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January 9, 1970

Rudolph V. ALOSIO, Plaintiff,
IRANIAN SHIPPING LINES, S.A., et al., Defendants. ATLANTIC STEAMERS SUPPLY CO., Inc. of Pennsylvania, Atlantic Steamers Supply Co., Inc., Maritime Food Corporation, Lee & Palmer, Inc. and Marine Maintenance Company, Intervening Plaintiffs, v. IRANIAN SHIPPING LINES, S.A., et al., Second Defendants

Frankel, District Judge.

The opinion of the court was delivered by: FRANKEL


FRANKEL, District Judge.

 The moving defendants, claiming they do not fit within CPLR § 302(a)(1), (2) or (3), seek dismissal of the complaint under Fed. R. Civ. P. 12(b)(2). However, the affidavits - considering both the things said in those for the plaintiffs and the things omitted in those for defendants - make out a convincing case for in personam jurisdiction on alternative or cumulative theories.

 Defendants maintain that they are not amenable to the jurisdiction of the court because they did nothing "in their own behalf" within the State, but that all their activities here were "solely on behalf of ISL corporation." However debatable it may be in light of the reasons underlying the "minimum contacts" theory, see International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), to differentiate between a corporate act and an individual act, this remains a distinction of legal significance. See, e.g., Schenin v. Micro Copper Corp., 272 F. Supp. 523 (S.D.N.Y. 1967); Unicon Management Corp. v. Koppers Co., 250 F. Supp. 850 (S.D.N.Y. 1966); Rene Boas & Assoc. v. Vernier, 22 A.D. 2d 561, 257 N.Y.S. 2d 487 (1st Dep't. 1965).

 Accepting the distinction, plaintiffs contend, both upon the merits and for jurisdictional purposes, that (1) no viable corporation ever existed; (2) defendants, insofar as the corporation had any meaningful existence, acted to defraud that entity as well as its creditors; and (3) in either case all the disputed conduct of defendants, both through their physical presence in the State and intended effects there, was for their own enrichment at the expense of corporate creditors. A final determination of the factual disputes central to the assertion of jurisdiction will be largely or entirely dispositive of questions of liability as well. Cf. Land v. Dollar, 330 U.S. 731, 67 S. Ct. 1009, 91 L. Ed. 1209 (1947); United States v. Montreal Trust Co., 358 F.2d 239 (2d Cir.), cert. denied, 384 U.S. 919, 86 S. Ct. 1366, 16 L. Ed. 2d 440 (1966); Unicon Management Corp. v. Koppers Co., supra.

 At this stage, however, where it is enough for plaintiffs to show "threshold jurisdiction" sufficient to demonstrate the fairness of allowing them to continue the suit here, United State v. Montreal Trust Co., supra, 358 F.2d at 242-243, the affidavits amply accomplish the demonstration in their favor. This conclusion could not be reached, or course, if the problem were one of "weighing" affidavits on the two sides containing square contradictions of each other. It can be and is reached because the sworn allegations in plaintiffs' affidavits of concrete, specific and plainly material facts are in significant respects simply ignored by the ostensibly responsive affidavits. In motion papers that reflect intensive, detailed, expert lawyering on both sides, striking omissions of this sort cannot be overlooked or denied their patent importance.

 Appraising the respective submissions in this light, the court finds it amply established for present purposes that the movants did in fact and in legal effect "transact" business in New York for their private and personal benefit (with the corporation constituting at most a facade), justifying the claim of jurisdiction under CPLR § 302(a)(1).

 There is even stronger basis for the "tort" jurisdiction under subdivisions (2) and (3) of § 302(a). To be sure, the charges of fraud and conspiracy in the verified complaint and affidavits opposing the present motion may not prevail ultimately. But the showing on the papers is a powerful one - sufficient, as has been noted, in light of the sworn assertions which as of now stand largely unanswered. Without trailing now through a summary of all the details, there is an unrefuted showing that:

(1) The movants used an unfinanced or inadequately financed corporate husk to defraud those they dealt with.
(2) They opened illegal bank accounts and used them to siphon money out of the corporation to pay personal obligations.
(3) They diverted corporate revenues to themselves.
(4) They drove ISL into insolvency as a means of waging personal financial warfare.

 These sundry wrongs were committed mainly by the activities of the movants present physically in New York in association with assorted New Yorkers or, where performed elsewhere, were done with knowledge that hurtful consequences, including injuries to plaintiff creditors, would result in New York.

 In reaching the foregoing conclusions of fact, I have been influenced by the fact that plaintiffs, whose knowledge at the moment is obviously limited, have produced a powerful array of detailed information. Defendants, on the other hand, having first-hand knowledge, are notably silent and evasive. For example, relying upon supposed deficiencies in plaintiffs' "proof," defendants announced that the failure to pay in the capital of ISL had not been demonstrated. Despite their obvious knowledge of the fact, however, they chose never to assert, until long after argument of their motion, that plaintiffs' charge was false. *fn1" Similarly, the defendant Karafotias, in a reply affidavit exhibiting some odd ...

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