Tokyo Boeki (USA), Inc. v. SS NAVARINO
| Decision Date | 16 February 1971 |
| Docket Number | No. 69 Civ. 5504.,69 Civ. 5504. |
| Citation | 324 F. Supp. 361 |
| Parties | TOKYO BOEKI (U. S. A.), INC., Plaintiff, v. SS NAVARINO, her engines, boilers, etc. and Compania Naviera Hidalgo S. A., Pacific Star Line, Zim Israel Navigation Co., Ltd., and American-Israeli Shipping Co., Inc., Defendants. COMPANIA NAVIERA HIDALGO S. A., and Zim Israel Navigation Co., Ltd., Third-Party Plaintiffs, v. TOKYO BOEKI LTD., and Maher Stevedoring Co., Inc., Third-Party Defendants. |
| Court | U.S. District Court — Southern District of New York |
Miller, Montgomery, Spalding & Sogi, New York City, for third-party defendant Tokyo Boeki Ltd.; Merril Mironer, New York City, of counsel.
Dougherty, Ryan, Mahoney, Pellegrino & Giuffra, New York City, for defendant and third-party plaintiff Compania Naviera Hidalgo S. A.; Lawrence J. Mahoney, Peter J. Zambito, New York City, of counsel.
Thacher, Proffitt, Prizer, Crawley & Wood, New York City, for third-party defendant Maher Stevedoring Co., Inc.; Dwight B. Demeritt, Jr., New York City, of counsel.
Bigham, Englar, Jones & Houston, New York City, for plaintiff Tokyo Boeki (U. S. A.), Inc.; Louis G. Juliano, New York City, of counsel.
Hill, Betts & Nash, New York City, for defendant and third-party plaintiff Zim Israel Navigation Co., Ltd.; Donald B. Allen and Stephen F. Downs, New York City, of counsel.
Tokyo Boeki Ltd., a Japanese corporation, here moves under Rule 12(b), F.R. Civ.P., to set aside service of process on it as the third party defendant and to dismiss for lack of jurisdiction. In the alternative, Tokyo Boeki Ltd. seeks to amend its complaint to assert its right of arbitration against one of the third party plaintiffs, and for a stay of the action pending such arbitration under 9 U.S.C. § 3 and Rules 12 and 15, F.R. Civ.P.
This litigation arises out of a shipment of steel pipe from Wakayama, Japan, to Newark, New Jersey, in March and April of 1968. The pipe was ordered from Tokyo Boeki Ltd. ("Boeki Japan") by a New York corporation, Tokyo Boeki (U. S. A.) Inc. ("Boeki USA"), a wholly owned subsidiary of Boeki Japan. Boeki USA intended to resell the pipe to Cambridge Lee Metal Company of Massachusetts.
Boeki Japan arranged through Zim Israel Navigation Company, Ltd. ("Zim") for a space charter on the S.S. Navarino which Zim controlled under a time charter from the ship's owner, Compania Naviera Hidalgo S.A. ("Hidalgo"). Gold Star Line (Japan) Ltd., also referred to as Pacific Star Line, was the agent designated by Boeki Japan and Zim for the loading of the pipe at Wakayama. The terms governing the loading and shipment of the pipe were contained in a fixture note of February 6, 1968 between Gold Star Line as Zim's agent and Boeki Japan.
When the steel pipe arrived in Newark, the American-Israeli Shipping Company, also Zim's agent, contacted the Maher Stevedoring Co., Inc. and arranged to unload and store the pipe. Upon inspection after the pipe had been unloaded, Boeki USA found that the shipment had been damaged. In December 1969 Boeki USA brought an action for $13,000 in damages against Compania Naviera Hidalgo S.A., Pacific Star Line, Zim Israel Navigation Company, Ltd., and American-Israeli Shipping Company. Boeki USA also sought to arrest the S.S. Navarino.
In February 1970 Zim filed a third party complaint against Boeki Japan and Maher Stevedoring Co., Inc.; Boeki Japan answered on March 30, 1970, asserting the affirmative defense of lack of jurisdiction in personam because it was not present in New York. Zim served the third party complaint and summons upon Masayoshi Ishizaka, who was an employee of Boeki USA. In May 1970, Hidalgo served its third party complaint on another Boeki USA employee, Shintaro Inamura; Boeki Japan asserted the same defense. At no time was service attempted on Boeki Japan except through Boeki USA.
The moving party, Boeki Japan, argues that it is a distinct and separate corporate entity from Boeki USA, and that service of the complaint against Boeki Japan on Boeki USA by both third party plaintiffs is not service on Boeki Japan. It notes that Boeki USA's status as a subsidiary of Boeki Japan is not alone sufficient to make the subsidiary an agent authorized to accept service for the principal. Boeki USA is a separately incorporated entity under the laws of New York, keeping its own and separate books, records, tax returns, and operations. On such a showing, Boeki Japan seeks dismissal of the third party action.
In the alternative, Boeki Japan urges that it be allowed to amend its answer to the third party complaint of Zim and assert the affirmative defense that Boeki Japan and Zim must first resort to arbitration pursuant to the terms of the fixture note agreement between Boeki Japan and Gold Star Line (Japan) Ltd. as agent for Zim, of February 6, 1968. Paragraph 15 of the note provides arbitration for "any and all differences and disputes of whatsoever nature arising out of this charter," and the bill of lading for the pipe incorporated the terms of the note in full, reciting that "if there is any conflict between bill of lading and fixture note provisions of fixture note to govern." On these facts Boeki Japan contends that this court should let Boeki USA proceed against Zim and the other defendants on its action, and order that if judgment is recovered against Zim the claim of Zim over against Boeki Japan be submitted to arbitration.
The third party plaintiffs and third party defendant Maher Stevedoring Co., opposing parties on this motion, argue that Boeki USA is more than the mere subsidiary of Boeki Japan, and is in fact its agent in New York. They urge that Boeki Japan does business in New York. In support of their contentions that Boeki USA is the agent for Boeki Japan they point to the exchanges of personnel between the two companies, to the sales by Boeki USA of Boeki Japan products indicating a conduit-type relationship, to the listing of Boeki USA as one of Boeki Japan's "Overseas Offices" on Boeki Japan's letterhead, and to Boeki Japan's request that Boeki USA generate further orders from Cambridge Lee Metal Company.
Third party plaintiff Zim further argues, in opposition to Boeki Japan's motion for a stay of its third party complaint pending arbitration, that the interests of justice require that the case go forward with all parties and issues before the court. Zim notes that the bill of lading (which contains no arbitration clause) is sued on, not the fixture note, and asserts that Boeki Japan has waived its right to arbitration by an unreasonable delay in asserting it. Hidalgo, as the other third party plaintiff, opposes any stay of its claim against Boeki Japan because it was not a party to the agreement providing for arbitration. Maher Stevedoring Co. urges that, even if the stay is granted between Zim and Tokyo Boeki, it should not restrict Maher from proceeding with a cross claim against Boeki Japan arising out of Hidalgo's third party complaint against Maher as third party defendant.
Having in mind the importance of establishing with clarity the facts which determine whether a party is doing business in New York under New York CPLR § 301 and has an agent here to accept service, Maryland Tuna Corp. v. MS Benares and Nichimen Co. Ltd., Tokyo, 429 F.2d 307 (2d Cir. 1970); Gelfand v. Tanner Motor Tours, Ltd., 339 F.2d 317, 323 (2d Cir. 1964); Grandoe Glove Corporation v. Great Eastern Financial Corp., 34 A.D.2d 593, 308 N.Y. S.2d 467 (1970), this court sought additional affidavits of the parties beyond those submitted with the motion papers and beyond the deposition of Takahiro Harada, a manager of Boeki USA. Boeki Japan responded to the court's request by providing the affidavit of Shintaro Inamura, Vice President of Boeki USA. The affidavits and deposition establish the following facts as to the relationship between Boeki USA and Boeki Japan.
Boeki USA was incorporated in New York in 1964. Boeki Japan has been trading directly with New York customers since its creation in 1947. Boeki Japan owns all the 200 shares of outstanding Boeki USA stock; no dividends have ever been paid on this stock. The membership of the boards of directors of the two corporations overlap; Messrs. Y. Matsumiya and S. Tanaka serve on both Boards, Boeki Japan having five other Board members and Boeki USA two others.
On the letterhead of Boeki Japan there is a listing of "Overseas Offices" and leading the list of seven locations is "New York," a reference admittedly to Boeki USA. Zim also refers to a business director which lists among the "branches" of Boeki Japan the item "New York (Tokyo Boeki (USA) Inc.)."
"The administrative staff and other supervisory personnel of Boeki USA have primarily been former employees of Boeki Japan Ltd." (Affidavit of Shintaro Inamura sworn to December 31, 1970). The deposition of Takahiro Harada indicates that he worked for Boeki Japan in Venezuela before coming to New York and working for Boeki USA. Harada also indicated that the manager before him was one K. Ishizawa, who has since left Boeki USA and is in the employ of Boeki Japan in Tokyo. The Boeki USA administrative and supervisory personnel "usually work in the United States for a period of two or three years and then resume employment" with Boeki Japan in Tokyo or at one of its other offices. (Affidavit of Shintaro Inamura).
In its operations, Boeki USA keeps all its own corporate and business records, "but does send copies of certain financial and sales reports, major contracts, corporate minutes and litigation papers to Boeki Japan Ltd." (Affidavit of Shintaro Inamura). However, at the deposition of Takahiro Harada a number of the documents produced were copies supplied to Boeki USA by Boeki Japan for the deposition. Boeki USA and Boeki Japan file separate tax returns and keep separate records of business transactions "as if between wholly unrelated...
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