Funding Systems Leasing Corp. v. Diaz, 00572

• Decision Date: 03 June 1977
• Docket Number: No. 00572,00572
• Citation: 34 Conn.Supp. 99,378 A.2d 108
• Court: Connecticut Court of Common Pleas
• Parties: FUNDING SYSTEMS LEASING CORPORATION v. Rudolphe DIAZ et al.

Page 108

378 A.2d 108

34 Conn.Supp. 99

FUNDING SYSTEMS LEASING CORPORATION v. Rudolphe DIAZ et al.

No. 00572.

Court of Common Pleas of Connecticut, Middlesex County.

June 3, 1977.

Harry L. Wise, Hartford, for plaintiff.

Burke & Burke, Hartford, for defendants.

DONALD T. DORSEY, Judge.

This is an action for unpaid rent on a lease of electronic equipment. The defendants have appeared specially and pleaded in abatement that the parties to the lease stipulated in paragraph twenty-two therein that any action or proceeding arising under the lease would be litigated only in courts located in New York state. The plaintiff has demurred to the plea on the grounds that the stipulation seeks to oust this court of jurisdiction and is against public policy and unenforceable.

Paragraph twenty-two of the lease annexed to the complaint reads as follows:

"STIPULATION THAT AGREEMENT IS A LEASE UNDER NEW YORK LAW; VENUE OF LITIGATION; SERVICE OF PROCESS: It is hereby stipulated by and between the lessor and lessee that this agreement shall be deemed to be a lease. It is further stipulated that said lease was made in New York County, New York, regardless of the order in which the signatures of the parties shall be affixed thereto. And said lease shall be interpreted and the rights and liabilities of the parties here determined in accordance with the laws of the state of New York. As part of the consideration for the lessor's executing this lease, lessee hereby agrees that all actions or proceedings arising directly or indirectly from this lease shall be litigated only in courts located within the state of New York, and lessee hereby consents to the jurisdiction of any court located within the state of New York, and waives the personal service of any and all process upon the lessee herein, and consents that all such service of process may be made by certified or registered mail, return receipt requested, directed to the lessee at the address hereinabove stated; and service so made shall be complete five (5) days after the same have been posted as aforesaid."

Traditionally clauses of the type found in paragraph twenty-two of the lease were believed to divest courts of jurisdiction. Jurisdiction granted by law cannot be altered by private agreement. Any agreement which sought to do so was, therefore, held to be against public policy and unenforceable. That view was adopted by Connecticut in Parker, Peebles & Knox v. El Saieh, 107 Conn. 545, 141 A. 884. In that case the plaintiff was attempting to garnish the defendant's funds which were held by an insurance company. The garnishee claimed lack of jurisdiction because a clause of its policy with the defendant limited litigation thereunder to courts of Haiti. The court held that the contract could not deprive it of jurisdiction over the action.

Parker, Peebles & Knox was decided half a century ago. Over the years the trend of decisions in many courts has been towards giving effect to private jurisdictional arrangements under certain circumstances. The more recent decisions maintain the traditional view that a court cannot be ousted of jurisdiction by private agreement. Those agreements, however, are no longer viewed as affecting the jurisdiction of the courts. Decisions during the last twenty-five years make it clear that in the face of such an agreement a court retains the right to hear the case but that it is not bound to exercise that right. Where the agreement has been freely made and is not unreasonable, courts have declined to exercise their jurisdiction and have refused to proceed with the cause presented to them. Wm. H. Muller & Co. v. Swedish American Line Ltd., 224 F.2d 806 (2d Cir.), cert. denied 350 U.S. 903, ¹ 76 S.Ct. 182, 100 L.Ed. 793; Krenger v. Pennsylvania R. Co., 174 F.2d 556 (2d Cir.), cert. denied 338 U.S. 866, 70 S.Ct. 140, 94 L.Ed. 531; Chemical Carriers, Inc. v. L. Smit & Co.'s Internationale Sleepdienst, 154 F.Supp. 886 (S.D.N.Y.); Schwartz v. Zim Israel Navigation Co., 15 Misc.2d 576, 181 N.Y.S.2d 283; Berner v. United Airlines, Inc., 2 Misc.2d 260, 149 N.Y.S.2d 335; Central Contracting Co. v. C. E. Youngdahl & Co., 418 Pa. 122, 209 A.2d 810.

This question has not been directly at issue in Connecticut since the change in thinking typified by the above-cited cases has taken place. In Johnson Acoustics, Inc. v. P. J. Carlin Construction Co., 29 Conn.Sup. 457, 292 A.2d 273, the court refused to honor a clause limiting jurisdiction to New York courts. That case involved suit on a performance bond which limited litigation to courts of the state where the work was performed. The bond was required under General Statutes § 49-41. The court, discussing the modern rule as contained in the Central Contracting, Berner and Schwartz cases cited above, concluded (p. 459, 292 A.2d p. 275) that: "Whatever may be said about permitting individuals to contract between themselves as to the...