Yeckes-Eichenbaum, Inc. v. McCarthy

• Decision Date: 27 May 1943
• Citation: 49 N.E.2d 517,290 N.Y. 437
• Parties: YECKES-EICHENBAUM, Inc., v. McCARTHY et al.
• Court: New York Court of Appeals Court of Appeals

290 N.Y. 437

49 N.E.2d 517

YECKES-EICHENBAUM, Inc.,

v.McCARTHY et al.

Court of Appeals of New York.

May 27, 1943.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Yeckes-Eichenbaum, Inc., against Wilson McCarthy and others, as trusttees of the property of Denver & Rio Grande Western Railroad Company, debtor, in reorganization proceedings under the Bankruptcy Act, for breach of contract of carriage. From an order of the Appellate Division, Supreme Court, 264 App.Div. 403, 35 N.Y.S.2d 527, affirming an order of the Appellate Term of the Supreme Court, reversing a judgment of the Municipal Court of the City of New York, Genung, J., dismissing the complaint, the defendants appeal by permission of the Appellate Division, 265 App.Div. 813, 37 N.Y.S.2d 831. The following questions were certified: 1. Did the court acquire jurisdiction of defendants herein? 2. Did the assumption by the court of jurisdiction over defendants constitute an unreasonable burden on Interstate Commerce?

Order of the Appellate Division and that of the Appellate Term reversed and judgment of the Municipal Court of the City of New York affirmed. First question answered. James D. Ewing, William R. McDermott, and Eugene Z. DuBose, all of New York City, for appellants.

John B. Doyle, of New York City, for Charles M. Thomson, amicus curiae, in support of appellants' position.

Bernard Tomson, of New York City, for respondent.

RIPPEY, Judge.

The New York City Municipal Court Code (L.1915, ch. 279, as amended) provides, so far as material here, that a summons, in a case where the Municipal Court of the City of New York has jurisdiction of the subject matter of the action, may be served upon the defendant within the city of New York in like manner as though the summons issued out of the Supreme Court provided that it shall not be served by publication (s 21) and that the summons, or the summons and complaint, if the complaint is served with the summons, must be filed with proof of service in the office of the clerk in the district where the action or proceeding is pending within three days after service except that, where the summons has not been filed within three days after service, plaintiff may obtain an order providing for the filing of the same nunc pro tune (s 22). It is also provided that an objection that the court has no jurisdiction of defendant may be taken before answer by filing with the clerk a notice of special appearance accompanied with an affidavit of the party stating in particular the grounds of his objection whereupon a hearing must be had on the objections and, if the objections are sustained by the court, the complaint must be dismissed (s 88).

Service of the summons and complaint was attempted under the authority of section 229-b of the Civil Practice Act which, so far as material in the form in which it was in effect at the time of the attempted service, reads as follows: ‘When any natural person or persons not residing in this state shall engage in business in this state, in any action against such person or persons arising out of such business, the summons may be served by leaving a copy thereof with the complaint with the person * * * in charge of any business * * * within this state, and any summons so served shall be of the same legal force and validity as if served personally on such nonresident person or persons so engaging in business in this state within the territorial jurisdiction of the court from which the summons issues, provided that a copy of such summons and complaint together with a notice of such service upon such person in charge of such business according to the provisions of this section shall be forthwith sent to such nonresident person or persons by registered mail, return receipt requested.’

The plaintiff caused a copy of the summons and verified complaint to be left with William W. Hatton, who was asserted to be the person in charge of the business of the defendants within this State, at 37 Wall Street in the City of New York, on September 12, 1940, and caused to be sent by registered mail, return receipt requested, another copy of the summons and complaint, together with notice of the aforesaid service upon Hatton, addressed to the defendants at 554 Equitable Building, Denver, Colorado. Thereupon a notice of special appearance was filed by defendants, accompanied by affidavits stating the particular grounds of objections to the jurisdiction of the court with respect to the person of the defendants. It was asserted, among other things, that Hatton was not a person in charge of the business of the defendants within the State of New York, that the defendants did not engage in business in this State, that the causes of action referred to in the complaint did not arise out of any business transacted by the defendants in this State and that the defendants had no relation to or connection with the subject matter of the action and facts were presented to sustain such objections. Thereupon the plaintiff moved to dismiss the notice of special appearance. Pending a hearing on the motion, a copy of the summons and complaint was served upon one George R. Kenny, who was claimed by the plaintiff to be a person in charge of the defendants' business in New York State. Later an affidavit was filed by the plaintiff which presented evidentiary facts which indicated only that The Denver and Rio Grande Western Railroad Company, of which the defendants were trustees, was doing business in New York State and that Kenny was its managing agent. It was then stipulated that an affidavit of such service might be filed in the offices of the Clerk of the Municipal Court nunc pro tunc as of September 12, 1940, with the same force and effect as if then filed. No claim appears here, directly or by inference, that any attempt has been made to make service upon The Denver and Rio Grande Western Railroad Company, a foreign corporation. Upon the hearing, the objections of the defendants to the jurisdiction of the court were sustained and the complaint was dismissed. The Appellate Term reversed and overruled the objections and the Appellate Division affirmed the order of the Appellate Term.

The plaintiff is a domestic corporation with its principal place of business in the city of New York. The Denver and Rio Grande Western Railroad Company was organized under the laws of the State of Colorado where it...