The opinion of the court was delivered by: BARTELS
Defendants, Warren Avis and Avis Industrial Corporation (hereafter "Avis Industrial"), move to dismiss this removed diversity contract action upon the grounds that there is no in personam jurisdiction over either of them and, with respect to Warren Avis, that service of process was improper under New York law.
In his affidavit in opposition to defendants' motions the plaintiff, Irving Karlin, alleges the following facts.
In about September, 1968, Karlin spoke to Sidney McNiece, Treasurer, Secretary and Financial Vice President of Avis Industrial, with respect to a possible sale of Avis Industrial. McNiece suggested that the best way to effectuate the sale of the corporation would be a sale of the controlling stock interest, which was held by Warren Avis. Karlin claims that all conversations and meetings referred to in his affidavit occurred in New York. After speaking with some prospective buyers, Karlin met with McNiece and Thomas J. Ault, the president of Avis Industrial, on or about October 15, 1968, at 715 Park Avenue (an apartment leased by Avis Industrial). At this meeting Karlin was told by McNiece and Ault that the company needed cash, that Warren Avis would not put it up but that Warren Avis "offered through Mr. Ault and Mr. McNiece (as officers of Avis Industrial Corp. and as authorized agents for Mr. Avis) to sell the corporation by a purchase of a controlling interest of Avis stock." Specifically, Karlin was told at the meeting that Warren Avis had authorized McNiece to explore with Karlin, as finder, a prospect for the purchase of the Warren Avis stock. Karlin told McNiece that he was looking for a commission of 5% of the consideration involved in the deal, half of it to be paid by each side. McNiece and Ault asked Karlin to consider reducing their side's fee to a lower recognized formula, which Karlin agreed to accept and for which McNiece assured Karlin that he had the approval of Warren Avis. A meeting was then arranged, attended by McNiece, Ault, Karlin, and one Richard Weisinger, a prospect found by Karlin who represented a buying group. At that meeting it became clear that Avis Industrial would, in fact, need more cash. Consequently, a possible $2,000,000 equity financing was discussed. In addition to other meetings, a final meeting was held in New York City on January 9, 1969, attended by McNiece, Ault, Weisinger, and Warren Avis. At that meeting, not attended by Karlin, it was agreed that Warren Avis would sell all his Avis Industrial stock to Ultra Dynamics for $4,000,000 and that Avis Industrial would sell 49,744 shares of its treasury stock to Ultra Dynamics for $596,928. At the meeting Buyer and Seller agreed to set aside for Karlin a finder's fee of $132,000. The agreement was reduced to a formal writing in Detroit, Michigan, on or about January 16, 1969. The formal agreement recognized that Karlin was the finder entitled to be paid. Karlin was not paid.
Based upon this version of the facts, Karlin claims that he is entitled to a commission from Warren Avis on the sale of his personal stock and a commission from Avis Industrial on the sale of its treasury stock. His position is that the officers of Avis Industrial in negotiations with him acted for both Warren Avis and Avis Industrial. He claims that the ultimate goal was the sale of the corporation and that the only way to sell the corporation was to sell the controlling shares of its stock, which happened to be owned by Warren Avis. In addition, Karlin claims to have worked out a proposal for assisting the corporation to obtain working capital of $2,000,000, which proposal was not acted upon but which was partially substituted for by the sale of the treasury stock. Service of process upon Warren Avis was attempted on January 23, 1971, by leaving the summons at the 715 Park Avenue apartment with Warren Avis, Jr., the twenty-year-old college student son of Warren Avis.
Defendants claim that in personam jurisdiction was not secured over Avis Industrial or Warren Avis, and that service of process upon Warren Avis was defective. No claim is made that there was any irregularity in the service of the summons and complaint upon Avis Industrial on January 18, 1968. In adjudicating the issues of jurisdiction over the defendants raised by these facts, the court will attempt to discern the conclusion which it believes a New York court would reach were it presented with the same facts.
The initial question for consideration is whether there is personal jurisdiction over Warren Avis. The relevant statute is the N.Y. CPLR § 302(a)(1), which provides that a court may exercise jurisdiction over a non-domiciliary for causes of action arising out of the transaction of business within the state by the non-domiciliary or his agent.
Since no affidavit submitted by the defendants disputes the crucial facts that a brokerage agreement was concluded in New York between Karlin and McNiece and Ault, acting as agents for Warren Avis, the case falls squarely within § 302(a)(1). The argument of Warren Avis that the final contract between Avis and Ultra Dynamics for the sale of Avis stock was consummated in Michigan, not New York, is entirely irrelevant since it is the finder contract, not the Ultra Dynamics contract, which gives rise to the instant cause of action. The negotiations for and conclusion of a contract within New York is unquestionably a transaction of business supporting long-arm jurisdiction. Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y. 2d 13, 308 N.Y.S. 2d 337, 256 N.E. 2d 506 (1970). The instant case is clearly distinguishable from the situation present in Glassman v. Hyder, 23 N.Y. 2d 354, 296 N.Y.S. 2d 783, 244 N.E. 2d 259 (1968) [the most factually analogous case discovered by the court], where a New York broker entered into a verbal telephone brokerage contract with a New Mexican landowner who never entered New York and who never sent an agent into New York. In addition, and for the record, it should be noted that defendants' position that jurisdiction will not attach where the contract is not consummated in the forum state is not supported by the authorities. Generally, it is held that substantial negotiations for a contract are a sufficient predicate for the assertion of New York long-arm jurisdiction even though the contract is culminated elsewhere. See e.g. Liquid Carriers Corporation v. American Marine Corporation, 375 F.2d 951, 956 (2d Cir. 1967); Potter's Photographic Applications Co., Inc. v. Ealing Corporation, 292 F. Supp. 92, 100-103 (E.D.N.Y. 1968); Northland Paper Company, Inc. v. Mohawk Tablet Company, 271 F. Supp. 763 (S.D.N.Y. 1967); cf. National Gas Appliance Corporation v. AB Electrolux, 270 F.2d 472 (7th Cir. 1959), cert. denied, 361 U.S. 959, 80 S. Ct. 584, 4 L. Ed. 2d 542 (1960).
The remaining issue involving Warren Avis is whether service was properly made upon him. As stated above, the process server went to the apartment at 715 Park Avenue and left the summons with Warren Avis, Jr., a student at Brown University, who was staying at the apartment on one of his occasional social visits to New York City. A copy of the summons was then mailed to Warren Avis, Sr. at the aforesaid address.
Section 308 of the CPLR was amended, effective September, 1970, to provide, in pertinent part, that service may be made upon a natural person by
"2. * * * delivering the summons within the state to a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be served and by mailing the summons to the person to be served at his last known address * * *."
The court must decide whether the requirements of this statute have been met. To resolve the initial question of whether the Park Avenue apartment is the dwelling place or usual place of abode of Warren Avis, it is necessary to review the history of the apartment. According to the affidavit of McNiece, the apartment was leased prior to January, 1970 by Avis Industrial as a place to stay, instead of a hotel room, for its officers and top employees while in New York. In addition, it was used from time to time for the conduct of business relating to Columbia Metal Products Co., Inc., a wholly-owned subsidiary of Avis Industrial. Karlin claims that beginning in January, 1970, Warren Avis took the apartment in his own name and paid the rent therefor. Karlin further claims that he made daily telephone calls to the apartment during the week prior to service of process and invariably received the answer that the caller should leave his name, phone number and a message and that Warren Avis would return the call. Avis does not deny the foregoing and, in fact, admits that he has "maintained" the apartment since January, 1970. He counters, ...