Mary Scanapico v. Richmond, Fredericksburg & Potomac Railroad Company, and Seaboard Air Line Railroad Company and Atlantic Coast Line Railroad Company

439 F.2d 17

• Court: Court of Appeals for the Second Circuit
• Decided: December 18, 1970
• Docket: 34256_1
• Status: Published

Opinions

HAYS, Circuit Judge:

This is an appeal from an order of the United States District Court for the Eastern District of New York denying defendant’s motion to quash the service of summons. It is here by permission of this court, granted upon the statement of the district judge under 28 U. S.C. § 1292(b) (1964) that the order

“[i]nvolves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation. * * *>>

Appellee sued for injuries sustained when a suitcase fell on her from an overhead rack in a railroad car in which she was a passenger traveling from Florida to New York. Appellee is a resident of New York. The injury occurred when the train was traveling over the tracks of appellant railroad between Washington and Richmond.

Appellant moved to quash the service on it of the summons and complaint on the ground that its activities in New York were insufficient, under the due process clause of the Federal Constitution and under New York law, to provide a basis for the exercise over it of personal jurisdiction and on the further ground that such an assertion of jurisdiction would constitute an undue burden on interstate commerce. It is from the order denying this motion that defendant appeals.

The parties are agreed, and the district court found, that the activities of the appellant in New York consisted of:

(1) freight solicitation by two employees, one of whom resided in New York;

(2) sale and issuance by connecting railroads of coupon tickets and through bills of lading good, in part, for carriage over appellant’s Richmond-Washington tracks, for which appellant received a share of the payment;

(3) daily presence in New York of appellant’s freight cars in interstate trains operated by connecting railroads.

Under recent opinions of the Supreme Court the older mysteries of corporate presence are no longer determinative of issues of personal jurisdiction over corporations. The question in each case is not whether the corporation is in some metaphysical sense “present” in the state but whether the corporation’s contacts with the state are sufficient to justify the exercise of jurisdiction without offending “traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), citing Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940). With increasing nationalization of commerce “a trend is clearly discernible toward expanding the permissible scope of state jurisdiction over foreign corporations and other non-residents.” McGee v. International Life Insurance Co., 355 U.S. 220, 222, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957).

We are warned, however, that

“[I]t is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. See Vanderbilt v. Vanderbilt, 354 U.S. 416, 418. [77 S.Ct. 1360, 1362, 1 L.Ed.2d 1456.] Those restrictions are more than a guarantee of immunity from incom-venient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the ‘minimal contacts’ with that State that are a prerequisite to its exercise of power over him.” Hanson v. Denckla, 357 U.S. 235, 251, 78 S.Ct. 1228, 1238, 2 L.Ed.2d 1283 (1958).

Whether the- “assertion of jurisdiction contravenes a constitutional guarantee” is, of course, a question of federal law. See Arrowsmith v. United Press Internat'l, 320 F.2d 219, 223 (2d Cir. 1963).

In the present case, it appears that the appellant employed a resident of Syracuse, New York, to solicit freight traffic throughout the State except for the area immediately around New York City, where another employee of appellant solicited such freight. At all times freight cars belonging to appellant were to be found in New York. Tickets and bills of lading for carriage over appellant’s tracks were sold by persons acting, for this purpose, as appellant’s representatives. We hold that these activities of appellant in the State constitute sufficient “minimum contacts” to permit, within constitutional limitations, the exercise of personal jurisdiction. McGee v. International Life Insurance Co., supra; Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952); International Shoe Co. v. Washington, supra; Curtis Publishing Co. v. Golino, 383 F.2d 586 (5th Cir. 1967); Volkswagen Interamericana, S.A. v. Rohlsen, 860 F.2d 437 (1st Cir.) cert. denied, 385 U.S. 919, 87 S.Ct. 230, 17 L.Ed.2d 143 (1966); Scholnik v. National Airlines, 219 F.2d 115 (6th Cir.) cert. denied, 349 U.S. 956, 75 S.Ct. 882, 99 L.Ed. 1280 (1955 ).

In Blount v. Peerless Chemicals Inc., 316 F.2d 695 (2nd Cir.), cert. denied sub nom. Colbert v. Peerless Chemicals Inc., 375 U.S. 831, 84 S.Ct. 76, 11 L.Ed.2d 62 (1963), where we held the activities within the state of New York of a foreign corporation insufficient to provide a basis for the exercise of jurisdiction, we pointed out that the corporation involved in that case did not solicit business in New York and had no employees here. In contrasting the present case with Blount we might add that in Blount the corporation did not have representatives in New York who sold its services and did not have property in New York.¹

In this case where federal jurisdiction is based upon diversity of citizenship we must also determine whether personal jurisdiction is properly asserted under New York law. Arrowsmith v. United Press Internat'l, supra. The applicable New York statute is Section 301 of the New York Civil Practice Law and Rules (McKinney's 1963). In Frummer v. Hilton Hotels Internat'l, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 227 N.E.2d 851 (1967), the Court of Appeals, interpreting Section 301, held that a plaintiff who alleged that he was injured in the Hilton Hotel in London could establish personal jurisdiction in New York over the British corporation which operated the London Hilton. New York’s highest court, reasserting its familiar rule that solicitation of business in the state without more is insufficient to provide a basis for personal jurisdiction, found the necessary additional activities in the corporation’s use of a New York representative to make reservations at the London Hilton and to do “public relations and publicity work.” 19 N.Y.2d at 537, 281 N.Y.S.2d at 44, 227 N.E.2d at 853.

In Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116 (2d Cir. 1967), cert. denied, 390 U.S. 996, 88 S.Ct. 1198, 20 L.Ed.2d 95 (1968), this court was called upon to apply the New York law with respect to the exercise of personal jurisdiction over a foreign corporation. Plaintiffs brought suit in the United States District Court for the Eastern District of New York against two California corporations and a Nevada corporation, alleging that plaintiffs sustained injuries while traveling on a bus in Arizona. The district court granted defendants’ motion to set aside the service of summons and plaintiffs appealed. The district court’s decision antedated the decision of the New York Court of Appeals in the Frummer case. Relying largely on Frummer which had been decided in the meantime, we reversed the ■ determination of the district court and held that plaintiffs had acquired personal jurisdiction over defendants. In an opinion by Chief Judge Lumbard, this court said:

“In our view, the decisive test is that upon which the court in Frum-mer relied, ‘the [reservation] Service does all the business which [defendant corporation] could do were it here by its own officials.’ 281 N.Y.S.2d at 44, 227 N.E.2d at 854. In the context of the Frummer case, we take this to mean that a foreign corporation is doing business in New York ‘in the traditional sense’ when its New York representative provides services beyond ‘mere solicitation’ and these services are sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation’s own officials would undertake to perform substantially similar services.” Gelfand v. Tanner Motor Tours, Ltd., supra, at 120-121.

In the Gelfand case, a representative of defendant corporations confirmed reservations for bus tours on defendants’ lines and promoted travel over those lines.

In the present case not only did appellant’s solicitation of business in New York provide a much more acceptable basis for establishing personal jurisdiction than the “mere solicitation” referred to in the New York cases, since the solicitation was carried on by appellant’s own employees, one of whom resided in Syracuse, but the additional factors seem to us to be at least as extensive as those found to be sufficient in Frummer and Gelfand. These additional factors include, as we have pointed out, sale by representatives within the state of passage over appellant’s tracks and the day-to-day presence within the state of appellant’s freight cars from the use of which the appellant was deriving revenue.

Appellant also contends that the assertion of jurisdiction over it in New York imposes an undue burden on interstate commerce. The cases which appellant cites hark back to earlier days and reflect a far less fully developed stage of our national economy. In McGee v. International Life Insurance Co., supra,, the Court said, 355 U.S. at p. 223, 78 S.Ct. at p. 201:

“* * * modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.”2

In the Frummer case the New York Court of Appeals said:

“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 [interstate] trade. When their activities * * * either directly or through an agent, become as widespread and energetic as the activities in New York conducted by [defendant], they receive considerable benefits from such * * * business and may not be heard to complain about the burdens.” Frummer v. Hilton Hotels Internat'l, Inc., 19 N.Y.2d at 538, 281 N.Y.S.2d at 45, 227 N.E.2d at 854.

We reject appellant’s contention that subjecting it to personal jurisdiction in New York imposes an undue burden on interstate commerce.

For the reasons given we affirm the determination of the district court.

1 . On the effect of the use of appellant’s freight cars in New York, compare the issue of the ownership of the trucks involved in Agrashell, Inc. v. Bernard Si-rotta Co., 344 F.2d 583, 589-590 (2d Cir. 1965).

2 . Whether some other forum may be more convenient for trial is not before us. Presumably defendant will be able to move for transfer to another forum under 28 U.S.C. § 1404(a) (1964).