Appeal from an order of the United States District Court for the Southern District of New York, Harold R. Tyler, Jr., Judge. Lewis and Eugenia Van Wezel Foundation, Inc., Merfris, S.A., Thibaut De St. Phalle, Ladenburg, Thalmann & Co., and Walter H. Saunders appeal from an order dismissing their actions for lack of personal jurisdiction over Guerdon Industries, Inc.
Medina, Mansfield and Mulligan, Circuit Judges.
This appeal presents a question concerning the scope of CPLR 302(a)(1), the New York long-arm statute. The precise issue before us is whether or not appellants' causes of action, based upon promissory notes admittedly issued by appellee, arise from the transaction of business in New York, within the meaning of CPLR 302(a)(1). For the reasons that follow, we hold that they do. The opinion below is not reported.
In 1959, several partners, employees and clients of Ladenburg, Thalmann & Co., an investment house, joined together to form Trailer Homes, Inc., a Delaware corporation, for the purpose of acquiring several Michigan companies, including Guerdon Industries. Trailer operated from Ladenburg's New York office, employed Ladenburg's New York attorneys, and opened a New York bank account at the Irving Trust Co.
The necessary capital with which to purchase the Michigan companies was raised by issuing six percent notes, on July 31, 1959, to:
Ladenburg, Thalmann & Co. for $1,250,000;
Red Canyon Corp., a Ladenburg client, for $1,000,000;
Lionel Pincus, a Ladenburg employee, for $150,000; and
Lewis Van Wezel, a Ladenburg client, for $100,000.
These notes were signed in New York, were made payable in New York, and the interest on them was paid by checks drawn, in Michigan, on the Irving Trust account.
The Michigan companies were purchased on August 4, 1959, whereupon the name of Trailer Homes was changed to Guerdon Industries, Inc. The president of Guerdon maintained his office in Michigan, while Guerdon's secretary maintained his office in New York until 1966. Meetings of the Board of Directors have been held in New York on occasion.
On May 12, 1960, Guerdon borrowed $6,000,000 from Prudential Insurance Company of America in exchange for promissory notes. The next day, on May 13, 1960, the holders of the Guerdon six percent notes entered into an agreement with Prudential which they subordinated their debt to that of Prudential. The not holders, moreover, agreed not to sue to recover on their notes unless Prudential joined in the action. On October 29, 1970, Prudential waived this right and consented to the commencement of these actions against Guerdon.
All of the notes currently being sued upon are at least one step removed from the original notes issued in 1959. There are three groups of ...