Gillmore v. J. S. Inskip, Inc.

• Decision Date: 10 July 1967
• Citation: 54 Misc.2d 218,282 N.Y.S.2d 127
• Parties: Frederick H. GILLMORE, Plaintiff, v. J. S. INSKIP, INC., Aston Martin Lagonda, Incorporated, and Aston Martin Lagonda, Limited, of England, Defendants.
• Court: New York Supreme Court

Page 127

282 N.Y.S.2d 127

54 Misc.2d 218

Frederick H. GILLMORE, Plaintiff, v. J. S. INSKIP, INC., Aston Martin Lagonda, Incorporated, and Aston Martin Lagonda, Limited, of England, Defendants.

Supreme Court, Special Term, Nassau County, Part I.

July 10, 1967.

[54 Misc.2d 219] Marvin, Montfort, Healy, McGuire, & Salley, Garden City, for plaintiff.

Brand, Morgan & Brand, Garden City, for defendants Aston Martin Lagonda, Inc.

Samuel D. Pressman, New York City, for defendant Inskip.

MEMORANDUM

BERNARD S. MEYER, Justice.

This motion to dismiss for lack of jurisdiction over the person of defendants Aston Martin Lagonda, Limited and Aston Martin Lagonda, Incorporated, raises issues concerning the constitutionality, retroactivity and interpretation of CPLR 302(a)(3) as amended by Laws of 1966, Chap. 590, effective September 1, 1966. The motion is denied without prejudice to assertion of the same defense in defendants' answer or answers.

Limited is a corporation, organized under the laws of Great Britain, which manufactures Aston Martin automobiles. Corporation is a corporation, organized under the laws of the State of Pennsylvania, which imports into and services in Pennsylvania Aston Martin automobiles purchased from Limited and delivers the automobiles in Pennsylvania to dealers who have placed orders for them. J. S. Inskip, Inc. is the distributor for New York and other parts of the Eastern Seaboard. Plaintiff Gillmore, about April 29, 1966, purchased an Aston Martin car from Inskip. The car delivered to him by Inskip was manufactured by Limited, imported and serviced by Corporation and by Corporation delivered to Inskip in Pennsylvania. On May 20, 1966, after delivery of the car to plaintiff in New York, it caught fire and was destroyed, allegedly as a result of defective manufacture and service. In January 1967 plaintiff commenced this action, which sets forth causes of action for both negligence and breach of warranty, against Limited, Corporation and Inskip. Inskip has cross-claimed against Limited and Corporation. Plaintiff and Inskip both oppose the motion, but the affidavit submitted on behalf of Inskip is by its attorney and not shown to be based on personal knowledge, and, therefore, is not considered, and the affidavit submitted on behalf of plaintiff adds to the above stated facts only a newspaper clipping stating that in March 1967 Limited's deputy managing director announced in New York a price reduction of Aston Martin cars.

On the foregoing facts, jurisdiction, if it exists at all, must be founded on CPLR 302(a)(3). The complaint alleges a tortious act committed without the state causing injury to property within the state, but in addition to that § 302(a)(3) requires a showing that defendants (1) regularly do or solicit business in New York, or (2) engage in a persistent course of conduct in New York, (3) or derive substantial revenue from goods used or consumed or services rendered in New York, or (4) expect or reasonably should expect the act to have consequences in New York and derive substantial revenue from interstate or international commerce. The moving papers sufficiently establish that neither moving defendant regularly does or solicits business in New York or engages in any other persistent course of conduct in New York. Even if the Inskip affidavit be considered, it establishes no more than that Inskip has been appointed distributor for New York and that defendants exhibited Aston Martin automobiles at the 1967 Automobile Show. A distributor is not as a matter of law an agent (but cf. Lewin v. Bock Laundry Mach. Co., 16 N.Y.2d 1070, 266 N.Y.S.2d 391, 213 N.E.2d 686), and nothing in the papers before the court establishes that Inskip was anything other than an independent contractor to whom an automobile distributorship had been granted. Exhibition at one auto show is not regular business or solicitation nor a persistent course of conduct.

The 'substantial revenue' provisionsof CPLR 302(a)(3) do not require any connection between the tortious act committed outside the state and the deriving of revenue from goods used in New York or from interstate or international commerce, Judicial Conference Report proposing the bill that became Chapter 590, 1966 McKinney's Session Laws at p. 2790, and under clause (ii) of that section the 'requirement of foreseeability relates to forum consequences generally and not to the specific event which produced injury within the state,' ibid. In light of Inskip's appointment as distributor for the area including New York, defendants 'should reasonably expect' improper manufacture or servicing 'to have consequences in the state.' If, therefore, either defendant received 'substantial revenue' from goods used in New York or from interstate or international commerce, the statute subjects it to personal jurisdiction.

What constitutes 'substantial revenue' under CPLR302(a)(3)(i) and (ii) is not defined in the statute or in the Judicial Conference Report, supra, 1966 McKinney's Session Laws 2780, 2786--2790, or in the annotations to Section 1.03 of the Uniform Interstate and International Procedure Act, 9B Uniform Laws Annot. 312, on which Chapter 590 was based in part. Viewed in the context of the constitutional limitations discussed below, which required 'minimal contact' with the forum and proscribe the exercise of jurisdiction when it would be unfair to require a foreign defendant to come into the forum to defend, the phrase should, logically, be construed to require comparison of New York (or interstate or international) gross sales revenue with a defendant's total gross sales revenue, cf. Kramer v. Vogl, 17 N.Y.2d 27, 32, 267 N.Y.S.2d 900, 903, 215 N.E.2d 159, 161, or New York, interstate or international net profits with a defendant's total net profit, but there are cases which deal with the question of substantiality in terms of dollar volume of sales or profit in the abstract, see Singer v. Walker, 15 N.Y.2d 443, 466, 261 N.Y.S.2d 8, 25, 209 N.E.2d 68, 81; Johnson v. Equitable Life Assur. Soc., 22 A.D.2d 138, 140, 254 N.Y.S.2d 136, aff'd on stipulation for jurisdiction, 18 N.Y.2d 933, 277 N.Y.S.2d 136, 223 N.E.2d 562; Newman v. Nathan Inc., 46 Misc.2d 407, 259 N.Y.S.2d 637, rev'd on other grounds 24 A.D.2d 867, 264 N.Y.S.2d 382; Rietsch v. S.A. Des Automobiles Peugeot, 45 Misc.2d 274, 256 N.Y.S.2d 772. It is not necessary to decide exactly what 'substantial revenue' means for the purpose of CPLR 302(a)(3), for though the moving affidavits contain conclusory allegations framed in the language of the statute, they set forth neither gross sales nor net profis from New York, or from interstate or foreign commerce, nor comparative total sales or net profit figures. All that the moving papers establish is that one automobile, for which Inskip paid in excess of $12,000 came in to New York and six automobiles valued for customs purposes at $55,586 moved in international commerce from Limited to Corporation. The latter fact, together with the statement in Corporation's affidavit that its operation consists of importing Aston Martin cars and 'reselling them to distributors and dealers in the Eastern Seaboard and Mid-West areas of the United States' raises the inference that Corporation derives All of its revenue from interstate or international commerce. On this motion it is up to defendants to show the absence of substantial revenue, cf. Johnson v. Equitable Life Assur. Soc., 16 N.Y.2d 1067, 266 N.Y.S.2d 138, 213 N.E.2d 466. Since neither has done so, the motion must, unless the statute is not retroactive or is unconstitutional, be denied. It may, however, be possible for either or both defendants to prove that they do not derive substantial revenue within the meaning of the section; they are, therefore, granted leave to raise the jurisdictional issue in the answer or answers they file.

The retroactivity point can be disposed of quickly. Longines-Wittnauer Watch Co. v. Barnes & Reinecke, 15 N.Y.2d 443, 454, 261 N.Y.S.2d 8, 16, 209 N.E.2d 68, 74, establishes that there is no constitutional objection to applying § 302 to a suit instituted after its effective date based on events occurring before its effective date, and the same rule, of course, applies to the 1966 amendment. While both the Longines case and Simonson v. International Bank, 14 N.Y.2d 281, 251 N.Y.S.2d 433, 200 N.E.2d 427,...