The opinion of the court was delivered by: CONNER
This is an action to recover a debit balance in defendants' joint commodity account with plaintiff, which is alleged to have arisen out of defendants' purchases and sales of soybean contracts on the Chicago Board of Trade. Plaintiff is a New York corporation doing business as a broker-dealer in securities and commodities; defendants are residents of New Jersey.
The action was commenced in the New York Supreme Court and removed here on defendants' petition. Defendants move to dismiss the complaint on the ground that the Court lacks jurisdiction over their persons or property.
Plaintiff asserts jurisdiction over defendants on the basis of an order of attachment granted by the New York Supreme Court on May 26, 1977, which was levied upon two other commodity accounts maintained by defendants at the New York City office of the Clayton Brokerage Co. of St. Louis, Inc. pursuant to N.Y.C.P.L.R. §§ 6202, 5201, 314, 315. Shortly thereafter the United States Supreme Court decided Shaffer v. Heitner, 433 U.S. 186, 53 L. Ed. 2d 683, 97 S. Ct. 2569 (1977) which applied to quasi in rem jurisdiction the same "minimum contacts-fairness" test of due process that the Court had developed with respect to in personam jurisdiction in International Shoe v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945). Defendants claim that application of the principles announced in Shaffer renders unconstitutional the assertion of jurisdiction over defendants based on the attachment in this case.
In Shaffer the court held that the attachment of property of the defendant unrelated to plaintiff's suit is alone not sufficient to confer jurisdiction over a foreign defendant.
"[Any] assertion of state court jurisdiction must satisfy the International Shoe standard.... [Although] the presence of the defendant's property in a State might suggest the existence of other ties among the defendant, the State, and the litigation, the presence of the property alone would not support the State's jurisdiction."
Shaffer v. Heitner, supra at 208-09.
The effect of Shaffer on the New York law upon which plaintiff relies here has recently been considered by the Second Circuit, which held that
"The application of the 'minimum contacts' standard to proceedings begun by attachment now means that the presence of the defendant's property within New York must be viewed as only one contact of the defendant with the state, to be considered along with other contacts in deciding whether the assertion of jurisdiction is consistent with 'traditional notions of fair play and substantial justice'. International Shoe Co. v. Washington, supra, 326 U.S. at 316; Shaffer v. Heitner, supra, 433 U.S. at 209. Hence, some attachments still valid under New York law, and still constituting valid bases (so far as New York law is concerned) for quasi-in rem jurisdiction, will no longer satisfy the applicable due process requirement where the defendant has less than minimum contacts with New York." Intermeat, Inc. v. American Poultry Incorporated and A & W Foods, 575 F.2d 1017, slip op. at 2528 (2d Cir. 1978) (footnotes omitted).
The decision in Intermeat makes clear that the lack of connection between the attached property and the suit begun by attachment does not preclude assertion of jurisdiction over a foreign defendant if there are other contacts between the defendant and the forum state that will satisfy the minimum contacts requirement of International Shoe. The test is "whether there are sufficient minimum contacts to make it fair and just that the foreign [defendants] be required to come to New York to defend the action that was begun by attachment," and "whether the relationship among the plaintiff, the [defendants], and the forum state make it fair and reasonable to try the action" here. Intermeat, Inc. v. American Poultry, supra at 2529-30.
Defendants describe their contacts with New York as follows:
"The defendants live and work in New Jersey. Their commodity account with Drexel Burnham, which was in existence from March 18th to April 29th, 1977, was opened without any contacts in New York on the part of the defendants. The defendants previously maintained an account at Shearson Hayden Stone, Inc. with a Mr. James Sheehan as their registered representative. Mr. Sheehan switched jobs to Drexel Burnham at the beginning of 1977 and he telephoned the defendants in New Jersey to ask them to transfer their account to Drexel Burnham. They agreed, and Sheehan mailed them the forms necessary to open the Drexel Burnham account, which defendants filled out in New Jersey and mailed back to Sheehan.
"From the time of the opening of the account, until after it was closed and this litigation had commenced, the defendants never visited New York in connection with their account. All orders for purchases or sales of contracts were given over the phone to Mr. Sheehan. Almost all of these transactions were ...