Kend v. Chroma-Glo, Inc.

51 F.R.D. 547, 14 Fed. R. Serv. 2d 1632, 1970 U.S. Dist. LEXIS 9365
CourtDistrict Court, D. Minnesota
DecidedNovember 30, 1970
DocketNo. 5-70 Civ. 45
StatusPublished
Cited by3 cases

This text of 51 F.R.D. 547 (Kend v. Chroma-Glo, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kend v. Chroma-Glo, Inc., 51 F.R.D. 547, 14 Fed. R. Serv. 2d 1632, 1970 U.S. Dist. LEXIS 9365 (mnd 1970).

Opinion

NEVILLE, District Judge.

Plaintiff filed an action in the New York State court alleging a breach of contract and seeking recovery of certain sales commissions alleged to be due him. Since defendant was and is a foreign corporation with respect to New York, plaintiff availed himself of a remedy provided by New York Statute, McKinney’s Consolidated Laws of New York, C.P.L.R. § 6201, and procured a court order attaching certain funds due defendant from a New York source thereby obtaining quasi in rem jurisdic[548]*548tion. The sheriff seized $42,181.86. Thereafter defendant removed the case from State court to the United States District Court for the Eastern District of New York. Subsequently and under date of June 26, 1970, the latter court granted defendant’s motion to transfer the case under 28 U.S.C. § 1404(a) to the United States District Court for the District of Minnesota, Fifth Division, requiring in its order inter alia that defendant thereupon appear in personam. This defendant has done by filing a general appearance. The clerk of this court now holds in the Registry of the court the sum of $40,072.77 (the amount having been reduced by the sheriff’s “lawful poundage fees”). Defendant now moves this court to release the funds so held, asserting first that had the action originally been brought in Minnesota plaintiff would not, on the record as it now appears, have been entitled to an attachment and second that in any event upon defendant’s making its general appearance, the concept of quasi in rem jurisdiction no longer obtains and so the funds should be delivered to defendant.

New York C.P.L.R. § 6201 lists a number of grounds for obtaining an order of attachment, most related to or based upon an allegation that a defendant is attempting to or has departed the State or has fraudulently transferred or concealed his assets or is about to do so. The attachment in the case at bar, however, was not requested on any of these grounds but solely on the grounds that:

“1. the defendant is a foreign corporation or not a resident or domiciliary of the state”

No mention is now made by either party in the moving papers to this court seeking to effect or opposing a release of the funds of the fact that the attachment is necessary or unnecessary to the security of the plaintiff were he to obtain a judgment. This has significance in view of the New York Statute C.P.L. R. § 6223, which provides in the penultimate sentence as follows:

“If, after the defendant has appeared in the action, the court determines that the attachment is unnecessary to the security of the plaintiff, it shall vacate the order of attachment.”

The commentaries and annotations to the above quoted section contain the following :

“The next to last sentence of this section is intended to permit vacatur of an attachment that was sought solely, or primarily, for jurisdictional reasons, after that function has been served.”

Thus it would seem that under New York law, had the action remained there in State court, or in the United States District Court, a showing would have to be made that “the attachment is unnecessary to the security of the plaintiff”. No such showing has been made in the case at bar. The court does not know whether the defendant is a multimillion dollar corporation or a small sales or service business with little or no assets; nor does the court have any knowledge as to its size, length of time it has engaged in business or even any facts as to the type and extent of its business. The question then is, on whom is the burden to establish that the attachment is “unnecessary to the security of the plaintiff.” This court believes that were it sitting in New York, either in the State court or in the United States District Court for the Eastern District of New York, it would be compelled to rule that the burden is on the one who seeks the release of the attached funds, i.e., the defendant in this case, to establish the lack of necessity to the security of the plaintiff. It could attempt to do so by producing financial statements and historic data as to the corporation’s assets and liabilities and its ability to meet a judgment if obtained against it or perhaps in other ways. Such has not been done here however and defendant’s motion it would seem would be denied by a court sitting [549]*549in New York. The annotations to § 6223 further read:

“It has recently been held that where a defendant moves to vacate an attachment on the ground that it is unnecessary to the security of the plaintiff, the burden is upon the defendant to demonstrate this to the court. George A. Fuller Co. v. Vitro Corp., 1966, 26 A.D.2d 916, 274 N.Y.S.2d 600. This accords with the general rule that upon all motions to vacate an order of attachment, the burden rests upon the defendant to demonstrate that the plaintiff’s papers are inadequate. See, e. g., Waterman-Bic Pen Corp. v. L. E. Waterman Pen Co., 1959, 8 A.D.2d 378, 187 N.Y.S.2d 872.” (Supp.1970 at p. 41)
“A new ground has been added by the CPLR for vacating an order of attachment, viz., that it is unnecessary for the security of the plaintiff. This is a salutary development, and does not overlook the jurisdictional significance of attachment since the motion to vacate on this ground cannot be made until the defendant has submitted himself to personal jurisdiction in New York. If the defendant appears and then demonstrates that he is solvent and willing to pay a judgment, the court has the discretion to vacate the order of attachment.” [Emphasis added] (S.upp.1970 at p. 42)

As to the burden of proof in vacating attachment generally see B. B. Weit Printing Co. v. Frances Denney, Inc., 300 F.Supp. 405 (S.D.N.Y.1969); Hydromar Corp. of Delaware v. Construction Aggregates Corp., 32 A.D.2d 749, 300 N.Y.S.2d 797 (1969). See also Gitlin v. Stone, 262 F.Supp. 500, 501 (S.D.N.Y. 1967), where, though the original attachment was not solely for jurisdictional purposes, the court stated:

“Defendant’s contention that the attachment should be vacated entirely for the reason that they are now prepared to submit to the Court’s in personam jurisdiction, is without merit. The attachment was not sought solely for the purpose of acquiring quasi in rem jurisdiction. * * * The personal appearance of a non-resident defendant does not require that an attachment procured pursuant to the provisions of the foregoing section be vacated or modified.”

The only question then left for decision by this court in whether the transfer by the United States District Court for the Eastern District of New York to this court under 28 U.S.C. § 1404(a) in any way affects or makes inapplicable the above conclusion. In this court’s opinion it does not.

A transferee court under 28 U.S.C. § 1404(a) must apply the law of the transferor state. Fed.R.Civ.P. Rule 64 reads in pertinent part as follows:

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Bluebook (online)
51 F.R.D. 547, 14 Fed. R. Serv. 2d 1632, 1970 U.S. Dist. LEXIS 9365, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kend-v-chroma-glo-inc-mnd-1970.