Taca International Airlines, S. A. v. Rolls-Royce of England, Ltd.

Appellate Division of the Supreme Court of New York

Taca International Airlines, S. A. v. Rolls-Royce of England, Ltd.

21 A.D.2d 73, 248 N.Y.S.2d 273, 1964 N.Y. App. Div. LEXIS 4050

CourtAppellate Division of the Supreme Court of the State of New York

DecidedApril 9, 1964

StatusPublished

Cited by6 cases

This text of 21 A.D.2d 73 (Taca International Airlines, S. A. v. Rolls-Royce of England, Ltd.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Taca International Airlines, S. A. v. Rolls-Royce of England, Ltd., 21 A.D.2d 73, 248 N.Y.S.2d 273, 1964 N.Y. App. Div. LEXIS 4050 (N.Y. Ct. App. 1964).

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Per Curiam.

This action seeks recovery for the loss of plaintiff’s aircraft as the result of a crash at Managua, Nicaragua. Plaintiff has sued several defendants, among them Rolls-Royce, Ltd., an English corporation. This defendant has moved to set aside the service on it. Service was purportedly made by service on Rolls-Royce, Inc., and Bruce Thomson. There is no question [74]*74but that these persons were served, the issue being whether such service reached the moving defendant.

Rolls-Royce, Ltd., manufactures and sells motor cars and airplane engines. It also sells parts and gives service to its customers. These products are sold practically world-wide and customers can get service at many places. Rolls-Royce, Ltd., owns all the stock of Rolls-Royce of Canada, Ltd., a Canadian corporation, and this company owns all the stock of Rolls-Royce, Inc. The business of Rolls-Royce, Inc., is solely in the sale of products manufactured by Rolls-Royce, Ltd., and the servicing of the purchasers of these products. The three mentioned companies have, some directors in common, and key executive personnel in Rolls-Royce, Inc., were former executives of either the English or Canadian company and were assigned to their positions by the parent English company. There are frequent conferences among executives of the three companies at which the policies of Rolls-Royce, Inc., are determined. Rolls-Royce, Inc., employees who require technical training are given it by Rolls-Royce, Ltd., in England. All sales literature used by Rolls-Royce, Inc., is written and published by Rolls-Royce, Ltd.

Rolls-Royce, Inc., gets its income in several ways. It owns no automobiles, and when a sale is made to a customer it buys a car from Rolls-Royce, Ltd., in England and imports it. The sale is at a fixed price which is lower than the price to the ultimate purchaser. Rolls-Royce, Ltd., gives a warranty directly to the purchaser which Rolls-Royce, Inc., delivers with the car. Rolls-Royce, Ltd., pays Rolls-Royce, Inc., a fixed annual fee for services rendered to customers in connection with these warranties. As to airplane engines, the compensation for service is paid by Rolls-Royce of Canada and this payment is measured by the price of the spare parts sold by Rolls-Royce, Inc.

All of the net income of Rolls-Royce, Inc., goes to Rolls-Royce of Canada and appears in that company’s balance sheet. As affected by the other operations of the Canadian company it then appears in the balance sheet of Rolls-Royce, Ltd.

The question is whether these facts constitute doing business in this State. Each case necessarily depends on its own facts (Chaplin v. Selznick, 293 N. Y. 529, 533). The fact that a corporation has a subsidiary does not in and of itself bring it within the State or make it amenable to process (Compania Mexicana v. Compania Metropolitana, 250 N. Y. 203). It is otherwise where the subsidiary, though nominally independent, actually functions as a department of the parent (Rabinowitz v. [75]*75Kaiser-Fraser Corp., 198 Misc. 707, affd. 278 App. Div. 584, affd. 302 N. Y. 892). And this is not affected by the fact that the subsidiary is given the appearance of being an independent contractor (Goodman v. Pan American World Airways, 1 Misc 2d 959 [Eager, J.], affd. 2 A D 2d 707). The facts here are virtually conclusive that any claim of independence on the part of Rolls-Eoyce, Inc., is illusory. It is clearly a sales agent, despite the forms that would make it appear on the surface to be a purchaser.

We are not unmindful of the decision in Steingold v. Capital Airlines (34 Misc 2d 33, affd. 19 A D 2d 778) where, on similar service, the action was dismissed by this same moving defendant. The decision there was on an entirely different ground, namely, the advisability of entertaining an action by a nonresident against a foreign corporation for an accident occurring outside this State. The court concluded the equities in that case did not warrant exercise of the discretionary power to entertain the action. The question litigated here is entirely different.

The order should be reversed and the motion denied, with costs to the appellant.

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Per Curiam.

This action seeks recovery for the loss of plaintiff’s aircraft as the result of a crash at Managua, Nicaragua. Plaintiff has sued several defendants, among them Rolls-Royce, Ltd., an English corporation. This defendant has moved to set aside the service on it. Service was purportedly made by service on Rolls-Royce, Inc., and Bruce Thomson. There is no question [74]*74but that these persons were served, the issue being whether such service reached the moving defendant.

Rolls-Royce, Ltd., manufactures and sells motor cars and airplane engines. It also sells parts and gives service to its customers. These products are sold practically world-wide and customers can get service at many places. Rolls-Royce, Ltd., owns all the stock of Rolls-Royce of Canada, Ltd., a Canadian corporation, and this company owns all the stock of Rolls-Royce, Inc. The business of Rolls-Royce, Inc., is solely in the sale of products manufactured by Rolls-Royce, Ltd., and the servicing of the purchasers of these products. The three mentioned companies have, some directors in common, and key executive personnel in Rolls-Royce, Inc., were former executives of either the English or Canadian company and were assigned to their positions by the parent English company. There are frequent conferences among executives of the three companies at which the policies of Rolls-Royce, Inc., are determined. Rolls-Royce, Inc., employees who require technical training are given it by Rolls-Royce, Ltd., in England. All sales literature used by Rolls-Royce, Inc., is written and published by Rolls-Royce, Ltd.

Rolls-Royce, Inc., gets its income in several ways. It owns no automobiles, and when a sale is made to a customer it buys a car from Rolls-Royce, Ltd., in England and imports it. The sale is at a fixed price which is lower than the price to the ultimate purchaser. Rolls-Royce, Ltd., gives a warranty directly to the purchaser which Rolls-Royce, Inc., delivers with the car. Rolls-Royce, Ltd., pays Rolls-Royce, Inc., a fixed annual fee for services rendered to customers in connection with these warranties. As to airplane engines, the compensation for service is paid by Rolls-Royce of Canada and this payment is measured by the price of the spare parts sold by Rolls-Royce, Inc.

All of the net income of Rolls-Royce, Inc., goes to Rolls-Royce of Canada and appears in that company’s balance sheet. As affected by the other operations of the Canadian company it then appears in the balance sheet of Rolls-Royce, Ltd.

The question is whether these facts constitute doing business in this State. Each case necessarily depends on its own facts (Chaplin v. Selznick, 293 N. Y. 529, 533). The fact that a corporation has a subsidiary does not in and of itself bring it within the State or make it amenable to process (Compania Mexicana v. Compania Metropolitana, 250 N. Y. 203). It is otherwise where the subsidiary, though nominally independent, actually functions as a department of the parent (Rabinowitz v. [75]*75Kaiser-Fraser Corp., 198 Misc. 707, affd. 278 App. Div. 584, affd. 302 N. Y. 892). And this is not affected by the fact that the subsidiary is given the appearance of being an independent contractor (Goodman v. Pan American World Airways, 1 Misc 2d 959 [Eager, J.], affd. 2 A D 2d 707). The facts here are virtually conclusive that any claim of independence on the part of Rolls-Eoyce, Inc., is illusory. It is clearly a sales agent, despite the forms that would make it appear on the surface to be a purchaser.

We are not unmindful of the decision in Steingold v. Capital Airlines (34 Misc 2d 33, affd. 19 A D 2d 778) where, on similar service, the action was dismissed by this same moving defendant. The decision there was on an entirely different ground, namely, the advisability of entertaining an action by a nonresident against a foreign corporation for an accident occurring outside this State. The court concluded the equities in that case did not warrant exercise of the discretionary power to entertain the action. The question litigated here is entirely different.

The order should be reversed and the motion denied, with costs to the appellant.

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21 A.D.2d 73, 248 N.Y.S.2d 273, 1964 N.Y. App. Div. LEXIS 4050, Counsel Stack Legal Research, https://law.counselstack.com/opinion/taca-international-airlines-s-a-v-rolls-royce-of-england-ltd-nyappdiv-1964.

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