Laufer v. Ostrow

• Decision Date: 07 March 1980
• Citation: 435 N.Y.S.2d 873,107 Misc.2d 690
• Parties: Jerome LAUFER, Plaintiff, v. Ira OSTROW and The Mt. Olive Corp., Defendant.
• Court: New York Supreme Court

Page 873

435 N.Y.S.2d 873

107 Misc.2d 690

Jerome LAUFER, Plaintiff, v. Ira OSTROW and The Mt. Olive Corp., Defendant.

Supreme Court, Trial Term, Suffolk County, Part VIII.

March 7, 1980.

Wydler, Balin, Pares, Soloway, Seaton & Marglin, New Hyde Park, for plaintiff.

Tananbaum & Sibener, Commack, for defendant.

UNDERWOOD, Justice.

The amended complaint alleges five causes of action and plaintiff seeks damages and an accounting as a result of the failure of defendants to pay sales commissions.

Defendants moved pursuant to CPLR 3211(a)(8) to dismiss plaintiff's complaint upon the ground that "the court has not jurisdiction of the person of the defendants." The court by a memorandum-decision stated inter alia that "the contradictory affidavits before this court do not sufficiently disclose whether the corporate defendant or individual defendant are subject to the jurisdiction of this court under CPLR 301 or CPLR 302 ..." and the court granted plaintiff's cross-motion for an examination before trial.

Thereafter, a non-jury trial was held before the undersigned to determine the jurisdictional question.

I

Plaintiff and the individual-defendant were the principal witnesses at the trial and the following facts were elicited.

Plaintiff was a resident of the State of New York when the action was commenced and he now lives in the State of Florida. He was a salesman for the defendant-corporation and he "... started calling on trade, trying to sell merchandise ... (He) first started calling on a New York trade which is where most of the business was being done at the time." Plaintiff "... tried to sell them merchandise and in other cases (he) serviced them (by) deliver(ing) swatches to them ... to enable them to sell the product." Plaintiff called on the New York accounts under the supervision of the individual-defendant. Plaintiff received his pay checks from the corporate-defendant in New Jersey.

Defendant-corporation is a foreign corporation organized under the laws of New Jersey and it is not licensed to do business in New York (note however Business Corporation Law sec. 1312(b)). Its corporate records and minutes are maintained in New Jersey. The corporation "... was formed in early 1975 to act as a selling agency for Pem-Kay Furniture Company, which is a furniture manufacturing company ... in North Carolina ..." It was also characterized as a "sales agency" for Pem-Kay Furniture. The corporation employed several salesmen and "the responsibilities of the salesmen were to solicit the distribution of goods (of Pem-Kay Furniture Company-author) throughout the portions of the United States that we could reach geographically within our trucking areas of North Carolina." The accounts of Pem-Kay Furniture were allocated to the several salesmen "to service specific customers to again sell or solicit business and to try and achieve volume for Pem-Kay through Mt. Olive ..."

The individual-defendant a New Jersey resident on many occasions over a period of years visited the New York accounts to solicit and service business for the defendant-corporation and to inquire about complaints. In short, the individual-defendant acted as the "chief" salesman for the defendant-corporation.

Defendant-corporation does not maintain an office, a telephone or a checking account in New York and it does not advertise in New York. All orders solicited by the salesmen must be approved by the defendant-corporation in New Jersey and all customers pay their bills directly to Pem-Kay in North Carolina or its factor which is also located there.

Finally, the individual-defendant testified that the corporate-defendant conducted substantial business with the New York accounts. He stated that the corporate-defendant did $500,000.00 worth of business with Macy's, $700,000.00 worth of business with Saks, $400,000.00 worth of business with Sloan, and $500,000.00 worth of business with Gertz.

II

Plaintiff's primary argument is that defendants are "doing business" within the State of New York pursuant to CPLR 301 and are therefore subject to the jurisdiction of the Court.

CPLR 301 simply states that "a court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." A leading treatise has stated that "CPLR 301 carried into the new practice all extant New York statutory and case law principles on bases of jurisdiction." (1 Weinstein-Korn-Miller N.Y.Civ.Prac. par. 301.10) and "doing business" is one such principle (see e. g. Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915). In fact, the Tauza case held that the cause of action sued upon does not have to arise out of the activities in this state if the foreign corporation was "doing business" in New York (Id. at p. 268, 115 N.E. 915; see also Public Administrator of County of N. Y. v. Royal Bank of Canada, 19 N.Y.2d 127, 278 N.Y.S.2d 378, 224 N.E.2d 877). The burden of proving that jurisdiction over the person of defendants has been obtained is on the plaintiff. (Peterson v. Spartan Industries, Inc., 33 N.Y.S.2d 463, 354 N.Y.S.2d 905, 310 N.E.2d 513).

Plaintiff, therefore, argues that "the Court must look into the entire complex of facts involved in ascertaining ... (doing business and) defendants have conducted their business in such a manner as to be subject to the jurisdiction of this Court ..."

Plaintiff is correct in this assertion. The Court of Appeals has stated that "there is, of course, no precise measure of the nature or extent of local purchasing activities which will render a foreign corporation amenable to process in this State. Each case must be decided on its own particular facts." (Sterling Novelty Corp. v. Frank and Hirsch Distributor Co., 299 N.Y. 208 at 210-211, 86 N.E.2d 564). The court also stated that "the test for 'doing business' is and should be a simple pragmatic one ...". (Bryant v. Finnish National Airline, 15 N.Y.2d 426 at 432, 260 N.Y.S.2d 625). "No abstract test for determining presence of a foreign corporation has been articulated; activities which can be characterized as systematic, regular or continuous, or those which take place from a relatively permanent office tend to support a finding of 'doing business'." (1 Weinstein-Korn-Miller N.Y.Civ.Prac. par. 301.16).

Finally, this court is aware of the very recent decisions of the Supreme Court of the United States in Rush v. Savchuk (444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516) and World-Wide Volkswagon Corporation v. Woodson (444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490). Although these cases dealt with quasi in rem jurisdiction (Rush ) and long-arm personal jurisdiction (World-Wide Volkswagon ) the Court commented on the jurisdiction of a State over non-resident defendants as follows:

"As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a non-resident defendant only so long as there exist "minimum contacts" between the defendant and the forum State. International Shoe Co. v. Washington, supra at 316 (66 S.Ct., at 158). The concept of minimum contacts, in turn, can be seen to perform two related but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal...