*995 MEMORANDUM and ORDER
Defendants, by motion to set aside the order of attachment and service of process and to dismiss the action, raise the question whether
Shaffer v. Heitner,
1977, - U.S. -,
The action is for personal injuries and wrongful death. The claim is that plaintiff’s decedent was killed through the negligent operation of a grader owned by LeeHy and driven by Clem at a shopping center construction site in Henrico County, Virginia. The decedent was, and the plaintiff widow and her three children are residents of New York. Lee-Hy is a Virginia corporation the activities of which are confined to that , state and Clem is a resident of Virginia, an employee of Lee-Hy and has been working only in Virginia. The decedent was an employee of a New York corporation and his office was at the firm’s New York office; he visited the shopping center construction site frequently, at least once a week, and, frequently, three or' four times in a single week. He was on an overnight visit to the site on September 24, 1975, when he was killed.
Plaintiff obtained a Seider v. Roth attachment based on the contractual obligations of Royal Globe Insurance Company and Continental Casualty Insurance Company to defendant Lee-Hy. Both insurance companies maintain offices in New York.
Defendants argue that
Shaffer
requires for the exercise of jurisdiction sufficient contacts among the forum, the defendant and the litigation to satisfy the standards of
International Shoe Co. v. Washington,
1945,
Plaintiff contends, in substance, that this is not a case in which jurisdiction builds on nothing but property unconnected with the subject matter of the action, but an application of a now familiar jurisdictional principle that was evolved in keeping with the standards outlined in International Shoe. Plaintiff notes that she is a New York resident and that the insurance, contracts are contracts to defend against and indemnify against her claim.
Defendants reply that it is defendants’ not plaintiffs’, contacts with New York that are jurisdictionally significant, and that the property here, the insurance contracts, are “property” in which plaintiff has an interest only if and to the extent — and perhaps, even, when — her claim is shown to be valid, and is, thus, no different from any other *996 property seized under a writ of foreign attachment.
Shaffer
is best read for the legal concepts it enunciates rather than for its application of them to the facts in the record before it. The dissent of Mr. Justice Brennan from Part IV of the opinion, and that part only, suggests that, and the dissent reflects also disagreement with the limited or nil significance assigned to the choice-of-law factor in determining the question of jurisdiction (- U.S. at -, -,
“The question in International Shoe was whether the corporation was subject to the judicial and taxing jurisdiction of Washington. Chief Justice Stone’s opinion for the Court began its analysis of that question by noting that the historical basis of in personam jurisdiction was a court’s power over the defendant’s person. That power, however, was no longer the central concern:
‘But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” Milliken v. Meyer,311 U.S. 457 , 463,61 S.Ct. 339 , 343,85 L.Ed. 278 .’326 U.S., at 316 ,66 S.Ct., at 158 .
“Thus, the inquiry into the State’s jurisdiction over a foreign corporation appropriately focused not on whether the corporation was ‘present’ but on whether there have been
‘such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.’ Id., at 317,66 S.Ct., at 158 .
Mechanical or quantitative evaluations of the defendant’s activities in the forum could not resolve the question of reasonableness:
‘Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.’ Id., at 319,66 S.Ct., at 160 .
Thus, the relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of the States on which the rules of Pennoyer rest, became the central concern of the inquiry into personal jurisdiction. The immediate effect of this departure from Pennoyer’s conceptual apparatus was to increase the ability of the state *997 courts to obtain personal jurisdiction over nonresident defendants.” (Footnotes omitted.)
Noting that in cases like
Harris v. Balk,
1905,
“In such cases, if a direct assertion of personal jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally impermissible.”
It is not argued, nor could it be, that Lee-Hy or Clem have even a minimum of contacts with New York, the forum state, or that, if, instead of contract rights against two insurers, tangible property transiently in New York were the property attached, it would be easy to claim that jurisdiction could exist in a New York court. That is not clear to the exclusion of every doubt. If
Pennoyer v. Neff,
1877,
Seider v. Roth
was an action by New York residents against a resident of Quebec arising out of an accident in Vermont. Plaintiffs served a levy under, an order of attachment on the casualty insurance company which had issued an automobile liability policy to defendant. The majority put the decision on the ground that the policy was a “debt” owed to defendant which could be seized in attachment under N.Y.C. P.L.R. § 6202 in light of Section 5201, which defines debt very inclusively. The court relied on
Matter of Riggle’s Estate,
1962,
Oltarsh v. Aetna Insurance Co.,
1965,
The court reconsidered
Seider v. Roth
in
Simpson v. Loehmann,
1967, 1968,
*999
“As demonstrated by a reading of the majority and dissenting opinions in the
Seider
case, the question whether the insurer’s obligation constitutes a debt owing to the insured defendant and, as such, is subject to attachment under the CPLR was thoroughly debated and considered. It was our opinion when we decided- that case, and it still is, that jurisdiction in rem was acquired by the attachment in view of the fact that the policy obligation was a debt to the defendant. And we perceive no denial of due process since the presence of that debt in this State (see, e.
g., Harris v. Balk,
“The argument that our decision sanctions a ‘direct action’ against the insurer is sufficiently answered by what we wrote in
Seider v. Roth
(
‘It is said that by affirmance here we would be setting up a “direct action against the insurer. That is true to the extent only that affirmance will put jurisdiction in New York State and require the insurer to defend here, not because a debt owing by it to the defendant has been attached but because by its policy it has agreed to defend in any place where jurisdiction is obtained against its insured.’ ”
Since the authority of
Harris v. Balk
has been overshadowed by
Shaffer,
although the Court may not have overruled it in explicit terms, it is important that Chief Judge Fuld noted separately the predicate considerations of
Seider v. Roth.
He said (
“The historical limitations on both in personam and in rem jurisdiction, with their rigid tests, are giving way to a more realistic and reasonable evaluation of the respective rights of plaintiffs, defendants and the State in terms of fairness. (See, e. g., International Shoe Co. v. Washington,326 U.S. 310 ,66 S.Ct. 154 ,90 L.Ed. 95 ; McGee v. International Life Ins. Co.,355 U.S. 220 ,78 S.Ct. 199 ,2 L.Ed.2d 223 ; Longines-Wittnauer Watch Co. v. Barnes & Reinecke,15 N.Y.2d 443 ,261 N.Y.S.2d 8 ,209 N.E.2d 68 .) Such an evaluation requires a practical appraisal of the situation of the various parties rather than an emphasis upon somewhat magical and medieval concepts of presence and power. Viewed realistically, the insurer in a case such as the present is in full control of the litigation; it selects the defendant’s attorneys; it decides if and when to settle; and it makes all procedural decisions in connection with the litigation (See, e. g., Thrasher v. United States Liab. Ins. Co.,19 N.Y.2d 159 , 167,278 N.Y.S.2d 793 ,225 N.E.2d 503 .) Moreover, where the plaintiff is a resident of the forum state and the insurer is present in and regulated by it, the State has a substantial and continuing relation with the controversy. For jurisdictional purposes, in assessing fairness under the due process clause and in determining the public policy of New York, such factors loom large.
“The position taken by some who disagree with Seider would require that, as a matter of State policy, insurance be explicitly eliminated as the basis for the exercise of our in rem jurisdiction but this represents a judgment requiring data and information with respect to the practical effect of the Seider decision not presently available to this court.”
The language adumbrates Shaffer; it rests, as does Shaffer, on International Shoe.
*1000 Judge Keating, concurring in the result, observed that the insurer in such a policy, must defend in any state in which the insured is involved in an accident, including direct action states — such as Louisiana. After speaking of the interest of direct action states in the lot of its residents injured in accidents occurring in the direct action state, Judge Keating continued
“Similar State interests, it seems to me, would sustain a direct action against the insurer in this jurisdiction if the Legislature had authorized such actions, even though the action could not have been brought directly in the State in which the accident took place. Although no direct action statute is presently in effect, I see no policy reason for not holding that service of process on the real party defendant — the insurer — is sufficient to compel it to defend in this State, provided it transacts business here and is thus subject to the jurisdiction of our courts.
“This court has on a number of occasions given effect to the strong State interest in facilitating recovery of persons injured in automobile accidents. The fact that the injury occurs outside of this State does not, of course, lessen that interest. (Babcock v. Jackson,12 N.Y.2d 473 ,240 N.Y.S.2d 743 ,191 N.E.2d 279 ; Macey v. Rozbicki,18 N.Y.2d 289 , 292,274 N.Y.S.2d 591 ,221 N.E.2d 380 [concurring opn.].)
“Likewise, we have on a number of occasions recognized that the real party in interest is the insurer and we have given effect to the fiction sought to be perpetuated here only where the insurer would be prejudiced thereby. As we recently stated: ‘The law maintains the fiction that the insured is the real party in interest at the trial of the underlying negligence action [only] in order to protect the insurance company against overly sympathetic juries.’ ”
Judges Breitel and Bergan concurred in the decision “on constraint of
Seider v. Roth
” because “the institutional stability of a court is more important than any single tolerable error.” Judge Burke dissented, questioning whether the “direct action” approach was constitutionally tolerable where the accident giving rise to the alleged liability occurred outside the forum. On this ground he differentiated
Watson v. Employers Liability Assurance Corp.,
1954,
On reargument the court made explicit its holding that the recovery in a Seider v. Roth type attachment could not exceed the face value of the policy attached even if the action was defended on the merits; further consideration of the provisions of N.Y.C.P. L.R. 320(c), seemingly exacting a general appearance in order to defend on the merits, as applicable to other types of attachment cases, was left to the future.
Thrasher v. United States Liability Ins. Co.,
1967,
“Although [the attorneys] were technically representing [the insured], in reality they were representing the interest of the insurance company (Oltarsh v. Aetna *1001 Ins. Co.,15 N.Y.2d 111 , 118-119,256 N.Y.S.2d 577 ,204 N.E.2d 622 ; Bearor v. Kapple, Sup.,24 N.Y.S.2d 655 , 658-659; cf. Bennett v. Troy Record Co.,25 A.D.2d 799 ,269 N.Y.S.2d 213 ). The law maintains the fiction that the insured is the real party in interest at the trial of the underlying negligence action in order to protect the insurance company against overly sympathetic juries (see Leotta v. Plessinger,8 N.Y.2d 449 , 461-462,209 N.Y.S.2d 304 ,171 N.E.2d 454 ). Once a judgment has been rendered, however, and a suit is subsequently brought against the insurance company, the reason for the fiction no longer exists for the factor of insurance is now one of the essential elements of the pending cause of action (see Oltarsh v. Aetna Ins. Co., supra, 15 N.Y.2d p. 118,256 N.Y.S.2d 577 ,204 N.E.2d 622 ). To hold that service on the attorney retained by the insurance company does not constitute service upon the insurer only serves to perpetuate this fiction. That it is fiction is abundantly demonstrated by the present case. The services of Glatzer, Glatzer & Evans were retained and paid for by the insurer. They had complete control of the defense „ in the negligence action.”
Seider v. Roth
and
Simpson
came under exacting constitutional scrutiny in
Minichiello v. Rosenberg,
2d Cir. 1968,
“. . . the Justice’s final consideration — the plaintiff’s difficulty in bringing the defendant before the forum — applies with even greater force to the state of plaintiff’s residence than to that of injury in light of the development of long-arm statutes that will generally allow the state of injury to obtain personal jurisdiction of the insured and so avoid the need for a direct action against the insurer.
“We thus believe that, all things considered, the Supreme Court would sustain the validity of a state statute permitting direct action against insurers doing business in the state in favor of residents as ■well as on behalf of persons injured in it.”
The state’s interest in protecting its residents was considered to be as great as its interest in a nonresident’s in-state accident. The burden to the named defendant was considered as largely swept away by. the
Simpson
limitation of the recovery to the face amount of the policy, possibly a constitutionally required limitation. On rehearing in banc, Judge Friendly used
Harris v. Balk
to meet the argument that
Seider v. Roth
was too burdensome to the named defendant. He said (
“The Maryland judgment deprived Balk of money he could have used for whatever purpose he willed; a Seider judgment would mean simply that liability policies, on which appellants could not have realized for any purpose other than to protect themselves against losses to others, will be applied to the very objective for which they were procured.”
Judge Friendly observed that the named defendant could defend fully without exposure to personal liability, that the named defendant’s covenant of cooperation might not even subject him to the inconvenience of required attendance at trial in the forum, and that the typical
Seider v. Roth
case was removable to the federal court, where' defendant had the right under 28 U.S.C. § 1404(a) to move to transfer the case for the convenience of the parties and witnesses, in the interest of justice, to the place of defendant’s residence or the place of the accident.
Cf. Van Dusen v. Barrack,
1964,
Farrell
in substance limited
Seider v. Roth
to those cases in which the plaintiff was resident in the forum state, because the constitutional doubt with respect to applying it in favor of nonresidents suing on out-of-state accidents would be exceedingly serious. Judge Friendly read both
Seider v.
*1002
Roth
and
Simpson
as implying such a limitation (
Seider v. Roth
has not been widely followed. It was followed in
Forbes v. Boynton,
1973,
“It is well established that the liability of the insurer to indemnify becomes fixed on the happening of an accident within the coverage of the policy, subject to defenses which may arise thereafter.”
The court emphasized that the insurer is in full control of the litigation and selects defense counsel. The court declined to characterize the procedure as “direct action” against the insurer. The court, however, added (
“Our legislature has provided a means by which foreign motorists who have been involved in an accident on our highways can be submitted to the jurisdiction of our courts in actions for damages resulting therefrom. RSA ch. 264 (Supp. 1972). The State of New Hampshire has a similar interest in providing a resident plaintiff the use of our courts to obtain redress for injuries incurred in an accident on an out-of-State highway particularly when the State of residence of the defendant would furnish the defendant a forum if the roles were reversed. Simpson v. Loehmann,21 N.Y.2d 305 -319,287 N.Y.S.2d 633 -645,234 N.E.2d 669 -677 (1967).” (Emphasis added).
Robitaille v. Orciuch,
D.N.H.1974,
The Supreme Court of Minnesota sustained the validity of the
Seider v. Roth
type of attachment as limited to suits by residents, with limitation of recovery to the amount of the liability insurance policy, provided adequate notice and an opportunity to defend are given to the named defendant.
Savchuk
v.
Rush,
Minn.1976,
Fairly representative of the more numer- ' ous cases rejecting
Seider v. Roth
is
Javorek
v.
Superior Court,
1976,
Seider v. Roth and Simpson are sui generis in the field of jurisdiction. They cannot be pigeon-holed as in rem or in personam. They are in real terms in personam so far as the insurer is concerned. For the named defendant the suit is only an occasion of cooperation in the defense; his active role is that of witness. It is beside the point to test the constitutionality of the procedure in terms of the named defendant; his role as a party is hardly more real than that of the casual ejector Richard Roe in common law ejectment actions. What is at stake in the suit is the plaintiff’s claim for the payment of his alleged damages by the insurer.
Section 167, subdivision 1, of the New York Insurance Law and Section 38.1-380 of the Virginia Code are alike in making
*1003
the insurer directly liable to the plaintiff not only if the judgment against the insured is not promptly paid but also if the insured becomes bankrupt. The insurance contract is, thus, not merely a contract with insured protecting the insured against loss, but it directly obligates the insurer to pay persons injured by the insured’s negligence. If the insurer refuses to defend, it may be brought in as a third party defendant under Rule 14 of the Federal Rules of Civil Procedure.
Colton v. Swain,
7th Cir. 1975,
The emphasis in many of the cases on the supposedly contingent nature of the insurer’s obligation appears to be misplaced. The occurrence of the accident, the plaintiff’s injuries, and the insured’s connection with the accident are determinative events.' To be sure there may never be a suit, but the insured is under an immediate duty to give prompt notice of the accident to the insurer. Investigation usually commences at once, and the parties in interest, potential plaintiff, insurer and insured are identified. Control of investigation, defense and settlement are in the insurer’s hands. The prospective plaintiffs relationships are with the insurer, not with the insured. When an action is commenced the insurer controls the conduct of the defense, and, if the suit is in a federal court, plaintiff may obtain discovery of the existence and content of any relevant insurance agreement (Rule 26(b)(2)). Ironically, perhaps, it is the insurer, the one who is responsible for the defense of the suit and for the payment of any judgment, and who is itself unable to deny that it is fully suable in the state, who puts forward the plea to jurisdiction in the name of the nominal defendant, who will not pay the judgment, nor manage the defense. One court, commenting on
Seider v. Roth
and
Simpson,
suggested that the New York court did not
go
far enough.
Kirchen v. Orth,
E.D.Wis.1975,
“The law has too long maintained the fiction that the insured is the real party in interest. Viewed realistically and honestly, the insurance company conducts the defense, employs its own attorneys, decides if and when to settle, and is in full control of the entire litigation. The principal concern of the insurer is to protect its own ‘contingent’ liability under the contract. As a general proposition, the law of this state rejects this legal fiction, recognizing that the insurer is the real party in interest and that the insured is a mere nominal party. When utilized to completely defeat the causes of action of injured Wisconsin plaintiffs, the legal fiction created by no-action clauses becomes too onerous to enforce in good conscience. Thus, aside from the equitable consideration presented by this case, precluding the insurance company’s assertion of the no-action clause is compelled by a realistic and reasonable evaluation of the respective rights of the plaintiffs, defendants, and the State of Wisconsin. The interest of the State of Wisconsin in facilitating recovery of residents injured in automobile accidents is not lessened by the fact that the accident occurred out of state. Therefore, a recognition of realities, rather than fictions, dictates the conclusion that this action is maintainable *1004 against Guaranty National, notwithstanding its no-action clause.” (Footnote omitted)
See, similarly,
Barrios v. Dade County,
S.D.N.Y.1970,
It is concluded that Shaffer does not require rejection of Seider v. Roth and Simpson. The jurisdiction exercised under those cases is one in favor of residents only, is available only against insurers suable in the state, requires giving adequate notice to the insured, and, in all probability, the judgment rendered in such a suit does not prejudice the named defendant’s right to relitigate the issues of liability and damages if he is sued again for the amount in excess of that recovered in the suit based on the Seider v. Roth attachment; and there remains the caution that the procedure may not be used as the means of obtaining a preference in the distribution of inadequate coverage in cases involving multiple claims and claimants. See Miniehiello v. Rosenberg, supra; Farrell v. Piedmont Aviation, Inc., supra.
Sustaining the jurisdiction in the present case does not offend the policy considerations underlying Shaffer and preserves the anonymity of the defending insurance company in keeping with the policy of those states, which, like New York, do not authorize direct action against insurance carriers.
It is
ORDERED that defendant’s motion to set aside the service of process and to dismiss the action is denied.
Notes
International Shoe raised the questions (1) whether the Company was liable to the state for unemployment compensation fund contributions based on the wages paid by the company to its eleven to thirteen salesmen resident in the state for their services in the state, and (2) whether, when the Company did not pay the contributions, the state could enforce payment by suit initiated by service of process on one of the resident salesmen. The Court concluded (
“Applying these standards, the activities carried on in behalf of appellant in the State of Washington were neither irregular nor casual. They were systematic and continuous throughout the years in question. They resulted in a large volume of interstate business, in the course of which appellant received the benefits and protection of the laws of the state, including the right to resort to the courts for the enforcement of its rights. The obligation which is here sued upon arose out of those very activities. It is evident that these operations establish sufficient contacts or ties with the state of the forum to make it reasonable and just according to our traditional conception of fair play and substantial justice to permit the state to enforce the obligations which appellant has incurred there. Hence we cannot say that the maintenance of the present suit in the State of Washington involves an unreasonable or undue procedure.”
An issue was whether commerce was impermissibly burdened by the unemployment compensation system and its enforcement in the Company’s case, and the Court held that it was not.
Henegan v. Merchants Mutual Ins. Co.,
1st Dept. 1968,