Bryant v. Finnish Nat. Airline

• Decision Date: 22 October 1964
• Citation: 253 N.Y.S.2d 215,22 A.D.2d 16
• Parties: Eleanor BRYANT, Plaintiff-Respondent, v. FINNISH NATIONAL AIRLINE, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 215

253 N.Y.S.2d 215

22 A.D.2d 16

Eleanor BRYANT, Plaintiff-Respondent, v. FINNISH NATIONAL AIRLINE, Defendant-Appellant.

Supreme Court, Appellate Division, First Department.

Oct. 22, 1964.

Douglas B. Bowring, New York City, of counsel (Haight, Gardner, Poor & Havens, New York City, attorneys) for appellant.

Joseph R. Apfel, New York City, of counsel (Daniel Leeds, New York City, attorney) for respondent.

Before BREITEL, J. P., and VALENTE, McNALLY, STEVENS and EAGER, JJ.

STEVENS, Justice.

Plaintiff instituted action to recover damages for personal injuries received October 12, 1962, at Orly Airport, Paris, France, which were allegedly caused by the negligence of the defendant. Defendant moved for an order pursuant to CPLR Rule 3211(a)(8) to dismiss the complaint on the ground that the court had no jurisdiction over the person of defendant. By order entered February 14, 1964, the motion was denied and defendant appeals therefrom.

The facts are relatively simple. Plaintiff, an air hostess in the employ of Trans-World Airlines (TWA) claims that she was knocked down and injured by a baggage cart 'blown and thrown forcibly' against her caused by an excessive air blast of one of defendant's aircraft which was proceeding on Ramp Area Parking Spot D. 2, at the airfield. Plaintiff asserts she was legally standing on Ramp Area Parking Spot D. 4. There is no claim that defendant's plane was illegally on Spot D. 2, nor any claim that defendant was responsible for the position of the cart.

Plaintiff served a summons and complaint in New York upon one Pentti Rosenberg, the Agency and Interline Manager of Finnair (Aero O/Y) a foreign corporation, sued herein as Finnish National Airline (herein Finnair). The question to be resolved is whether jurisdiction of the defendant was obtained as a result of such service.

CPLR § 301 provides 'A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore.' The words 'as might have been exercised heretofore' 'permits the courts to develop prior concepts used in New York without the limitations of statutory language.' 1 Weinstein-Korn-Miller, N.Y.Civ.Prac., Art. 3, § 301.10. 'Exercise of judicial power by the state through its courts requires the satisfaction of requirements which fall under three heads: subject matter, basis, and service. * * * Defects in connection with the second and third [i. e., basis and service] are reached by objections based upon 'lack of jurisdiction of the person of the defendant' (C.P.L.R. 3211(a)(8) or analogous objections to jurisdiction in in rem or quasi in rem actions (CPLR 3211(a)(9)).' 1 Weinstein-Korn-Miller, N.Y.Civ.Prac., Art. 3, § 301.01.

Under Section 224, General Corporation Law (now Business Corporation Law, § 1314(a)), '[a]n action against a foreign corporation may be maintained by a resident of the state * * * for any cause of action.' Plaintiff, a New York resident, claims as her basis for arguing that the courts acquired jurisdiction of the defendant, that defendant is doing business in the state and service was made in the prescribed manner.

Personal service upon a foreign corporation shall be made by delivering the summons 'to an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service' (CPLR § 311(1)). 'A statute which points out how personal service of process may be made upon a defendant reasonably seems to be considering a case where a litigant can be made a defendant legally in our courts * * *.' (Dollar Co. v. Canadian Car & Foundry Co., 220 N.Y. 270, 275, 115 N.E. 711, 712).

The broad general rule laid down in the past was that to justify service of process upon a foreign corporation it must be shown that such corporation does a substantial part of its main business in the state (Holzer v. Dodge Brothers, 233 N.Y. 216, 221, 135 N.E. 268, 269) or that the foreign 'corporation transacts, with a fair measure of continuity and regularity, a reasonable amount of its business within this commonwealth' (Brocia v. Franklin Plan Corporation, 235 App.Div. 421, 422, 257 N.Y.S. 167, 169). Now we speak of 'systematic, regular and permanent' activities of the foreign corporation (Joseph v. Litke, 13 A.D.2d 736, 737, 214 N.Y.S.2d 934, 935). As Mr. Justice Valente pointed out: 'The trend in the decisions of the United States Supreme Court * * * has been toward expanding the area in which a state may exercise jurisdiction over a foreign corporation. * * * In International Shoe [International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95] the flexible standard adopted by the court for in personam jurisdiction over a foreign corporation was whether the corporation had certain 'minimum contracts' with the State such that the maintenance of the suit did not offend 'traditional notions of fair play and substantial justice'.' (Simonson v. International Bank, 16 A.D.2d 55, 57, 225 N.Y.S.2d 392, 394, aff'd 14 N.Y.2d 281, 251 N.Y.S.2d 433, 200 N.E.2d 427.) But '[t]he International Shoe case * * * merely developed the doctrine that a state may extend the jurisdiction of its courts to encompass actions against a nonresident with respect to matters arising from significant acts of a nonresident in the State' (Breitel, J., Fremay, Inc. v. Modern Plastic Machinery Corp., 15 A.D.2d 235, 238, 222 N.Y.S.2d 694, 698). In other words the privilege to conduct certain activities within a state may carry with it the obligation to respond in the courts of that state, when the obligation sought to be enforced arises out of or is connected with the activities conducted within the state. International Shoe Co. v. Washington, supra.

The accident in the case before us did not arise from any 'significant act' done by defendant within the state. We must therefore resolve whether there is presence of the defendant by reason of its doing business here, or the existence of such minimum contacts 'that maintenance of the suit would not offend 'traditional notions of fair play and substantial justice'' (Mtr. of La Belle Creole Intern., S. A. v. Attorney-General, 10 N.Y.2d 192, 197, 219 N.Y.S.2d 1, 5, 176 N.E.2d 705, 708, citing cases). 'Each case must be decided on its own facts having in mind the nature of the action or proceeding involved' (ibid., 197, 219 N.Y.S.2d 5, 176 N.E.2d 708).

The defendant is a foreign corporation organized under the laws of Finland, with its principal operating base, its head executive and administrative offices located in Helsinki, Finland, and is not registered in the United States. None of its stockholders, directors or officers are citizens or residents of the United States and defendant has not qualified to do business in the State of New York. All of Finnair's flights begin and end outside of the United States. It operates no aircraft within the United States and, according to Rosenberg, the office in New York does not sell tickets even for its own flights and receives no payment of fares for defendant's flights at its New York office. Defendant maintains a one-and-a-half room office at 10 East 40th Street, New York, staffed with three full-time and four part-time employees, none of whom is an officer or director of defendant. Its principal function is to receive from international air carriers or travel agencies reservations for travel on Finnair in Europe which it transmits to defendant's space control office in Europe. Upon occasion the New York office will transmit information concerning a reservation from the international air carrier or travel agency to defendant's space control office in Europe and relay the confirmation or reply, when received, to such airline or agency. The New York office does some information and publicity work for defendant, and places a certain amount of advertising regarding Finnair's European services in connection with its publicity work. None of the New York office employees has authority to bind the defendant and contracts in connection with such office activities must be sent to the office in Helsinki for approval. Finnair maintains a bank account in which, according to Rosenberg, the average balance is less than $2000 and out of which is paid the salaries of the employees, the rent and normal operating expenses of the New York office.

As the term 'doing business' is used in reference to foreign corporations, it 'relates to the ordinary business which the corporation was organized to do' (Kline Brothers and Co. v. German Union Fire Ins. Co. of Baltimore, 147 App.Div. 790, 795, 132 N.Y.S. 181, 185, aff'd 210 N.Y. 534, 103 N.E. 1125). It is not the occasional contact or simple collateral activity which is included. For example, Section 218, General Corporation Law, requires of a foreign corporation doing business in this state, as a prerequisite to the maintenance of any action upon a contract made in this state, that it obtain a certificate of authority. This provision is designed to afford protection to our own corporations from unfair competition of foreign corporations, and to put domestic corporations 'upon a comparatively equal footing with those of foreign corporations coming in here to do business' (Angldile Computing Scale Co. v. Gladstone, 164 App.Div. 370, 374, 149 N.Y.S. 807, 811). 'But the making of a single sale, or the making of a series of sales, through a mere selling agent, by means of orders directed to the foreign corporation in its own state, where the goodg are delivered to a common carrier of that state under the terms of the contract, is not doing business in the state of New York within the meaning of that language as used in the statute' (ibid., p. 375, 149 N.Y.S., p. 811). 'The 'doing business' * * * is the exercising of its corporate franchises--the maintaining of a place of business within the state, in the sense that the corporations organized and doing business under the laws of this state...