17 N.Y.2d 27 (1966)

A non-domiciliary’s transaction of business within New York, for purposes of long-arm jurisdiction under CPLR 302(a)(1), requires more than merely shipping goods into the state pursuant to an order sent from within the state; the cause of action must arise from in-state business activity.

Summary

Kramer, a New York resident, sued Vogl, an Austrian leather producer, for fraud, alleging that Vogl falsely promised Kramer exclusive U.S. distribution rights. Kramer claimed he relied on these promises, purchasing and promoting Vogl’s leather, only to discover Vogl was also selling to another distributor, Chilewich. Service was made on Vogl in Austria. The New York Court of Appeals held that New York courts lacked personal jurisdiction over Vogl. The court reasoned that Vogl’s actions did not constitute transacting business within New York under CPLR 302(a)(1) because Vogl had no direct sales, promotion, or advertising activities in the state. Furthermore, the tortious act did not occur within New York under CPLR 302(a)(2), as all actions by Vogl occurred in Europe. The court affirmed the dismissal of the action.

Facts

Plaintiff Kramer, a New York leather importer, claimed that Defendants Vogl, Austrian leather producers doing business as “Yogi”, fraudulently induced him into becoming their exclusive U.S. distributor. Vogl allegedly promised Kramer exclusive distribution rights (except for one specific customer) to incentivize Kramer to purchase and promote Yogi leathers. Kramer purchased large quantities of leather from Vogl between August 1960 and March 1962, and again in March 1962 when the agreement was allegedly renewed with the same exclusivity assurances. However, Kramer asserted that Vogl had already arranged to sell to Chilewich and associated companies by the time of the renewal in March 1962. All shipments from Vogl to Kramer were f.o.b. European ports. Vogl never conducted direct sales, promotion, or advertising within New York. The initial agreement was formed at a meeting in Paris in 1959, followed by a confirmation letter from Vogl in Austria to Kramer in New York. Kramer purchased the leather outright; he was not paid on commission or salary.

Procedural History

Kramer sued Vogl in New York, serving them in Austria. Vogl moved to dismiss for lack of personal jurisdiction, arguing they transacted no business in New York. The lower courts granted the motion to dismiss. The Appellate Division affirmed. Kramer appealed to the New York Court of Appeals, which granted leave to appeal.

Issue(s)

1. Whether the defendant’s actions constituted commission of a tortious act within New York State under CPLR 302(a)(2)?
2. Whether the defendant’s actions constituted transacting business within New York State under CPLR 302(a)(1), such that New York courts could exercise personal jurisdiction over the non-domiciliary defendants?

Holding

1. No, because under CPLR 302(a)(2), the defendant’s act or omission must occur within the State of New York, and in this case, all actions by Vogl occurred in Europe.
2. No, because the cause of action did not arise from the transaction of business within the state, as the defendants did not conduct any direct sales, promotion, or advertising activities in New York.

Court’s Reasoning

Regarding the tortious act claim under CPLR 302(a)(2), the court relied on its prior decisions in Feathers v. McLucas and Singer v. Walker, clarifying that the statute requires the tortious act itself to be committed within New York, not just the injury. The court emphasized that the statutory phrase is not synonymous with “commits a tortious act without the state which causes injury within the state.” Here, all of Vogl’s actions took place in Europe, negating jurisdiction under this provision.
Regarding the transaction of business claim under CPLR 302(a)(1), the court acknowledged its liberal interpretation of the statute but stated that the facts did not meet the threshold. The court distinguished the case from situations where a non-resident defendant has local salesmen or solicits business in New York through catalogs or advertisements. In this case, Vogl merely sold goods f.o.b. to a local distributor. The court noted that Vogl’s sales to Kramer represented a small percentage of Vogl’s overall sales. Therefore, the cause of action could not be said to have arisen out of any transaction of business within the state. The court declined to decide whether it would be constitutional for New York to exercise jurisdiction over any outsider who ships goods into the state.