Case Name: Arthur M. Loeb, Respondent, v. The Star & Herald Company, Inc., Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1919-04-04
Citations: 187 A.D. 175
Docket Number: 
Parties: Arthur M. Loeb, Respondent, v. The Star & Herald Company, Inc., Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 187
Pages: 175–188

Head Matter:
Arthur M. Loeb, Respondent, v. The Star & Herald Company, Inc., Appellant.
First Department,
April 4, 1919.
Corporations — action for libel against foreign corporation — jurisdiction — doing business within State — property within State — service of process upon managing agent —• evidence.
In an action for libel by a resident of this State against a foreign corporation publishing a newspaper in the city of Panama, evidence held, insufficient to establish that the defendant was doing business within this State, or that it had property within the State, or that service was made upon its managing agent.
Neither the declarations of an alleged managing agent of a corporation nor those of any other person in the office with regard to his authority to represent said corporation are binding upon it or have any probative force on the issue with respect to his agency.
A managing agent, within the meaning of subdivision 3 of section 432 of the Code of Civil Procedure, must be some person invested by the corporation with general powers involving the exercise of judgment and discretion, as distinguished from an ordinary agent or attorney who acts in an inferior capacity and under the direction and control of superior authority, both in regard to the extent of his duty and the manner of executing it.
Merrei/l, J., dissented, with opinion; Page, J., dissented in part, with memorandum.
Appeal by the defendant, The Star & Herald Company, Inc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 6th day of November, 1918, denying its motion to set aside the service of the summons and complaint herein.
Philip L. Miller of counsel [Hjalmar H. Boyesen with him on the brief; Sullivan & Cromwell, attorneys], for the appellant.
Alexander A. May per of counsel [Isidor Bayer with him on the brief; Mayper & Boochever, attorneys], for the respondent.

Opinion:
Laughlin, J.:
I am of opinion that George T. Green, upon whom the summons and complaint were served, was not a managing agent of the defendant within the provisions of section 432, subdivision 3, of the Code of Civil Procedure, quoted in the opinion of Mr. Justice Merrell.
The libel was published and the cause of action arose in Panama where the defendant was incorporated and conducted the business of publishing two newspapers, one in the English language and one in Spanish. It did no business here excepting that through one Carlos K. Duque. It solicited and took advertising here to be published in its newspapers in Panama and paid him commissions therefor which were deducted from the payments made. Duque also conducted a commission business of moderate proportions and he owned and managed the University Garage here and for those purposes he maintained an office at 17 Battery place in the city of New York, where the service was made, and there employed said Green as his private secretary. It appears that Duque had other business which he conducted in Panama and that he was there a large part of the time and had not been in the New York office for about a year prior to the day of the service. In his absence it was his custom to leave with or send to said Green a schedule of advertising rates and to direct him to take orders and collect for advertising space according to such rates and to deduct commissions and remit the surplus to the company, and during the absence of Duque, Green also conducted his other commission business and managed the garage. Green was paid by Duque personally and had no connection with the defendant other than as herein stated.
It is stated in the affidavit of the process server that she knew Green to be the managing agent of the defendant and it is stated in an affidavit made by the wife of the plaintiff, who obtained an interview with Green with a view to obtaining information for the purpose of serving the summons, that Green was in charge of the business of the defendant in the city of New York and that the defendant had property here; but these are merely conclusions of the affiants and are of no avail unless supported by the facts properly set forth. (Taylor v. Granite State Provident Assn., 136 N. Y: 343; Moore v. Monumental Mutual Life Ins. Co., 77 App. Div. 209.) The only other statements in the affidavits upon which it is sought to sustain these conclusions are a general statement in the affidavit of the process server to the effect that the service was made in the office of the company and that Green informed her that he was in full charge of its business and was its manager and that there was no officer or director of the company in this State, and that she noticed stationery of the company and two cases three feet by three feet in dimensions addressed to it in the office and its name on the office entrance door, and statements in the affidavit of the plaintiff's wife to the effect that she went to the office of the company on the pretext of placing an order for advertising and asked for Duque and was informed that he was in Panama, but that said Green was in charge of defendant's business, and that on calling on Green there the next day, he informed her that he was the manager and in full charge of defendant's business and could furnish rates and make all necessary-arrangements and take advertising for the paper and that he verbally made her a quotation of advertising rates and stated that he would send bills for the advertising monthly, and that remittances therefor should be made at that office; and she says that at her request he wrote a letter, on stationery in the name of the company, addressed to a company she assumed to represent, specifying the rates for advertising and signed the same, " The Star and Herald Company, per G. T. Green," and that she noticed the name of the defendant on the entrance door to the office and noticed other stationery consisting of letterheads and envelopes with the name of the defendant printed thereon and two small wooden cases partly open, marked in ink, " Star and Herald Company." Green denied that he stated to the process server or to the plaintiff's wife that he was the manager of the defendant, and says that he had " no voice of any kind whatsoever in any of the affairs of said company," and that he had no authority excepting that derived from his employer Duque, which was to quote rates for advertising and to collect the cost of such advertising and remit the surplus after deducting his employer's commissions, and that the office at No. 17 Battery place, where the service was made, was the office of his employer, Duque, and that the sign at the entrance thereto in large type on the transom "was " Carlos R. Duque," and in smaller type on the glass face of the entrance door, " The Star and Herald Company, Panama." Neither the declarations of Green nor those of any other person in the office with regard to his authority to represent the defendant are binding upon it or have any probative force on the issue with respect to his agency. (Vitolo v. Bee Publishing Co., 66 App. Div. 582; Cohr v. Pittsburgh Bridge Co., 146 N. Y. 281.)
There is no evidence with respect to the amount of advertising thus obtained by the defendant here or as to whether advertising orders were obtained only occasionally or so frequently that it might be said that there was a continuity of business. So far as appeared there was no business of the company to be managed here. The only employee of the company here in any view of the evidence was Duque, and the fair inference is that in connection with his other business he was taking advertising orders for the defendant on a commission basis so that the business he was conducting was his own and not that of the defendant.
The observations made in some opinions to the effect that service which renders it reasonably probable that the party proceeded against will receive a process in time to defend (See Hiller v. B. & M. R. R. R. Co., 70 N. Y. 223; Palmer v. Pennsylvania Co., 35 Hun, 369; affd., 99 N. Y. 679; Rochester, Hornellsville & L. R. R. Co. v. N. Y., L. E. & W. R. R. Co., 48 Hun, 190; Barrett v. A. T. & T. Co., 138 N. Y. 491; Pope v. Terre Haute Car Mfg. Co., 87 id. 137), must be read in connection with the express requirements of provisions of the Code of Civil Procedure that the person upon whom the service is made must be a managing agent of the company, and in the light of the rule stated in Taylor v. Granite State Provident Assn, (supra) that such a managing agent " must be some person invested by the corporation with general powers involving the exercise of judgment and discretion, as distinguished from an ordinary agent or attorney, who acts in an inferior capacity and under the direction and control of superior authority, both in regard to the extent of his duty and the manner of executing it." (See, to the same effect, Coler v. Pittsburgh Bridge Co., supra.) If the fact that the process eventually reached the defendant were a controlling factor, service could seldom be set aside, for the motion in all cases must be made by defendant. If there were any evidence that the defendant authorized Green to act as its managing agent within the State it would doubtless be immaterial whether it compensated him for his services or whether he was paid therefor by another (Palmer v. Pennsylvania Co., supra); but here there is no evidence that it authorized Green to act as its agent and the evidence shows that the services he performed were under his employment by, and were for, Duque.
That he assumed to act as agent for the defendant is not sufficient. He must have been authorized by it so to act. (Tauza v. Susquehanna Coal Co., 220 N. Y. 259, 268, 269.) Here there is not even evidence of ratification, for it was not shown that he corresponded with the company in his own name; and the fair inference is that since he was acting as the private secretary of Duque, his correspondence was with him or with the company in his name. In Tauza v. Susquehanna Coal Co. (supra) the defendant maintained an office in charge of a sales agent with a number of salesmen and clerical assistants under him and through these agencies systematically and regularly solicited and obtained orders which resulted in continuous shipments of coal into the State. This was held to be sufficient to show doing business within the State to enable our courts to acquire jurisdiction over the defendant, which was a foreign corporation, and to sustain service on the sales agent on the theory that he was a managing agent. The facts of this case fall far short of bringing it within that decision upon either point and leave it, I think, fairly within the rule declared by this court on quite similar facts in Vitolo v. Bee Publishing Co. (supra) which was followed in Moore v. Monumental Mutual Life Ins. Co. (supra); in Fontana v. Post Printing & Publishing Co. (87 App. Div. 233), and in Beck v. North Packing & Provision Co. (159 id. 418), none of which, I think, can be said to have been overruled on this point by Tauza v. Susquehanna Coal Co. (supra).
Moreover, I think, it was not sufficiently shown that the defendant had property within this State to authorize the court to take jurisdiction of the action. That provision of the Code, which is a condition precedent to acquiring jurisdiction, has been held to contemplate the existence here of property of a substantial nature from which a recovery might, in part at least, be satisfied. (Barnes v. Mobile & North Western R. R. Co., 12 Hun, 126; Reddington v. Mariposa L. & M. Co., 19 id. 409; Tuchband v. Chicago & Alton R. R. Co., 16 Civ. Proc. Rep. 241.)
I am of opinion, therefore, that it has not been shown that the defendant was doing business within the State (See Grant v. Cananea Consol. Copper Co., 189 N. Y. 241, and authorities therein cited), or that it had property within the State or that the service was made upon a managing agent of the defendant. This case on the last point I think falls within the rule stated in Coler v. Pittsburgh Coal Co. (supra) as follows: " In the absence, therefore, of proof with respect to what the relation actually is to the foreign corporation of the person, to whom the summons is delivered in this State, it is the wiser and better rule to adopt that the right to maintain the action has not been acquired."
The order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.
Clarke, P. J., and Shearn, J., concurred; Merrell, J., dissented.
Page, J.:
I concur in the result of the opinion of Mr. Justice Laxjghlin on the ground that it does not sufficiently appear that the defendant has property within this State, which would be necessary to confer jurisdiction on the court, as the cause arose without the State. I agree with Mr. Justice Merrell that the person served was a managing agent within section 432 of the Code of Civil Procedure.