Case Name: Prudential Oil Corporation, Respondent-Appellant, v. Phillips Petroleum Company, Appellant-Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1979-04-05
Citations: 69 A.D.2d 763
Docket Number: 
Parties: Prudential Oil Corporation, Respondent-Appellant, v Phillips Petroleum Company, Appellant-Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 69
Pages: 763–764

Head Matter:
Prudential Oil Corporation, Respondent-Appellant, v Phillips Petroleum Company, Appellant-Respondent.

Opinion:
Orders, Supreme Court, New York County, entered, respectively, September 16, 1977 and June 22, 1978, affirmed, without costs. As to defendant-appellant-respondent's claim that dismissal is required by section 489 of the Judiciary Law, an argument adopted by our respected dissenter, it is necessary only to add that the situation here found meets the requirements set out in Fairchild Hiller Corp. v McDonnell Douglas Corp. (28 NY2d 325) and American Express Co. v Control Data Corp. (50 AD2d 749) of a peculiar relationship between assignee and assignor such as to obviate any legitimate finding that the sole reason for the assignment was to achieve a transfer for the purpose of suit, and that alone, without "a legitimate business reason." (Prudential Oil Corp. v Phillips Petroleum Corp., 546 F2d 469, 476.) The subject assignment, as Special Term found, was but one small detail of corporate parent restricture involving several subsidiaries and dispositive of a wide range of assets. Collateral estoppel did not preclude Special Term from so finding. That the United States Court of Appeals made a finding that the assignment was inoperative to confer jurisdiction upon that court does not necessarily mean that the agreement is champertous under State law. "The existence of federal jurisdiction is a matter of federal, not state, law." (Kramer v Caribbean Mills, 394 US 823, 829.) There the converse situation was before the court: that because an assignment was valid under State law, it was ipso facto valid to sustain subject matter jurisdiction under section 1359 of title 28 of the United States Code. In short, the purpose behind examination for existence of diversity jurisdiction (§ 1359) was entirely different from that in this court. We are therefore not bound by the highly restricted finding in the Federal court, applicable as it was solely to the limited matter of subject matter jurisdiction. The Federal finding did not work a collateral estoppel. (Cf. Silberstein v Silberstein, 218 NY 525, 528; Mehlhop v Central Union Trust Co. of N. Y., 235 NY 102, 108.) The adjudication in the Federal courts was not on the merits at all, and the facts found are not material to the instant case. (Cf. Erie R. R. Co. v International Ry. Co., 209 App Div 380, 383, affd 239 NY 598; see 9 Carmody-Wait 2d, NY Prac, § 63:207.; Siegel, New York Practice, § 469.) Examination of the factual pattern discussed in the opinion below more than justifies Justice Nadel's refusal at Special Term to find and apply collateral estoppel. Concur —Sandler, Sullivan and Markewich, JJ.