Court Opinion

ID: 9637859
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:24:14.545826+00
Date Added: 2024-06-11T18:10:01.219718
License: Public Domain

HAND, Circuit Judge
(dissenting). The defendants over whom jurisdiction is here claimed are 31 individuals, divided into two syndicates, of 12 and 19 members, respectively. The plaintiff’s theory is that each syndicate constitutes an unincorporated association, and that personal jurisdiction has been got over each by serving its treasurer, a *735British corporation, Lloyds, under section 13 of the General Associations Law of New York. It must therefore appear that Lloyds is the treasurer of each syndicate, that personal jurisdiction has been got over it, and that through it personal jurisdiction follows as against all the members of each syndicate, as a joint obligor. For the sake of simplicity I shall assume with the plaintiff that Lloyds is the treasurer of each syndicate and that it has been personally served with process in the state of New York. It seems to me doubtful that the first is true, and I should wish to scrutinize the second, if the case depended upon it; but, as I disagree with my brothers upon the third, I may pass at once to that.
The record contains not a syllable to show that either of these syndicates had ever underwritten another risk in the state of New York. Regarded as entities, as the plaintiff wishes us to regard them, they have never “done business” in the state, as that phrase is used in this connection. The plaintiff must assert that the authorization of a single contract in New York subjects all the defendants to jurisdiction as respects that contract, regardless of the fact that it is unique, and that not a single defendant has ever set foot within the state. Nor can it help her case that other Lloyds syndicates yearly underwrite similar losses in large numbers. If Lloyds itself underwrote the policies and were the obligor, it would indeed be different; but the plaintiff makes no such claim, and her proof would fail if she did. After arguing that eaeh syndicate is to be treated as a legal person, as much as a corporation, she may not ask us to tack the business of other such syndicates for purposes of jurisdiction.
It is well-settled law that, even when the cause of action is of local origin, a corporation may not be sued unless it is “present” within the state. Whatever may in the end be the meaning of that word, there is no doubt that it involves some continuity of corporate activity, and that the single transaction out of which the cause of action grows is not by itself enough. Lumbermen’s Ins. Co. v. Meyer, 197 U. S. 407, 25 S. Ct. 483, 49 L. Ed. 810; St. Louis Southwestern Ry. Co. v. Alexander, 227 U. S. 218, 33 S. Ct. 245, 57 L. Ed. 486, Ann. Cas. 1915B, 77; Rosenberg Co. v. Curtis Brown Co., 260 U. S. 516, 43 S. Ct. 170, 67 L. Ed. 372; Bank of America v. Whitney Bank, 261 U. S. 171, 43 S. Ct. 311, 67 L. Ed. 594. The same rule was applied to a cause of action arising elsewhere in Phila. & Reading Ry. v. McKibbin, 243 U. S. 264, 37 S. Ct. 280, 61 L. Ed. 710, and perhaps in General Investment Co. v. Lake Shore Ry., 260 U. S. 261, 43 S. Ct. 106, 67 L. Ed. 244, though it would seem under Simon v. So. Ry., 236 U. S. 115, 35 S. Ct. 255, 59 L. Ed. 492, that the question of the corporation’s “presence” is in such eases irrelevant. In any event, if these syndicates had been corporations, there cannot be the slightest doubt that the process would have been void. Natural persons, either severally or in a group, are surely as immune from extraterritorial jurisdiction as artificial persons.
Apparently assuming that the case is the same as though the syndicates had been “present” within the state, the plaintiff attempts to distinguish Flexner v. Farson, 248 U. S. 289, 39 S. Ct. 97, 63 L. Ed. 250. Perhaps the doctrine of that ease is not to be extended to associations or partnerships. We need not decide that question here. If it is, it would apply to the ease at bar, because the decision turned upon the inability of the state to exclude the defendants from its borders. Precisely the same inability exists as respects aliens. The Passenger Cases, 7 How. 283, 12 L. Ed. 702; Henderson v. N. Y., 92 U. S. 259, 23 L. Ed. 543; Chy Lung v. Freeman, 92 U. S. 275, 23 L. Ed. 550; People v. Compagnie, etc., 107 U. S. 59, 2 S. Ct. 87, 27 L. Ed. 383. Furthermore, the treaty of commerce and navigation with Great Britain insures aliens the right of entry, it is indeed argued that the word “Commerce” in such treaties is to be limited to its meaning in the interstate commerce clause. That appears to me an unreasonable and improbable interpretation, but it is unnecessary to decide the point. If these syndicates are to be classed as individuals, Flexner v. Farson, supra, would rule, even if they were “present.”
It seems to me quite unnecessary to consider the difficulties which that case in any event raises. It had been held in International Harvester Co. v. Kentucky, 234 U. S. 579, 34 S. Ct. 944, 58 L. Ed. 1479, that a state’s power to subject corporations to its process was not dependent upon its power to exclude the activities out of which the cause of action arose. It had also been said in Kane v. New Jersey, 242 U. S. 160, 37 S. Ct. 30, 61 L. Ed. 222, that a state might attach to the right of a motorist to pass through the state the condition that he should be subject to process. New York surely may regulate, and indeed in article 10 of its Insurance Law (Consol. Laws, c. 28) has reg-plated, *736the business of Lloyds syndicates “present.” Maybe it could attach a similar condition to the underwriting of a single risk. It has not done so, and I can see no necessity for deciding a matter which is certainly not free from all doubt. My decision in U. S. & Cuban, etc., Co. v. Lloyds (D. C.) 291 F. 889, need not rest upon the doctrine of Flexner v. Farson, supra.
But, if I am wrong in thinking that there must be some continuous activity within the state, it seems to me plain that at all events section 13 has no applicability to the case at bar. I have assumed, though it is doubtful, that Lloyd’s was a treasurer within the meaning of the statute. Generally both the president and the treasurer are joint obligors, and in such a ease, under section 1197 to 1200 of the New York Civil Practice Act, in an action against all the members, the judgment could be taken against all, and execution would go, not only against those' served, but against the joint assets. Such an action might be begun under section 13 simply by naming the president or treasurer. But the plaintiff must go further; she must say that the statute covers a ease where no joint obligor is served at all. Now, some execution under such a judgment must be possible. What could it be? Certainly not against the members severally, for that is not possible under the sections of the Civil Practice Act just cited. Nor against the joint assets, for the same reason. Such a judgment would be brutum fulmen, an impotent gesture, which no other court need respect, or would.
We are dealing merely with a detail of local procedure, a means for avoiding the need at common law of naming a great number of parties and' serving them all. This device by our decision is being extended to cover a case where at best it would raise grave constitutional doubts, and must fly in the teeth of other statutes of the state in pari materia. Until we are forced so to construe it by an authoritative decision of the highest court, I submit we should not contradict its apparent-purpose. If we are right, a California partnership of eight partners, which has an employee called a treasurer, may be forced to defend an action in New York, if he passes through and is caught; and this by virtue of a statute which was at least primarily intended only to avoid the procedural hardships of the common' law in eases of numerous joint debtors.
I dissent.