements, the foreign corporation must possess such 'minimum contacts' with the State that maintenance of the suit will not offend 'traditional notions of fair play and substantial justice'. McGee v. International Life Ins. Co., 355 U.S. 220, 222, 78 S.Ct. 199, 2 L.Ed.2d 223; see, also, International Shoe Co. v. State of Washington, 326 U.S. 310, 314, 66 S.Ct....