Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65 (1984)
Quasi-in-rem jurisdiction over a non-domiciliary defendant is permissible in New York when the defendant has minimum contacts with the state, and the cause of action is related to property located within the state, even if CPLR 302 does not authorize in personam jurisdiction.
Summary
Banco Ambrosiano, an Italian bank, sued Artoc Bank, a Bahamian bank, in New York to recover $15 million allegedly loaned to Artoc. Ambrosiano attached Artoc’s New York bank account. The New York Court of Appeals held that quasi-in-rem jurisdiction was proper because Artoc had sufficient minimum contacts with New York through its regular use of a New York bank account to effectuate international transactions, and because the lawsuit arose directly from transactions involving that account. The court emphasized that while CPLR 302 may not always provide for in personam jurisdiction to the full extent permitted by due process, quasi-in-rem jurisdiction could fill this gap when minimum contacts are present.
Facts
Banco Ambrosiano (Ambrosiano), an Italian bank, loaned $15 million to Artoc Bank & Trust Limited (Artoc), a Bahamian bank. The loan consisted of three $5 million transactions. Artoc directed Ambrosiano to deposit the funds into Artoc’s account at Brown Brothers Harriman in New York. Repayment, according to Artoc’s documentation, was to be made to Ambrosiano’s account at its New York correspondent bank. Artoc argued the loans were intended for Ambrosiano’s Peruvian subsidiary, and repayment was contingent on the subsidiary’s repayment to Artoc. Artoc’s only contact with New York was its maintenance of the correspondent bank account at Brown Brothers.
Procedural History
Ambrosiano commenced the action by obtaining an ex parte order restraining Brown Brothers from transferring funds in Artoc’s account. Ambrosiano moved to confirm the attachment; Artoc challenged the jurisdiction. Special Term granted Ambrosiano’s motion, finding a reasonable relationship between the property and the cause of action, sufficient for quasi-in-rem jurisdiction. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether the exercise of quasi-in-rem jurisdiction over Artoc’s New York bank account is consistent with due process, given that Artoc’s sole contact with New York is the maintenance of this account and the loan transactions involved deposits into and repayments to accounts within the state.
Holding
Yes, because Artoc’s New York bank account was closely related to Ambrosiano’s claim, Artoc regularly used the account for international banking, and Artoc directed funds to be deposited into and repaid to New York accounts, thus establishing sufficient minimum contacts with New York to satisfy due process for quasi-in-rem jurisdiction.
Court’s Reasoning
The Court of Appeals analyzed the impact of Shaffer v. Heitner, which extended the minimum contacts analysis of International Shoe to quasi-in-rem jurisdiction. The court acknowledged that Shaffer limited the use of quasi-in-rem jurisdiction. However, it emphasized that a “gap” exists in New York law because CPLR 302 doesn’t extend in personam jurisdiction to the constitutional limit. The court stated that in such cases, quasi-in-rem jurisdiction is appropriate. The court found that Artoc’s contact with New York was not merely the presence of property. “This is not a case in which property is coincidentally located within the State’s borders and forms the only relevant link to defendant; rather, Artoc’s account with Brown Brothers is closely related to plaintiff’s claim.” The court also pointed out Artoc’s regular use of the account for international banking and the fact that Artoc directed funds to be deposited and repaid through New York accounts. These factors, taken together, establish sufficient minimum contacts to satisfy due process. The court further held that the lower courts did not abuse their discretion in refusing to dismiss the action on the grounds of forum non conveniens and that Ambrosiano, as a foreign banking corporation, could maintain the action under Banking Law § 200-b (subd 2, par [a]).