The opinion of the court was delivered by: EDELSTEIN
Plaintiff, Kenneth Chertok (Chertok), instituted suit in New York Supreme Court, New York County, against defendant, Ethyl Corporation of Canada, Ltd. (Ethyl of Canada), for the breach of an alleged finder's fee contract. Defendant has moved pursuant to F.R. Civ. P. 12(b)(2) to dismiss the complaint for lack of in personam jurisdiction.
On February 3, 1971, plaintiff attempted service of the complaint upon Ethyl (of Canada) by serving Ethyl Corporation, the defendant's parent company, at the latter's office in New York City. On March 4, 1971, Ethyl (of Canada) removed the action to this court pursuant to 28 U.S.C. § 1441. The removal was grounded upon diversity of citizenship. 28 U.S.C. § 1332. Thereafter, on March 5, 1971, Mr. Kenneth A. Freberg, President of Ethyl (of Canada), was personally served with a summons and verified complaint at defendant's principal place of business in the city of Toronto, Ontario, Canada.
There is substantial agreement as to the facts.
Ethyl is a Canadian corporation engaged in the manufacture and sale of various petroleum chemicals with its sole and principal place of business located at Toronto, Ontario, Canada. It is a subsidiary of Ethyl Corporation, a Virginia corporation maintaining an office in New York. Ethyl (of Canada) is not and never has been licensed or otherwise qualified to do business in the State of New York or any other part of the United States. It owns no real or personal property situated in New York, nor does it have an office, agent, or other representative for the purpose of transacting business within the State. Ethyl (of Canada) does not manufacture, solicit, sell, ship, or advertise in New York, nor does it maintain any telephone listings here. All of Ethyl's income has resulted from activities which are carried on solely in Canada.
In March 1970 plaintiff Chertok's associate, John H. Coleman, contacted Robert H. Shannon, the manager of defendant's Chemical Products Department, concerning Ethyl's possible interest in acquiring certain mineral concessions in Ethiopia. This contact was made by telephone call to Toronto, Canada. Coleman represented that Chertok had an exclusive and preferred position on these concessions. Subsequently a meeting took place in Toronto between Mr. Chertok and Mr. Shannon. At this meeting it was stated that "if Ethyl Ltd.'s interest should develop further, the parties would have to negotiate an agreement to compensate Chertok at or prior to the time of signing of such a concession agreement with the Ethiopian government." (Shannon affidavit at 2.) Thereafter several telephone conversations occurred between Chertok (who was in New York) and Shannon (who was in Canada). The substance of these calls was incorporated in a letter from Shannon to Chertok, at the latter's request. This letter confirmed their understanding. In addition it advised Chertok of the forwarding of one thousand dollars ($1,000.00) to him. Further telephone conversations resulted in a revision of their understanding to comply with Chertok's requests. Specifically, the revision reflected that "should our [Ethyl's] interest develop further, it would be necessary to negotiate a finder's fee 'and an eventual percentage of the net profits' if such profits ever came into being." (Shannon affidavit at 3.)
Shannon admits a total of three (3) trips to New York during the ensuing months. The initial one occurred in mid-March for the purpose of obtaining technical information about Ethiopian mineral resources from John Carman, Director of Technical Services for the United Nations. Shannon remained for only a few hours, and it appears that Chertok was unaware of this visit.
The second trip occurred on May 21, 1970. On this trip three separate meetings were held at various locations. Shannon and D.S. Kerby, an independent geological consultant retained by Ethyl (of Canada), flew to New York and met with Chertok at the offices of Ethyl Corporation, at which time Shannon handed Chertok a letter incorporating the terms of the revised understanding, and also informing Chertok of a recommendation that he be paid a thirty-five hundred dollar ($3,500.00) fee for performing the following services:
"(1) for using your [Chertok's] good offices to acquire restricted geological and exploration reports which we [Ethyl of Canada] had no knowledge of nor could obtain from the Mines Ministry of Ethiopia.
"(2) for arranging a meeting for a discussion with the Minister and Vice-Minister with our consulting geologist to obtain first-hand interpretations of such data and other terms and conditions in respect to exploration in Ethiopia.
"(3) for exclusive access to this information through yourself [Chertok] and a 15 day first refusal right in respect to certain concessions in Ethiopia." (Exhibit 5 to defendant's moving papers)
Thereafter, Chertok, Shannon and Kerby proceeded to the Ethiopian Consulate to negotiate with the Ethiopian Minister and Vice-Minister of Mines who had recently arrived in New York from Ethiopia for purposes totally unrelated to the Chertok matter. This May 21, date and location were pre-arranged by Chertok to accord with the convenience of the Ethiopian officials during their brief stay in New York. The negotiations proved inconclusive. After dinner with Chertok, Shannon and Kerby returned to Toronto.
The third visit to New York was a social one as Shannon accompanied his daughter to the Juilliard School of Music. While here, however, Shannon had lunch with Chertok, but little, if any, business was discussed.
Thereafter there were more telephone conversations between Shannon and Chertok which proved to be fruitless. On October 11, 1970, Shannon learned that no agreement with the Ethiopian Government would be possible unless technical personnel were sent overseas. This was in conflict with the purported understanding of May 21, 1970. Be that as it may, no agreement concerning the concessions was ever forthcoming. Then the instant suit was commenced by Chertok.
Plaintiff concedes that defendant was not doing business in New York at the time in question. Simonson v. International Bank, 14 N.Y. 2d 281, 251 N.Y.S. 2d 433, 200 N.E. 2d 427 (1964); Lumbermens Mutual Casualty Company v. Borden Company, 265 F. Supp. 99, 102 (S.D.N.Y. 1967). He contends that Ethyl (of Canada) subjected itself to the in personam jurisdiction of the New York courts by transacting business within the meaning of C.P.L.R. Section 302(a)(1). Plaintiff maintains that the visits by Shannon to New York concerning the Ethiopian concessions, the execution of the alleged finder's fee agreement, the payment in New York of certain fees and the numerous telephone conversations between Shannon and Chertok are sufficient minimum contacts "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice,'" International Shoe Co. v. State of Washington et al., 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 ...