Baltimore Publishing Co. v. Swedish-America Mexico Line, Ltd. , 143 Misc. 229 ( 1932 )

Callahan, J.

This action is brought by a Maryland corporation against one organized under the laws of Sweden to recover damages arising out of the latter's breach of a contract, made in Sweden, for the carriage of merchandise from that country to Baltimore, Md. The action was commenced in April, 1926, and issue joined during the same month. Various steps were thereafter taken in the litigation, including the issuance and execution of a commission to Sweden and the procural by the defendant of an undertaking for costs. The case had been marked off the calendar by the consent of the parties and had subsequently been restored for trial for the 13th of October, 1931. On June 13, 1931, more than five years after it had answered on the merits, the defendant moved to dismiss the complaint on the ground that the action was brought by a non-resident plaintiff against a foreign corporation on a cause of action arising outside the State, unconnected with any business done by the defendant in this jurisdiction. The present appeal is taken from the order of the court below denying the motion.

One of the contentions of the defendant is that it does no business in this State and may not, therefore, be sued here. This presents the question of whether our courts have jurisdiction of its person. By failing to move to dismiss in accordance with section 278 of the Civil Practice Act and rules 106 and 107 of the Rules of Civil Practice, and by answering on the merits, the defendant must be deemed to have waived the right to question jurisdiction on the ground that it does no business here. (Civ. Prac. Act, § 278, subd. la.)

Although we must accordingly assume that the defendant is doing business in this State to such a degree as to subject it to the jurisdiction of our courts for at least some purposes, it does not follow that it may be sued here without its consent to the same extent that a non-resident individual might be. For example, “ in respect of interstate commerce a non-resident corporation is not subject to suit, even though process be served on one who is a true agent, unless the cause of action grows out of the business transacted within the territory of the forum.” (Guerin Mills v. Barrett, 254 N. Y. 380, 385.) (See, also, N. V. Brood en Beschuitfabriek, etc., v. Aluminum Co., 231 App. Div. 693; Davis v. Farmers Co-operative Co., 262 U. S. 312; Michigan Central R. R. Co. v. Mix, 278 id. 492; Panstwowe Zaklady Graviozne v. Automobile Ins. Co., 36 F. [2d] 504.) In so far as subdivision 4 of section 225 of our General Corporation Law may be construed to subject a foreign corporation engaged in interstate commerce to the necessity of defending suits in this State brought by another foreign corporation on causes of action arising elsewhere and not connected with any business transacted by the defendant in this State, it has been held unconstitutional as imposing an unreasonable burden upon interstate commerce in violation of the commerce clause (Art. 1, § 8, subd. 3) of the Federal Constitution. (N. V. Brood en Beschuitfabriek, etc., v. Aluminum Co., supra.)

The same reasoning would appear to be equally applicable where the defending corporation is engaged, as here, in foreign commerce within the meaning of the Federal Constitution, rather than in interstate commerce. Whether the exemption from suit in a foreign State is broad enough to permit a foreign corporation to resist jurisdiction in all cases where the cause of action does not arise out of the business transacted in the forum (See Louisville & N. R. R. Co. v. Chatters, 279 U. S. 320, 325, 328; Mitchell Furniture Co. v. Selden Breck Construction Co., 257 id. 213, 216; but see contra Tauza v. Susquehanna Coal Co., 220 N. Y. 259, 269; see, also Hutchinson v. Chase & Gilbert, 45 F. [2d] 139, 140) need not be determined at this time, since subjecting the defendant here to suits in the courts of this State would clearly impose an undue burden upon foreign commerce and would, therefore, bring the instant case within the doctrine of N. V. Brood en Beschuitfabriek, etc., v. Aluminum Co. (supra) and the authorities cited therein.

Has the defendant, by answering on the merits and failing to raise any objection to jurisdiction for a period of five years, waived its right to raise the point at this time? If the question is one of jurisdiction of the person, the answer must be in the affirmative. (Civ. Prac. Act, § 278, subd. la.) If, on the other hand, jurisdiction of the subject-WMtter is involved, it is not too late to make the point for the first time at the trial (Civ. Prac. Act, § 279), and the court may even dismiss the action during the trial of its own motion. (Robinson v. Oceanic Steam Navigation Co., 112 N. Y. 315, 324.)

There are statements on respectable authority indicating that an objection that an unreasonable burden would be imposed upon interstate or foreign commerce by retaining jurisdiction is one to the subject-matter of the action. In N. V. Brood en Beschuitfabriek, etc., v. Aluminum Co. (supra) the record discloses that the motion was founded on lack of jurisdiction of the subject of the action. No question of waiver was, however, involved, the defendant having moved promptly, without appearing or answering. It was, therefore, immaterial whether the complaint was dismissed for lack of jurisdiction of the person or of the subject-matter and that question was not really considered. To the extent that the case of Panstwowe Zaklady Graviozne v. Automobile Ins. Co. (supra) may be regarded as authority for treating the problem as one of jurisdiction over the subject-matter, I am unable to agree with it.

It appears to me that an objection that the defendant may not be sued here because the cause arose without the State and that to defend it here is likely to impose an unjust burden upon defendant is, in effect, a statement by the defendant that it is not here for the purpose of such a suit, exactly as a claim that it is not doing business here at all is tantamount to a declaration that it is not here for the purpose of any suit. By doing business within a foreign State a corporation may be regarded as impliedly assenting to be sued in connection with business transacted there, but not necessarily as to business unrelated to corporate action within that State. (Cf. Mitchell Furniture Co. v. Selden Breck Construction Co., supra; Louisville & N. R. R. Co. v. Chatters, supra.) In other words, by doing business within a foreign State a corporation confers upon the- courts of the latter only a limited jurisdiction of its person.

There are many expressions in the Federal decisions which indicate that a corporation, although it may not be compelled, may consent to be sued in a foreign jurisdiction upon a cause of action arising elsewhere, unconnected with the business done there. (Louisville & N. R. R. Co. v. Chatters, supra, 325; Michigan Central R. R. Co. v. Mix, supra, 493; Atchison, Topeka & Santa Fe R. Co. v. Wells, 265 U. S. 101, 103.) If the defendant’s consent may confer jurisdiction it would appear to follow logically that the question is one of jurisdiction of the person, for even the consent of the parties may not confer jurisdiction of the subject-matter where it is otherwise lacking. (Robinson v. Oceanic Steam Navigation Co., supra.) The court manifestly could not dismiss the action at the trial of its own motion if the defendant were willing to assume the burdens incident to its defending in this State. Does this not establish the true character of the objection as one to the person of the defendant?

Jurisdiction of the subject-matter is the power lawfully conferred to deal with the general subject involved in the action. (Hunt v. Hunt, 72 N. Y. 217, 230; Reynolds v. Stockton, 140 U. S. 254; Lange v. Benedict, 73 N. Y. 12; writ of error dismissed, 99 U. S. 68.) An action on contract is, as a general rule, transitory and may be entertained wherever jurisdiction of the parties can be procured. (Hutchinson v. Ward, 192 N. Y. 375.) Section 225 of our General Corporation Law of 1929 confers upon our courts jurisdiction of , actions by non-residents against foreign corporations doing business here, without any limitation as to the place where the cause of action may have arisen. The fact that a foreign corporation may, nevertheless, if it so chooses, resist jurisdiction, where an undue burden would be imposed upon it in connection with interstate or foreign commerce, does not alter the fact that jurisdiction of the court over the subject-matter exists. It is merely a request to a court to determine that it is not here to an extent justifying the court to entertain jurisdiction over it because the cause of action arose elsewhere.

“No local rule of practice can prevent the carrier from laying the appropriate foundation for the enforcement of its constitutional right by making a seasonable motion.” (Michigan Central R. R. Co. v. Mix, supra, 496.) The motion here, however, may not be said to have been made seasonably. Indeed, it appears that it was made only after the Statute of Limitations barred the plaintiff from suing elsewhere.

It would be unjust to permit it to assert at this late date that the suit places an undue burden on it.

Order affirmed, with ten dollars costs and disbursements.