Gelfand v. Tanner Motor Tours, Ltd.
Decision Date | 13 November 1967 |
Docket Number | No. 77,Docket 31156.,77 |
Citation | 385 F.2d 116 |
Parties | Nettie GELFAND and Phillip Gelfand, Plaintiffs-Appellants, v. TANNER MOTOR TOURS, LTD. (California Corporation), Tanner Motor Tours of Nevada, Ltd. (Nevada Corporation), Tanner Motor Tours Corporation, Limited (a Nevada Corporation), Tanner Motor Tours, Ltd. (a Nevada Corporation), Tanner Motor Tours, Ltd. of California (a California Corporation) and Lucky Cab Co. (a Nevada Corporation), Defendants-Appellees. |
Court | U.S. Court of Appeals — Second Circuit |
Richard E. Shandell, New York City (Fuchsberg & Fuchsberg, New York City, on the brief), for plaintiffs-appellants.
William J. Quinlan, New York City (Denis R. Sheil, New York City, on the brief), for defendants-appellees.
Before LUMBARD, Chief Judge, and SMITH and FEINBERG, Circuit Judges.
The sole question on this appeal is whether defendant corporations are doing business in New York through their promotional representative, Herbert J. DeGraff, so as to give the district court personal jurisdiction over them under traditional principles of New York law as preserved by § 301 of New York Civil Practice Law and Rules. All other grounds for in personam jurisdiction over defendants were considered and rejected in an earlier opinion of this court, 339 F.2d 317 (2 Cir. 1964) when we remanded the case for further findings on the issue now before us. On remand, the district court again found that defendants' activities in New York were not sufficient to warrant a finding that they were doing business in New York. Upon the additional evidence now before us and in light of a New York opinion written after the decision below, we reverse.
The plaintiffs, New York residents, brought suit for injuries sustained on May 4, 1962 when a wheel broke off a Gray Line bus in which they were riding in Arizona en route from Las Vegas to the Grand Canyon. Mr. and Mrs. Gelfand sued six corporate defendants. Three defendants have moved to dismiss the complaint. Although the other three named defendants did not appear the district court dismissed the action against all six defendants. The three moving defendants are Tanner Motor Tours, Ltd. (California), Tanner Motor Tours of Nevada, Ltd. and Lucky Cab Co. Tanner (California) operates sightseeing and charter bus services in Southern California and also performs interstate services for Tanner (Nevada). That corporation operates sightseeing and charter bus service in Clark County, Nevada, and also operates a car rental agency. The district court assumed, but did not make a finding, that Tanner (Nevada) operated the Grand Canyon tour. The record leaves open the possibility that Tanner (California) operated some or all of the tour buses. Lucky Cab Co. operates a taxicab service in Las Vegas and Clark County, Nevada. Defendants are related companies under common ownership. The parent company is Tanner Motor Livery, Ltd., not named as defendant in this suit.
The moving defendants also are members of Gray Line Sight-Seeing Companies Associated, Inc., a non-profit membership corporation organized under Maryland law. As such they are licensed to use the words "Gray Line" in promoting their tours. Gray Line Associated does not operate any sightseeing or tour services of its own. Its expenses are met from dues paid by more than 90 members. The Tanner companies account for approximately 14 or 15% of the total sightseeing business of the Gray Line companies.
Gray Line Associated conducts national advertising programs and public relations campaigns and contacts travel agents to induce them to use its members' facilities. It has a contract with Herbert J. DeGraff Associated, Inc. to act as its sales service representative. In New York, Gray Line Associated is listed at an office maintained by DeGraff Associated, Inc. at 501 Madison Avenue. Mr. Herbert J. DeGraff holds the title of Vice President of Sales for the Eastern Region of Gray Line Associated. However that position imposes no duties on him beyond those provided in the contract between Gray Line Associated and his organization. In consideration of an annual fee of $23,500, DeGraff Associated, Inc. agreed:
The agreement would terminate automatically if Herbert J. DeGraff was disabled. DeGraff Associated represents many other clients in the travel business besides Gray Line Associated.
The court below found that DeGraff Associated was retained as an independent contractor by Gray Line Associated. Mr. DeGraff did not receive direct payment from any of the defendants for any of the services he performed and he is not on the payroll of any of them nor an officer, director or stockholder of any of them. There was no evidence that DeGraff or his corporation were under the control of defendants or that Gray Line Associated was under the control of Tanner, although the president of the Tanner corporations, C. H. Tanner, was also president of Gray Line Associated until October 1964.
Mr. DeGraff's most important work for Gray Line Associated was in arranging package tours with major wholesale travel agents and transportation carriers. However DeGraff also provided a special service for whichever defendants ran the Grand Canyon tour. Although under no contractual obligation to the Tanner corporations, DeGraff Associated cleared reservations for the Grand Canyon tour. Until informed by Gray Line of Las Vegas, the promotional name used by defendants who operated the Grand Canyon tour, that space was no longer available, DeGraff confirmed reservations, except group reservations, without obtaining Las Vegas' approval. In 1962, 1963 and 1964, approximately 3,000 of 7,000 total annual passenger reservations on the tour were cleared and confirmed by DeGraff. The value of the bookings confirmed through DeGraff Associated each year was approximately $120,000. Six of DeGraff's clerks spent part of their time working on Grand Canyon reservations. Mr. DeGraff testified that without his reservation service the tour could not be effectively merchandised.
The amenability of the defendant corporations to suit in a federal diversity action is governed by the law of the state in which the federal court sits, unless it should be found not to comply with constitutional requirements. Arrowsmith v. United Press International, 320 F.2d 219, 6 A.L.R.3d 1072 (2 Cir. 1963). This suit, having been brought in the Eastern District of New York, we must look to New York law.
New York's highest court recently said in Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 43-44, 227 N.E.2d 851, 853 (1967):
( . (International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, supra; see Simonson v. International Bank, 14 N.Y.2d 281, 286, 251 N.Y.S.2d 433, 436, 200 N.E. 427, 429, supra.) (Citations partially omitted.)
Judge Dooling found that there was no personal jurisdiction over the defendant corporations because their contacts with New York through Gray Line Associated and DeGraff Associated lacked "some integrating factor, like directness of control, or the formalization of service, obligations of the kind covered by...
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...1998), §14:753 Geiger v. American Tobacco Company , 277 AD2d 420, 716 NYS2d 108 (2d Dept 2000), §14.703 Gelfand v. Tanner Motor Tours, 385 F2d 116 (2d Cir 1967), cert den 390 US 996, 88 SCt 1198, 20 LEd2d 95 (1968), §§7:59, 7:160 Gellman v. Hilal , 159 Misc2d 1085, 607 NYS2d 853 (1994), §1:......
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...1998), §14:753 Geiger v. American Tobacco Company , 277 AD2d 420, 716 NYS2d 108 (2d Dept 2000), §14.703 Gelfand v. Tanner Motor Tours, 385 F2d 116 (2d Cir 1967), cert den 390 US 996, 88 SCt 1198, 20 LEd2d 95 (1968), §7:59, Gellman v. Hilal , 159 Misc2d 1085, 607 NYS2d 853 (1994), §1:90 Gene......
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