Kalfus v. Anderson

McLaughlin, J.

Plaintiffs sued to recover damages allegedly sustained as a result of the defendants’ breach of contract covering the delivery of certain merchandise. The defendants are receivers of the Seaboard Air Line Railway, a common carrier. Between July 7, 1943, and August 11, 1943, the defendant carrier was engaged by the plaintiffs’ agents at Miami, Florida, to deliver merchandise in Alabama and Georgia. While the affidavit in opposition to the motion does not specifically so state, it would appear that at the time of the transaction the plaintiffs were residents of the State of New York. The making of the contract and the performance or breach, if there was one, occurred entirely outside of this jurisdiction. The defendants do not have any lines extending into this State, and their moving papers assert that they do not have any business office in New York except for the solicitation of business on its out-of-State lines. The affidavit in opposition to the motion alleges that defendants maintain offices in the city of New York at 233 Broadway, 12 West 53d Street and 120 Wall Street. Tins information it appears was obtained from the telephone directory. The defendants allege that each of these offices is maintained for no other purpose except that of soliciting business for its lines outside the State.

On the application in the lower court the defendants took the position that in order to defend this action they would be compelled to bring their employees and witnesses from Florida, Alabama and Georgia for the purpose of testifying, and also to bring their books and records with respect to these shipments into this State. This it was argued would constitute an undue burden on interstate commerce, and upon that ground the lower court granted the defendants’ motion to dismiss the complaint.

This appeal presents the question as to whether on the facts shown it was proper for the lower court to thus dismiss the complaint. It is clear that the entire transaction took place outside this State. The contract was made at Miami and the merchandise was to be delivered in Alabama and Georgia. The breach, if any, occurred outside this State as also the alleged cause of action based thereon. Defendants’ lines are entirely without the State and the only offices maintained here are for the solicitation of business outside the State. Under these circumstances it would appear that to compel the defendant to appear and defend an action in this State would constitute an undue burden on interstate commerce. (Davis v. Farmers Co-operative Co., 262 U. S. 312; Denver & R. G. W. R. Co. v. Terte, 284 U. S. 284.)

Appellants rely upon the case of Hirliman v. Southern Pacific Co. (268 App. Div. 192) and urge that that case is applicable to the facts of the present case. In the Hirlimcm case {supra) it appeared that the defendants maintained a general office in New York which was second in importance only to its main office, in San Francisco. A vice-president, comptroller, treasurer, assistant secretary, assistant general counsel, freight and traffic manager, general eastern trade agent and passenger traffic agent, were all located in New York. In addition its transfer and income tax bureaus were here. It solicited business and entered into actual contracts, issued bills of lading and accepted payments. It had a ticket office and separate offices for freight and passenger traffic, it maintained bank accounts here, and also kept its stock registers here. It had a total of between 150 and 200 employees in its New York offices. In holding that the facts were sufficient to subject defendant to suit in this jurisdiction the Appellate Division in this department (Towxley, J.) stated (p. 193): “ We do not consider it unreasonable to compel a defendant engaged in business in this State to the extent indicated here to respond to a suit by a resident.”

Proof of facts such as existed in the Hirliman case {supra) is lacking in the case before us. It cannot be said here that the defendants are engaged in business in this State to such a great extent that they should be subjected to suit here. It would therefore follow that the lower court was justified on the facts in holding that the present action would constitute an undue burden upon interstate commerce.

Appellants contend however that even if the action did constitute an undue burden on interstate commerce the defendants nevertheless by proceeding with the defense of this action waived any jurisdictional defects. It appears that the summons in this action was served on December 7, 1944, and that the defendants after being furnished with certain information concerning the plaintiffs’ alleged cause of action, appeared in the action sometime in January, 1945. Subsequent thereto the defendants demanded a bill of particulars as to the complaint which was furnished. It was not until February 28, 1945, that the motion to dismiss on the ground that the action constituted an undue burden on interstate commerce was made. These facts, the appellants argue, constituted a waiver by the defendants of any objection to the jurisdiction of the court. Under sections 278 and 279 of the Civil Practice Act it Seems quite clear that an objection on the ground that the court does not have jurisdiction of the subject matter of the action is never waived by failure to raise it before trial. Here the defendants raised the question by motion after they had appeared in the action.

The argument is made that this being an action to recover for damages for breach of contract the lower court had jurisdiction and that the defense that the action would constitute an undue burden on interstate commerce was one of personal privilege to the defendants and therefore could be waived. This court either did or did not have jurisdiction of the subject matter of the action. If the action constituted an undue burden on interstate commerce then this court did not have jurisdiction of the subject matter of the action. That being the case it is immaterial whether the defendants appeared generally in the action. (Shea v. Export Steamship Corp., 253 N. Y. 17; Robinson v. Oceanic Steam Nav. Co., 112 N. Y. 315).

The motion to dismiss the complaint was properly granted and the judgment and order should be affirmed, with $10 costs.