Colbert v. International Sec. Bureau Inc.

• Decision Date: 23 March 1981
• Citation: 437 N.Y.S.2d 360,79 A.D.2d 448
• Parties: Maurice COLBERT et al., Appellants, v. INTERNATIONAL SECURITY BUREAU INC., et al., Respondents; et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 360

437 N.Y.S.2d 360

79 A.D.2d 448

Maurice COLBERT et al., Appellants, v. INTERNATIONAL SECURITY BUREAU INC., et al., Respondents; et al., Defendants.

Supreme Court, Appellate Division, Second Department.

March 23, 1981.

Francis E. Dorn, Brooklyn, for appellants.

Berel, Navarra & Mullen, P. C., New York City (Sebastian J. Navarra and John M. Tomsky, New York City, of counsel), for respondents.

Before DAMIANI, J. P., and LAZER, GIBBONS and O'CONNOR, JJ.

DAMIANI, Justice Presiding.

This case presents two questions concerning the defense of lack of in personam jurisdiction; one is recurrent, the other novel.

The plaintiffs sue to recover damages for defamation arising out of a private investigative report commissioned by the defendant Southern Railway Company from the defendant International Security Bureau, Inc., and allegedly prepared by defendant Arthur J. Schultheiss, an officer and director of International Security. On or about December 30, 1977 plaintiffs' attorney drew a summons and complaint and turned them over to a process server for delivery to the named defendants. The validity of the process server's attempt at serving defendant Southern Railway Company was challenged by that defendant and on appeal was ultimately sustained (Colbert v. International Security Bur., 70 A.D.2d 945, 417 N.Y.S.2d 975, affd., 49 N.Y.2d 988, 429 N.Y.S.2d 187, 406 N.E.2d 1080). This appeal involves the other two defendants.

The process server went to the offices of International Security where defendant Schultheiss was employed and left a copy of the summons and complaint with Lenore Sobel, one of its employees.

Apparently Mrs. Sobel turned the papers over to a responsible officer of the corporation and he referred the matter to its attorney. Since the summons and complaint named both International Security and Schultheiss as defendants and charged them jointly with defaming plaintiffs in an investigative report prepared as a part of corporation's business, the attorney drew a joint answer for both of those defendants which denied the material allegations of the complaint and set forth the following four defenses: (1) failure to state a cause of action, (2) lack of personal jurisdiction over the answering defendants, (3) truth, and (4) qualified privilege.

The plaintiffs moved to strike the affirmative defense of lack of jurisdiction from the answer of International Security and Schultheiss, claiming that Mrs. Sobel was a managing agent and that Schultheiss had answered as a "volunteer" and had therefore submitted himself to the jurisdiction of the court. Those defendants cross-moved to dismiss upon the ground of lack of jurisdiction. The cross motion was supported by the affidavit of Schultheiss which stated:

"At no time have I ever been served with a copy of the complaint either by personal service or by mail at my home or office".

On November 27, 1978 a hearing was held on the motion and cross motion before Mr. Justice BELLARD. The evidence adduced at the hearing disclosed that Lenore Sobel had been employed by International Security for a period of nine years. The other persons who worked in the office were Mr. Schultheiss and Mr. Van Norden, who were officers of the corporation, approximately seven investigators, who prepared the investigative reports that were the corporation's business, and Miss Panzer, who had administrative duties and worked with the investigators.

Mrs. Sobel testified that her duties consisted of taking telephone messages and relaying them to the investigators, who often worked outside the office, and to Mr. Schultheiss and Mr. Van Norden. She ordered stationery and supplies when directed to do so, and she did light bookkeeping. An accountant checked her books once a month. Checks received from clients in payment for services were accepted by her and held for safekeeping. She prepared the payroll checks but did not have "signatory powers".

In the absence of corporate officers, Van Norden and Schultheiss, no one was "in charge" of the office and no one was authorized to accept service of process. Mrs. Sobel testified that in the nine years that she had worked for International Security she had never been served with a summons or subpoena. She explained that she did not supervise anyone, stating "I take the orders. I don't give them." Each employee had his or her own work to do and, when the officers were out of the office, performed his or her duties more or less on an honor system.

January 16, 1978 was one of the very "rare occasion(s)" upon which Mrs. Sobel had been left alone in the office. A process server entered and asked whether there was anyone else present. Mrs. Sobel told him that she was alone and he then stated that he was going to leave a summons for International Security with her. She refused to take it but "he said it is the law, I have to take it", and he dropped it on her desk and walked out. The process server then provided the plaintiffs' attorney with an affidavit stating that he had served Mrs. Sobel as the "managing agent" of defendant International Security. He was not called to testify at the hearing.

The hearing minutes contain the following colloquy between court and counsel (Norman Lowenthal for plaintiffs, Sebastian J. Navarra for defendants International Security and Schultheiss) on the issue of jurisdiction over Schultheiss:

"MR. LOWENTHAL: Your Honor, at the outset they speak in terms of the alleged service of Arthur J. Schultheiss. There is no question that Arthur J. Schultheiss was never served; but he voluntarily appeared in this action. Once he voluntarily appears in the action we have jurisdiction of this man. We have never said we served the man. In his answer he appeared.

"THE COURT: Did he appear specially?

"MR. LOWENTHAL: No. The general answer we never served him. He voluntarily appeared. That is jurisdiction.

"MR. NAVARRA: * * *

"This appearance by Mr. Schultheiss in this action was raised by an affirmative defense of lack of jurisdiction. Our memorandum of law in support of the same amply demonstrates and cites cases that indicate where the issue of jurisdiction and lack of jurisdiction was raised it is not waived.

"THE COURT: All I asked you is if he appears specially.

"MR. LOWENTHAL: Here is the affidavit, your Honor. (Handed)

"Your Honor, as far as the other defendant, Arthur Schultheiss, we do not have any affidavit of service. We have never claimed that we ever served this man with a summons and complaint; nor do we ever say we served somebody else on his behalf. It is our contention at this time that this man put in an answer, did not appear especially; and in that way he voluntarily subjected himself to the jurisdiction of this court.

"MR. NAVARRA: Your Honor

"THE COURT: Counsellor, he makes the admission that Arthur Schultheiss had never been served.

"MR. NAVARRA: Yes.

"THE COURT: Admits that.

"MR. NAVARRA: Right.

"THE COURT: Now he is trying to say it was cured by answer, by an answer.

"MR. NAVARRA: That is what he said, right." (Emphasis added.)

After Mrs. Sobel testified, the closing arguments by counsel touched upon the point at issue:

"MR. LOWENTHAL: I now wish to argue the point as far as the service the non-service upon a defendant who then puts in an answer and appears in that way; and then states in his answer that there was no service because of whatever it was. I say that is a voluntary service, a voluntary appearance and an answer.

"MR. NAVARRA: Your Honor, taking the point of the question of whether Mr. Schultheiss voluntarily appeared in this action * * * Pursuant to CPLR, Section 320, the statute tells us what your appearances are, and I say there is no question he was never personally served in this action. But even though we filed this answer on May 10, 1978 we preserved the objection to jurisdiction by including therein the affirmative defense of lack of jurisdiction."

Mr. Justice BELLARD denied plaintiffs' motion to strike the defense and granted the cross motion to dismiss. Plaintiffs have appealed.

On appeal plaintiffs contend that they obtained in personal jurisdiction over the corporate defendant International Security by serving Mrs. Sobel as its "managing agent." We cannot agree.

The record in this case makes it abundantly clear that Mrs. Sobel was a mere receptionist and clerk without supervisory duties or any administrative power to act on behalf of the corporation. Accordingly, she was not a "managing agent" within the meaning of subdivision 1 of CPLR 311. The term "managing agent" as used in the laws governing civil practice was long ago defined by the Court of Appeals to the effect that a "managing agent must be some person invested by the corporation with general powers involving the exercise of judgment and discretion" as distinguished from a mere employee "who acts in an inferior capacity and under the direction and control of superior authority, both in regard to the extent of his duty and the manner of executing it" (Taylor v. Granite State Provident Assn., 136 N.Y. 343, 346, 32 N.E. 992; see, also, Ann., 71 A.L.R.2d 178). We reject plaintiffs' claim that any corporate employee who has been left to mind an office in the absence of superior corporate officials can be deemed a managing agent for the purposes of service of process. Although this view is supported by at least one commentator (see McLaughlin, Practice Commentaries, McKinney's Cons. Laws of N. Y., Book 7B, CPLR 311:1, p. 256) and by intimations in our recent decision in Sullivan Realty Organization v. Syart Trading Corp. (68 A.D.2d 756, 417 N.Y.S.2d 976), to accept such a claim would essentially result in redefining the term "managing agent" to mean any "person of suitable age and discretion" (cf. CPLR 308, subd. 2) employed by the defendant corporation. However desirable such a liberalization of the method of service upon a corporation might be, it is the duty of the courts in interpreting a statute to attempt to carry...