business" clause requires some "purposeful activity" in New York State "in relation to the contract, albeit preliminary or subsequent to its execution." Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 457, 261 N.Y.S.2d 8, 18, 209 N.E.2d 68, 75 (1965). It requires that defendants have voluntarily elected to invoke the protection of the laws of New York. Supplementary Practice Commentary, CPLR § 302 (1968-69 Supp. at 114). Physical presence in the state either during preliminary negotiations, or during execution or performance of the contract is considered in determining in a particular case whether one has engaged in "purposeful activity" or has invoked the protection of New York's laws, such as to constitute "transacting business" for the purposes of CPLR § 302(a)(1). Longines-Wittnauer, supra.
In the instant case, Defendants allege that there were no physical contacts with New York State and that all preliminary negotiations and the execution of the note itself took place in the District of Columbia. The obligation was to be performed by mailing payments from the District of Columbia to New York. The test of Longines-Wittnauer, supra does not appear to have been met. There was no "purposeful activity" and no attempt to invoke the protection of New York law. The only connection with New York was that the promissory note provided that it should be governed and construed in accordance with the laws of New York State. However, no court has held this factor alone to be conclusive on the issue of jurisdiction, if the defendant had no other contacts with the state. Weinstein, Korn & Miller, supra at 3-5.
Whether the type of activity conducted within New York State is adequate to constitute "transacting business" under the "long-arm" statute, CPLR § 302(a)(1), depends upon the facts in each case; the question cannot be answered by applying a mechanical formula. Schroeder v. Loomis, 46 Misc.2d 184, 259 N.Y.S.2d 42, 45 (Sup.Ct., Broome County, 1965). Since judgment on the pleadings and summary judgment are inappropriate when there are genuine issues as to material facts, 2A Moore's, supra at P12.15; 6 Moore's, supra at P56.09, it is fruitful to review the facts of New York cases analogous to our own, in order to see how the courts of New York have interpreted the "long-arm" statute, CPLR § 302, in light of particular factual situations. It will be seen from this review that the factual questions raised by Defendants and contested by Plaintiff are indeed material to a determination of the jurisdictional issue.
In the leading case of Kramer v. Vogl, 17 N.Y.2d 27, 267 N.Y.S.2d 900, 215 N.E.2d 159 (1966), the New York Court of Appeals was confronted with the situation of a nonresident who never came into the state, but who sold and sent goods into the state pursuant to an order sent from within the state. The original contract was arranged in Paris and all shipments to plaintiff in New York were f.o.b. European ports. The Vogls themselves carried on no sales, promotional or advertising activities in New York. The Court of Appeals rejected jurisdiction under CPLR § 302(a)(1) on the ground that the phrase "transacts any business within the state" does not cover the situation of a nonresident who never comes into New York State but who sells and sends goods into the state pursuant to an order sent from within the state. Kramer, supra at 31, 267 N.Y.S.2d at 903-904, 215 N.E.2d at 161-162. In the instant case, the facts surrounding the preliminary negotiations and the execution of the promissory note, and the performance of the obligations thereunder, are strikingly similar to the facts in Kramer.
In another analogous case, the Court of Appeals for the Second Circuit, applying the test of Longines-Wittnauer, supra, stated, "We fail to see in what material respect Hammons invoked the benefits and protections of New York law merely by negotiating and concluding goods contracts through the mails and by telephone with persons residing in New York." Agrashell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 587 (2d Cir. 1965). See also, Friedr. Zoellner (New York) Corp. v. Tex Metals Co., 278 F. Supp. 52 (S.D.N.Y. 1967). Similarly, we fail to see, on the facts alleged by Defendant, in what material respect Charles Rose invoked the benefits and protections of New York law by arranging a loan through the mails and by telephone with persons residing in New York and by agreeing to mail payments to New York.
Probably the case most closely analogous to the problems before this Court is Hubbard, Westervelt & Mottelay, Inc. v. Harsh Building Co., Inc., 28 App.Div.2d 295, 284 N.Y.S.2d 879 (1st Dep't 1967). Hubbard involved an Oregon corporation which executed a note in Arizona and delivered it in Arizona to plaintiff, a New York corporation. The note was given for services rendered in obtaining a mortgage commitment from a bank in New York, to finance the purchase of property in Arizona. Payment of the note was required to be made in New York. Defendant never physically entered the State of New York. The court held that defendant transacted no business in New York and committed no purposeful act in the state. Defendant's contacts with New York were insufficient to enable plaintiff to obtain personal jurisdiction under CPLR § 302(a)(1). Hubbard, supra. In the instant case, facts similar to those in Hubbard dictate the same conclusion; Charles Rose's contacts with New York were insufficient to enable Plaintiff to acquire personal jurisdiction under CPLR § 302(a)(1).
In sum, applying the New York interpretation of its own "long-arm" statute, CPLR § 302(a)(1), to the facts as alleged by Defendants, we conclude that the New York Supreme Court, Nassau County, had no jurisdictional basis on which to exercise in personam jurisdiction over the Defendants now before this Court. As a result, this Court is not required to give full faith and credit to the New York judgment on a Motion for Judgment on the Pleadings or for Summary Judgment. Of course, this determination in no way precludes the development of facts at trial which would support a conclusion that the New York court did in fact have sufficient jurisdictional basis to render a valid judgment.
6. Jurisdiction: Service
In addition to the requisite jurisdictional "basis," the second requirement for the exercise of in personam jurisdiction is that a reasonable method be used to notify a defendant of the proceedings and that he be given a reasonable opportunity to be heard. Weinstein, Korn & Miller, supra at 3-10. In order that a foreign judgment be given effect, it is necessary that the defendant have been given the required notice and opportunity to be heard. H. Goodrich, supra at § 205; Restatement of Conflicts § 429; Restatement of Conflicts § 429 and comment h (Tent. Draft No. 10). Otherwise, the judgment is rendered in violation of the due process clause of the fourteenth amendment, is therefore void and is not entitled to full faith and credit by the court in which enforcement is sought. Restatement of Conflicts § 589 and comment a; Restatement of Conflicts § 589 and comment a (Tent. Draft No. 11).
It is alleged that Blanche Rose, co-executrix of the estate of Charles Rose, was not served with process of any kind in the New York action and thus had no notice of the suit. The principles of due process which require notice and an opportunity to be heard would therefore seem to preclude our giving full faith and credit to the New York judgment. See 30A Am.Jur., Judgments § 265 (1958). However, there is a New York statute which provides that jurisdiction is complete when service of process is made upon one of the multiple representatives of an estate, and that a subsequent judgment binds even those who were not served, in their representative capacities. New York Estates, Powers and Trusts Law (EPTL) § 11-4.4, in 17B McKinney's Consol.Laws (1967). In the absence of a successful constitutional challenge to this statute, we are bound to apply this law in determining whether there was valid service in the New York action.
The question then becomes whether there was valid service on Bernard Krakow, the other defendant and co-executor of the estate of Charles Rose. It is admitted that Bernard Krakow was served with process. However, Defendants argue that such service was defective, since Krakow was personally served in the District of Columbia, rather than in New York. Under New York law, such service may be valid in certain circumstances. Personal service outside the state is valid only if the person served is subject to jurisdiction under CPLR § 302, and if the process server is either a New York resident over eighteen years of age who is not a party, or a person authorized to make service of process by the laws of the jurisdiction in which service is made, or a duly qualified attorney in such jurisdiction. CPLR § 313. See also H. Wachtell, supra at 31-34.
CPLR § 313, which authorizes such out-of-state service, is contrary to the decision of our Court of Appeals in Von Opel v. Von Opel, 103 U.S.App.D.C. 288, 257 F.2d 666 (1958). In that case, the Court held that since defendants were not residents of New York nor personally served there, the New York court lacked personal jurisdiction over them. While New York law would normally control, we need not now resolve the conflict between the New York statute and the District of Columbia case, since service of process under CPLR § 313 is only valid where the person served is subject to jurisdiction under CPLR § 302. Since we have already concluded that there was no jurisdictional basis on which the New York court could invoke "long-arm" jurisdiction under CPLR § 302(a)(1), and since we now find that jurisdictional basis under that statute is a prerequisite to out-of-state service under CPLR § 313, service of process on Defendant Krakow could not be valid in any event.
Having reached this conclusion, there is no need to decide whether the traditional rule, that nonresident executors cannot be sued in their representative capacity in a foreign jurisdiction, Vaughan v. Northup, 40 U.S. (15 Pet.) 1, 10 L. Ed. 639 (1839), is still good law. New York has recently rejected this rule and has held that where there was sufficient contact with New York State by the nonresident decedent to establish jurisdiction, that contact is sufficient to continue the action against the nonresident executor. Rosenfeld v. Hotel Corp. of America, 20 N.Y.2d 25, 281 N.Y.S.2d 308, 228 N.E.2d 374 (1967). Whether the New York rule could survive a constitutional challenge on the basis of due process, however, is a question about which there is doubt and which may ultimately be resolved by the Supreme Court.
© 1992-2004 VersusLaw Inc.