19 N.Y.2d 533 | NY | 1967
This appeal calls upon us to determine whether jurisdiction was validly acquired over one of the defendants, Hilton Hotels (U. K.) Ltd., a British corporation (hereafter referred to as Hilton [U. K.]).
The plaintiff alleges that in 1963 when he was on a visit to England he fell and was injured in his room at the London Hilton Hotel while attempting to take a shower in an “ ovular ”, modernistic type bathtub. He seeks $150,000 in damages not only from the defendant 'Hilton (U. K.) but also from the defendants Hilton Hotels Corporation and Hilton Hotels International, both of which are Delaware corporations doing business in New York. The defendant Hilton (U. K.), which is the lessee and operator of the London Hilton Hotel, has moved (pursuant to CPLR 3211, subd. [a], par. 8), for an order dismissing the complaint against it on the ground that the court lacks jurisdiction of the defendant’s person.
Both parties argue that “ the applicable statute” is CPLR 302 (subd. [a], par. 1) which authorizes our courts to exercise personal jurisdiction over a foreign corporation if it “ transacts any business within the state ” and the cause of action asserted against it is one “ arising from ” the transaction of such business. (See, e.g., Longines-Wittnauer v. Barnes & Reinecke, 15 N Y 2d 443; Lewin v. Bock Laundry Mach. Co., 16 N Y 2d 1070;
Jurisdiction was, however, properly acquired over Hilton (U. K.) because the record discloses that it was “ doing business ” here in the traditional sense. (CPLR 301; see Public Administrator of County of N. Y. v. Royal Bank of Canada, 19 N Y 2d 127; Bryant v. Finnish Nat. Airline, 15 N Y 2d 426; Taca Int. Airlines v. Rolls-Royce of England, 15 N Y 2d 97; Tauza v. Susquehanna Coal Co., 220 N. Y. 259; International Shoe Co. v. Washington, 326 U. S. 310.)1 As we have frequently observed, a foreign corporation is amenable to suit in our courts if it is “ engaged in such a continuous and systematic course of ‘ doing business ’ here as to warrant a finding of its ‘ presence ’ in this jurisdiction.” (Simonson v. International Bank, 14 N Y 2d 281, 285; see, e.g., Bryant v. Finnish Nat. Airline, 15 N Y 2d 426, 430, supra; Berner v. United Airlines, 3 N Y 2d 1003; Elish v. St. Louis Southwestern Ry. Co., 305 N. Y. 267; Tauza v. Susquehanna Coal Co., 220 N. Y. 259, supra.) Although “mere solicitation” of business for an out-of-state concern is not enough to constitute doing business (Miller v. Surf Props., 4 N Y 2d 475, 480; see International Shoe Co. v. Washington, 326 U. S. 310, 315, supra), due process requirements are satisfied if the defendant foreign corporation has “ certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘ traditional notions of fair play and substantial justice ’ ”. (International
The defendant’s reliance on Miller v. Surf Props. (4 N Y 2d 475, supra) is misplaced. In that case, we held that the activities of a “ travel agency ” were not sufficient to give our courts in personam jurisdiction over a Florida hotel when the agency’s
It is to be borne in mind, contrary to certain intimations in the dissenting opinion, that this appeal deals with the jurisdiction of our courts over a foreign corporation rather than the liability of a parent company for the acts of a wholly owned subsidiary. (Cf. Walkovzky v. Carlton, 18 N Y 2d 414.) The “ presence ” of Hilton (U. K.) in New York, for purposes of jurisdiction, is established by the activities conducted here on its behalf by its agent, the Hilton Reservation Service, and the fact that the two are commonly owned is significant only because it gives rise to a valid inference as to the broad scope of the agency in the absence of an express agency agreement such as the one which existed in the Berner case (3 N Y 2d 1003, supra).
We are not unmindful that litigation in a foreign jurisdiction is a burdensome inconvenience for any company. However, it is part of the price which may properly be demanded of those who extensively engage in international trade. When their activities abroad, either directly or through an agent, become as widespread and energetic as the activities in New York conducted by Hilton (U. K.), they receive considerable benefits from such foreign business and may not be heard to complain about the burdens.
Since, then, Hilton (U. K.) was “ doing business ” in New York in the traditional sense and was validly served with process in London, as provided by statute (CPLR 313), our courts acquired “ personal jurisdiction over the corporation for any cause of action asserted against it, no matter where the events occurred which give rise to the cause of action.” (Public
The order of the Appellate Division should he affirmed, with costs, and. the certified question answered in the affirmative.
The court is in agreement that personal jurisdiction cannot be extended over the defendant, Hilton Hotels (IT. K.) Limited, a British corporation, under the provisions of New York’s long-arm statute (CPLB 302, subd. [a], par. 1). Disagreement arises only over whether personal jurisdiction may be extended under ‘t traditional ’ ’ concepts of doing business in the State or by reason of the foreign corporation’s “presence” in the State (CPLB 301
The traditional concept, of course, had its finest articulation in Judge Cardoeo’s opinion in Tauza v. Susquehanna Coal Co. (220 N. Y. 259). Since then rather settled lines of distinction or tests have demarked reasonably well the basis upon which such jurisdiction rests (e.g., Miller v. Surf Props., 4 N Y 2d 475; Elish v. St. Louis Southwestern Ry., 305 N. Y. 267, 270-271; Sterling Novelty Corp. v. Frank & Hirsch Distr. Co., 299 N. Y. 208, 210-212; Yeckes-Eichenbaum v. McCarthy, 290 N. Y. 437, 444; Gaboury v. Central Vermont Ry. Co., 250 N. Y. 233, 238; Holzer v. Dodge Bros., 233 N. Y. 216, 221; see Simonson v. International Bank, 14 N Y 2d 281, 285; cf. Hanson v. Denckla, 357 U. S. 235, 251; International Shoe Co. v. Washington, 326 U. S. 310, 320). But, in recent years, undoubtedly under the liberating and liberal philosophy of long-arm jurisdiction, the traditional basis for personal jurisdiction over foreign corporations allegedly doing business here has been stretched to cover a variety of unusual situations (Public Administrator of County of N. Y. v. Royal Bank of Canada, 19 N Y 2d 127; Bryant v. Finnish Nat. Airline, 15 N Y 2d 426; Taca Int. Airlines v. Rolls-Royce of England, 15 N Y 2d 97).
The personal injury negligence tort of which plaintiff complains occurred in an English hotel in London resulting from a fall in the bathtub. Plaintiff is a New York resident who was then on tour in England. The hotel is operated by a British corporation, Hilton Hotels (U. K.) Limited, all but one of the shares of which are owned by Hilton Hotels International, Inc. International is a Delaware corporation owning directly or through subsidiaries a large number of hotels in countries outside the United States mainland. The stock of International is owned in part by Hilton Hotels Corporation, the American parent of the widespread Hilton Hotel enterprises. Both Hilton Hotels and International, although affiliated, have somewhat different stock ownership, with shares in each listed and available on public stock exchanges. Associated with this complex is an affiliate, Hilton Credit Corp., providing credit card financing and distribution and a hotel reservation service, in New York and elsewhere. This latter corporation is jointly owned by Hilton Hotels Corporation and International.
There is no claim by plaintiff that the Hilton complex or any of its components is used to defraud, deceive, or mislead those who deal with it, or that there has been any failure in the operation and management of the several corporations to keep their
The pivotal, but disputed, assertion upon which the present decision depends is that the Hilton Credit Corporation in handling reservations for the British corporation “does all the business which Hilton (U. K.) could do were it here by its own officials ’ ’.
In this connection the majority would distinguish Miller v. Surf Props. (4 N Y 2d 475, supra) on the ground that here there is a local acceptance of reservations for the out-of-State hotel accommodations. In the Miller case a reservation service was also involved and during off-season periods it “ accepted ” reservations, subject to final confirmation, for its principal. At all times it received reservations, and during slack periods its receipt was the equivalent of acceptance by the hotel. Nevertheless this court held that no more than solicitation of business was involved and, therefore, the Florida principal was not subject to judicial jurisdiction in this State. The fact that the reservations “accepted” by the agency in Miller could be disavowed by the principal, although they were, at least during slack seasons, for all practical purposes “final”, should not be a critical distinction. As a matter of commercial practice there are many independent agencies servicing the hotel, theater, and athletic event businesses which receive “ blocks ” of accommodations for sale and acceptance without the need for verifying availablity with their principals, or thereby subjecting their principals to judicial jurisdiction through them.
But more important, there is no support in the record for the assertion that the Hilton Reservation Service “both accepts and confirms room reservations at the London Hilton”. As established by the brochure of the Reservation Service and the affidavit of the vice-president of Hilton International, the ReseA vation Service only “ confirm[s] availabilities” at various hotels (not merely Hilton hotels) “ based on forecasts supplied by the hotels ”. As a matter of fact, the affidavits supplied by plaintiff do not contradict this assertion but only equivocate
That in the Miller case a wholly separate enterprise was involved is not the distinction, unless, of course, the separateness of parent and subsidiary corporations is to be wholly ignored, a position which the majority purportedly disavows, but yet takes by “ inference ”.
As recognized, the solicitation or mere promotion of business for an out-of-State enterprise does not constitute the doing of business in the State (Miller v. Surf. Props., 4 N Y 2d 475, supra; Elish v. St. Louis Southwestern Ry. Co., 305 N. Y. 267, 269, supra; Yeckes-Eichenbaum v. McCarthy, 290 N. Y. 437, supra; see International Shoe Co. v. Washington, 326 U. S. 310, 314, supra). This is traditional law and there is no avowed intention to change it. On the other hand, the maintenance of localized activities in the State has, of course, been the basis for asserting personal jurisdiction (see, e.g., Elish v. St. Louis Southwestern Ry. Co., 305 N. Y. 267, supra; Sterling Novelty Corp. v. Frank & Hirsch Distr. Co., 299 N. Y. 208, supra). The majority bridges the gap between these two rules by finding that separate but affiliated corporations perform the localized services, albeit local services of the narrowest scope, on behalf of the foreign corporation and, therefore, the foreign corporation is performing the localized services here, thus subjecting it to personal jurisdiction. This, of course, is a non sequitur, unless there is no power or privilege on the part of business enterprises to limit and segregate their assets, liabilities, and suability, if done, in fact, and if done without fraud or deception, by the utilization of separate adequately financed corporations, either subsidiary or affiliated.
The law has been that business enterprises do have that power and privilege (see Compania Mexicana v. Compania Metropolitana, 250 N. Y. 203, holding that a foreign subsidiary is not
While it is said that the separateness of affiliated corporate entities is not being disregarded, ‘ ‘ valid inference ’ ’ is drawn from the fact of “ common ownership ” (really less than that) to find a breadth of localized activity not otherwise established by the record facts. Hence, the intercorporate relations are made a determining factor in this very case and generalized disavowals fail to obscure the reasoning process involved.
On this analysis, the present case extends the “ doing business ” rule well beyond the existing principles or precedents. And the effect on the flexibility and promotion of world-wide business enterprises would be drastic and unhealthy. Those who have sought to liberalize and broaden the bases for juris
Similarly, courts in the United Kingdom evidently will not assert jurisdiction over a foreign corporation merely because it maintains a subsidiary in Britain (see The World Harmony [Konstantinidis v. World Tankers Corp.], [1965] 2 All E. R. 139, 147-149). Liberal Canadian jurisdictional statutes likewise do not recognize such a basis of jurisdiction (Ontario Rules of Practice, rule 25 [1] ; Quebec Code of Civ. Pro., art. 94). The same is probably true in Australia (see Cowen, AmcricanAustralian Private International Law [1957], p. 38).
In Civil Law and other code countries the recognized bases of personal jurisdiction over foreign corporations admits of the assertion of such jurisdiction only on the existence of a specially designated office, situs of headquarters, or what is described as “ domicile ” in a special sense (see Seidl-Hohenveldern, American-Austrian Private International Law [1963], p. 99; Garland,
These are striking limitations in the code countries. They suggest very strongly that the extension of personal jurisdiction projected in this case would hardly be tolerated. The influence in the code countries of domiciliary jurisdiction (in the Anglo-American sense) is much too great, and the equivalent “ presence ’ ’ doctrine much more restrictive than here. There is not the slightest suggestion in these materials that a formally separate foreign corporation could be brought before a foreign forum because of some intercorporate relationship, however intimate, with a local corporation.
These limitations elsewhere, and in the past, bespeak caution for the future, and especially when one considers the salutary purposes served by permitting enterprises to limit and segregate their activities as they are extended into other and frequently less developed parts of the world. Of great significance, of course, is what was also mentioned earlier, that harmful extensions of doctrine in this area will easily lend themselves to reciprocal manipulation against American enterprises operating through subsidiaries or affiliates in other countries.
While the circumstances in this case are not as serious in their effect in permitting personal jurisdiction, because plaintiff is indeed a New York resident, and the Hilton enterprises looked at in the large as a layman would view them are so much 1 ‘ present ”, the rules applied will not stay so limited. Under such grossly extended rules nonresidents would also be able to sue in New York, where tort verdicts are regarded as very high; and there are other categories in which jurisdiction might be invoked under circumstances much less appealing than here. Again, it
Accordingly, I dissent and vote to reverse and grant the motion to dismiss the complaint against Hilton Hotels (U. K.) Limited.
Judges Bubice, Scileppi and Beegan concur with Chief Judge Fuld; Judge Breitel dissents and votes to reverse in an opinion in which Judges Van Voorhis and Keating concur.
Order affirmed, etc.
. This ground for decision is properly brought before us by the certified question since the courts below, in sustaining jurisdiction over the defendant, specifically relied on both our “long-arm” statute (CPLB 302, subd. [a], par. 1) —which, as indicated, is limited to a cause of action arising out of the transaction of business in New York—and the Taca Int. Airlines case (15 N Y 2d 97, supra) which concerned “ doing business” here in the traditional sense. (Cf. Singer v. Walker, 15 N Y 2d 443, 466—467.)
. “A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore.”
. “b. Subsidiary of corporation. Judicial jurisdiction over a subsidiary corporation does not of itself give a state judicial jurisdiction over the parent corporation. This is true even though the parent owns all of the subsidiary’s stock. Cannon Mfg. Co. V. Cudahy Packing Co., 267 U. S. 333 (1925). So a state does not have judicial jurisdiction over a parent corporation merely because a subsidiary of the parent does business within its territory.
“If the subsidiary corporation does an act, or causes effects, in the state at the direction of the parent corporation, the state has judicial jurisdiction over the parent to the same extent that it would have had such jurisdiction if the parent had itself done the act or caused the effects.
“ Judicial jurisdiction over a subsidiary corporation will likewise give the state judicial jurisdiction over the parent corporation if the parent so controls and dominates the subsidiary as in effect to disregard the latter’s independent corporate existence.
“Judicial jurisdiction over a parent corporation does not of itself give the state judicial jurisdiction over a subsidiary corporation. If the parent does an act, or causes effects, in the state at the direction of the subsidiary, the state has judicial jurisdiction over the subsidiary to the same extent that it
“Even in the absence of a stock relationship between a local and a foreign corporation, jurisdiction over the foreign corporation has sometimes been exercised on the basis of activities that the local corporation has conducted in the state as the agent of the foreign corporation. The existence of an agency relationship may be found when the foreign corporation consigns goods to the local corporation and exercises control over the latter with respect to price, merchandising or advertising.” (Comment 5.)
The Reporter’s Note, which is extended, after referring to the Taca- and Rdbinowitz cases (supra), comments: “In effect, the New York courts do not seem to distinguish between the situation where the foreign corporation maintains a branch in the State and where it maintains a subsidiary.” This, of course, would seem to go beyond the court’s intentions.