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PALLAS v. DRIV-RITE

April 2, 1966

Earl A. PALLAS, Plaintiff,
v.
DRIV-RITE, INC., Defendant



The opinion of the court was delivered by: PORT

PORT, District Judge.

 The issue before the court is, does this court have personal jurisdiction over the defendant corporation? The plaintiff bases his claim of jurisdiction upon service made pursuant to Rule 4(e) F.R.Civ.P. which provides in part,

 
Whenever a statute or rule of court of the state in which the district court is held provides (1) for service of a summons * * * upon a party not an inhabitant of or found within the state, * * * service may * * * be made under the circumstances and in the manner prescribed in the statute or rule.

 The state statute relied upon is New York's "long arm" statute, CPLR § 302. *fn1"

 The complaint seeks damages by reason of alleged fraudulent representations made by the defendant's agent in inducing the plaintiff to enter into an agreement with the defendant.

 The affidavits supporting and opposing defendant's motion to dismiss disclose the following facts which are not disputed. The defendant Driv-Rite, Inc. (Driv-Rite) is incorporated under, and licensed to do business in Oklahoma. Its principal office and place for the transaction of business is at Tulsa, Oklahoma.

 Driv-Rite is not authorized to transact business in New York. It has no office in New York. Its advertising in newspapers included the Wall Street Journal and Syracuse Post Standard, both circulated in Onondaga County. Copies of the Post Standard ads are attached to the plaintiff's affidavit. They seek a "working partner" who "[must] be available immediately" and of whom a "$15,000 investment is required." The ads state, "[other] area available." "[Complete] information" can be obtained by calling "Steve Rosner HA 2-0403," announces one ad; the other instructs those interested to "[write] Box F-215, The Post Standard."

 The Post Standard is published in Syracuse and distributed throughout the area around Syracuse. HA 2 is a telephone exchange in the Syracuse area.

 
The defendant's affidavit alleges that it did, "advertise in the newspapers including the Wall Street Journal to the effect that it was attempting to locate distributors within the New York area; that in answer to such advertisement, the Plaintiff Earl A. Pallas did contact the Defendant and that by virtue of such contact the Defendant did have a representative come to the State of New York and enter into an agreement with the said Earl A. Pallas, which agreement was transmitted for acceptance to Tulsa, Oklahoma. * * * [That] Defendant Corporation and Plaintiff eventually entered into the above mentioned contract at Tulsa, Oklahoma; that Plaintiff thereupon attended a training seminar at Tulsa, Oklahoma, at the expense of said Defendant and did return to New York at the end of such seminar."

 It is further undisputed that the negotiations with Rosner at the Syracuse airport resulted, at that time and place, in the execution of a distributorship agreement by the plaintiff and the delivery by him to Rosner of $15,000 as "a license fee", pursuant to the terms of the agreement. As indicated above, the agreement was subsequently accepted and executed by the defendant at Tulsa, Oklahoma.

 The plaintiff seeks damages of $15,150 comprised of the $15,000 "license fee" and $150 allegedly incurred in connection with a trip to Tulsa. The gravamen of plaintiff's claim is the alleged misrepresentation made by Rosner at the airport meeting.

 The defendant argues that its activities do not constitute the transaction of "any business within the state" as that language is used in § 302(a) 1, CPLR, and consequently, there is a lack of jurisdiction over it requiring a dismissal of the action. The plaintiff places a contrary construction on the effect of those activities.

 The plaintiff does not place jurisdiction on the commission of "a tortious act within the state", § 302(a) 2, CPLR. In view of the holding herein that the claim alleged arises out of the transaction of business within New York, it is not necessary to determine whether the making of the alleged misrepresentation within the state would suffice as a jurisdictional base.

 This case is not wholly dissimilar to Singer v. Walker, one of the trilogy, reported as Longines-Wittnaur Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965) through which the Court of Appeals of New York has announced guidelines for determination of the scope and applicability of § 302(a) 1 & 2, CPLR. The complaint in Singer sought damages for personal injuries sustained when a geologist's hammer manufactured by an Illinois corporate defendant shattered while being used for its intended purpose in Connecticut by the infant plaintiff. Holding that the tortious conduct out of which the injury arose was committed in Illinois in connection with the manufacture and labeling of the hammer, the Court of Appeals refused to sustain jurisdiction bottomed on the commission of a tortious act in New York, § 302(a) 2. In Feathers v. ...


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