Taca Intern. Airlines, S. A. v. Rolls-Royce of England, Limited
| Decision Date | 09 April 1964 |
| Docket Number | ROLLS-ROYCE |
| Parties | TACA INTERNATIONAL AIRLINES, S.A., a corporation of El Salvador, Plaintiff-Appellant, v.OF ENGLAND, LTD., a corporation of the United Kingdom, Rolls-Royce, Inc., a corporation of Delaware, Capital Airlines, Inc., a corporation of Delaware, and United Air Lines, Inc., a corporation of Delaware, defendants-Respondents. |
| Court | New York Supreme Court — Appellate Division |
William M. Keegan, Jamaica, of counsel (P. G. Pennoyer, Jr., New York City, with him on the brief; Bigham, Englar, Jones & Houston, New York City, attorneys), for appellant.
Robert Layton, New York City, of counsel (Thomas F. Cusack, Jr., New York City, with him on the brief; Gilbert, Segall & Young, New York City, attorneys), for respondent Rolls-Royce of England, Ltd.
Before VALENTE, J. P., and McNALLY, STEVENS and STEUER, JJ.
This action seeks recovery for the loss of plaintiff's aircraft as the result of a crash at Managua, Nicaragua. Plaintiff has used several defendants, among them Rolls-Royce Ltd., and English corporation. This defendant has moved to set aside the service on it. Service was purportedly made by service on Rolls-Royce Inc. and Bruce Thomson. There is no question but that these persons were served, the issue being whether such service reached the moving defendant.
Rolls-Royce Ltd. manufactures and sells motor cars and airplane engines. It also sells parts and gives service to its customers. These products are sold practically world-wide and customers can get service at many places. Rolls-Royce Ltd. owns all the stock of Rolls-Royce of Canada Ltd., a Canadian corporation, and this company owns all the stock of Rolls-Royce Inc. The business of Rolls-Royce Inc. is solely in the sale of products manufactured by Rolls-Royce Ltd. and the servicing of the purchasers of these products. The three mentioned companies have some directors in common and key executive personnel in Rolls-Royce Inc., were former executives of either the English or Canadian company and were assigned to their positions by the parent English company. There are frequent conferences among executives of the three companies at which the policies of Rolls-Royce Inc. are determined. Rolls-Royce Inc. employees who require technical training are given it by Rolls-Royce Ltd. in England. All sales literature used by Rolls-Royce Inc. is written and published by Rolls-Royce Ltd.
Rolls-Royce Inc. gets its income in several ways. It owns no automobiles, and when a sale is made to a customer it buys a car from Rolls-Royce Ltd. in England and imports it. The sale is at a fixed price which is lower than the price to the ultimate purchaser. Rolls-Royce Ltd. gives a warranty directly to the purchaser which Rolls-Royce Inc. delivers with the car. Rolls-Royce Ltd. pays Rolls-Royce Inc. a fixed annual fee for services rendered to customers in connection with these warranties. As to airplane engines, the compensation for service is paid by Rolls-Royce of Canada and this payment is measured by the price of the spare parts sold by Rolls-Royce Inc.
All of the net income of Rolls-Royce Inc. goes to Rolls-Royce of Canada and appears in that company's balance sheet. As affected by the other operations of the Canadian company it then appears in the balance sheet of Rolls-Royce Ltd.
The question is whether these facts constitute doing business in this state. Each case necessarily depends on its own facts (Chaplin v. Selznick, 293 N.Y. 529, 533, 58 N.E.2d 719). The fact that a corporation has a subsidiary does not in and of itself bring it within the state or make it amenable to process (Compania Mexicana v. Compania Metropolitana, 250 N.Y. 203, 164 N.E. 907). It is otherwise where the subsidiary, though nominally independent, actually functions as a department of the parent (Rabinowitz v. Kaiser-Frazer Corp., 198 Misc. 707, 96 N.Y.S.2d 642, affd. 278 App.Div. 584, 102 N.Y.S.2d 815, affd. 302 N.Y. 892, 100 N.E.2d 177). And this is not...
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