McGowan v. Smith

• Decision Date: 21 December 1979
• Citation: 72 A.D.2d 75,423 N.Y.S.2d 90
• Court: New York Supreme Court — Appellate Division
• Parties: Gerard F. McGOWAN, Individually and as Parent and Natural Guardian of Gerard Anthony McGowan, an Infant, Respondent, v. Elton SMITH and Jill Smith, his wife and Adam, Meldrum & Anderson Co., Inc., Respondents. ADAM, MELDRUM & ANDERSON CO., INC., Third-Party Plaintiff-Respondent, v. FREDERICK ATKINS, INC., Third-Party Defendant-Respondent, and Mogi Trading Company, Third-Party Defendant-Appellant.

Page 90

423 N.Y.S.2d 90

72 A.D.2d 75

Gerard F. McGOWAN, Individually and as Parent and Natural Guardian of Gerard Anthony McGowan, an Infant, Respondent, v. Elton SMITH and Jill Smith, his wife and Adam, Meldrum &

Anderson Co., Inc., Respondents.

ADAM, MELDRUM & ANDERSON CO., INC., Third-Party Plaintiff-Respondent, v. FREDERICK ATKINS, INC., Third-Party Defendant-Respondent, and Mogi Trading Company, Third-Party Defendant-Appellant.

Supreme Court, Appellate Division, Fourth Department.

Dec. 21, 1979.

Brown, Kelly, Turner, Hassett & Leach, Buffalo (Andrew D. Merrick, Buffalo, of counsel), for appellant.

Cox, Barrell, Walsh, Roberts & Grace, Buffalo (Gerald Grace, Jr., Buffalo, of counsel), for respondents Smith.

Hurwitz & Fine, P. C., Buffalo (James Gauthier, Buffalo, of counsel), for respondents AM&A.

Before SIMONS, J. P. and HANCOCK, SCHNEPP, DOERR and WITMER, JJ.

DOERR, Justice.

This case calls for yet another interpretation of CPLR 302, New York's "long arm" statute dealing with personal jurisdiction over non-domiciliary defendants.

On July 28, 1971 Gerald Anthony McGowan, a resident of the State of New York and the son of plaintiff, was visiting the temporary summer residence of defendants Elton and Jill Smith in Point Abino, Ontario. During this visit a fondue pot owned by the Smiths, being used in the preparation of dinner, exploded causing serious burns to Gerald Anthony McGowan, giving rise to this cause of action for negligence, breach of warranty and strict liability.

Mrs. Smith had purchased the fondue pot from defendant and third-party plaintiff Adam, Meldrum and Anderson Co., Inc. ("AM&A") at its department store in Buffalo, New York. AM&A is one of 25 member stores for whom first third-party defendant Frederick Atkins, Inc. ("Atkins") is a corporate buying office. AM&A owns stock in Atkins and at least one of its directors or officers is an officer or director of Atkins. The member stores periodically send a committee to the Orient to procure merchandise, which enables them to order large quantities of merchandise and thereby obtain a better price. This is done under the aegis of Atkins.

In January, 1969 Atkins held a meeting of the member stores in Chicago, Illinois where it was decided that a fondue pot would be a "target item" for the stores in a forthcoming trip of the committee to Japan. As a result, over 7,000 pots of the type allegedly causing the injuries complained of were purchased from the second third-party defendant Mogi Trading Company ("Mogi"), of which approximately 500 were purchased by AM&A. Allegedly it is one of these pots which caused the injury to the infant.

Mogi is a Japanese corporation with its principal place of business in that country. Its business is exporting merchandise manufactured in Japan, and it does not itself manufacture any products. It is not licensed or authorized to do business in New York and does not have any sales personnel or other agent employed here. It has no property, bank account or office in New York and there is no indication in the record that it directly solicits any business in New York State. Its gross sales for the years 1969 and 1970 were very substantial with about 75 percent of its sales attributed to the United States market. Generally, negotiations concerning sales to the United States take place in Japan.

Representatives from Mogi attend an annual housewares show in New York City, as well as a similar show in Chicago. As overseas guests they are not permitted to bring samples to the shows and do not take orders there. Their attendance is simply to gain knowledge of what items should be prepared for export. It is conceded that attendance at these shows has brought "some good results" for Mogi.

In addition to exports through Atkins, Mogi has sold goods to one other independent importer in New York and to the New York office of F. W. Woolworth Company. As in the case of Atkins, it appears these orders were placed directly in Japan. There is no evidence that business negotiations were conducted between Mogi and Atkins or with any other customers in New York State.

Mogi was served in Nagoya, Japan by registered mail. No service was made in the State of New York. In his second amended complaint, plaintiff asserts that in personam jurisdiction exists over Mogi because it transacts business in the State of New York (CPLR 302, subd. a, par. (1)).

Plaintiff also relies on that portion of the "long arm" statute conferring personal jurisdiction over a non-domiciliary who:

commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce . . ." (CPLR 302, subd. a, par. (3)).

Mogi subsequently moved to dismiss the complaint or in the alternative, for summary judgment, claiming that New York lacked in personam jurisdiction over it. This motion was denied. The order denying the motion must be reversed.

The question of whether a state may exercise personal jurisdiction over a non-domiciliary involves due process considerations. Pennoyer v. Neff,95 U.S. 714, 24 L.Ed. 565, spelled out an uncomplicated rule that jurisdictional due process could be satisfied only if the defendant made an appearance or was personally served within the forum state. In International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 this rigid test was significantly modified where the Supreme Court observed that "due process requires only that in order to subject a defendant to a judgment in personam, if he not be present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice' (citations omitted)." (International Shoe Co., supra, p. 316, 66 S.Ct. p. 158). The Court pointed out that a corporation's presence within the forum is required and that this presence can be manifested only by activities carried on in its behalf by those who are authorized to act for it. This is not to say that in each case "presence" requires that the non-domiciliary be physically found within the forum. The International Shoe Co. Court observed that when corporate activities are continuous and systematic and give rise to the liabilities sued upon in the forum state, it is present there and that while casual presence or the conduct of single or isolated items of activity may not be enough to fix jurisdiction, some single or occasional acts, because of their nature and quality and the circumstances of their commission, may be deemed sufficient. The International Shoe Co. rule undertook certain refinements in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283, where the Court wrote:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws (citations omitted) (Hanson v. Denckla, supra, p. 253, 78 S.Ct. p. 1239).

There is no fixed standard to measure the minimum contacts required to sustain jurisdiction. Thus, even though a business relationship between two parties may have existed and been pursued over a significant period of time, that alone will not subject the non-domiciliary to the jurisdiction of the forum state (McKee Elect. Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 283 N.Y.S.2d 34, 229 N.E.2d 604; Katz & Son Billiard Prods. v. Correale & Sons, 26 A.D.2d 52, 270 N.Y.S.2d 672, affd. 20 N.Y.2d 903, 285 N.Y.S.2d 871, 232 N.E.2d 864; Rainbow Indus. Products v. Haybuster Mfg., Inc., D.C., 419 F.Supp. 543). On the other hand, whether or not a defendant was physically present in the forum state, one act can be sufficient to satisfy the jurisdictional requirement of transacting business so long as that act is sufficiently purposeful and points toward invoking the benefits and protections of the laws of the forum state (McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 363 N.E.2d 551; Parke-Bernet Galleries v. Franklyn,26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506). CPLR 302 is "a single-act statute requiring but one transaction albeit a purposeful transaction to confer jurisdiction in New York" (Parke-Bernet Galleries v. Franklyn, supra, p. 17, 308 N.Y.S.2d p. 339, 256 N.E.2d p. 508).

Similarly, the mere shipment of goods into New York, however substantial, without more, will not confer personal jurisdiction over a non-domiciliary defendant (Delagi v. Volkswagenwerk AG of Wolfsburg, Germany, 29 N.Y.2d 426, 328 N.Y.S.2d 653, 278 N.E.2d 895; McKee Electric Co. v. Rauland-Borg Corp., supra; Kramer v. Vogl, 17 N.Y.2d 27, 267 N.Y.S.2d 900, 215 N.E.2d 159; Parker v. Green, 63 A.D.2d 977, 406 N.Y.S.2d 112), nor will shipment out of New York suffice (Aero-Bocker Knitting Mills v. Allied Fabrics Corp., 54 A.D.2d 647, 387 N.Y.S.2d 635; Katz & Son Billiard Prods. v. Correale & Sons, supra). "While place of contract may be a factor to be considered in determining whether the claim arose from a transaction within New York State, it is insufficient to confer jurisdiction (citations omitted)." (Aero-Bocker Knitting Mills v. Allied Fabrics Corp., supra, p. 648, 387...