Overmyer v. Eliot Realty

• Decision Date: 06 June 1975
• Citation: 83 Misc.2d 694,371 N.Y.S.2d 246
• Parties: Daniel H. OVERMYER, Plaintiff, v. ELIOT REALTY, Defendant.
• Court: New York Supreme Court

Page 246

371 N.Y.S.2d 246

83 Misc.2d 694

Daniel H. OVERMYER, Plaintiff, v. ELIOT REALTY, Defendant.

Supreme Court, Westchester County.

June 6, 1975.

On Motion for Reargument July 25, 1975.

Greenspan & Aurnou, White Plains, Easton & Echtman, P.C., New York City, for plaintiff.

Carroll, Carroll & Butz, Syracuse, Corwin & Freidman, White Plains, for defendant.

DECISION

JOSEPH F. GAGLIARDI, Justice.

By order to show cause dated May 1, 1975, plaintiff obtained a temporary restraining order staying execution of a Texas judgment, which order similarly enjoined plaintiff from transferring any assets without adequate consideration. The order further provided that service was to be made upon defendant's New York counsel by certified or registered mail, return receipt requested. Issues are raised regarding the Full Faith and Credit clause of the Federal Constitution (U.S.Const., Art. IV, § 1).

Plaintiff is a New York resident and the principal behind several corporations that bear his name (see D. H. Overmyer v. Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31 L.Ed.2d 124). The underlying facts herein emanate from plaintiff's financial difficulties throughout his corporate empire. Annexed to the order to show cause is a summons and complaint, and several exhibits. An amended complaint containing three causes of action, was served on defense counsel on May 7, 1975. The amended complaint is not substantially different from the original as the thrust of each pleading is for a declaratory judgment and permanent injunction. The amended complaint alleges that defendant is a Connecticut corporation that has retained a New York law firm to enforce and execute upon the Texas judgment; that said judgment was filed and docketed with the Westchester County Clerk; and execution directed to the Sheriff in April 1975, which is the first time plaintiff received notice of the judgment (cf. CPLR 5403; Texas Rules of Civil Procedure 306d). The essential factual background pertaining to the judgment, as alleged, is as follows: On July 1, 1973, defendant sued plaintiff and one of his corporations ¹ for monies due under a certain lease agreement on real property located in Texas; ² plaintiff and the corporation were defended by house counsel which vigorously engaged in pretrial matters; on October 10, 1973, the corporation's right to do business in Texas was revoked; on October The 'Trial Amendment' recites the appropriate time sequence of the check issuance and subsequent revocation of the corporation's right to do business in Texas; that the check was issued for a pre-revocation debt and was approved and consented to by plaintiff herein; and requests a judgment against said plaintiff pursuant to Article 12.14 of the Texas Tax Code.

24, 1973, the corporation deposited a check with the Texas court in the sum of $90,810.47 representing partial payment of corporate debts created prior to October 10, 1973; the check was dishonored; in November 1973 the corporation filed a petition in bankruptcy; on November 15, 1973, house counsel, on notice to all parties, obtained an order from the Texas court permitting them to withdraw because virtually all attorneys associated with this plaintiff's legal department were being let go; ³ in December 1973, a receiver was appointed and undertook the defense of actions against the corporations; on February 5, 1974, defendant filed a 'Trial Amendment' in the Texas action requesting judgment against plaintiff personally pursuant to Article 12.14 of the Texas Tax Code; no notice of said amendment was sent to the receiver and, although there is an affidavit of service annexed thereto by defendant's Texas counsel that said amendment was sent by certified mail, return receipt requested, to plaintiff's New York counsel and to plaintiff, both plaintiff and his former counsel aver that they have no recollection regarding receipt of said amendment; and final judgment was entered on March 15, 1974.

The Texas judgment in pertinent part states:

'On February 18, 1974, came on for trial the above-entitled and numbered cause, wherein Eliot Realty, Inc., is Plaintiff, and D. H. Overmyer Company, Inc., a Texas corporation, D. H. Overmyer Company, Inc., an Ohio corporation, Overmyer Distribution Services, Inc., and D. H. Overmyer, an individual, are Defendants. Eliot Realty, Inc., appeared through its corporate representatives and its attorney of record and announced ready for trial. Each of the defendants, having been duly served with process having entered a general appearance herein, and having been duly notified of the trial date in the manner and for the length of time required by law, failed to appear.

'Whereupon, Plaintiff waived its right to trial by jury and all matters of fact and of law were submitted to the Court. The Court, having examined the pleadings and records herein, determined that the same are in due form and contain all of the allegations and information required by law, and determined that this Court has The judgment consists of nine pages and finding number 3 states: ⁴

jurisdiction over the subject matter and over all parties and proceeded to try said cause. The Court, having read the pleadings and having heard the testimony of the witnesses and the documentary evidence and the arguments of counsel, and being fully advised in the premises, is of the opinion and finds that the law and the facts are with the Plaintiff, Eliot Realty, Inc., and enters judgment against the Defendants in accordance with the findings and rulings herein set out.'

'That the Defendant, D. H. Overmyer Company, Inc., a Texas corporation, on October 24, 1973, tendered to this Court its draft in the sum of $90,810.47, that said draft represented partial payment of the damages due Plaintiff under the contract of lease described above, that said Defendant wholly defaulted in the payment of said draft and became indebted to Plaintiff for the principal sum thereof in the amount of $90,810.47, that the Defendant D. H. Overmyer, an individual, was at the time of the creation of said indebtedness the Chairman and Chief Executive Officer of D. H. Overmyer Company, Inc., a Texas corporation, that the right of said corporation to do business in this State was duly and lawfully forfeited by the Comptroller of Public Accounts of this State on September 10, 1973, in accordance with Article 12.14, V. A.T.S., Tax.-Gen., and the Defendant D. H. Overmyer, an individual, having known of the creation of such indebtedness and having approved and consented thereto, became jointly and severally liable with the Defendant D. H. Overmyer Company, Inc., a Texas corporation, to Eliot Realty, Inc., in the sum of $90,810.47 of the $95,196.88 indebtedness. . . .'

The first ordering paragraph directed judgment against two Overmyer corporations in the sum of $95,196.88 and against plaintiff herein personally in the sum of $90,810.47.

Subsequently, a reorganization plan was considered by the referee in bankruptcy and the Overmyer creditors, including defendant herein. The plan is still viable and would exonerate plaintiff from all individual liability but does not contemplate the instant judgment because defendant did not notify the referee in time for said judgment to be included. The Texas judgment was docketed in this Court by New York counsel on January 24, 1975 (Eliot Realty Inc., v. D. H. Overmyer Co., S.Ct.West.Cty., Index No. 1187/75). Execution was subsequently directed to the Sheriff but it appears that no levy has been made. The County Clerk's file also contains a letter and affidavit from New York counsel for defendant. In the margin of the affidavit is written the following '1/7/75 Approved for filing pursuant The first cause of action prays for a declaration that the Texas judgment is a nullity on the ground that defendant obtained the judgment by trick and design in improperly filing the 'Trial Amendment' and obtaining judgment at a time when defendant was without legal representation. The brief amplifies this claim and asserts that defendant's action constituted a fraud on the court. The complaint further states that the judgment is void under Texas law. The second cause of action alleges that the Texas judgment is a penal judgment, not entitled to full faith and credit in this State. The third cause of action prays for a permanent injunction restraining enforcement.

to Section 5402 CPLR' and is signed by a Senior Assistant County Attorney.

The order to show cause contains a request for a preliminary injunction. Defendant, who has not answered, has also moved for dismissal for lack of jurisdiction In rem and in personam (CPLR 3211(a)(2), (8)), or, alternatively, for a bond in the amount of $100,000.00. Said motion shall be treated as a cross-motion.

Defendant, through its New York counsel, contends that it is a foreign corporation, not licensed to do business in this state and does no business here. Plaintiff urges that the lease agreement, which is the predicate for the Texas judgment, was consummated in New York. Plaintiff has submitted a personal affidavit stating that all negotiations relating to the lease and its execution 'upon information and belief, took place in New York'. Plaintiff further states that defendant sent representatives here to collect rent due on the Texas premises. Plaintiff and his former Chief Counsel also aver that defendant has sent representatives here to participate in the reorganization arrangements. Defense counsel's bald assertion of no forumrelated activity is merely conclusory and not entitled to any weight. Furthermore, it is clear that defendant engaged in purposeful activity in this state by seeking enforcement of the Texas judgment and the Court holds such activity to be transaction of business here, which supports acquisition of In personam jurisdiction (CPLR 302(a)(1)). ⁵

Other than the reference to CPLR 3211(a)(2) (subject matter jurisdiction) in its moving papers, defendant does not mention...